Christian Revival Crusade Inc v Milne (No 3) - [2008] SADC 55

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
CHRISTIAN REVIVAL CRUSADE INC v MILNE (NO 3)
[2008] SADC 55
Judgment of His Honour Judge Tilmouth
8 May 2008
PROFESSIONS AND TRADES - LAWYERS - DUTIES AND LIABILITIES - TO COURT
In earlier proceedings the court found that instructions to issue proceedings were invalid. Solicitors for the plaintiff therefore held no valid retainer. Principles relating to challenging a retainer, the onus of proof with respect thereto, and the jurisdiction to make such orders considered.
Held: The solicitors ought to pay the costs related to the breach of action on an indemnity basis for the most part.
District Court Rules 2006 r26(2), r264(1), s42(1); Real Property Act s191(g); Associations Incorporation Act 1985 (SA) s61, s40, referred to.
Zimmerman Holdings v Wales [2002] NSWSC 44; Knight v FP Special Assets Limited (1992) 174 CLR 178; McKewins Hairdressing & Beauty Supplies Pty Ltd v Deputy Commissioner of Taxation (2000) 171 ALR 335, (2000) 74 ALJR 1000; Harry s Bagg's Liquidation Warehouse Pty Ltd v Whittaker (1982) 44 NSWLR 421; AW & LM Forrest Pty Ltd v Beamish (1998) 146 FLR 451, applied.
Morgans Hill Gold Mining Co v Briscoe (1887) 8 NSWLR 123, distinguished.
Griffiths v Evans [1953] 1 WLR 1424; AW & LM Forrest Pty Ltd v Beamish & Ors (1998) 146 FLR 451; Zimmerman Holdings v Wales [2002] NSWSC 44; Adams v London Motor Builders [1921] 1 KB 495; Inglis v Moore & Ors (No 2) (1979) 25 ALR 453; McKenzie v Director General of Conservation and Natural Resources & Ors [2001] VSC 220 ; Ernst & Young (Reg) v Tynski Pty Ltd (2003) 47 ACSR 433; Sanpine v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 365; Hawksford v Hawksford (2005) 191 FLR 173, discussed.
Halliday v Sacs Group Pty Ltd (1993) 67 ALJR 678; Simmons v Liberal Opinion Limited [1911] 1 KB 966; Richmond v Branson & Son [1914] 1 Ch 968; Workers' Union v Bowen (1946) 72 CLR 575; Geilinger v Gibbs [1897] 1 Ch 479; Harry S Bagg's Liquidation Warehouse Pty Ltd v Whittaker (1982) 44 NSWLR 421; Nurse v Durnford (1897) 13 C764; Fricker v Van Grutten (1896) 2 Ch 649; Allman v Daly (No 2) [1959] VR 614; Borhord Constructions Pty Ltd v Overall [2005] SASC 429; Young v Toynbec [1910] 1 KB 215; Zimmerman Holdings v Wales [2002] NSWSC 44, considered.

CHRISTIAN REVIVAL CRUSADE INC v MILNE (NO 3)
[2008] SADC 55
Preliminary

The principal judgment in these proceedings was delivered in November last year.[1] Since then the court handed down a second set of reasons disposing of the third party proceedings.[2] In these the court respectively described the action by the “plaintiff” as incompetent, and yet it declined to make declarations relating to the management and membership of the Christian Revival Crusade Gawler Church.
[1] Christian Revival Crusade Inc v Milne & Ors [2007] SADC 125.
[2] Christian Revival Crusade Inc v Milne (No 2) [2008] SADC 43.
Having resolved the third party proceedings, attention then turns to the applications for costs of the trial in the principal proceedings. This judgment deals with those questions. There are two aspects. The first an application against Boltons Lawyers, solicitors for the plaintiff in the principal proceedings, for the costs of the action (excluding the third party proceedings) on an indemnity or alternatively a party/party basis. The second relates to costs orders against the remaining third parties, Mr Streeter, Mr & Mrs Stevens, Maud Rowton and Tracey Stevens. The basis for each is grounded in the orders dismissing the plaintiff’s claim as incompetent, the antecedent finding of invalidity of the meeting of 22 October 2006 and that no office holders were validly appointed by that meeting.[3] Orders for costs are also sought in relation to various interlocutory applications, preceding the trial.
[3] Exhibit P2, V1 p251-253.
Once again it proves necessary in order to appreciate the grounds forming the basis of the claims to costs against third parties, to repeat some of the history of the matter and to note the correspondence of relevance, between the parties.
The factual basis for costs orders against third parties
This exercise begins with the meeting of 22 October 2006. Minutes were taken by Tracey Stevens.[4] Extensive discussions relating to the legal problems of the plaintiff “CRC (Gawler)” obviously took place. It was attended by fourteen people including Mr Whimpress, a solicitor from Boltons Lawyers, solicitors of record for the putative plaintiff. Affidavits sworn and filed by him, disclose he was at all material times “a solicitor in the employ of Boltons”. The parties agree the sole practice is conducted by the solicitor John William Bolton, so should any orders be made against the solicitors of record, judgment is to be entered against him.
[4] Exhibit D8 P158-163.
The probabilities are that Mr Whimpress attended the meeting in his capacity as legal adviser, rather than as a participant and that he played no part in moving or voting upon resolutions. Very clearly he outlined “the legal issues and ramifications at hand concerning the recent disputes between CRC (Gawler) and the State Executive” and in doing so he must have either had a copy of the Constitution of CRC (Gawler) in hand, or a good working knowledge of it if he did not. He noted “irreconcilable differences between” the parties, and advised matters may have to be “decided … by … litigation”. It may be readily accepted, as Mr Whimpress is recorded as stating, there were issues of complexity relating to the problems in hand. A Church Board was purportedly elected at this meeting. Then a motion was passed “to elect Peter Whimpress, acting on behalf of Boltons Lawyers, as the legal representative for the CRC Gawler”. It was this meeting and these resolutions which the court invalidated in its judgment of November 2007.
Legal proceedings are commenced
On 24 August 2006 a caveat was lodged over the property by Mr Whimpress, claiming an absolute legal interest by CRC (Gawler) in the real estate at Evanston on which a Church and Manse are situated. The foundation was stated to be that the local church “has not been consulted in regards to any disposition of its land”.[5] Boltons then issued proceedings by way of Statement of Claim settled by Mr Whimpress on 24 November 2006, in the name of CRC (Gawler), against Pastor Milne and real estate agents engaged to sell the property. The plaint claimed relief by way of removal of the caveat, injunctions to prevent sale, and declarations that certain named persons (including the third parties Tracey Stevens and Maud Rowton) were duly elected office holders of the plaintiff and that thirteen other named persons (including the extant third parties) were members of the plaintiff.
[5] Exhibit P2 V1 p251-252.
On 27 November 2006 an interlocutory application was filed pursuant to s191(g) of the Real Property Act 1886 (SA) for an extension of time in which to bring proceedings in order to establish the validity of the claim on which the caveat was founded, in response to an application for removal lodged with the Registrar General of Lands Titles on 2 November 2006. This was supported by an affidavit of Tracey Stevens, taken by Mr Whimpress.
The correspondence
Pastor Milne, the first defendant, wrote to Mr Whimpress on 15 November 2006 suggesting the meeting of 22 October 2006 was “conducted illegally and in contravention of the Rules of Constitution of the Gawler CRC”. According to the findings of the court in the principal proceedings, this was plainly correct. He went on to remind Mr Whimpress that he, Milne, remained public officer despite the purported resolutions, and he pointed out that as from 24 August 2005, all the business affairs of the Church were handled by him as “Public Officer of CRC Gawler Inc. under delegation to the CRC State Executive”.
This was followed by a letter from the solicitor then acting for Mr Milne. In that letter to Boltons Lawyers of 1 December 2006, Mr Robson maintained the action was commenced “against the wrong parties”, that (in effect) the third parties were “the real plaintiffs in the action”, pointed out he had instructions “to apply to join CRC as a defendant” and that his client proposed to name those persons as defendants to a counterclaim. As a consequence, an application to that effect was filed and heard on 4 December 2006, when orders were made by a Judge of this court refusing to extend the caveat, permitting CRC Churches International South Australia (CRC (SA)) to be joined as fourth defendant, and dismissing the action against the land agents, up until then second and third defendants.
Mr Robson followed this promptly with a further letter dated 5 December 2006. He pressed the view that the alleged members of CRC (Gawler) should bring proceedings personally and suggested s61 of the Associations Incorporation Act 1985 (SA) provided a better forum for airing their grievances. In light of the earlier reasons of the court, he was as to the former, plainly correct, and as to the latter, may well have been. He put the third parties on notice that they were personally at risk of costs. At no stage however, did he warn Boltons they may be.
In its defence of 25 January 2007, the fourth defendant CRC (SA) specifically pleaded the action was “improperly and unconstitutionally commenced in the name of Gawler CRC” and repeated there was “no proper constitutional authority for the commencement of this action in the name of Gawler CRC”. It was on this day that a defence was filed and the third party proceedings issued. The third parties never had solicitors and represented themselves throughout. The extant third parties were however called by Mr Whimpress as witnesses for the plaintiff in the principal proceedings. The defence went on to plead the “members or purported members should be personally liable for the cost of the action”.[6] These allegations were effectively denied in a reply settled by Mr Whimpress of 29 March 2007,[7] which also pleaded:[8]
… section 40 of the Associations Incorporation Act 1985 provides that the rules of natural justice apply, and that under s21(2) of that Act the members are not responsible for the liabilities of the plaintiff.
The power to make costs orders against third parties
[6] Defence paras 1.4 and 8 respectively.
[7] Paras 1, 2 and 19 respectively.
[8] Para 19.
These circumstances give rise to the application for an order for costs against the solicitors and as against the third parties personally. There can be no doubting the jurisdiction of the court to make such orders, pursuant to s42(1) of the District Court Act (above), backed up by Rule 264(1) of the District Court Civil Rules 2006: Allman v Daly (No2),[9] and Brohard Constructions Pty Ltd v Overall.[10] Nor is there any doubting the capacity of the court to make orders against third parties, as s42(1) expressly provides costs may be ordered “against any person (whether a party to or a witness to the proceedings or not)”. An amendment that effect in 1999, reversed the decision in Vestris v Cashman[11] holding otherwise.
[9] [1959] VR 614 at 618.
[10] [2005] SASC 429.
[11] (1990) 72 SASR 449.
The capacity of a court to order costs against solicitors has been recognised for well over a century, although the basis was not so clear. Originally it was considered to be an aspect of the power of a court to control the conduct of its officers, springing from an implied contact of authority to act: Young v Toynbee.[12] Whatever its genesis, the power is now one exercised at large, in the manner indicated by the joint judgment of Mason CJ and Deane J in Knight v FP Special Assets Limited:[13]
In Ram Coomar Coondoo v Chunder Canto Mookerjee, the Judicial Committee of the Privy Council sought to explain the exercise of the jurisdiction to order costs against persons who were not parties on the record: (1876) 2 App Cas 186 at p 212.
The instances in which persons other than parties to the suit have been held liable to costs in England, have been principally those of solicitors, over whom the Court exercises disciplinary jurisdiction, as in the case of In re Jones: (1870) LR 6 Ch 497. The Courts have also ordered the real parties to pay the costs in actions of ejectment, originally on the ground that that action was in form a fictitious proceeding, and having once assumed this power they have continued to exercise it in the actions substituted for that of ejectment. Again, the Courts, it has been said, would so interfere in case of any contempt or abuse of their proceedings: see Hayward v Giffard. But all these cases relate to applications either in the cause itself, or to the summary jurisdiction of the Court.
The Judicial Committee omitted to mention all the instances of orders for costs against non-parties mentioned in the previous paragraph of this judgment. Not all the cases in which orders were made against persons who were not parties on the record can be explained on the footing stated by the Judicial Committee. The relator cases are but one example. And it is artificial to attribute the orders for costs against solicitors to an exercise of the disciplinary power rather than to an exercise of the jurisdiction to award costs of the proceedings.
The cases awarding costs against non-parties are more readily explicable on the footing that there was no absence of jurisdiction to order costs against non-parties in the strict sense and that the jurisdiction could be exercised against persons who were considered to be the "real parties" to the litigation. That is how Lord Denman CJ expressed the rule in Reg v Greene (1843) 4 QB 646 [114 ER 1042], a decision which was overlooked in Ram Coomar Coondoo, which was an Indian appeal. Lord Denman CJ said at p 650 [p 1044]:
We take the true rule to be that the Court may adjudge from all circumstances who is the party, and give costs against any party, or against an attorney, if the affidavit of the person sought to be charged, or any affidavit produced by an attorney, shews good ground for imposing them upon them respectively. But, if the claim for costs should arise from the affidavits produced in answer, there must be a special application. In the present case costs are asked in respect of the statements made in opposition to the rule.
[12] [1910] 1 KB 215 at 225 and 227.
[13] (1992) 174 CLR 178 at 188-189, Gaudron J agreeing at 206.
Various factors have influenced the courts over the years when making these kind of orders. An order against a solicitor was justified in Simmons v Liberal Opinion Limited,[14] on the basis that “proceedings … were entirely abortive” and “costs were incurred quite wrongly”,[15] in AW & LM Forrest Pty Ltd v Beamish & Ors,[16] on the basis of a less than honourable attitude of the solicitor, and in Zimmerman Holdings v Wales[17] on the basis of “the circumstances and degree of negligence or fault in the solicitor”. Nevertheless as Gummow J cautioned in McKewins Hairdressing & Beauty Supplies Pty Ltd v Deputy Commissioner of Taxation:[18]
[16] …The power to make such an order should be exercised sparingly, in particular where the order sought is one for indemnity costs. However, it is of the first importance that solicitors observe the basic professional requirement and obligation to the courts before which they appear that they not institute and conduct litigation on instructions for some third party which is a stranger to that litigation. It is not to the point that Mr Levick may have believed that what was sought to be done would have benefited the company or its directors or that for a time at least the directors may have acquiesced in this course. This must be all the more so where a liquidation has supervened in the proceedings and where those proceedings, in any event, have no prospect of success.
Implied warranty of retainer
[14] [1911] 1 KB 966.
[15] At 972 and 974 and respectively.
[16] (1998) 146 FLR 450 at 460.
[17] [2002] NSWSC 447]) at [10], upheld in Massey v Wales (2003) 57 NSWLR 718.
[18] (2000) 171 ALR 335, (2000) 74 ALJR 1000 at [16].
Counsel for Boltons Lawyers declined to call Mr Whimpress, so the court has to draw inferences and make findings as to his actions from the evidence and documentary material already available to it. In the principal proceedings the purported meeting of CRC (Gawler) was invalidated because of the failure to give formal notice to CRC (SA) or the Advisory Council, the latter being duly constituted according to Article IX of the Constitution,[19] and because of breaches of the requisite procedural requirements of the Church Constitution.[20] The meeting was called when the original third parties became aware of the proposal to sell the Church, after a for-sale sign was erected on the property, a subject they had a legitimate interest in, and legitimate expectation of being consulted over.
[19] At paras [404-405].
[20] At paras [107-110].
As mentioned already, Mr Whimpress was present at that meeting and he gave extensive legal advice to those present. It was on his advice an election of office holders occurred, then and there. Judged by the minutes his advice included the following:[21]
·many legal issues faced them, including ownership, control, power, finances and membership;
·part of the difficulty related to the complexity of the Constitution making it difficult for many to understand;
·to resist the State Executive and not make any decision until they elect new board members;
·all members wishing to be recognised as such should sign a statutory declaration;
·the State Executive believed it had the power to deal with assets, which were the property of CRC (Gawler);
·ownership of the property was the underlying issue as ownership is disputed by both parties;
·the Constitution declares “we are an independent organisation”.
[21] Exhibit PD8, p158-163.
The minutes lead to the overwhelming inference that Mr Whimpress must have had a copy of the Constitution with him when he advised on these as well as other issues mentioned earlier. In them the “Constitution” is mentioned a number of times, and at others specific sections are cited, for example section 3, section VI paragraphs 1 to 4, and section X, 1-3. As Part X(3) was deleted in November 1995 (relating to changing the Church Board) it may have been that his copy was outdated, but the fact remains detailed and extensive recourse was had a number of times to the precise requirements of the constitution.
The minutes also indicate that he must have known CRC (SA) was claiming lawful interim control of the management of CRC (Gawler). In any case that was made very clear by Robson’s letter to him of 12 September 2006, in which he pointed out that the Gawler Church reverted to “outreach status” and came under the control of the State Executive as of December 2001. The letter concluded:[22]
… my client does not accept that any authority remains in any members of the Gawler Assembly as that authority was clearly transmitted to the State Executive in December 2001. My client therefore does not accept that any valid meeting of members pursuant to the Incorporations Act could occur at this time, even if valid memberships could be ascertained, which is doubtful.
[22] Exhibit SNR1 to the affidavit of Simon Neil Robson of December 2007.
Seen in the light of the nature of his involvement at the meeting, and armed with the knowledge of the facts alluded to, Mr Whimpress must have realised that by holding a meeting without notifying the Advisory Council or the State Executive, and conducting the meeting without the participation of a Church Board, or the Advisory Council in its stead, would be, or was very likely to be, unconstitutional. In the highly unlikely event that he did not, by any reasonable objective measure, he plainly should have.

Despite this he continued to press ahead with proceedings in the name of CRC (Gawler) and he persisted in acting as counsel during the trial, even though he was well and truly on notice the very capacity of CRC (Gawler) to bring the proceedings – and hence his retainer - was in question. In the result the court found the proceedings in its name were incompetent for this very reason. It follows from this, that he could not have been duly authorised to issue proceedings on behalf of CRC (Gawler), as he did.
Although Mr Whimpress no doubt acted in good faith, he was personally too close to the issues at stake to give impartial or objective legal advice. His decision making was plainly misguided. In particular he should have questioned the legal capacity of CRC (Gawler) to bring the proceedings by no later than 4 December 2007 when the issues should have crystallised in his mind as a consequence of interlocutory proceedings of that day. There is no evidence that he did so.
Costs against the solicitor
It was submitted by Mr Henchliffe for Boltons, that there was an onus on solicitors of record to establish their retainer, a proposition supported by the authorities cited by him: Harry S Bagg’s Liquidation Warehouse Pty Ltd v Whittaker,[23] AW & LM Forrest Pty Ltd v Beamish.[24] In addition to the two authorities relied on, the decision in Hawkin’s Hill Gold Mining Co v Briscoe,[25] favours the view that the solicitor bears the onus of proof. The position is not however that straight forward, owing to sharply conflicting case law as to which side bears the onus of establishing the retainer.
[23] (1982) 44 NSWLR 421 at 430B.
[24] Above at 458.
[25] (1887) 8 NSWR 123.
In other decisions the reverse proposition has prevailed: they hold the party impugning a solicitor’s authority, must establish its absence: Adams v London Improved Motor Coach Builders Ltd,[26] Inglis v Moore & Others (No 2),[27] McKenzie v Director-General of Conservation and Natural Resources & Ors,[28] Ernst & Young (Reg) v Tynski Pty Ltd,[29] Sanpine v Koompahtoo Local Aboriginal Land Council,[30] and Hawksford v Hawksford.[31]
[26] [1921] 1 KB 495 at 500 and 502.
[27] (1979) 25 ALR 453 at 464–465.
[28] [2001] VSC 220 at [53-55].
[29] (2003) 47 ACSR 433 at [35].
[30] [2005] NSWSC 365, affirmed on other grounds Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 241 ALR 88; (2007) 82 ALJR 345.
[31] (2005) 191 FLR 173 and refer to Knox Street Apartments v Flexman [2002] NSWSC 102.
More to the point, Mason CJ in Halliday v SACS Group Pty Ltd held, when considering an application for an extension of time in which to appeal from a decision of another judge of the High Court:[32]
Dawson J held that the party who challenges the existence of a retainer bears the onus of establishing the absence of it. In this case, there never was a challenge to the existence of the retainer during the course of the proceedings. His Honour went on to say:
The mere fact that a person appears on the record as the solicitor for a party does not necessarily justify the conclusion that there is a contract of retainer between the solicitor and that party; (see, by way of analogy only, Hall v Laver 1 Hare 571, at 575–6; 66 ER 1158, at 1160). But, at least where the party is aware of this and takes no steps to rectify it, then a presumption must arise that there is a contract of retainer between them (see, by way of analogy only, Reynolds v Howell (1873) LR 8 QB 398, per Blackburn J at 400). And, both in so far as the court is concerned and as between the parties to an action, the presumption that the solicitor on the record represents the party for whom he is recorded as being solicitor must surely be a strong one (see Lady de la Pole v Dick (1885) 29 ChD 351, per Cotton LJ at 347. See also O 7, rr 2(2), 7(2)).
The applicant contends that the judgments in Adams v London Improved Motorcoach Builders Ltd [1921] 1 KB 495 do not support the approach taken by his Honour. In my view, what his Honour said plainly accords with the judgments of Bankes LJ and Atkin LJ in that case. Further support for his Honour’s conclusion is provided by Hudgson v Endrust (Aust) Pty Ltd (1986) 11 FCR 152 and Davies v Taylor (No 2) [1974] AC 225.
As Campbell J felicitously points out in Hawksford v Hawksford,[33] these decisions of “two single judges of the High Court … constitutes a persuasive precedent of high order.”
[32] (1993) 67 ALJR 678 at 679-680.
[33] Above at [47].
By the act of issuing proceedings on behalf of a party, solicitors warrant their authority to represent that party in accordance with the principles outlined in Halliday v SACS Group Pty Ltd, principles having their origin in the decisions of the Court of Appeal in Young v Toynbee[34] and Simmons v Liberal Opinion Limited.[35]
[34] [1910] 1 KB 215.
[35] Above at 971-972.
The case law consistently maintains that if upon challenge, the retainer of a solicitor to act for a party is not established, the solicitor should pay so much of the costs of the proceedings of the other party as are attributable to the false assumption of instructions: Harry S Bagg’s Liquidation Warehouse Pty Ltd v Whittaker,[36] AW & LM Forrest Pty Ltd v Beamish & Ors.[37] In that situation, the court has a discretion to award such costs on a party/party or indemnity basis: Forrest Pty Ltd v Beamish,[38] Zimmerman Holdings v Wales.[39]
Should an order be made for costs against the solicitors?
[36] At 430 D & G.
[37] At 458 & 459.
[38] At 459-460.
[39] Above at [10].
The decision of Mr Whimpress to accept instructions to sue was clearly ill-advised. Proceedings should never have been issued in the name of CRC (Gawler). Nevertheless there were undeniably issues of substance worthy of litigation, as to which both “parties” ultimately had a measure of success and failure. Although he was motivated by good intentions, he should have questioned his retainer, at least as of 1 December 2006 when he was squarely confronted with the problem by Mr Robson. By 4 December 2006 and, in any case certainly by not later than receiving the letter of 5 December and allowing time to reflect upon it, the impeding problems should have become obvious.
Mr Whimpress did not appreciate the problem as he should have. It is not possible to identify wilful obfuscation or blatant disregard of the dictates of proper professional practice: rather he was much more likely to have been simply out of his depth in what was admittedly a complex situation. Obviously he lacked objectivity and was probably too personally close to the matters in dispute. To adopt an expression of Powell J in Harry S Bagg’s Liquidation Warehouse Pty Ltd v Whittaker,[40] he acted in “sublime ignorance” of the implications the legal situation held for him. Given these findings it is clearly appropriate to order costs against the solicitors in the circumstances.
[40] (1982) 44 NSWLR 421 at 422G.
It was suggested Mr Whimpress acted in this way in an ill-disguised endeavour to shield the third parties from personal liability for costs. No such purpose is demonstrated. Once the third party proceedings were on foot, it was self-evident that the individuals concerned were vulnerable to adverse costs orders. Despite this, as well as the warning contained in the letter of 5 December, the proceedings remained on foot as originally constituted. Rather than provide a shield against costs, the continuing stance exposed them to ever increasing and unnecessary risks. This stance rather graphically demonstrates that Mr Whimpress barely appreciated the consequences of the course of action he embarked upon.
That said, costs orders against errant solicitors have their boundaries. It is not to be assumed the entire costs of the litigation should necessarily fall at their feet. In the first place, the potential liability for adverse costs orders should apply from the date of the first summons, 24 November 2006, by which the authority to institute proceedings for the plaintiff was first maintained as a matter of record. It should end when Boltons withdrew on 6 December 2007.
Challenging a solicitor’s retainer
In the second place, it is not necessarily an order for costs in the proceedings at large that applies in such circumstances, it is one connected to the consequences of the assumed retainer. In this respect counsel for Boltons pointed out the problem could have easily been brought to a head by CRC (SA) moving to challenge the retainer. That this was open to them, cannot be doubted. Had the issue been brought forward after proceedings were issued as it plainly was in the defence of 25 January 2005, the appropriate course would have been to strike out the name “CRC Gawler” as a party: Harry S Bagg’s Liquidation Warehouse Pty Ltd v Whittaker.[41]
[41] Above at 430 D and G.
Case law establishes that when the authority to act is in question, the matter can be clarified by means of interlocutory proceedings or motion to challenge the retainer: AW & LM Forrest Pty Ltd v Beamish & Ors,[42] Richmond v Branson & Son.[43] No other authority is needed other than Australian Workers' Union v Bowen,[44] which speaks in terms of an “independent application” for that purpose. In fact the cases suggest such a course is not only open, but one that should ordinarily be taken, as Young J observed in AW & LM Forrest v Beamish & Ors:[45]
However, the authorities on which Mr Conti, QC relies do not say that a late made application is defeated by delay; they merely say that the application should be made timeously or at least without undue delay; see eg Danish Mercantile Co Ltd v Beaumont [1951] Ch 680, 687. Although there was delay in the instant case there was not undue delay and I cannot see in the pleadings any great matter that occurred after the defence and before the motion which would have exacerbated the costs.
[42] Above at 451.
[43] [1914] 1 Ch 968 at 974.
[44] (1946) 72 CLR 575 at 590 per Dixon J and see Rich J at 590 and Williams J at 592.
[45] Above at 459.
This passage serves to confirm the view that costs awarded against a solicitor on account of an unauthorised retainer, should be connected to the consequences, rather than being entirely at large. For example in Geilinger v Gibbs[46] solicitors were ordered “to pay to the defendants their costs of the action so far as they are attributable to the infant plaintiff having been made a party”. An identical approach was taken in Harry S Bagg’s Liquidation Warehouse Pty Ltd v Whittaker, the order being expressed in terms of “the solicitor should pay so much of the defendant’s costs of the proceedings and of the application as are attributable to [the plaintiff] being made a party”,[47] and in AW & LM Forrest Pty Ltd v Beamish & Ors where Young J ordered:[48]
… the proper cause to adopt would be to … order … that the solicitor bear so much of the defendants’ costs of the proceedings and the application as was attributable to those companies being joined as parties.
[46] [1897] 1 Ch 479 at 484.
[47] Above at 430 E.
[48] Above at 462.
The authority to act was not challenged in this case for reasons best known to the defendants. They might have considered there were advantages in riding on the coat tails of a claim well underway. The proceedings provided impetus and a convenient vehicle to bring its own agenda forward for determination. After all it was caught up in an intractable problem. These were reasonable forensic decisions, if so made. Whether they were or not, it is inescapable that had the retainer been challenged early, that process would have conclusively resolved the question much earlier than November 2007. The chances are that Boltons would have received an advice from counsel and conceded the point and if not a hearing of no more than two days would have sufficed to try the issue.
All this means the defendants cannot now lay claim to the costs of the entire proceedings, against Boltons. The defendants made a conscious decision to go to trial on all issues, or they did not advert to the remedy of early challenge. Either way they may only legitimately have the benefit of those costs reasonably flowing from the failed retainer and no more. It follows that an order for costs against Boltons should be made as a direct consequence of issuing proceedings as a from 24 November 2006, relating to those issues that could and should have been resolved upon a challenge to the retainer being promptly launched. Those issues included the validity of the meeting and the resolutions it purported to pass.
Wherever the burden lies, it would not make any difference to the outcome of this case. The court was able to invalidate the meeting, and hence the instructions to act flowing from invalid resolutions, on the basis of the Constitution, the minutes of the meeting and the few documents necessary to prove due appointment of the Advisory Council. Once those documents were in evidence, it became a relatively straight forward exercise to conclude all the relevant parties were not notified or engaged as necessitated by the Constitution and due process. Once those findings were made, valid instructions to retain Boltons could not be demonstrated according to any onus.
In this particular case, the authority of Mr Whimpress could have been fairly easily brought to a head, by such a course of action. The imperfection in his authority was one relatively easily exposed, in the manner mentioned above. It is also one more than likely that would have turned entirely on documentary evidence and conversely one unlikely to warrant calling oral evidence. Such proceedings would probably have effectively brought to his attention the problems faced, called upon Mr Bolton himself to confront the issues and may well have produced the consequence of Boltons withdrawing.
The trial in the principal proceedings was far from confined to such questions. The court dealt with significant wider issues, including the decision to close CRC (Gawler), that of affiliation, and the powers of the Advisory Council. Ultimately the court dismissed the action by the plaintiff as incompetent.[49] At the same time it made it clear the power and authority of the Advisory Council was “quite specific”, restricted to resolving the impasse involved, did not directly authorise closure of CRC Gawler and only permitted sale of the land once the obligations of disclosure, consultation and compliance with the due process provisions of the constitution were satisfied and the obligations of natural justice fulfilled.[50] On those questions CRC (SA) largely failed.
[49] At paragraphs [136-140].
[50] At paragraphs [138].
The trial commenced on Monday 22 October 2007 and ran the entire week. Closing addresses occupied the whole of the sixth and final day, Monday 29 October 2007. The “plaintiff” closed its case at 11.35am on the third day of the trial, so that roughly two and a third days were taken up with its case and two and two thirds in the defence case, although many documents and issues were common to each. However the issue of the retainer could, as already indicated, have taken no more than two days at most to resolve. On this footing the defendants should be confined to costs of two-sixths of the action against the lawyers, as that is the extent to which their conduct contributed to these proceedings.
On what basis should an order be made?
Ordinarily the practice of the court is to make orders for costs as between party and party: Rule 26(2) District Court Rules 2006. It is apparent for reading the early English cases that whether by design or default, costs orders against solicitors acting without instructions were made as a rule, on the solicitor and client basis. That is more akin to the indemnity than the party/party basis. Those cases relied upon by Powell J in Harry S Bagg’s Liquidation Warehouse Pty Ltd v Whittaker,[51] Nurse v Durnford[52] and Fricker v Van Grutten,[53] were cases where costs were awarded as between solicitor and client. Orders in Young v Toynbee[54] were merely expressed in terms of ‘costs thrown away in the action’ and to “pay all the costs of the action”. Later cases cited in AW & LM Forrest Pty Ltd v Beamish[55] suggest orders on the party and party basis, but as Young J then observed “(P)robably the rule now is that costs are in the discretion of the court and there is no presumption one way or the other”.
[51] Above at 430 D.
[52] (1879) 13 Ch D 764 at 768.
[53] (1896) 2 Ch 649 at 659, 660 and 663.
[54] (1910) 1 KB 215 at 229 and 235 respectively.
[55] At 460.
The consideration that Mr Whimpress was well intentioned but thoroughly misguided, count against an award of indemnity costs. The fact that he continued to act despite the warning signs looming pre-trial, and the difficulties that should have become obvious to him by the time of or as a result of the hearing of 4 December 2006, point the other way. His actions were compounded by the time of the hearing on 9 June 2007, when the full ramifications of his firm continuing to act were apparent for all to see. On that day he acknowledged during the course of submissions relating to the application to adjourn, “my appointment may in fact be invalid”. On balance these latter considerations lean towards an order for indemnity costs. In all the circumstances, the most appropriate course is to allow costs against Boltons Lawyers on a party and party basis up until a reasonable response following the hearing of 5 December and the letter of 6 December should have been forthcoming, say after a further week and on an indemnity basis thereafter.
Costs against the extant third parties personally
The minutes of the October 22^nd meeting reveal very clearly the lay members were at a complete loss and struggled to grasp the complexity of the legal problems involved. This is unsurprising. The final resolutions indicate they effectively delegated decision making on legal questions to their solicitor. They had no idea of the options available litigation wise or of the implications of holding the meeting in the way that it was, or of issuing proceedings in the name of CRC (Gawler). They were wholly dependant on legal advice in these things.
So far as the retainer and related issues goes, the solicitors are to be held responsible for those; the sins of the legal profession should not be visited on their clients. The realities are that the position is the same here as that described by Lord Denning in Griffiths v Evans,[56] “the client is ignorant and the solicitor is, or should be, learned”. Otherwise the proceedings, as improperly constituted as they were, had the merit of teasing out important issues destined for curial resolution one way or another. The balance of those issues were unrelated to questions of retainer. Much evidence was devoted to the administration of and the reasons for resolving to close the Gawler Church. The defendants admitted putting it up for sale without notifying the third parties or engaging them in the decision making process.[57] As to these issues they substantially failed. In all the circumstances the fairest course is simply to make no order as to costs of the trial in relation to the issues not covered by the order against Boltons.
[56] [1953] 1 WLR 1424 at 1428.
[57] Principal judgment paragraph [68].
Sundry costs issues
Finally there are costs reserved, pertaining to various interlocutory proceedings on 4 December 2006, 3 April 2007, 4 June 2007 and 9 July 2007. The first related to the application to extend the caveat, which was refused. Orders were also made joining CRC Churches International Inc as a defendant, dismissing the action against the real estate agents, preventing either party from dealing with the Evanston property and setting time limits for filing pleadings. The matter was referred to the Master’s list for an urgent hearing in the New Year.

Whether intended or not, matters certainly played conveniently into the defendants’ hands. In effect orders were made fast tracking the action on all issues, including wider aspects going beyond the retainer. Honours were about even in the outcome, so the correct order would be that each party bear their own costs of this part of the process. However as against Boltons, some component must have related to the retainer, so that one third of the costs of and incidental to this application should be borne by them. The appropriate order is that they pay that much, but otherwise as against the third paries, each party is to bear their own costs of and incidental to the application heard by a Judge on 4 December 2006.
The second appearance of 3 April 2007 led to another order reserving costs. On this occasion a Master made no order on the defendants’ application concerning service of third party notices. Mr Streeter applied for leave to represent the named third parties, apart from Bobby Topper, Marilyn Hicks, Graham Hicks, Barry Menzel, Beverley Lockwood, Ken Ainsbury and Sophie Cairns. It was opposed by the defendants on the footing that Ms Stevens and Mr Streeter held an interest in the proceedings. The defendants’ applications seeking consent orders in the form of declarations, an urgent trial and interim management of the property, were referred for argument, as was the application for leave to represent the remaining third parties. As with the first appearance, this was very much an even outcome, but one still connected to the retainer issue, so similar orders for costs should be made.
Turning then to the third appearance on 4 June 2007, the record suggests this was virtually entirely devoted to dealing with Mrs Streeter. The upshot was the defendants discontinued against her. Costs between the plaintiff and the defendants in respect of this proceeding as it relates to her were reserved. The only other order of consequence was the defendants’ application for the entry of consent orders as against non participating third parties, were referred to the trial judge. In these circumstances very little took place as between the defendants and the remaining third paries on this occasion, so that no order for costs is the only sensible order to make in the circumstances.
Finally on 9 July 2007 a Judge of this court granted the application by the third parties for an adjournment of the trial listed for hearing commencing that day, on account of their inability to secure legal representation. This brought the consequences of the decision of Boltons to continue acting to a complete head and painted the third parties into somewhat of a corner. On the other hand this occasion presented a perfect opportunity for the defendants to apply to the judge to try the retainer issue. Their counsel indicated the defendants were ready to proceed and witnesses were available to give evidence. Had the judge been acquainted with the principles, it is highly likely he would have accepted that invitation. It would have been a practical and sensible course in the circumstances. That being the situation, in keeping with the earlier reasons relating to the 4 December appearance, there should be an order against Boltons for one third of the costs of and incidental to this adjournment. As for the balance, there should be no order as to costs, in favour of or as against any party.
Conclusion and orders
The circumstances were such that the solicitor for CRC (Gawler) accepted instructions to issue proceedings, when he should have appreciated by any reasonable objective measure, that he ought to have declined to act. He compounded the situation by ignoring several ever clearer warning signs along the way. Having accepted a retainer without valid instructions, he rendered himself liable in costs to the opposing party, for so much of the proceedings consequent upon him so doing. However, the defendants failed to bring proceedings to clarify that question at an early stage. The proper exercise of the discretion in the circumstances of this case, is that the consequent costs be allowed to the extent of one third of the trial in the principal proceedings.
Accordingly Boltons Lawyers must pay one-third of the defendants’ costs on a party and party basis, as and from 24 November 2006 until 13 December 2006 and on an indemnity basis thereafter, until 6 December 2007, inclusive. The solicitors must also be held responsible on a party and party basis, for one third of the costs of and incidental to the interlocutory hearings of 4 December 2007, but for one-third of the costs on an indemnity basis for the appearance on 3 April 2007 and the adjournment of 9 July 2007. Those costs are to be paid by the principal of Boltons Lawyers, John William Bolton.
As to the balance of the costs of the trial and of the proceedings on the dates mentioned, as well as the interlocutory proceedings of 4 June 2007, as between the third parties and the defendants, there will be no order as to costs.