Clout v Gray
[1995] FCA 206
•4 Apr 1995
IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION ) No. ART 1 of 1992
BANKRUPTCY DISTRICT OF )
THE STATE OF QUEENSLAND )
IN THE MATTER of an application by
GRAHAM ROSS BENDEICH
BETWEEN : DAVID LEWIS CLOUT
Appellant
AND : JOHN ARTHUR NICOL GRAY
First Respondent
AND : BRAEGROVE PTY LTD
Second Respondent
CORAM: Spender J
PLACE: Brisbane
DATE: 4 April 1995
MINUTES OF ORDER
THE COURT ORDERS THAT:
(i)the application be dismissed;
(ii)the applicant pay the respondents' costs, to be taxed if not agreed.
Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION ) No. ART 1 of 1992
BANKRUPTCY DISTRICT OF )
THE STATE OF QUEENSLAND )
IN THE MATTER of an application by
GRAHAM ROSS BENDEICH
BETWEEN : DAVID LEWIS CLOUT
Appellant
AND : JOHN ARTHUR NICOL GRAY
First Respondent
AND : BRAEGROVE PTY LTD
Second Respondent
CORAM: Spender J
PLACE: Brisbane
DATE: 4 April 1995
REASONS FOR JUDGMENT
This is the remaining matter in an appeal by Mr David Lewis Clout against the taxing officer's taxation of a bill of costs delivered on behalf of Mr Clout to Braegrove Pty Ltd and other objectors (whom I will refer to collectively as 'Braegrove'). Braegrove was an objector to an application by Graham Ross Bendeich to be registered as a trustee in bankruptcy. Braegrove had issued a witness summons to Mr Clout in those proceedings and Neaves J ordered that Braegrove pay Mr Clout's costs in relation to that summons and a related summons.
After the hearing of the appeal against the disallowance by the taxing master of certain of Mr Clout's costs, by an application filed on 5 November 1993, Braegrove sought to re-open the hearing of the appeal and sought an extension of time prescribed by r. 173(1) (which is twenty-one days) to enable them to raise matters which were not objected to at the time of the taxation or the appeal or in accordance with rr. 163(6) and (8), and seek to put before the Court factual material which was not before the court in the appeal against the taxing officer's decision, nor before the taxing officer.
The taxation of costs in bankruptcy proceedings is dealt with in Part XIII of the Bankruptcy Rules. Rule 163(6) provides:
"A party on whom a bill of costs is served may, by notice, object to any item in the Bill. "
Rule 163(7) provides:
"The notice must:
(a)list each item or part of an item in the bill that is objected to; and
(b)state briefly the nature and grounds of objection to each item or part of an item objected to. "
and r. 163(8) provides:
"The party objecting to the bill must file the notice and serve it on each interested party not less than 2 clear days before the day appointed for taxing the bill. "
Section 167 of the Bankruptcy Act 1966 deals with the taxation of costs. Section 167(8) provides:
"A person interested may appeal to the Court from a decision of the taxing officer in allowing or disallowing a bill of costs or bill of charges or an item in such a bill. "
Rule 173 provides:
"(1) An appeal under sub-section 167(8) of the Act from a decision of the taxing officer with respect to the taxation of a bill of costs or bill of charges shall be instituted by filing an application to the Court to review the taxation of the bill within 21 days after the day on which the taxing officer signs a certificate of taxation in relation to that bill.
(2) Any person who appeals against the allowing or disallowing of an item or items in a bill of costs or bill of charges shall, specify that item or those items in the application by which he institutes the appeal. "
(3) An application to review the taxation of a bill of costs or a bill of charges shall be heard and determined by the Court upon the evidence that had been brought in before the taxing officer, and further evidence shall not be received upon the hearing of the application unless the Court otherwise directs. "
The requirement for an express direction by the court in r. 173(3) before further evidence can be received does not, in my opinion, require the making out of "special grounds", such as found in O. 70 r. 10 of The Rules of the Supreme Court (Qld).
In Clarke v. Japan Machines (Australia) Pty Ltd [1984] 1 Qd. R. 404, Thomas J, with whom Campbell CJ and Andrews SPJ agreed, said at 408:
"Order 70, r. 10 of The Rules of the Supreme Court gives this Court 'full discretionary power to receive further evidence upon questions of fact'. The last sentence of the rule provides that upon an appeal from a judgment 'after...hearing of a cause or matter upon the merits, such further evidence...shall not be admitted except on special grounds'.
...
The classic statement of what amounts to 'special grounds' for reception of further evidence upon an appeal was approved recently by Lord Bridge in Langdale v Danby [1982] 3 All ER 129 at 137-138. Three conditions must be fulfilled. 'First it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial: second, the evidence must be such that, if given, it would probably have an important influence on the result of the case, although it need not be decisive: third, the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible.' "
The application to re-open the hearing of the appeal from the taxing officer's decision and to seek to put factual material before the court came about because the material suggests that, after the hearing of the appeal on the taxation, the solicitor acting for Braegrove caused a search to be made at the High Court Registry in Canberra of the Register of Practitioners maintained by the High Court pursuant to the Judiciary Act 1903, and it is said that such search disclosed that a solicitor employed in the firm of solicitors acting for Mr Clout and who had performed work the subject of some of the items in the bill of costs was not registered as a practitioner entitled to practice in the Federal Court of Australia.
It was sought to have the taxing officer directed by the court to consider further objections to Mr Clout's bill of costs, such objections to be limited to the ground that at the relevant time the employed solicitor was not entitled to practice as a solicitor in any federal court.
It is clear that the further evidence sought to be put before the court would not satisfy the test for the reception of fresh evidence on an appeal. It could have been discovered prior to the taxation and prior to the appeal by the exercise of reasonable diligence. The effect of this state of affairs on the bill as delivered and to which items it might have an influence does not clearly emerge.
However, in my opinion, the proscription against the reception of evidence that was not before the taxing officer "unless the court otherwise orders", does not require that before the court would "otherwise order", the tests for the reception of fresh evidence have to be shown to be satisfied, or that in some other way, special grounds have to be made out. The intention is that the appeal is ordinarily to be conducted on the material before the taxing officer and that some reason has to be shown why the court should depart from that ordinary position. It may be that the mere failure to exercise reasonable diligence would not be such as to persuade a court to otherwise direct. It seems to me that the question of a court direction would depend on many factors including the nature of the evidence sought to be adduced, any explanation as to the failure to produce it before the taxing officer, the significance of the evidence and its effect on the ultimate result, and the credibility of the evidence.
The inability on the part of the applicants to specify which items and to what extent the taxing officer's conclusion should be different in the light of the discovery that the employed solicitor was not on the roll of practitioners seems to me to be a relevant consideration. It seems to be accepted by counsel for Braegrove that what really is sought is an account as to what services were and what services were not performed by the unemployed solicitor, and that to determine the consequences on the items of the bill as taxed.
I am not seeking to downplay the potential significance of the failure by the solicitor to be on the Register of Practitioners. Sections 55A, 55B and 55C of the Judiciary Act 1903 provide:
"55A A person who has been admitted to practise as a barrister or solicitor, or as both, under rules made in pursuance of paragraph (ga) of section 86 of this Act is, subject to those rules, entitled to practise in any federal court as a barrister or solicitor, or as both, as the case may be.
55B (1)Subject to this section, a person who:
(a)is for the time being entitled to practise as a barrister or solicitor, or as both, in the Supreme Court of a State; or
(b)is for the time being entitled, under a law (including this Act) in force in a territory, to practise as a barrister or solicitor, or as both, in the Supreme Court of that Territory;
has the like entitlement to practise in any federal court.
...
55B(3) A person is not entitled to practise as a barrister or solicitor in a federal court by reason of sub-section (1) unless his name appears in the Register of Practitioners kept in accordance with the next succeeding section as a person entitled to practise in that capacity.
55C(1) For the purposes of s. 55B, the Chief Executive and Principal Registrar of the High Court shall cause a Register of Practitioners to be kept at the Registry of the High Court.
(2) Where it is shown to the satisfaction of the Chief Executive and Principal Registrar that a person would, but for sub-section (3) of the last preceding section, be for the time being entitled by reason of that section to practise as a barrister or solicitor, or as both, in federal courts, the Chief Executive and Principal Registrar shall cause the name of the person, and the capacity in which he is to be entitled to practise, to be entered in the Register of Practitioners. "
It was held in Little v Registrar of High Court of Australia (1991) 101 ALR 247 by the Full Court of the Federal Court (Sheppard, Ryan and French JJ) that a legal practitioner who by virtue of s. 90(1)(b) of the Legal Profession Practice Act 1958 (Vic) is not qualified to practice in Victoria, is not "entitled to practice" in the Supreme Court of that state within the meanings of ss. 55B and 55C of the Judiciary Act 1903, and that such a practitioner therefore has no "like entitlement to practice in any federal court" under s. 55B(1).
In Guss v Veenhuizen (No. 2) (1976) 136 CLR 47, the High Court was concerned with an application to review a taxation of costs. A solicitor admitted to practice in the Supreme Court of Victoria was not, through an error on the part of the Registrar of the High Court, entered in the Register of Practitioners. He had instituted an appeal in the High Court in a case in which he was a party and acted as solicitor on the record and instructed counsel on his own behalf. The appeal was allowed and the respondent was ordered to pay the appellant's costs. On a taxation of costs, the taxing officer disallowed the solicitor's bill on the ground that at the time the costs and disbursements were incurred, he had not been entitled to practice in the High Court because his name did not appear in the Register of Practitioners in accordance with ss. 55B and 55C of the Act. All the members of the High Court held (Gibbs ACJ, Mason, Jacobs, Murphy and Aickin JJ) held that the solicitor was entitled to have his bill taxed to the extent of the filing fees and counsels' fees, and a majority (Gibbs ACJ, Jacobs and Aickin JJ, with Mason and Murphy JJ dissenting) held that he was also entitled to his professional costs. The majority gave effect to a rule of practice that a solicitor who acts for himself in litigation is entitled to his professional costs and that s. 55B did not in their view operate as a bar to his being allowed professional costs when, in the special circumstances of that case, they were in respect of work done by him in person and not as a solicitor.
In the reasons for the majority appears the view that rectification of the register nunc pro tunc should not be made where it would affect vested rights of third parties.
The view of the minority (Mason and Murphy JJ) was that the absence of the appellant's name from the register constituted a complete statutory bar to recovery of professional costs claimed by him.
The present does not seem to have the special features which provided the basis for the majority to reach the conclusion they did. Absent those special features, entry on the register is a necessary requirement for entitlement to practice in federal courts, and the entitlement to fees for professional services, either as between solicitor and client or as a component of a party-and-party costs order, as the circumstances of the taxation would require, is a live question. Were it necessary to consider that question, the authorities do not speak with a single voice.
There is no equivalent in the Bankruptcy Rules to O. 71 r. 19(1) of the High Court Rules or O. 62 r. 8(1) of the Federal Court Rules, both of which speak of bills of costs of solicitors entitled or admitted to practice in the court.
In my opinion, where there is a disentitling statute, the statute does not extinguish the client's debt to the uncertified solicitor but extinguishes the solicitor's remedy to sue the client.
In In re Jones (1869) L.R. 9 Eq. 63, where Lord Romilly, M.R. said at 66:
"This solicitor was in this position: by an accident arising from a mistake of his London agents he was without a certificate for five months...By the 6 & 7 Vict. c. 73, s. 26, it is provided that 'no person who, as an attorney or solicitor, shall sue, prosecute, defend, or carry on any action or suit, or any proceedings in any of the Courts aforesaid' (that is, any Court of Law or Equity), 'without having previously obtained a stamped certificate which shall be then in force, shall be capable of maintaining any action or suit at law or in equity for the recovery of any fee, reward, or disbursement for or in respect of any business, matter, or thing done by him as an attorney or solicitor as aforesaid whilst he shall have been without such a certificate as aforesaid. ' "
The Master of the Rolls said at 67:
"The question is, whether the want of the certificate puts an end to the debt, or only takes away the remedy....I am of the opinion that in this case the debt is still subsisting, although the solicitor can take no steps to enforce its payment. "
His conclusion, at p. 68, was:
"I am of opinion that the debt was still due, and that the Act does not take away the right of the solicitor either to set off the debt, or to apply to its discharge money which was already in his hands, and the result is, that the bill must go back to the Taxing Master, with a direction that he is to tax the items which he disallowed by reason of the solicitor not being certificated. "
In In re Hope (1872) 7 L.R. Ch. App. 766, it was held that a person who has been ordered to pay costs cannot, on the ground that the solicitor on the other side was uncertificated, refuse to pay the costs. After referring to the statute which was the same as that considered in In re Jones, their Lordships said:
"...there was nothing to prevent the client from paying the attorney, and the want of a certificate could not create any impropriety on the part of the client in doing so. No doubt he might have refused to pay the costs incurred, but he was bound in honour to pay them, and if he had done so, and there was nothing to shew that he had not, he had a right to recover them from the person who had been ordered to pay. "
In TNT Bulkships v Hopkins (1989) 65 NTR 1, Kearney J applied the principle to which I have just referred.
It was suggested on behalf of the respondents to the present application that it might well be that the solicitor's claim would be sustainable on the basis of a claim in restitution of the kind found by Pavey & Mathews Pty Ltd v Paul (1987) 162 CLR 221 at 227 and 256-7. In Re O'Connor's Bills of Costs [1993] 1 Qd R 423, the applicant was a Queensland resident entitled to practice as a solicitor in Queensland, but his name was not on the roll of solicitors of the Supreme Court of New South Wales. The respondent, who was also a Queensland resident, retained the solicitor in Queensland to commence an action on her behalf in the High Court. That court made an order pursuant to s. 44 of the Judiciary Act, remitting the proceedings there commenced to the Supreme Court of New South Wales. The applicant continued to conduct the proceedings in that court. His bill of costs relating to his conduct of those proceedings in such court were disallowed by a taxing officer of the Supreme Court of Queensland. Derrington J held that the applicant is entitled to have the costs taxed in accordance with the ordinary principles and allowed the appeal and directed the taxing master to proceed with the taxation. His conclusion was based both on the application of the doctrine of restitution and unjust enrichment in respect of a benefit received and accepted by the respondent, and on a consideration of the fact that the applicant asked the court to enforce the legitimate performance in Queensland of a contract made in Queensland which could have been legally performed in the state where performance was necessary but was illegally performed and of which the respondent had received and accepted the benefit. He held that the illegal performance did not taint the applicant's right to recover under the contract.
In my opinion, relying on Fullalove v Parker [1862] LJCP 239; 142 ER 1137, it is unnecessary to descend further into this difficult area.
That case held that an objection that an attorney is not duly certificated should be taken before the master and that if made the subject of an application to the court it should at least be shown clearly that the party could not by the exercise of reasonable diligence have ascertained the fact in time to bring it to the master's attention.
Willes J, with whom Byles J agreed, said in 142 ER at 1138:
"I am of opinion that there should be no rule in this case. I do not come to this conclusion on the ground that there has been delay in the making of the application, but, because, after a taxation without any objection taken before the master, I am of opinion that it is too late to make the application in any form. Undoubtedly, if the plaintiff's attorney is uncertificated, he is disabled from recovering costs; and the plaintiff would not be entitled to recover for payments made in respect of services rendered by the attorney under such circumstances, except where he has made advances to his attorney without notice of his disability. Where such advances have been made, they cannot be recovered back; for, the debt is due, though the attorney is disabled from bringing an action to recover it. There is, however, another difficulty in the way of this motion. We must not be understood as at all intending to discourage applications of this [248] kind: but I find this court in a case of Punter v Lord Grantley, 3 M & G 295, 3 Scott, N.R. 647, lay down that which we consider to be a very convenient rule, viz. that this is an objection which should be taken before the master. The only ground that could be urged by Mr Garth on this occasion was that neither the defendant nor his attorney was aware of the attorney's position when the bill was under taxation. But I think his affidavit should have gone further, and should have shewn that he could not by the exercise of reasonable diligence have made himself acquainted with the fact in time to avail himself of the point before the master. Upon this affidavit, it is clear that there has been no such reasonable diligence. I therefore think there is no ground for our interference. "
In summary, this is a claim based on material that could and should have been placed before the taxing officer. It seems to me that the issue in the present application is on all fours with the facts in Fullalove v Parker. In those circumstances and in particular the absence of any satisfactory explanation for the omission, I would not direct the reception of the material sought to be relied on in the applicant pursuant to r. 173(3).
The application should be dismissed. The applicant should pay the respondents' costs, to be taxed if not agreed.
I certify that this and the twelve (12) preceding pages are a true copy of the reasons for judgment herein of his Honour Justice Spender.
Associate
Date: 4 April 1995
Counsel for the appellant: Mr P. Hack
instructed by: Clayton Utz
Counsel for the respondents: Mr G. Robinson
instructed by: Lynch & Co.
Date of Hearing: 14 December 1993
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