Corinne Griffin & Co as trustee of the Corinne Griffin & Co Law Practice Trust Account v Fraser
[2024] WASC 264 (S)
•15 OCTOBER 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: CORINNE GRIFFIN & CO AS TRUSTEE OF THE CORINNE GRIFFIN & CO LAW PRACTICE TRUST ACCOUNT -v- FRASER [2024] WASC 264 (S)
CORAM: LUNDBERG J
HEARD: ON THE PAPERS WITH WRITTEN SUBMISSIONS FILED ON 7 AUGUST 2024 AND 14 AUGUST 2024
DELIVERED : 15 OCTOBER 2024
FILE NO/S: TRU 2 of 2024
BETWEEN: CORINNE GRIFFIN & CO AS TRUSTEE OF THE CORINNE GRIFFIN & CO LAW PRACTICE TRUST ACCOUNT
Applicant
AND
JULIE MARIE FRASER
Respondent
Catchwords:
Practice and procedure - Costs orders - Appropriate costs order in judicial advice proceedings - Applicant law firm is an unincorporated legal practice which represented itself in the proceedings - Whether applicant law firm entitled to recover costs in respect of the time spent by principal of the practice - Consideration of the decision of the High Court in Bell Lawyers Pty Ltd v Pentelow - Applicant law firm not entitled to costs order in respect of time spent by principal of the practice - Ability to recover costs for employed solicitors conceded by the respondent
Practice and procedure - Whether costs orders sought in favour of the applicant and the respondent should be reduced on discretionary grounds - Turns on own facts
Trustees - Entitlement to remuneration and to charge trust property pursuant to s 98(5) of the Trustees Act 1962 (WA) - Asserted inconsistency between provisions in the Legal Profession Uniform Law (WA) and in the Trustees Act 1962 (WA) - Whether inherent jurisdiction may be exercised to assess and approve trustee's remuneration - Turns on own facts
Legislation:
Civil Procedure Act 2005 (NSW), s 3(1)
Legal Profession Uniform General Rules 2015 (WA), r 42
Legal Profession Uniform Law (WA), s 135 and s 144
Legal Profession Uniform Law Application Act 2022 (WA)
Rules of the Supreme Court 1971 (WA), O 1 r 2, O 66 r 1, O 66 r 9(2)
Supreme Court Act 1935 (WA), s 37(1)
Trustees Act 1962 (WA), s 71, s 92, s 97, s 98(1), s 98(5)
Result:
Orders made as set out in [80] of the reasons
Category: B
Representation:
Counsel:
| Applicant | : | No appearance |
| Respondent | : | No appearance |
| Non-party | : | No appearance |
Solicitors:
| Applicant | : | Corinne Griffin & Co |
| Respondent | : | Lewis Kitson |
| Non-party | : | HFM Legal |
Case(s) referred to in decision(s):
Atanaskovic v Birketu [2023] NSWCA 312; (2023) 113 NSWLR 305
Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; (2019) 269 CLR 333
Birketu Pty Ltd v Atanskovic [2024] HCASL 117
Boyle v Farano [2023] WASC 303
Burrows v Macpherson & Kelley Lawyers (Sydney) Pty Ltd [2021] NSWCA 148
Corinne Griffin & Co v Fraser [2024] WASC 264
Duke of Norfolk’s Settlement Trusts [1982] Ch 61
London Scottish Benefit Society v Chorley (1884) 13 QBD 872
Manzo v CSM Lawyers Pty Ltd [2024] FCAFC 96
O’Brien v Warburton [2012] WASC 82
Penhall v Abu.Tony Pty Ltd [2023] NSWSC 1630
Re Queensland Coal and Oil Shale Mining Industry (Superannuation) Ltd [1999] 2 Qd R 524
Spencer v Coshott [2021] NSWCA 235; (2021) 106 NSWLR 84
Treasury Wine Estates Limited v Maurice Blackburn Pty Ltd (No 2) [2021] FCAFC 38; (2021) 388 ALR 540
Tsaknis v Lilburne [2010] WASC 152
United Petroleum v Herbert Smith Freehills [2020] VSCA 15
Table of Contents
A. Introduction
B. First issue - the applicant's entitlement to costs in respect of her own time
Overview
The indemnity principle and the Chorley exception
The 'employed solicitor' rule
Bell Lawyers
Subsequent consideration of Bell Lawyers
Disposition
C. Second issue - the applicant's entitlement to remuneration
Overview
Asserted inconsistency with the Legal Profession Uniform Law
Disposition
D. Third issue - costs orders in favour of the applicant law firm
E. Fourth issue - costs orders in favour of Julie
F. Conclusion and orders
LUNDBERG J:
A. Introduction
On 31 July 2024, the Court published its reasons and made substantive orders to dispose of the applicant law firm's application for judicial advice brought pursuant to s 92 of the Trustees Act: Corinne Griffin & Co v Fraser (Primary Reasons).[1] I will use the same definitions in these reasons as appear in the Primary Reasons.
[1] Corinne Griffin & Co v Fraser [2024] WASC 264.
The issue of costs was held over to allow the parties a further opportunity to file submissions, although I note that brief written submissions on costs were also made prior to, and at, the substantive hearing on 18 July 2024: see Primary Reasons [27(c)] and [130]. I made directions to permit further submissions to be filed, which were received from Julie and from the applicant law firm on 7 and 14 August 2024 respectively. No costs orders have been sought on behalf of Dianne and no submissions were filed on her behalf.
Having regard to the submissions on costs filed by the parties, the issues arising are:
(a) The first issue is whether the applicant is entitled to recover costs for her own time (i.e. Ms Corrine Griffin's time) as the principal of an unincorporated law practice which represented itself in the proceedings.[2] The respondent contends the applicant is not so entitled, having regard to the decision of the High Court in Bell Lawyers Pty Ltd v Pentelow (Bell Lawyers).[3] In advancing this submission, the respondent's counsel made it abundantly clear that the respondent accepted the applicant had acted entirely properly and her conduct was not in issue in any respect.[4]
(b)The second issue is whether, in the alternative to the claim for costs as part of the first issue, the applicant is entitled to remuneration from the trust property pursuant to s 98(5) of the Trustees Act, or otherwise.
(c)The third issue is whether the costs sought by the applicant law firm under s 97 of the Trustees Act in respect of the application should be reduced in the exercise of the Court's discretion.
(d)The fourth issue is whether costs orders should be made in favour of Julie under s 97 of the Trustees Act in respect of the application, and whether those costs should be reduced in the exercise of the Court's discretion.
B.First issue - the applicant's entitlement to costs in respect of her own time
Overview
[2] An unincorporated legal practice is one of the species of a 'law practice' identified in s 6(1) of the Legal Profession Uniform Law (WA) (Legal Profession Uniform Law), being the law applied and modified as a law of Western Australia by the Legal Profession Uniform Law Application Act 2022 (WA).
[3] Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; (2019) 269 CLR 333.
[4] Respondent's submissions dated 7 August 2024, [11] at footnote 2 and ts 54.
The first issue is whether or not the applicant is entitled to a costs order in respect of her own time. Julie contends that Ms Griffin is not entitled to costs for her own time, but concedes that the applicant law firm is entitled to the costs of any solicitor or clerk employed by her, and is entitled to counsel's fees and other disbursements such as filing fees.[5]
[5] Respondent's submissions dated 7 August 2024, [28(a)].
Julie's contention in this regard arises because the applicant is an unincorporated legal practice which represented itself in the proceedings, and Julie places reliance on the decision of the High Court in Bell Lawyers in support of the proposition that, absent a circumstance of indemnity, costs may not be awarded.
Some context is needed in order to explain this contention.
The indemnity principle and the Chorley exception
It is well understood that the statutory power of a court to award costs is not designed to compensate litigants for their labour in conducting proceedings. Costs are also not a reward for a litigant's success. Rather, costs are awarded to provide the successful party with a measure of indemnity against the expense of professional legal costs actually incurred in the litigation.[6] Costs orders provide a party with a partial indemnity.
[6] Bell Lawyers [33] (Kiefel CJ, Bell, Keane and Gordon JJ).
The existence of an underlying circumstance of indemnity is thus a prerequisite to a costs order. However, at least until the decision of the High Court in Bell Lawyers, the application of an exception, known as the Chorley exception, permitted a self-represented litigant, who was a solicitor, to recover their professional costs of acting in litigation, notwithstanding the absence of a circumstance of indemnity.[7] The exception derived its name from the decision of the English Court of Appeal in London Scottish Benefit Society v Chorley (Chorley).[8]
[7] Bell Lawyers [1].
[8] London Scottish Benefit Society v Chorley (1884) 13 QBD 872, 877 (on appeal from (1884) 12 QBD 452).
In Chorley, an action was brought by the London Scottish Benefit Society against Messrs Chorley, Crawford and Chester, for money had and received as solicitors. It appears these gentlemen were partners of a firm of solicitors. The defendants, Mr Crawford and Mr Chester, conducted their own defence and were successful at first instance. The published decisions say little, if anything, about the eponymous Mr Chorley.
Objection was taken to the bill of costs presented by Mr Crawford and Mr Chester and it was contended they ought not to be allowed any costs other than out of pocket expenses, or such costs as they would be entitled to if they were non-professional men.
At first instance the objection was overruled. An appeal to the Queen's Bench Division was dismissed. The question then travelled on appeal to the Court of Appeal, constituted by the then Master of the Rolls, Sir William Brett, and Lord Justices Bowen and Fry. The decision of the Queen's Bench Division was affirmed on appeal.
Brett MR answered the question raised on appeal as follows, stating the primary rule and also the exception:[9]
When an ordinary party to a suit appears for himself, he is not indemnified for loss of time; but when he appears by solicitor, he is entitled to recover for the time expended by the solicitor in the conduct of the suit. When an ordinary litigant appears in person, he is paid only for costs out of pocket. He cannot himself take every step, and very often employs a solicitor to assist him: the remuneration to the solicitor is money paid out of pocket. He has to pay the fees of the court, that is money paid out of pocket; but for loss of time the law will not indemnify him. When, however, we come to the case of a solicitor, the question must be viewed from a different aspect. There are things which a solicitor can do for himself, but also he can employ another solicitor to do them for him; and it would be unadvisable to lay down that he shall not be entitled to ordinary costs if he appears in person, because in that case he would always employ another solicitor.
[9] Chorley (875).
Bowen LJ and Fry LJ expressed agreement with the principle and the result.[10] Each member of the Court denied that the principle was grounded upon the 'privileges of a solicitor'. The Chorley exception thereafter allowed a self-represented solicitor to recover his or her costs of acting in a proceeding.
The 'employed solicitor' rule
[10] Chorley (876 - 877) (Bowen LJ) and (877 - 878) (Fry LJ).
Pre-dating Chorley, authorities had also supported the principle that a party using an employed solicitor could recover the costs arising with respect to that solicitor. The authorities treated this as a circumstance distinct from the situation in which solicitors represented themselves in proceedings and sought to recover those costs. Sometimes referred to as the 'employed solicitor' rule, this principle had been regarded as being consistent with the notion that the existence of an underlying circumstance of indemnity was an essential prerequisite to the making of a costs order, and not an exception thereto.[11]
[11] See, for example, Gageler J in Bell Lawyers [68].
As earlier noted, counsel for Julie accepts that the costs of the applicant's employed solicitors and clerks may be recovered by the applicant in the present case. Given that concession, I need not express any view as to the currency of the 'employed solicitor' rule.
Bell Lawyers
In Bell Lawyers, the High Court concluded that, not only should the Chorley exception not be extended by judicial decision to the benefit of barristers, as opposed to solicitors, but six members of the Court concluded that the exception was not part of the common law of Australia,[12] with Nettle J declining to decide the point.[13]
[12] Bell Lawyers [57] (Kiefel CJ, Bell, Keane and Gordon JJ), [63] (Gageler J), and [93] (Edelman J).
[13] Bell Lawyers [76] (Nettle J).
Important to the reasoning of the plurality in Bell Lawyers was the rejection of the idea that solicitors should be encouraged to act for themselves, described as being contrary to the modern orthodoxy that it is undesirable, as a matter of professional ethics, for a solicitor to act for himself or herself in litigation.[14] The court expressed the view that a 'self-representing solicitor, lacking impartial and independent advice that the court expects its officers to provide to the litigants they represent, may also lack objectivity due to self-interest'.[15] Further, the plurality described the continued existence of the Chorley exception as an 'affront to the fundamental value of equality of all persons before the law'.[16]
[14] Bell Lawyers [19] (Kiefel CJ, Bell, Keane and Gordon JJ).
[15] Bell Lawyers [18] (Kiefel CJ, Bell, Keane and Gordon JJ).
[16] Bell Lawyers [3] (Kiefel CJ, Bell, Keane and Gordon JJ). See also Edelman J at [91].
In examining the language of the applicable statutory provision in that case, the plurality rejected the contention that the use of the word 'remuneration' in the definition of costs is apt to encompass costs within the Chorley exception. The relevant definition in s 3(1) of the Civil Procedure Act 2005 (NSW) is:
costs, in relation to proceedings, means costs payable in or in relation to the proceedings, and includes fees, disbursements, expenses and remuneration.
Thus the plurality rejected the argument that the recovery by a lawyer for work on his or her own case was 'remuneration' for the exercise of professional skill by a qualified legal professional.[17]
[17] Bell Lawyers [42] - [43] (Kiefel CJ, Bell, Keane and Gordon JJ).
As to the 'employed solicitor' rule, the plurality in Bell Lawyers noted that the removal of the Chorley exception would not disturb the well-established understanding in relation to in-house lawyers employed by governments and others, that where such a solicitor appears in proceedings to represent his or her employer, the employer is entitled to recover costs in circumstances where an ordinary party would be so entitled by way of indemnity.[18] However, whether, and on what basis, the same position would apply to a circumstance in which an incorporated legal practice acted for itself (as opposed to an unincorporated legal practice), was expressly left open by the plurality:[19]
[51]Whether the same view should be taken in relation to a solicitor employed by an incorporated legal practice of which he or she is the sole director and shareholder stands in a different position. It might be queried whether such a solicitor has sufficient professional detachment to be characterised as acting in a professional legal capacity when doing work for the incorporated legal practice. And it might be queried whether costs claimed by an incorporated legal practice for work of its sole director and shareholder are within the expansive view of indemnity that has been adopted in the authorities. In this regard, in McIlraith, Brereton J was disposed to attribute "no significance" to the circumstance that the party seeking an order for costs was an incorporated legal practice whose director was the solicitor who actually performed the work for which costs were sought. It is neither appropriate nor necessary to come to a conclusion as to whether Brereton J was correct in this regard.
[52]The resolution of this question may require close consideration of the legislation which provides for incorporation of solicitors' practices and the intersection of that legislation with the provisions of the Civil Procedure Act in light of the general rule; and so the resolution of this question may be left for another day, when all the legislation that bears on the question has been the subject of argument.
[53]It is sufficient for present purposes to say that whether or not an incorporated legal practice that is a vehicle for a sole practitioner should be able to obtain an order for costs for work performed by its sole director and shareholder is ultimately a matter for the legislature. Whether the Chorley exception is part of the common law of Australia is a matter for this Court.
[18] Bell Lawyers [50] (Kiefel CJ, Bell, Keane and Gordon JJ).
[19] Bell Lawyers [51] - [53] (Kiefel CJ, Bell, Keane and Gordon JJ).
Gageler J preferred the view that the 'employed solicitor' rule formed part of the general rule, rather than an exception to it.[20]
Subsequent consideration of Bell Lawyers
[20] Bell Lawyers [68] (Gageler J).
The decision of the High Court in Bell Lawyers has been the subject of considerable treatment at intermediate appellate level in the past 5 years or so.
Chronologically, the authorities which have analysed the issue and which require some comment begin with the decision of the Victorian Court of Appeal in United Petroleum v Herbert Smith Freehills (United Petroleum).[21] Thereafter follows a trio of decisions from the New South Wales Court of Appeal, being Burrows v Macpherson & Kelley Lawyers (Sydney) Pty Ltd (Burrows),[22] Spencer v Coshott (Spencer),[23] and Atanaskovic v Birketu (Atanaskovic).[24] Completing the series of intermediate appellate court authorities is the relatively recent decision of the Full Court of the Federal Court in Manzo v CSM Lawyers Pty Ltd (Manzo), delivered on 16 July 2024.[25]
[21] United Petroleum v Herbert Smith Freehills [2020] VSCA 15.
[22] Burrows v Macpherson & Kelley Lawyers (Sydney) Pty Ltd [2021] NSWCA 148.
[23] Spencer v Coshott [2021] NSWCA 235; (2021) 106 NSWLR 84.
[24] Atanaskovic v Birketu [2023] NSWCA 312; (2023) 113 NSWLR 305.
[25] Manzo v CSM Lawyers Pty Ltd [2024] FCAFC 96. For completeness, I note the Full Court referred to an earlier decision of the Full Court of the Federal Court which touched upon this issue without elaboration, namely Treasury Wine Estates Limited v Maurice Blackburn Pty Ltd (No 2) [2021] FCAFC 38; (2021) 388 ALR 540.
Among the first instance decisions of particular relevance is that of Robb J in the Supreme Court of New South Wales in Penhall v Abu.Tony Pty Ltd (Penhall).[26] Counsel for the applicant submits that Penhall was determined in a similar factual setting to the present, that it is highly persuasive, and that I should follow it.
[26] Penhall v Abu.Tony Pty Ltd [2023] NSWSC 1630.
The issue is due to receive further attention from the High Court in the coming months, following a grant of special leave to appeal against the decision of the New South Wales Court of Appeal in Atanaskovic.[27] It appears that the central question for determination by the High Court in Atanaskovic is the currency of the 'employed solicitor' rule, in the context of the costs powers in the Civil Procedure Act 2005 (NSW). Although the Court would doubtlessly benefit from the further assessment of these issues by the High Court, it is not appropriate to simply hold this issue over until that appeal has been determined, and neither party submitted that I should do so. The issue must be resolved on the basis of the authorities as they stand.
[27] Birketu Pty Ltd v Atanskovic [2024] HCASL 117 (11 April 2024).
As I have earlier noted, the dispute between the parties in the present proceedings does not concern the 'employed solicitor' rule, and nor is the Court concerned with an incorporated legal practice. Corrine Griffin & Co, the applicant law firm, is an unincorporated legal practice. Therefore, the Court need not express views on the principles which may specifically apply in these settings and a detailed review of the authorities identified above is unnecessary for this purpose. That said, to the extent to which the foregoing authorities help to explain the scope of the decision in Bell Lawyers, it is instructive to undertake a limited review of the cases.
I will commence this limited review by considering the conflict between the decision in United Petroleum and the decision of the majority in Atanaskovic. The majority in the latter case held that partners of an unincorporated law firm who obtained a costs order in their favour were entitled to recover costs for work performed by employed solicitors.[28]
[28] Atanaskovic [167] - [168] (Kirk JA) and [339] - [346] (Simpson AJA).
In contrast, the Victorian Court of Appeal in United Petroleum concluded that the decision in Bell Lawyers precluded a law firm from recovering costs for the time spent by its employees in litigation.[29]
[29] United Petroleum [120] - [121] (Whelan, McLeish and Niall JJA).
The members of the Victorian Court of Appeal expressed themselves in the following terms, preferring the view that a continuation of the 'employed solicitor' rule would considerably undermine the decision of the High Court in Bell Lawyers:[30]
[119] Ultimately, we have come to the conclusion that to treat employee solicitors of a legal firm as falling within the 'well-established understanding' would considerably undermine Bell Lawyers. It would extend the 'well-established understanding' to cases of self-represented legal firms and perpetuate a significant degree of special treatment not accorded to non-lawyer litigants, referred to in Chorley as 'ordinary litigants'.
[120] In substance it would, anomalously, allow firms of solicitors to recover for their own time spent in the litigation. It would also mean that a legal practice with employees could recover fees when a sole practitioner could not.
[121] It follows that, in our view, Bell Lawyers prevents recovery of costs in favour of Freehills for the time spent by its own employees...
[30] United Petroleum [119] - [121] (Whelan, McLeish and Niall JJA).
Turning then to the decision of the Full Court of the Federal Court in Manzo, it is notable that the Court similarly adopted an approach which would avoid, in their Honours' view, any undermining of the result in the Bell Lawyers' decision. The Full Court was in that case addressing the application of the High Court's decision in the circumstance of an incorporated legal practice. Nonetheless, the manner which the Full Court assessed the principles in Bell Lawyers, and its ratio, is instructive.
In Manzo, Logan, Perry and Meagher JJ, recognised that this particular issue was left open by the plurality in Bell Lawyers, and so approached the question on the basis that any departure from the application of the general indemnity rule must be for the High Court to determine, or for the legislature. In adopting this approach, their Honours concluded that a correct understanding of the rationale for the rejection of the Chorley exception could be found in the following observation of Ward P (in the minority) in Atanaskovic:[31]
[164][Any] solicitor litigant, like every other litigant who is party to proceedings, is entitled under a costs order to recover costs where it actually incurs professional legal costs. It does not incur these costs when acting for itself. Any departure from the application of the general rule in this context must be for the High Court (or the legislature) to determine. The ability for government bodies (or corporate entities not being legal firms, such as banks) to claim in-house solicitors/counsel fees, to my mind, must be an acceptance that policy permits it (they being sufficiently independent and their employer not being in the position of someone who operates to profit from litigation).
[31] Atanaskovic [164] (Ward P), cited in Manzo [25].
The Full Court of the Federal Court rejected the submission that the size of the incorporated legal practice might be determinative of the issue, noting that the legal practice in that case had three directors and three shareholders. The submission sought to draw a distinction between that scenario and the circumstance in which there was a sole director and sole shareholder, in which the independence issues (or lack thereof) might be magnified.[32]
[32] Manzo [23] - [24].
Their Honours concluded that an acceptance of this submission would 'considerably undermine' the rejection in Bell Lawyers of the Chorley exception and create an 'artificial distinction based on the size of an incorporated legal practice'.[33] Accordingly, the Full Court held that the law firm in question was not entitled to an order for its costs of acting as solicitor for itself in the proceedings.[34]
[33] Manzo [24], adopting the language employed by the Victorian Court of Appeal in United Petroleum at [119].
[34] Manzo [26].
With respect, I agree with the Full Court's analysis that the ratio of the majority in Bell Lawyers is not as narrow as was apprehended by the majority of the New South Wales Court of Appeal in Atanaskovic.[35] The approach I should adopt is to give full weight to the general rule, reinforced by the majority in Bell Lawyers, that a circumstance of indemnity is a prerequisite to the grant of any costs order.
[35] Manzo [21].
It is against this backdrop that I have given consideration to the approach adopted by Robb J in Penhall. His Honour was there called on to consider whether the indemnity principle and the decision in Bell Lawyers precluded a solicitor recovering costs where they appeared in proceedings solely in the capacity of the executor of a deceased estate.
Robb J concluded that the decision in Bell Lawyers did not preclude a finding that a solicitor, in favour of whom a costs order had been made, could recover the solicitor's own professional costs where the solicitor was a party solely in their capacity as the legal personal representative of a deceased person whose estate was entitled to bring or defend the proceedings (provided at least that the solicitor was not a beneficiary of the estate of the deceased).[36]
[36] Penhall [42].
In explaining this conclusion, his Honour stated:[37]
[42]…That is especially so, in my view, where the solicitor has accepted the appointment as the legal personal representative of the deceased under a will that entitles the solicitor to be paid their professional fees as an expense of the estate. If it were otherwise, the party against whom the order for costs was made would be spared the obligation to pay legal costs genuinely and reasonably incurred by the estate of the deceased, in circumstances where those costs would then have to be paid out of the estate. If that were the result imposed by the law, the beneficiaries, as the parties entitled beneficially to success in the proceedings, would have to meet their own costs.
[37] Penhall [42].
Further, his Honour regarded the essential criterion as being whether the solicitors were, as a matter of substance, effectively acting for themselves (that is, self-represented) when they defended the proceedings in question, adopting the observations of Ward P in Atanaskovic.[38]
[38] Penhall [46] referring to Ward P in Atanaskovic at [157].
Robb J concluded that:[39]
[45]In my view, it is not an affront to equality before the law to permit a solicitor who is an executor, and who is entitled to be paid their professional fees out of the estate, a right to recover those professional fees as part of the costs awarded against another party in the proceedings. Further, this situation does not involve the solicitor profiting personally from their exertions in the conduct of the proceedings in their own name, when they do so as an executor for the benefit of the estate of the deceased. In substance, the solicitor is not acting for themselves, but is acting for the beneficiaries of the estate. The solicitor is doing so because the solicitor has been chosen as the executor by the deceased, or has otherwise become the legal personal representative of the deceased by some process in which the beneficiaries of the estate had an interest.
[46]… A party who is only a party in the capacity of the legal personal representative of a deceased estate, and who becomes entitled to be paid their professional fees out of the estate, is not as a matter of substance effectively acting for themselves.
[39] Penhall [45] - [46].
Counsel for the applicant, as I have noted above, submitted that, while this Court was bound by the decision of the majority in Bell Lawyers, that did not prevent the Court from following the approach which found favour with Robb J, noting that the present case was one in which the applicant law firm was not truly, as a matter of substance, acting for itself.[40] Rather, it was submitted that Corrine Griffin & Co had brought the proceedings in its capacity as a trustee, seeking directions from the Court as to the manner in which the trust fund should be distributed.[41] The applicant law firm in the present matter was not suing for recovery of its fees, as was the case with the barrister in Bell Lawyers, and the case with the law firms in both Atanaskovic and United Petroleum. The applicant law firm had not pursued sequestration orders against a former client, as was the case in Manzo. Nor was the applicant law firm defending claims against it in negligence or contract, as in Burrows.
[40] Applicant's submissions dated 14 August 2024, [6].
[41] Applicant's submissions dated 14 August 2024, [6].
It was submitted on behalf of the applicant that the present facts are aligned with those in Penhall, where the solicitor party had initiated proceedings solely in their capacity as the legal personal representative of a deceased person.
Disposition
I accept that the applicant law firm was bound to bring the present application, and I do not consider that the applicant law firm can be said to have had a 'personal interest' in the proceedings. Ms Griffin's interest in complying with her professional obligations in respect of trust money is not a personal interest. Seeking judicial advice and directions from the Court in this respect is the antithesis of a personal interest, in my view. The submissions made on behalf of Julie to this effect may be rejected.[42]
[42] Respondent's costs submissions dated 7 August 2024, [11].
That rejection does not, however, assist the applicant law firm, given the view I take as to the ratio of the majority in Bell Lawyers, which fundamentally requires that a circumstance of indemnity be demonstrated as an essential criterion for the making of any costs order. That circumstance is absent in relation to the costs sought in respect of the applicant's own time as the principal of her unincorporated legal practice in conducting the proceedings. The absence of a personal interest is not to the point. Ultimately, while the applicant law firm may have been bound to bring the proceedings, it was not bound to represent itself in the proceedings.
On a review of the various decisions to which I have referred, I consider the decision of the High Court in Bell Lawyers, by which this Court is bound, requires that I approach the present question on the following bases:
(a)First, it must be accepted that the Chorley exception is not part of the common law of Australia.[43] The plurality made it clear that the breadth of the statutory costs power under consideration in Bell Lawyers, which included the word 'remuneration' (as does the costs power under the rules of this Court), did not leave room for the Chorley exception.[44]
(b)Second, while costs are creatures of statute or of the rules of court, the general principle at common law remains that costs are to be awarded by way of an indemnity (more correctly, a partial indemnity) for professional legal costs actually incurred in the conduct of litigation.[45]
(c)Third, while the majority in Bell Lawyers explained their decision by reference to considerations of independence and equality before the law, the ratio of the decision should not be assessed in any narrow fashion, and it would be wrong to undermine the decision by giving effect to additional exceptions.[46] Indeed, in a broad sense, in my respectful opinion, to give life to fresh exceptions to the general indemnity rule in favour of solicitors who act in proceedings on their own behalf would be to 'revive an inequality before the law in relation to the recovery of costs for a special class of litigant in person',[47] which the majority described as an affront.
[43] Bell Lawyers [57] (Kiefel CJ, Bell, Keane and Gordon JJ), [63] (Gageler J), and [93] (Edelman J).
[44] Bell Lawyers [44] (Kiefel CJ, Bell, Keane and Gordon JJ).
[45] Bell Lawyers [33] and [57] (Kiefel CJ, Bell, Keane and Gordon JJ), [60] and [63] (Gageler J), and [93] (Edelman J).
[46] United Petroleum [119]; Atanaskovic [164] (Ward P); Manzo [25] (Logan, Perry and Meagher JJ).
[47] Manzo [24].
The foregoing is unaffected by the particular statutory provisions which apply in the present case. The statutory framework may be briefly described.
First, there are general provisions in the Supreme Court Act 1935 (WA) (SCA) and in the Rules of this Court which empower the Court to make orders with respect to costs.
Section 37(1) SCA provides that, subject to the provisions of that Act, the rules of the Court and any other statute, the costs of and incidental to all proceedings in this Court, including the administration of estates and trusts, shall be in the discretion of the Court or judge, and the Court or judge shall have full power to determine by whom or out of what estate, fund, or property, and to what extent such costs are to be paid.
To a similar effect, O 66 r 1(1) RSC states that, subject to the express provisions of any statute and of the Rules of the Court, the costs of and incidental to all proceedings including the administration of estates and trusts shall be in the discretion of the Court. The sub-rule further provides that, without limiting the general discretion conferred on the Court by the SCA and subject to O 66 RSC, the Court will generally order that the successful party to any action or matter recover his costs.
These provisions afford the Court the widest possible power and discretion in the allocation of costs, but the discretion must nonetheless be exercised judicially. It is trite that costs must be awarded on principle, not arbitrarily or capriciously.
The Rules of this Court provide a broad definition of the term 'costs', which is defined to include 'fees to counsel, charges, disbursements, expenses and remuneration': see O 1 r 2 RSC. That definition is relevantly to the same effect as the provision under consideration in Bell Lawyers.[48] The plurality described the term 'remuneration' in that context as not being apt to include the notion of payment to a person by himself or herself for work done by himself or herself.[49]
[48] Bell Lawyers [14] (Kiefel CJ, Bell, Keane and Gordon JJ).
[49] Bell Lawyers [44] (Kiefel CJ, Bell, Keane and Gordon JJ).
Second, the parties made reference to the express powers in relation to costs in the context of trustees. Section 97 of the Trustees Act states:
97.Costs of court proceedings, orders as to
The Court may order the costs and expenses of and incidental to any application for any order under this Act, or of and incidental to the order, or any conveyance or assignment in pursuance thereof, to be raised and paid out of the property in respect of which any of them is made, or out of the income of the property, or to be borne and paid in such manner and by such persons as the Court thinks fit.
Additionally, O 66 r 9(2) RSC provides:
(2)Where a person is or has been a party to any proceedings in the capacity of trustee, personal representative or mortgagee, he shall, unless the Court otherwise orders, be entitled to the costs of those proceedings, in so far as they are not recovered from or paid by any other person, out of the fund held by the trustee or personal representative or the mortgaged property, as the case may be; and the Court may otherwise order only on the ground that the trustee, personal representative or mortgagee has acted unreasonably, or in the case of a trustee or personal representative, has in substance acted for his own benefit rather than for the benefit of the fund.
Third, the parties drew the Court's attention to s 98 of the Trustees Act, which concerns a trustee's remuneration and entitlement to render charges. The provision relevantly states:
98.Trustees' remuneration
(1)The Court may, out of the property subject to any trust, allow to any person who is, or has been, a trustee thereof or to that person's personal representative such commission or percentage for that person's services as is just and reasonable.
….
(5) In the absence of a direction to the contrary in the trust instrument, a trustee being a person engaged in any profession or business for whom no benefit or remuneration is provided in the trust instrument is entitled to charge and be paid out of the trust property all usual professional or business charges for business transacted, time expended, and acts done by him or his firm in connection with the trust, including acts that a trustee not being in any profession or business could have done personally; and, on any application to the Court for commission or percentage under subsection (1), the Court may take into account any charges that have been paid out of the trust property under this subsection.
It has been held that s 98(5) operates to permit a professional executor to charge proper professional fees for work done in the course of an administration in addition to any entitlement to commission under s 98(1) of the legislation.[50]
[50] O’Brien v Warburton [2012] WASC 82 [215] and [216] (E M Heenan J).
In my respectful view, nothing in the terms of these provisions assist the applicant law firm's cause, insofar as the applicant seeks an order for 'costs' in respect of her own time. These provisions do not expressly operate as an exception to the general indemnity principle applicable to costs orders, which remains a prerequisite. Indeed, the decision in Bell Lawyers would be undermined if an overly broad characterisation of these statutory provisions were adopted.
For these reasons, I consider the applicant is not entitled to recover costs in respect of her own time spent in conducting these proceedings, and the submission advanced by the respondent to this effect should be accepted.
C. Second issue - the applicant's entitlement to remuneration
Overview
The alternative contention advanced by the applicant law firm, as I understood their submissions, was that the applicant was entitled to charge the trust property, and be paid out of the trust property, for all usual professional or business charges for work undertaken in connection with trust. The power in s 98(5) of the Trustees Act, to which I have referred above, is relied upon in this regard, there being no express direction or power in the trust instrument which authorises payment of remuneration.
There is an additional power to which the applicant referred, namely s 71 of the Trustees Act, which allows a trustee to reimburse himself or herself out of the trust property for all expenses reasonably incurred. This power would be inapposite in the case of the applicant's own time spent conducting these proceedings. In my view, it is the power in s 98(5) of the Trustees Act which should be the focus of attention.
Asserted inconsistency with the Legal Profession Uniform Law
In opposing this aspect of the applicant's claim, the respondent advances submissions as to the interaction between the provisions of the Legal Profession Uniform Law and the Trustees Act.[51] In particular, the respondent submits that the provisions of the Legal Profession Uniform Law as to law practices and their dealings with trust money, which can be found in pt 4.2 thereof, should be seen as overriding the operation of the more general provision concerning a trustee's remuneration in s 98(5) of the Trustees Act.
[51] Respondent's submissions dated 7 August 2024, [19] - [27].
The regimes are said to be inconsistent as a matter of implication. The respondent places particular reliance on s 135 and s 144(2) of the Legal Profession Uniform Law and rule 42 of the Legal Profession Uniform General Rules 2015 (WA) (Legal Profession Uniform Rules). The respondent thus submits that the funds held by the applicant law firm in its trust account[52] may only be dealt with in accordance with this specific statutory regime.
[52] The applicant deposes that the funds were deposited into the law firm's trust account on or about 10 May 2023: see affidavit of Corrine Griffin sworn 15 February 2024, [13].
The relevant provisions of the Legal Profession Uniform Law were extracted in the Primary Reasons, but it is useful to set out the terms of s 135 again. That provision states:
135Dealing with trust money
(1)A law practice must deal with trust money in accordance with this Law and the Uniform Rules and not otherwise.
Civil penalty: 50 penalty units.
(2)Trust money held by a law practice may be dealt with only by the law practice or an associate of the law practice.
The respondent's submission was advanced as a matter of first principles statutory construction, without any supporting authority. So far as I am aware, the question as to the interaction between these regimes has not been judicially considered. At its core, the contention is that the specific provisions in pt 4.2 of the Legal Profession Uniform Law preclude a solicitor trustee seeking to engage the general provisions as to remuneration in s 98(5) of the Trustees Act.
There is no suggestion of a direct inconsistency between the regimes. Rather, it is said the regimes are indirectly inconsistent in the sense that one regime is said to be the specific and exclusive repository of the provisions which regulate the fees of solicitors acting as trustees in connection with the holding of trust money. The respondent submits that if Parliament had intended that law practices could charge for administering trust money under their control, one would have expected this to have been expressly dealt with under the Legal Profession Uniform Law or the Legal Profession Uniform Rules.[53]
Disposition
[53] Respondent's submissions dated 7 August 2024, [27].
There is some force in the respondent's arguments, noting the reference in s 135(1) of the Legal Profession Uniform Law to 'not otherwise', and bearing in mind as well the prescriptive nature of the regime.
In my view, the point of inconsistency can be resolved in the present circumstances (without reaching any conclusion as to whether the respondent's contentions as to inconsistency are correct, and without undermining the decision of the High Court in Bell Lawyers) by authorising the payment of the trustee's remuneration through an order of the Court, upon the Court being satisfied as to the reasonableness of the charges. This can be achieved in the exercise of the inherent jurisdiction of the Court to control and regulate the conduct and remuneration of trustees. That jurisdiction subsists quite apart from the provisions of the Trustees Act.[54] This approach would also be in harmony with s 139(3) of the Legal Profession Uniform Law which limits a law practice's ability to disburse moneys but expressly excludes the circumstance where a court order is made.
[54] Duke of Norfolk’s Settlement Trusts [1982] Ch 61, 78 - 79 (Fox LJ). See also Re Queensland Coal and Oil Shale Mining Industry (Superannuation) Ltd [1999] 2 Qd R 524.
The applicant submits that, strictly speaking, no order of the Court would typically be required to authorise a trustee acting in accordance with s 98(5) of the Trustees Act. I accept that is correct, at least in circumstances where the trustee is not a solicitor dealing with trust money. Be that as it may, the approach I consider appropriate in the present case, in the exercise of the Court's inherent jurisdiction, is to require that the applicant trustee seek approval from the Court in respect of the remuneration and the charges it seeks.
This regime, with some adjustments, is not dissimilar to the additional order which was proposed by counsel for the applicant in his written submissions. Counsel for the applicant had proposed a procedure by which the charges to be recovered by the applicant would be first notified to the respondent, with any disputes being brought to the Court for resolution, even though the applicant considered such a procedure was unnecessary.[55]
[55] Applicant's submissions dated 12 July 2024, [3].
The order I propose to make is set out at the conclusion of these reasons.
D. Third issue - costs orders in favour of the applicant law firm
The applicant seeks a costs order, pursuant to s 97 of the Trustees Act and O 66 r 9(2) RSC, that the applicant's costs and expenses of, and incidental to, the application be paid out of the trust funds on an indemnity basis (alternatively on a solicitor and client basis), with such costs to be assessed, if not agreed.
The orthodox position as to the costs of an applicant seeking directions under s 92 of the Trustees Act is that their costs should be paid out of the trust fund either on an indemnity, or a solicitor and client basis.[56]
[56] Gething M, Curwood M and Joseph R, Civil Procedure: Western Australia (vol 1), [66.1.36].
A departure from this position is urged upon by the Court by Julie. It is contended that the applicant's overall costs should be reduced by half in the exercise of the Court's discretion.[57]
[57] Respondent's submissions dated 7 August 2024, [12].
Julie observes in her submissions that the applicant law firm originally contended that the better construction was that the applicant law firm should not distribute any of the funds until it had received a signed direction and agreement from both Lance (or his personal legal representative) and Julie. An alternative construction was posited by the applicant law firm that up to 50% of the funds could be released to Julie if a signed direction or agreement was received from Julie.
Julie then notes that, on the day before the hearing, the applicant law firm filed a minute which accepted the alternative position, namely that Julie was entitled to 50% of the funds (after deduction of 50% of the applicant's costs). It is submitted by Julie that her entitlement to half of the funds was in fact identified as her fallback position in her written submissions, which were filed well before the hearing.
I do not accept these matters justify a reduction in the costs award which would otherwise be made in favour of a trustee bringing an application such as the present one. It was necessary, on any view, for the proceedings to be commenced by the applicant law firm given the respondent (i.e. Julie) had sought payment of the entirety of the funds held on trust. That is, there was no request by Julie, prior to the commencement of the proceedings, for the release of only 50% of the funds to her. The applicant, acting reasonably in my view, informed Julie's representatives that she was not satisfied that she could lawfully release the funds in the manner sought by Julie. An application to the Court for directions pursuant to s 92 of the Trustees Act was thus required.
On the Court's ultimate assessment of the matter, as explained in the Primary Reasons at [124] and [98]:
(a)it was proper for the applicant law firm to decline to accede to the request from Julie's solicitors to distribute the entirety of the funds to Julie; and
(b)it was proper for the applicant to have commenced these proceedings for judicial advice.
Accordingly, the usual position as to the applicant's costs should apply, namely, that her costs of the application be paid out of the trust fund either on an indemnity or a solicitor and client basis.[58] Following the approach in Boyle v Farano,[59] and in light of the reasons therein expressed, I will order that the costs be assessed on a solicitor and client basis. In the circumstances of this particular case, I do not see the need to impose a limit on the quantum of the costs by reference to a particular fixed sum, and no submission to this effect was made by either party.
E. Fourth issue - costs orders in favour of Julie
[58] Gething M, Curwood M and Joseph R, Civil Procedure: Western Australia (vol 1), [66.1.36].
[59] Boyle v Farano [2023] WASC 303 [130] - [131] (Quinlan CJ).
Julie seeks an order that she ought be awarded half of her costs, and they ought be ordered to be paid out of the funds to be disbursed to Lance. Further, it is submitted those costs should be awarded on a solicitor and client basis.
The order sought by Julie is consistent with the usual position as to the costs of a beneficiary on an application by a trustee for directions, where those costs are reasonably and properly incurred.[60] It may be said that there are factors present which justify a modification to this usual position. For example, I recognise that the present proceedings were brought against the backdrop of Julie's demand that the entirety of the funds should be paid to her, which is a position the Court did not accept.
[60] Tsaknis v Lilburne [2010] WASC 152 [84] (E M Heenan J).
However, I do not see this as a substantial enough factor which would weigh against the making of the usual order. As I have earlier noted, it was necessary for the proceedings to be brought by the applicant law firm, and I consider the role played by the respondent and her advisers in the course of the application was of assistance to the Court, a fact I recorded in my reasons: Primary Reasons [3].
F. Conclusion and orders
For the foregoing reasons, I will order as follows:
1.Pursuant to s 97 of the Trustees Act and O 66 r 9(2) RSC, the applicant's costs and expenses of, and incidental to, this application be paid out of the trust funds on a solicitor and client basis, such costs to be assessed if not agreed (with the applicant's costs and expenses not to include any time spent by Ms Corrine Griffin).
2.Pursuant to s 97 of the Trustees Act and O 66 r 9(2) RSC, half of the respondent's costs and expenses of, and incidental to, this application be paid out of the trust funds on a solicitor and client basis, such costs to be assessed if not agreed.
3.To the extent to which the applicant seeks payment from the trust funds for any amount by way of remuneration or charges (in addition to the costs and expenses to which order 1 above applies) for business transacted, time expended, or acts done by her or her firm in connection with the trust funds, that remuneration or those charges must be assessed by the Court in accordance with the following procedure:
(a)the applicant shall give written notice to the respondent of any remuneration or charges which it proposes to recover;
(b)within 14 days of such notice being given, the respondent shall inform the applicant whether it agrees to the remuneration or charges, or whether it opposes the remuneration or charges and, in the latter case, shall provide reasons for such opposition; and
(c)thereafter, the applicant has liberty to apply to Lundberg J for approval of any remuneration or charges which liberty shall be exercised by filing and serving a minute of proposed directions as to the filing of any submissions and affidavit material by the parties and indicating whether or not the matter is capable of being heard on the papers or whether a hearing is required.
4.The parties have liberty to apply generally.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
TL
Associate to the Honourable Justice Lundberg
15 OCTOBER 2024
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