Coshott v Spencer & Ors

[2019] HCATrans 166

[2019] HCATrans 166

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney   No S182 of 2017

B e t w e e n -

RONALD COSHOTT

Applicant

and

KEITH ROBERT SPENCER

First Respondent

DISTRICT COURT OF NEW SOUTH WALES ABN 3367 362 1537

Second Respondent

CHRISTOPHER PHILLIP WALL

Third Respondent

COSTS ASSESSMENT MANAGER

Fourth Respondent

Office of the Registry
  Sydney  No S4 of 2018

B e t w e e n -

RONALD MICHAEL COSHOTT

Appellant

and

KEITH ROBERT SPENCER

First Respondent

DISTRICT COURT OF NEW SOUTH WALES ABN 3367 362 1537

Second Respondent

CHRISTOPHER PHILLIP WALL

Third Respondent

COSTS ASSESSMENT MANAGER

Fourth Respondent

KEANE J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO SYDNEY

ON MONDAY, 26 AUGUST 2019, AT 9.30 AM

Copyright in the High Court of Australia

____________________

MR J.D. COOK:   May it please the Court, I appear for Mr Coshott in both matters.  (instructed by Murphy Lyons Lawyers)

MS M. CASTLE:   May it please the Court, I appear for the first respondent in both matters.  (instructed by Spencer & Co Legal)

HIS HONOUR:   Yes, Mr Cook.  Mr Cook, I have read the parties’ written submissions and I am familiar with the issues that are raised obviously, having sat on the Court that revoked special leave, so you can go directly to your points.

MR COOK:   Yes, your Honour, I am grateful for that.  Your Honour, in support of both summonses there is a supporting affidavit of a Mr Robert Coshott, sworn 10 May 2019.  Does your Honour have a copy of those documents?

HIS HONOUR:   I do.

MR COOK:   Your Honour, there are essentially two matters raised by the appellant, who is the costs respondent in respect of the two subject cost orders.  The principal argument before the taxing officer was in one respect whether Mr Spencer was self‑represented in the High Court such that the Chorley principle would become a relevant factor in considering whether the indemnity principle was satisfied.  The taxing officer found, and then confirmed on reconsideration, that Mr Spencer was not self‑represented and was represented by the law firm, Spencer & Co Legal, which is an incorporated legal practice.

Now, the outcome of that finding is that the bill of costs having been filed by Mr Spencer who is the costs applicant - they were not filed by Kejus which is the incorporated legal practice, in its capacity as the costs creditor.  The relevant costs creditor is Mr Spencer.  Fundamentally, the bills then purport to set out, excluding disbursements, costs which are said by Mr Spencer to be allegedly owed by him to Kejus.

That turns to the principal complaint of the appellant which is before the taxing officer there was no evidence in relation to Mr Spencer’s liability to Kejus.  If your Honour considers the bill of costs in respect of both costs orders there is no costs agreement attached.  There are no invoices attached.  My instructions are that neither of those matters, or any other matters which ought to have satisfied the taxing officer that the indemnity principle was satisfied in that regard was before the taxing officer.  So that is essentially the principal point ‑ ‑ ‑

HIS HONOUR:   It might be said against you that that was because the basis on which the application for special leave – why the grant of special leave was revoked was because the Court was satisfied, albeit on a reasonably sparse basis, that Mr Spencer was acting on behalf of Coshott when he performed the work in respect of which the claim was made.  Basically it was suggested that his position was no different from that of, say, a solicitor employed by a bank who carries out work and who can then charge and the bank can then recover from the other side.  It was on that footing that special leave was revoked.

MR COOK:   Yes, your Honour.  My understanding of ‑ ‑ ‑

HIS HONOUR:   You are addressing me now in relation to your preliminary point, are you?

MR COOK:   No, the primary point, your Honour, which is that ‑ ‑ ‑

HIS HONOUR:   Not the preliminary point about the issue said to arise in relation to Kejus’ standing.

MR COOK:   No, your Honour.  My point is not necessarily about standing.  It is, I submit, directly at the heart of the costs applicant’s claim for indemnification, which is this.

HIS HONOUR:   Yes.

MR COOK:   At the time of submitting its bill of costs, and at all times throughout the taxation process, it was incumbent upon the costs applicant to satisfy the taxing officer that it had a real liability, that he had a real liability in respect of the costs claimed in the bill of costs.  Now, my submission is, given the finding that the solicitor was Kejus and not Mr Spencer, it was incumbent upon Mr Spencer to establish that he had a liability to Kejus and there was no material before the taxing officer to demonstrate that point, your Honour, in my submission.

HIS HONOUR:   All right.  I understand that.

MR COOK:   The second matter may be one of form.  It may be one of substance.  The reason why I say that is because I am not aware how the High Court has recorded the solicitor for Mr Spencer in the High Court in terms of its own records.  What the second point is – it is dealt with in the submissions.  I will try to express a submission as succinctly as I can.

HIS HONOUR:   Is this the preliminary point?  Is this the point that is raised in the written submissions as a preliminary point?

MR COOK:   No.

HIS HONOUR:   You will forgive me for perseverating about the preliminary point.  It is just that being an old‑fashioned guy, when I read that there is a preliminary point I tend to think that maybe it should be dealt with as a preliminary point, if it is to be dealt with.

MR COOK:   Your Honour, to the extent that it relates to standing in the context of this application, the submission is withdrawn.

HIS HONOUR:   Okay.

MR COOK:   The same issue is relevant, in my submission, to the indemnity principle for this reason.  If the Court has recorded as the solicitor on the record in respect of the proceedings from which the relevant costs orders arose Kejus and not Mr Spencer, then it is my submission that Kejus was not entitled to render bills in respect of its legal costs of those proceedings because it is not a person entitled to be recorded as a solicitor on the record.

The position is slightly unclear on the face of the notice of appearance itself as - and it appears to comply with the form produced by the Court.  It does not identify expressly who is said to be the solicitor on the record on the form itself.  It merely confirms that a particular party appears and then provides an address for service.

If the Court has internally recorded the solicitor on the record as Mr Spencer in his capacity as the principal of Kejus, then I accept the submission goes nowhere.  But to the extent that the Court has recorded the solicitor on the record as Kejus, then my submission is Kejus was not entitled to render a bill for its fees and in those circumstances it would follow that Mr Spencer is not liable for any fees to Kejus for which he could be indemnified from the costs respondent.

HIS HONOUR:   They are your points?

MR COOK:   Yes, your Honour.

HIS HONOUR:   Can I ask, are you persisting with the contention that the matter should be put over until the decision in Bell v Pentelow?

MR COOK:   It is not something that I propose, your Honour, but I do say, on my reading of the transcript of the hearing in the Pentelow Case, it seems that there is a real possibility that the Court may express a view, perhaps in dicta, which may address this issue of substance over form, that is the Court may say that an employed solicitor for an incorporated legal practice who does work in relation to a matter where that employed solicitor is the ultimate client those costs, albeit costs which would appear on an

invoice of the incorporated legal practice, are still costs in respect of that person acting self‑represented for the purposes of the Chorley exception. 

If there was such a view expressed, then it may impact on the resolution of this matter because that particular question appears to have been the basis upon which the taxing officer has found that Mr Spencer was not self‑represented in these proceedings.

HIS HONOUR:   On the other hand it might be said against you that so far as this case is concerned the effect of the revocation of special leave was to leave in full force the decision of the Court of Appeal which might be said to be inconsistent.  The effect of that decision might be said to be inconsistent with the proposition you are putting.

MR COOK:   In relation to the second point I accept that, your Honour.  But it does not, in my submission, take away from my primary submission and, in fact, I believe it reinforces my primary submission.

HIS HONOUR:   Okay, thank you, Mr Cook.  Yes, Ms Castle.  Ms Castle, I notice that I have been given an affidavit by Mr Spencer.

MS CASTLE:   Yes.

HIS HONOUR:   Are you seeking to read that affidavit?

MS CASTLE:   Your Honour, I seek to read it but I say that there are two paths by which this Court can be satisfied that the taxing officer did not err and only one of those paths would involve their being evidence as to what occurred at the taxation hearing.  So, if I might develop both of those paths?

HIS HONOUR:   Just in terms of good order I might ask Mr Cook if he objects to the affidavit.

MS CASTLE:   Yes.

HIS HONOUR:   Given that you have indicated that you can make it relevant.  Mr Cook, what is your attitude to the reading of this affidavit?

MR COOK:   I do object, your Honour, under rule 57.05.5.

HIS HONOUR:   Okay.  We will have to see what Ms Castle says about it.  Thanks, Ms Castle.

MS CASTLE:   Yes, thank you, your Honour.  Your Honour, I seek to read the affidavit of Keith Spencer on this basis, that the rules allow – generally a review of taxation is conducted on the evidence that was before the taxing officer but the court can permit further evidence.  In the applicant’s submissions there is a submission about what occurred or, more to the point, what did not occur at the taxation hearing and it is material of a sort of evidentiary nature but it is not in an evidentiary form, that is it is an assertion in the submissions and so Mr Spencer’s affidavit goes to answer that.

It goes to this point.  Mr Spencer says at the taxation hearing when the applicant challenged items on the basis of what they called the indemnity principle issues, Mr Spencer indicated to the taxing officer that there was a costs agreement between him and Kejus and that he had it there but the taxing officer accepted what Mr Spencer had said and the taxing officer, we say, was entitled to do that because he had before him a solicitor of the court.  He was entitled to accept his word.

Furthermore, the assertion was not challenged nor did the applicant seek for the costs agreement to be produced in the moment.  Given the context of these proceedings to which your Honour earlier referred, that is the findings that were made at different levels, including in this Court, that the party, that is Keith Spencer, the respondent, retained a law firm, albeit it might be called his own law firm, but given that the court had accepted that the taxing officer was perfectly within his rights and acting in a manner that cannot be criticised to accept what Mr Spencer had said.  It was consistent with everything that had passed at the different levels of the case in the District Court, the Court of Appeal and before the High Court.

If your Honour were to say that is not relevant – that is not the sort of evidence that is contemplated by the rule and your Honour does not find it helpful, then even without Mr Spencer’s evidence what we have is the decision of the taxing officer on review and that is where he says that – that is reproduced in paragraph 15 of the respondent’s submissions:

“At the commencement of the taxation I made a ruling covering all of the Indemnity Principle objections.  I disallowed all of those objections for the following reasons.  The First Respondent was represented in the High Court at all times by Spencer & Co –

and it gives the address:

A notice of appearance to that effect was filed on 1 February 2018.”

As I point out later in the submissions there is a distinction to be drawn between the Judiciary Act and the right of a solicitor or barrister to practise in the federal courts and the State‑based legislation which permits law practices to operate out of a variety of business structures.  There is nothing inconsistent about those regimes. 

Mr Spencer is on the High Court’s register of practitioners and so he has an entitlement to practise and for his work to be charged for but it is the New South Wales – it is now the Legal Profession Uniform Law and there have been other versions of that law in recent times which permit a solicitor – which permit a law firm – in fact the correct term is “law practice” to be an individual solicitor or an incorporated legal practice and there is nothing that changes the result in this Court, that is to say a party, Mr Spencer, has retained a law firm to act for him.  There is a liability to pay those costs.

Your Honour may recall during the hearing of Coshott v Spencer, Mr Angyal made a remark about the situation which would ensue were Kejus to be in liquidation, that is to say, if there was a debt outstanding to Mr Spencer the liquidators would be entitled to pursue that debt in the ordinary course.

Now, it is not suggested in any way that the arrangement was some form of sham.  Perhaps the difficulty, conceptually and philosophically, may arise that when one looks at a company where the solicitor is the only solicitor who is a shareholder of that company it looks pretty close – if one ignores centuries of company law, that is – it looks as if the solicitor is providing services to himself and so on.

The appropriate way that that might be dealt with would not be by this Court ignoring the fact that Mr Spencer retained Kejus.  It would be by the State‑based legislatures to have something to say about it because, of course, an incorporated legal practice may have one solicitor shareholder or it may have 500 solicitor shareholders and so nothing really can be said about the situation like this where it is acknowledged that Kejus is essentially Mr Spencer’s firm.  It is a firm under his control.

HIS HONOUR:   Yes.  Well, it certainly looks artificial but then that is what Salomon v Salomon is all about.

MS CASTLE:   Indeed, your Honour, and to the extent that artificiality is something that the legislatures consider inappropriate in this area then that is where one would find an amendment being made and who would know what might happen after Bell v Pentelow is delivered.  As things stand now, the case that is really being put against the respondent is a lack of evidence case.

HIS HONOUR:   In relation to an issue that, if it had really arisen at all, the views of the Full Court expressed when special leave was revoked would be inconsistent with the notion that Mr Spencer had not retained Kejus.

MS CASTLE:   Yes.

HIS HONOUR:   I think on that basis what I am inclined to do, Ms Castle, is to mark Mr Spencer’s affidavit “Exhibit A For Identification” and place it with the papers but I will not actually let you read it on this application on the footing that it is really starting at shadows in the sense that it is addressing an issue that really did not arise.

MS CASTLE:   Yes.  Thank you, your Honour.

HIS HONOUR:   All right.  I will mark Mr Spencer’s affidavit as Exhibit A and place it with the papers.

EXHIBIT A:Affidavit of Keith Robert Spencer sworn 23 August

2019

Yes, Ms Castle, anything else?

MS CASTLE:   Your Honour, only to say that it seems that the argument is one about the costs indemnity principle.  I have really made submissions about that.  But to the extent that it veers close to Chorley the respondent simply says Chorley does not arise on this application because for Chorley to arise there needs to be identity between the named party, that is Mr Spencer, and the party that – the legal entity that provided the services.  It is accepted, by the means that your Honour has spoken about, that the party that provided the legal services was Kejus in this instance.  That is the only finding consistent with the High Court’s revocation of leave.

HIS HONOUR:   And leaves the conclusion of the Court of Appeal to that effect unaffected.

MS CASTLE:   Yes, your Honour.  Your Honour, those are my submissions.

HIS HONOUR:   Thanks, Ms Castle.  Yes, Mr Cook, anything in reply?

MR COOK:   Just briefly, your Honour.  Firstly, in relation to Mr Spencer’s affidavit, if your Honour turns to page 5 of that affidavit ‑ ‑ ‑

HIS HONOUR:   Are you reading it?

MR COOK:   No, your Honour.

HIS HONOUR:   I have ruled that I am putting it with the papers and I am not reading it, but if you want to read it you go right ahead.

MR COOK:   No, your Honour, you can put that affidavit to one side.  Dealing with my primary argument, your Honour, the question is not, in my submission, whether or not the costs applicant has established that there is a contractual relationship between him and Kejus for the purpose of the proceedings.  Your Honour may find ‑ ‑ ‑

HIS HONOUR:   Sorry, you are saying the issue is not that?

MR COOK:   No, it is not, your Honour, in my submission.

HIS HONOUR:   Okay.

MR COOK:   Not simply that.  It is a relevant matter, but that is not the end of the inquiry because for the purposes of the bill of costs, what the costs applicant needs to do is establish a liability as to the costs, not the existence of a contractual relationship.  The existence of a tax invoice, for example, or the existence of a costs agreement showing such things as the liability to pay legal costs itself or the applicable charge‑out rates in order to establish the costs which are claimed in the schedule to the bill of costs is something which, in my submission, was required of the costs applicant before the taxing officer.

Just responding briefly to my learned friend’s submission regarding - the submission that there was no evidence before the taxing officer, all I will say about that is your Honour has before you the file, the court file that was before the taxing officer and your Honour is entitled, in my submission, to interrogate that file to ascertain what evidence was before ‑ ‑ ‑

HIS HONOUR:   Ms Castle says the appearance was entered by Spencer & Co on behalf of the first respondent, Mr Spencer.

MR COOK:   Yes, your Honour.  The issue is not whether Spencer & Co was the solicitor on the record before the taxing officer.  The issue ‑ ‑ ‑

HIS HONOUR:   Spencer & Co was apparently the solicitor on the record and the party was Mr Spencer and Mr Spencer was the party because he is the person your client joined.

MR COOK:   Yes, your Honour, I accept that.  But in terms of my submission that there was no evidence before the taxing officer to demonstrate the indemnity principle, that is the liability of Mr Spencer to

Kejus, where my learned friend says that that submission is of an evidentiary nature in terms of what I submit was before the taxing officer, my response, your Honour, is that your Honour is entitled to interrogate the file as to what evidence was before the taxing officer in respect of, for instance, the existence of costs agreements or tax invoices.

HIS HONOUR:   Yes.

MR COOK:   There is nothing further, your Honour.

HIS HONOUR:   Thanks, Mr Cook.  I will consider the matter and I will ask that the Court now be adjourned.

AT 9.57 AM THE MATTER WAS ADJOURNED