Giannarelli & Ors v Wraith

[1990] HCATrans 312

A	"!.l, AUSTRALIA ;..
->);'~~~««,<.<..~c

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M63 of 1987

B e t w e e n -

EMILIO GIANNARELLI & ORS

Appellants

and

DARYL G. WRAITH & ORS

Respondents

Reference to a Justice of

questions arising on a taxation

of costs pursuant to Order 71

Rule 19(3) of the High Court

Rules

McHUGH J

Giannarelli(3) 1 13/12/90

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON THURSDAY, 13 DECEMBER 1990, AT 10.18 AM

Copyright in the High Court of Australia

MR J. WALSH:  If Your Honour pleases, I appear on behalf of

the appellants in this matter. (instructed by

Sheehan, Privitelli & Di Mauro Pty)

MR R.L. BERGLUND: If Your Honour, I appear on behalf of the

respondents. (instructed by Arthur Robinson &

Hedderwicks)

HIS HONOUR:  I have before me four questions referred to me

by the Registrar pursuant to Order 71 rule 19(3) of

the High Court Rules. Have counsel given any

thought to the order in which their submissions

should take place?

MR BERGLUND:  we have, Your Honour, and we could not decide

which way they ought to be placed. My submission

would be that perhaps the appellants ought to go

first simply because they are first on the record,

although we concede that the questions where ones

which were posed by the respondents, but they are

in the interests of both parties to have them

resolved.

HIS HONOUR:  Yes. I think the appellant might start.

MR WALSH: If Your Honour pleases.

The reference arises out of essentially an

order being made for discovery on 26 April by the

Registrar in a taxation of costs for certain

documents to be produced and those documents not

being produced.	The first question that arises in
the reference is:

On the basis of the evidence before the taxing

officer, is he entitled to require the

respondents to produce to him -

and then it lists from (a) to (e) various

documents.

HIS HONOUR:  Yes. By the way, have counsel prepared any

written submissions in this matter? They were not

asked for but - - -

MR WALSH:  No. A list of references and summary of argument

was submitted on behalf of the appellants but not

full submissions, Your Honour.

The first sub-category on question 1 is:

(i) for the purpose of determining if there

was no agreement binding on the solicitors

that the respondents would not have to pay the

costs of the proceedings in the High Court in

any event -

Giannarelli(3) 2 13/12/90

and -

(ii) for any other and, if so, what purpose?

And it is submitted on behalf of the appellants who

are supporting the decision of the Registrar in the

taxation that l(ii), of course, refers to,

essentially, the retainer that exists between the

solicitors and their clients and a question arises

which will be referred to in the course of

argument, Your Honour, just who the clients are.

On the title of the action, of course, the clients

or the respondents are referred to as Messrs

Wraith, Francis and Hedigan but in some parts of

the argument that has been advanced on behalf of
the respondents - and privilege is claimed, for

example, on certain documents - the privilege
appears to attach to another party, namely, an

insurer and I will refer to that in the course of

my argument.

If I could refer, firstly, to two sections of the Judiciary Act. The first section is section 80

and it relates to the common law. Section 80 says:

So far as the laws of the Commonwealth are not applicable or so far as their provisions are

insufficient to carry them into effect, or to

provide adequate remedies or punishment, the

common law of Australia as modified by the

Constitution and by the statute law in force

in the State or Territory in which the Court
in which the Jurisdiction is exercised is held

shall, so far as it is applicable and not

inconsistent with the Constitution and the

laws of the Commonwealth, govern all Courts

exercising federal jurisdiction in the
exercise of their jurisdiction in civil and

criminal matters.

That is the new form following the amendment in

December 1988. Prior to that, the common law was

referred to "the common law in England", and it is

the appellants' submission that the common law does

govern the question of discovery and the reasons

for the discovery in the taxation of costs if there

is not a specific provision to the contrary.

The second section of the Judiciary Act which

is applicable in this case, it is submitted, is

section 79 which refers to "State laws to govern

where applicable", and section 79 says:

The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the

Giannarelli(3) 13/12/90

laws of the Commonwealth, be binding on all

Courts exercising federal jurisdiction in that

State or Territory in all cases to which they are applicable.

That provision then brings us directly to the

Supreme Court Act in Victoria, section 64.

HIS HONOUR:  Why is it the law of Victoria that applies as

opposed to the law of New South Wales?

MR WALSH:  The action out of which the taxation arose was a

Victorian action. The matter came before the High

Court following an appeal from the Supreme Court of

Victoria. The initial action between the

appellant/plaintiffs and the respondent/defendants

arose initially before a single judge in Victoria,

then went on appeal to the Full Court of the

Supreme Court of Victoria and then went on appeal

to the High Court.

HIS HONOUR:  But it had no federal question until it reached

the High Court, did it?

MR WALSH:	No, it was a Victorian question.
HIS HONOUR:	Well then, the question under section 80 is

what jurisdiction is being exercised at the present

time? Section 80 says it is:

the common law of Australia ..... and by the

statute law in force in the State or Territory

in which the Court in which the jurisdiction

is exercised, shall ..... govern -

and so on. Well, I am sitting in New South Wales.

Why does not the law of New South Wales apply

MR WALSH:  The reason we are sitting in New South Wales is a

procedural matter. If the matter had come on

before Your Honour last week, we would have been

sitting in the Australian Capital Territory.

HIS HONOUR:  I appreciate that but that is one of the

anomalies that you get. You sit in Queensland,

you may have a different statute of limitations applicable; if you sit in New South Wales, have

another statute of limitations applicable. But, in
any event, what about the law of the Australian

Capital Territory?

MR WALSH:  It is submitted that the applicable law in

relation to the taxation of costs is, as far as it

is applicable, the law of Victoria. It is a

Victorian action.

Giannarelli(3)	4	13/12/90
HIS HONOUR:	At the moment, that seems to me to be the one law that does not apply.	You develop your

argument, but it seems to be very difficult to say that the law of Victoria applies to this question. This is a matter in the High Court of Australia;

it heard the appeal in Canberra. Just retracting

what I said, I suppose one point that you do have

running for you is that the Registrar is sitting in

Victoria. He sat in Victoria.

MR WALSH:  Yes. The decision that he made on discovery was

made in Victoria.

HIS HONOUR: That raises the question, again, as to whether

section 80 applies to a taxation of costs in those

circumstances. The Registrar is certainly not part

of the Court, is he? And what is more, on a

taxation of costs, he is an administrative officer,

is he not?

MR WALSH:	Yes, he sits in an administrative capacity and he is given certain powers to enable him to carry
out the functions of taxation. What is submitted
in relation to the law of the State: as it was
initially a Victorian action, that the laws of
Victoria should be the applicable laws in so far as
they are applicable. If there is any inconsistency
then a Commonwealth law should prevail and what is
put in relation to section 80 of the Judiciary Act is that the common law applies unless it has been
specifically abrogated by statute.
HIS HONOUR:	Any way, you wanted to draw my attention to a

provision in the Victorian Supreme Court Act?

MR WALSH:  Yes. That is section 64, headed, "Power for

Solicitor and Client to Agree on Costs".	The
section provides in subsection (1):

A solicitor and his or her client may, before

or in the course of the transaction of any

business, make an agreement concerning the

costs to be charged by the solicitor for that

business.

Subsection (2) provide how the agreement might provide for various options. Subsection (3) provides that the agreement must be in writing. (4), that:

The agreement may be enforced -

Subsection (5), that the agreement does not affect

other arrangements. The applicable section is

subsection (6) which says:

Giannarelli(3) 13/12/90

A client who has entered into a

solicitor-client agreement is not entitled to

recover from any other person under an order
for the payment of any costs which are the
subject of the agreement more than the amount

payable by the client to the client's own

solicitor under the agreement.

If I can refer to the basic objections to the

bill of costs?

HIS HONOUR: 

Yes.

MR WALSH: 

Under the general objections that was put before

the Registrar before he made his request for
discovery: the general objections by the
appellants state, under paragraph l(a) - - -

HIS HONOUR:  I have read those. You can take me to any

specific passage but I have read them.

MR WALSH:  Yes. What is submitted is that the appellants

submit that they are liable only to the same extent
as the respondents would be for costs, that the
extent of the damnification which is implicit in

the order of the High Court of 13 October 1988

where it says that "The Court doth further order

that the respondents' costs be taxed by the proper
officer of this Court but when so taxed and allowed
be paid by the appellants", it is submitted that
the extent of the costs which are to be paid by the

appellants and the extent to which they are taxed

is no more than the respondents themselves would be

liable and - - -

HIS HONOUR: Liable in fact or liable in law, because there

may be a very real difference? After all, the

respondents' solicitors may be able to look to the

respondents for the costs even though, in the

ordinary course of events, those costs will be paid

by the insurer.

MR WALSH:  Yes, it is possible that the retainer, which has

not been seen by the appellants, says on behalf of
the respondents, "Yes, we acknowledge we are

responsible for the costs but we fully expect our

insurer to pay the costs."

HIS HONOUR: That is rather inverting the onus, is it not?

The ordinary presumption is that the respondents are liable to their solicitors unless you show a contrary agreement.

MR WALSH:  Yes. That is the normal course and there is

always a retainer of some sorts, either verbal or

in writing, unless the solicitors act without a

retainer initially, which may or may not then be

Giannarelli(3) 6 13/12/90

ratified subsequently. What is submitted here is

that there was a retainer and that the proof of the

retainer is put to those who are seeking to enforce

the costs that flow out of that retainer, that is, that it is the respondents' responsibility, in the
taxation, to say, "This is the retainer and as a

result of this retainer we are liable for these

costs.

Now, in the taxation there is no opportunity

for the appellants in this case to seek discovery
of documents or to issue a notice to produce and
argument was put to the Registrar in his capacity

as the appropriate taxing officer and, if I can

refer to the reasons for decision of the taxing

officer, the Registrar says, at the top of page 2

and the bottom of page 1:

Having had an opportunity to consider the

written submissions filed by the parties, I

formed the opinion that it would be necessary

to have more factual material to enable me to

make a reasoned decision on those submissions.

The appellants are here to support that decision

and it is submitted that if the Registrar has

formed the opinion that it is necessary for him to

have more factual material to make a decision on

the submissions that have been put to him, that he

should have that material. And he does refer, on

page 3 of his reasons for decision, to the affidavit of Mr O'Donahoo which was put in opposition to that and he says, in referring to

paragraph 2 of that affidavit, about half-way down:

From time to time, interim solicitor client

bills detailing professional costs and

disbursements incurred in acting on the

Respondents' behalf have been rendered by my

Principals and paid in full.

The affidavit does not go on to say by whom the

accounts have been paid or to whom the accounts

were submitted.

And paragraph 3 of the affidavit which is

referred to states simply:

that there is no agreement pursuant to which

my Principals have foregone their right to

recover the professional costs and

disbursements incurred in acting on the

Respondents' behalf.

It does not go on to say what the agreement was.

And in all the argument, the affidavits and the

submissions that have been put before the

Giannarelli(3) 7 13/12/90

Registrar, there is no material from the named

respondents in this action as to their liability

for costs or to their retainer with the solicitors.

HIS HONOUR:  What is the position then in relation to an

ordinary motor vehicle insurer? Is the defendant

entitled to his party-and-party costs if he is

successful?

MR WALSH: It is submitted, Your Honour, that that question

is beyond the scope of the argument that should be

put to this Court today.

HIS HONOUR:  It may have a great bearing on it, might it

not, because your proposition seems to be that if

this litigation is being funded by the insurer who

has accepted the responsibility for the costs of

the respondents' legal fees, then the respondents

cannot recover them?

MR WALSH:  It is not quite as simple as that, Your Honour.

We are not saying that if the respondents may be

able to look to their insurer to pay the account,

that they are precluded from costs. What we are

saying is if the respondents never had any
liability for costs whatsoever in the first place,

there are no costs payable at all.

Now, it is expected, no doubt, that a contra

argument will be put that this sort of thing goes

on every day in every court in the land and that
insurance companies routinely fund actions for

personal injury, for property damage, for workers'

compensation and so on and that this is the norm,
and by putting this question we are putting a novel

point of law, the results of which would be

catastrophic if they were decided in the

appellants' favour. What is being put on behalf of

the appellants is an argument in relation to this

case only. We are not tackling the broader issue

of the proprietary or otherwise of how insurance

companies actually instruct solicitors or fund

running of a case from the insured, what is being litigation or under subrogation take over the	submitted is that in this case, in examination of
the bill of costs, and the conduct of the entire matter leaves open very broadly and very widely the question as to whether the respondents every had
any liability at all for any costs and it is
submitted if they had no liability the appellants likewise had no liability.

HIS HONOUR:  Now, is this liability in fact or liability in

law?

MR WALSH:  Liability in law. And, of course, if the

liability is in law, it is a liability in fact. If

Giannarelli(3) 13/12/90

there is an agreement which says that, "I, the

insurer, accept full responsibility and will give

full instructions and dictate the course of this

case", as a matter of law, then no costs flow to

the respondents. It is a question of fact that

they do not flow either. What happens in the

traditional motor insurance case is that the

insurance company takes over the running of the action but if, for whatever reason, the insurer does not pay the solicitor, the solicitor can then

look to the insured for the costs unless there is

an agreement that the insured is not responsible.

The Registrar, in his capacity as taxing

officer, has taken the view, as is stated on page 5

of his reasons, that he should take a broader view

of his powers to summon witnesses, direct and

require the production of books and so on -

for the purposes of taxation of costs.

HIS HONOUR: Well, you rely on his reasons.

MR WALSH:  Yes. He is carrying out an administrative

function where he is bound by the rules of court,

he is bound by law, but he is also bound by, in

taxation, the rules of natural justice. If I can

refer to two authorities - - -

HIS HONOUR:  What point are you coming to now? Are you

still on question l?

MR WALSH:  Yes. What is submitted is that once question 1 is

determined, the rest flows naturally. At the end

of my argument, Your Honour, I will be putting the

submission that once the documents are available to the Registrar, if the Registrar forms the view that there is material in it that, in the interests of

natural justice, should be made available to the

appellants to provide material in support of their

argument to which the appellants would not

otherwise have access, that the documents should be

made available to them.

HIS HONOUR:  Yes, but question 1 seems to be a reference to

the extent of the Registrar's power under

Order 71 rule 70, does it not?

MR WALSH:	Yes.
HIS HONOUR:	Because question 2 deals with the question of objection to production.
MR WALSH:	Question 1 refers specifically whether he can ask

for the documents to determine himself the

agreement or, if there is any other purpose.

Giannarelli(3) 9 13/12/90

HIS HONOUR:  Question 1 is directed to the extent of his

powers under Order 71 rule 70 to order production

of documents of the type described. It is another
question, which is taken up by question 2, as to
whether the respondents are entitled to refuse to
produce those documents and then question 3 raises
the question of the Registrar's power in the case
of the respondents refusing to produce them and

then question 4 takes up the question of what you

would probably call natural justice.

MR WALSH:  Yes, Your Honour. You see, when one looks at

question 2, it is:

Are the respondents entitled to refuse to

produce ..... any of the documents referred to

in question 1.

Of course, the broad answer to that is that any

party can refuse to obey a direction or an order of

the Court, either if there is, as is stated here,

in (a) :

legal professional privilege -

or in (b):

without stating any ground whatsoever.

(b) then turns to the question of what are the

consequences of -

HIS HONOUR:  Why do you say a party is entitled to refuse to

produce the documents?

MR WALSH:  Perhaps I put that badly. A party can always

refuse to obey a court order. The question then

arises as to what are the consequences.

HIS HONOUR:  But question 2 asks the question: have the

respondents an entitlement to refuse to produce the

documents? So you would have to address 2(a), do

you not?

MR WALSH:  Yes, whether there is legal professional

privilege.

HIS HONOUR:  Yes. Well, assume legal professional privilege

does attach to one or more of these documents.	Do
you deny the legal right of the respondents to
refuse to produce the document?

MR WALSH:  We deny the right to refuse to produce tne-ro. to

the Registrar. What is submitted is that the

respondents have a choice. If they say there is

legal professional privilege, they can either sit

Giannarelli(3) 10 13/12/90

on that privilege and not claim costs that flow

from - - -

HIS HONOUR: That is a separate question but question 2

seems to me to' be directed to legal rights and not

as to the course that the respondents may desire to

take or may ultimately take. But do you dispute

that the respondents have a legal right to resist

production of these documents on the ground of

legal professional privilege?

MR WALSH:  In relation to the taxation of costs, we do,

Your Honour. That is on the basis that legal

professional privilege enables a party not to

produce documents up to the stage of a taxation of

costs but when the successful party then seeks to
obtain costs from, in this case, the appellants,
the taxing officer has to be satisfied that the
costs were, in fact, incurred; they are fair and

reasonable.

HIS HONOUR:	I appreciate that. That is - - -
MR WALSH:	And you cannot do that without seeing the

documents that go to make up the costs.

HIS HONOUR:  That may be but I think you are not answering

the question that I want your assistance on and

that is the Registrar, having the power to require

the documents to be produced - and that is the

hypothesis upon which question 2 is based - can the
respondents then say, "I will not produce these

documents on the ground of legal professional

privilege."?

MR WALSH:	Yes.
HIS HONOUR:	They can say that?
MR WALSH:	Yes, but only if they do not want the bill of

costs taxed.

HIS HONOUR:  It may have other consequences but you do not

dispute, I take it, that legal professional

privilege applies just as much in a taxation of

costs as it does in ordinary court proceedings or

when there is an inquisition by the Commissioner of

Taxation?

MR WALSH:	No, what is put on behalf of the appellants is that legal professional privilege must, of
necessity, be temporarily waived for the purposes
of taxation.

HIS HONOUR: Again, there seems to be some ambiguity in

that. What do you mean by "must be temporarily

waived"?

Giannarelli(3) 11 13/12/90

MR WALSH:  That if the respondents want the costs taxed they

must, of necessity, waive the legal professional

privilege. As was put in one of the English cases:

"No show, no pay", that if the respondents take the
view that all these documents are privileged, as

they would in the running of the case, and if there was anything other than the question of taxation of costs, they are entitled to say, "Yes, these

documents are privileged" but if they want

taxation, they must temporarily waive the privilege for the purpose of enabling the Court or the taxing officer, the Registrar in this case, to be able to

form a full and proper view on the costs that are

being claimed. They cannot produce a bill, a

bundle of tied-up documents and say, "You cannot

see these because we claim legal professional

privilege."

HIS HONOUR:  But you are now really dealing with

question 3(b), are you not, rather than question 2?

MR WALSH:  Yes, because they flow in together. The

appellants' view is that - the appellants do not

want to say that, "These documents are not subject

to legal professional privilege for all purposes

and we want to see them for all or for other

purposes. We only want, firstly, the Registrar to

see them and then, secondly" - we then get to

question 4 - "the appellants to see them, in

relation to the taxation of costs."

HIS HONOUR:  Yes. Well, is your point this, that the

respondents are not entitled to the costs in

relation to any document unless they produce if

requested to do so?

MR WALSH:  Yes. And further than that, because the

essential retainer has been brought into question,
and the Registrar has said in his reasons, in

relation to the general objection raised by the

appellants, that he is not satisfied that that can

be answered without production of the

documents -

HIS HONOUR:  This point would arise independently of any

question of retainer, would it not?

MR WALSH:  Yes. The damnification question arises. What

the appellants say is that there must be a

retainer.

HIS HONOUR:  No, no, this point you are now raising does not

seem to be dependent upon the question of whether

or not there was a retainer or the terms of that

retainer. Is it your point that in any taxation of

costs a party is not entitled to costs in relation

Giannarelli(3) 12 13/12/90

to a document which he refuses to produce on the

ground of legal professional privilege?

MR WALSH:  Yes. Perhaps if I could clarify that. We say if

the documents are not produced, no costs can be

allowed on that document. In this particular case, because of the nature of the general objection that

the respondents had no liability at all, that if

the documents requested are not produced, the

appellants say that the respondents are not

entitled to any costs. What the appellants say is

that they cannot just say, "We won't claim for the
cost of typing or filing those particular documents
but we will claim for everything else" and produce
reams of paper which do not go to the essential

question of what the Registrar asked them to

produce.

If I could refer to two authorities which are

of some assistance in the procedure in relation to

taxation and that is Pamplin v Express Newspapers,

(1985) 2 All ER 185, and also Goldman v Hespar,

(1988) 3 All ER 97. Pamplin v Express Newspapers is

a decision of the - - -

HIS HONOUR:  I am familiar with the case. So, you might

just take me to the passage on which you rely.

MR WALSH:  Yes. On page 186, the second paragraph,

Mr Justice Hobhouse says:

The first principle is the principle of natural justice which applies wherever legal

proceedings involve more than one person, and

one party is asking the tribunal for an order

which will affect and bind another. Natural

justice requires that each party should have

an equivalent right to be heard. This means

that if one party wishes to place evidence or

persuasive material before the tribunal, the

other party or parties must have an

opportunity to see that material and if he

wishes submit counter-material and, in any	event, to address the tribunal about the
material.
On page 187, the procedure in taxation is

referred to, two-thirds of the way down the page,

under f, it states:

the taxing master, with the assistance of his

clerk, uses the lodged papers to familiarise

himself with the case, and the work done and

the expenditure incurred, so as to be prepared

to deal with any questions which may arise on

the taxation.

Giannarelli(3) 13 13/12/90

And then His Honour goes through the informal

friendly way the taxation is done.	He is
referring, of course, to England.	But then on

page 188, the second paragraph, refers to the

review:

The taxing master then appoints a day (or

days) for the review, and the parties or their lawyers again attend at his chambers. This is a complete rehearing of the taxation as to

disputed items. The parties are heard fully.

Further evidence may be placed before the master; he may exercise, with regard to any item the subject of objection, all the powers

he has on an original taxation.

Now, if I can refer to the bottom of page 189,

the last paragraph:

The provisions of other orders for discovery

and inspection of documents etc, do not apply.

However, it cannot be disputed that the rules

of natural justice apply to taxation

proceedings.

On page 190, the second-last paragraph and the last

paragraph:

At the taxation a problem may arise. An

issue of fact may emerge which necessitates

the master making formally or informally a
finding of fact. In such a situation the

master may have to ask the claimant what

evidence he wishes to rely on in support of

the contested allegation of fact. The

respondent may then take the stand that, if

the claimant wishes to adduce evidence, he

(the respondent) wishes to see it and comment

on or contradict it. This will mean that the

claimant will then have to elect whether he

wants to use the evidence and waive his

privilege or seek to prove what he needs in

course, the claimant would seek to prove his	this visualises is where, in the ordinary some other way. The type of situation which	allegation by simply producing a document.
If, however, the respondent objects to the claimant using the document without his seeing
it as well, the claimant may prove the
allegation in another way; for example, if it is the solicitor who conducted the litigation
who is attending the taxation, by that
solicitor formally or informally giving oral
evidence. The respondent could then formally
or informally cross-examine the solicitor. The master would then decide, having taken
into account any counter-evidence relied on by

Giannarelli(3) 14 13/12/90

the respondent, whether he accepted the

claimant's allegation.

And then the last paragraph:

The master does not have any power to

order discovery to be given; he does not have

any power to override a right of privilege.

But it is the duty of the master, if the

respondent raises a factual issue, which is
real and relevant and not a sham or fanciful
dispute, to require the claimant to prove the

facts on which he relies.

The top of page 191:

That is a choice for the claimant alone. The

master then has to decide the issue of fact on
the evidence. In considering whether he is

satisfied by the evidence, the master will no

doubt take into account that the claimant may

have a legitimate interest in not adducing the

most obvious or complete evidence, and may

prefer to rely on oral evidence rather than

producing privileged legal documents.

HIS HONOUR:  But that is an important point, is it not, that

a party may be able to recover for advice given in

a privileged document without producing the

document and that natural justice would be

satisfied if oral evidence was given of the general

nature of that document. You get an opportunity to

meet the oral evidence about its general nature and

costs could be allowed in respect of that document

without any breach of the rules of natural justice.

MR WALSH:  Yes. If it was a question of one particular

document of which there was particular sensitivity,

that the party did not wish even the Registrar to see, the work done which would normally be proved

by that document could be proved by other means.

But the fundamental question here is the damnification point, that the Registrar has asked

for specific documents so that he can be satisfied

that he has enough material before him to decide

that essential and basic question.

Now, that can be proved by perhaps means other

than particularly sensitive documents but there has

been a blanket claim of legal professional
privilege, not that document X cannot be shown but

we can prove it by document Y or by viva voce

evidence.

HIS HONOUR:  That makes it very difficult to lay down any

blanket rules, does it not, because supposing in

this case Mr O'Donahoo had put on an affidavit in

Giannarelli(3) 15 13/12/90

which he gave details of the oral arrangement with

the claim? That might well be the end of the

matter, might it not, if the Registrar accepted

that evidence?

MR WALSH:  But he has put on an affidavit and the content

and the effect of the content has not been accepted

by the Registrar who says he is not satisfied.

HIS HONOUR:  While I think of it, could I ask you this

question: has the Registrar got any power to

enforce an order he makes under Order 71 rule 70?

MR WALSH:  Only in so far as - in relation to a taxation, if

the documents are not produced, he does not do the

taxation.	He orders no costs and that is the end
of it.	He puts the onus on the claimant and says,

in effect, that, "If you want your costs, I need

these documents to be able to form a fair and

proper view as to whether you are entitled to costs

and if you will not show me the documents you do

not get any costs.

Pamplin was followed by Goldman v Hesper and

what was said in Pamplin was cited with approval on
page 99 by Lord Justice Taylor and on page 101 he

refers to that expression that I used some minutes

ago where, just opposite d, about half-way down the

page, it is stated:

"Can't see, won't pay" is the terse expression
of that argument. He suggests that waiver of

privilege should be partial only in the sense that it would be for the purposes of taxation

only and not in regard to any subsequent or

continuing substantive proceedings.

Alternatively, he submits that the taxing

officer should so conduct the taxation as to

indicate to the paying party or his lawyer the

time, relevance and expense framework of any

privileged documents relied on, but not the

content.

At the bottom of that page, the last

paragraph:

However, when the problem does arise the

taxing officer has the duty of being fair to

both parties: on the one hand, to maintain
privilege so far as possible and not disclose

the contents of a privileged document to the

paying party unnecessarily; on the other

hand, he has to see that that party is treated

fairly and given a proper opportunity to raise

a bona fide challenge. The contents of

documents will almost always be irrelevant to

considerations of taxation, which are more

Giannarelli(3) 16 13/12/90

concerned with time taken, the length of

documents, the frequency of correspondence and

other aspects reflecting on costs.

At the top of page 102, His Honour says:

There may be instances in which taxing

officers may need to disclose part, if not

all, of the contents of a privileged document

in striking the appropriate balance. He will
no doubt use all his expertise and tact in

seeking to avoid that situation wherever he

can.	I do not envisage it occurring, except
very rarely.	Of course it is always open to

the claimant not to rely on privileged

documents which he regards as peculiarly

sensitive.

And what is submitted is that if the respondents do
wish to persist in their blanket objection of legal

professional privilege and not produce the

documents, their option is not to proceed with the

taxation of costs and it is only in relation to the

costs question that the appellants ask for and support the Registrar in his decision that the

documents be produced and not for any further or

broader question either in relation to themselves

or in relation to insurance cases generally or any
other questions which might be of broader

importance.

If I can just conclude by - in relation to

paragraph 4 of the question, that to do natural
justice and to be fair to both parties, if the

taxation proceeds and the documents are produced to

the Registrar and those documents refer to or

relate to the objections which have been raised by

the appellants, then the Registrar, to be fair to

the appellants, should show the documents for the

limited purpose of allowing the appellants to

support their argument. The reason for that is, as

indicated earlier, Your Honour, the appellants do

not have the right under a taxation in the High
Court to have discovery of documents.	It is an

administrative function within the province

entirely of the Registrar. If Your Honour pleases,

I do not think I can take the instant argument any

further.

HIS HONOUR:  Thank you very much. Yes, Mr Berglund?

MR BERGLUND: If Your Honour pleases, I have taken the

liberty of preparing a summary of argument which I

can hand three copies, and I have more if -

HIS HONOUR:  I will just have a look at these. Thank you.

Giannarelli(3) 17 13/12/90

MR BERGLUND:  Your Honour, the issue that has been raised by

the appellants in this matter arises out of their

general objections to the bill. They raised

initially two general objections: firstly, whether

there was a question of maintenance involved, and
secondly, whether or not there was a question of

damnification and an entitlement to damnification.

We say that they are two questions which can

be answered shortly and simply by referring to

those line of authorities set out in the summary of

argument. Reference firstly to Inglis v Moore

where we say quite simply that it is not necessary

for a party to an action to pay costs; it is

sufficient if someone who has a legitimate interest

in the action incurs a liability to pay costs. And

it is quite clear, we say, from the decision in the

Archbishop of Canterbury's case and it has not

really been seriously questioned since then, I

would believe, that an insurance company has a

legitimate interest in the outcome of legal

proceedings to enable that insurance company to

incur costs on behalf of the insured to conduct

those proceedings on behalf of the insured and to

indemnify the insured against any legal costs

incurred.

It is, we say, though still no answer to any

claim generally, as put by the appellants, that it

is obvious in this case, as in any other case where

there is an insurance company involved, that the

insured is likely not to have to, in reality, pay

any costs whatever. There is still that legal

obligation, perhaps, on the part of the insured,

who is an actual named party to the litigation, to

pay the costs. Indeed, as the taxing officer noted

and relied upon in the Endrust case, which was the

unreported decision - - -

HIS HONOUR:	Mr Justice Pincus, yes.
MR BERGLUND:	- - -it would be quite supportable from

authority which we will take Your Honour to if

Your Honour wishes us to do so.

HIS HONOUR:	No, no.
MR BERGLUND:	But there is this implied retainer that if you

are a solicitor on the record - - -

HIS HONOUR:	Deemed retainer.
MR BERGLUND:	A deemed retainer then you are acting for the

person who is the party on the record. We can say

further if one looked closely at the decision of

Reg v Miller where there were the two gentlemen who

were involved in the alleged criminal activities of

Giannarelli(3) 18 13/12/90

affray, I think it was, in a shipping case. They

were the motivators behind the shipping company.

There was really no realistic possibility of them

ever having to pay the costs. It was their company

which was going to pay the costs of their defence

but nevertheless the court said you do not look at

that, you look at the legal liability and we say

that all the way from the Archbishop of

Canterbury's case it is quite clear that insurance

companies have a legitimate interest in maintaining

actions and the fact that they are there, though, does not really alter the situation regarding the

liability to pay costs and to indemnify a party.

What is important in relation to that question is

whether or not there was an agreement between the

solicitor acting for the litigant and the litigant

or any other party that there be no costs paid in

any event. In that respect we rely upon Gundry v

Sainsbury, Adams and Inglis v Moore again.

It is that threshold point which we say, with respect to the taxing officer, his argument starts

to stray. The burden of proving that there was a

clear agreement between the respondents and their

solicitors that no costs would be paid in any event

rests with the appellants and, again, we rely on

Miller's case, (1983) 1 WLR 1056, and we can look

at that case in some greater depth, Your Honour.

The question arose by reference of questions by the taxing master to the court. Those questions are at

page 1057, half-way between F and G:

Master Horne certified two questions involving

points of principle of general importance: 1.

Was the taxing master right in holding as a

matter of law that the liability of a client

to his solicitor for payment of his

solicitor's costs, which is implied in the

normal retainer of a solicitor by his client,

might be excluded where "it was never

realistically anticipated that the client

would have to bear any costs at all."

And it is quite clear from the decision ultimately	at page 1062 the court held, at line H, the answer
to that question was:

"No." It is not sufficient to exclude the

normal liability of a client to pay his

solicitors' costs that, "it was never

realistically anticipated that the client

would have to bear any costs at all."

The second question was perhaps one that is

not all that relevant to this particular reference

that is before the Court. But the question of the

burden of proof was considered by His Honour

Giannarelli(3) 19 13/12/90

Mr Justice Lloyd at page 1061 and he refers to, just below line F:

There was also some discussion as to the

burden of proof. The initial burden of

proving that Messrs. Richards Butler were

acting for Mr. Glennie lay on Mr. Glennie.

But that burden could be discharged, as it was

in the present case, by showing that

Mr. Glennie was the party to the proceedings,

and Richards Butler the solicitors on the

record.

And it is quite clear in this case, too.

Once it was shown, as is now conceded, that
Mr. Glennie was indeed the client, then a

presumption arose that he was to be personally liable for the costs. That presumption could,

however, be rebutted if it were established

that there was an express or implied

agreement, binding on the solicitors, that

Mr. Glennie would not have to pay those costs

in any circumstances.

In practice, of course, the taxing

officer will have before him on the taxation

the whole of the solicitor's file. If it

appears to the taxing officer that there is

doubt whether there was an express or implied

agreement, binding on the solicitors, not to
seek to recover the costs from the client, the
taxing officer should ask for further

evidence. It must then be for the taxing

officer to come to a conclusion on the whole

of the facts presented to him. Unless those

facts establish a clear agreement, express or

implied, that in no circumstances will the

solicitors seek to obtain payment from their

client, then the basic presumption stands, and

reasonable costs must be allowed -

It is our submission that the proposition

which the taxing officer considered in his decision

is, perhaps, applied in an erroneous way. Page 7

of the taxing officer's decision, he refers in the

first paragraph, about line 7:

In other words there must be a factual

background upon which I can exercise the

discretion given in rule 70 to require the

production of documents and papers. The

evidence upon which I should exercise the
discretion must, Mr Berglund submitted, "be
evidence which is sufficiently strong so as to

first cause me to reasonably doubt that the

normal situation applies, and not merely to

Giannarelli(3) 20 13/12/90

hold a fanciful notion that the normal

situation does not apply." (The normal

situation, I was informed, is where a

solicitor renders a bill of costs to a party

and there is -

it has the word "an"; I think it should be the word

"no" -

agreement whereby he waives any rights as to

the costs therein.)

If one cares to just simply look at the

decision of the court in Pamplin v Express

Newspapers,(1985) WLR 689 at page 696, at line H,

the paragraph at the bottom of that page, it is

said:

The master does not have any power to

order discovery to be given; he does not have

any power to override a right of privilege.

But it is the duty of the master, if the

respondent raises a factual issue, which is

real and relevant and not a sham or fanciful

dispute, to require the claimant to prove the

facts upon which he relies. The claimant then

has to choose what evidence he will adduce and

to what extent he will waive his privilege.

It is our submission that when one looks at

the general propositions which precede this
reference, and that is the basis of the general
objections which the appellants have to the overall

bill, we say that those general objections in so

far as the question of maintenance is concerned are

fanciful and we say that in relation to the

question of the retainer, there was before the taxing officer evidence to support the general

proposition that there is an implied retainer or a

deemed retainer. There was no evidence before him

to rebut that general position. All it was was an

assertion - and indeed there is only an assertion

today - that we want to have a look and see what is

going on before we can even determine whether we

are right or not.

Secondly, there was before the taxing officer

the affidavit of Mr O'Donahoo which showed that

bills had been rendered and bills had been paid.

If in fact there was an arrangement that there be

no costs paid at all, then there would be no bills
rendered and, indeed, even if that be so, there

would be no bills paid. We would say that the

evidence before the taxing officer was quite

clearly all in support of the general principle

being in place and for those reasons we would say

that there is no real suggestion that anything

Giannarelli(3) 21 13/12/90

other than those general propositions and general

position apply.

If one looks closely at what the appellants

were saying and the lack of evidence that they have

before the Court, and indeed before the taxing

officer, one would be inclined to say that it was,

to use the words in Pamplin, a fanciful dispute.

It is a pious hope that they would be able to get

something out, and we say for those reasons that on

the material before the taxing officer there was

nothing which would have caused him to come to a

conclusion, a reasonable conclusion, that there was

some doubt, as in Reg v Miller when

Mr Justice Lloyd said there was no reason for him

to come to a conclusion that there was some doubt

whether there was an express or implied agreement

but there would be no payment as to costs.

We say, for those reasons, the taxing officer

exceeded his power in this instance. We do not

challenge the capacity of the taxing officer to ask

for documents in other areas where there is

evidence put before him which would cast some doubt

upon the general status quo being in place in a

circumstance other than this, but it must be that

the burden of proof casts upon the appellant who is
challenging the bill and he must put something -
they must put something to the taxing officer to at

least give him something to hang on to, hang his

hat on, a toe-hole, whatever you like - - -

HIS HONOUR:  I appreciate what you said about the burden,

but having regard to the terms of the power the

taxing officer may exercise the power under

order 71 rule 70 of his own motion. Now, why does

he have to have any evidence before him before he

decides to exercise that power?

MR BERGLUND:  The power under rule 70 is for the purpose of

taxation of costs. The power, we would say, is

only exercisable where it is necessary for him to

obtain information in order to make a decision. It

whim of the taxing officer. There must be a bona is not a power which ought to be exercised at the fide need for the material to be obtained. The

purpose for which this material was being obtained

was to test the supposedly questions of whether the

general objections were fair and reasonable and it

is a case where we would say that in order to test

that he must have some information available to him

to even support a prima facie case, or perhaps not

even a prima facie case but something less than

that, but something more than the fanciful dispute

issue that it was submitted to him it was. He must

have some evidence before him that would require

him to explore the matter further. All that was

Giannarelli(3) 22 13/12/90

before him was an assertion that this appeal was

funded by an insurance company and that everyone

knows that insurance companies pick up the tab for

litigation for litigants. We would say that that

is not sufficient. The real question is: was

there an agreement between the parties and their

solicitor that under no circumstances would no

costs be paid.

Now, he is embarking upon this exercise of discovery to determine that issue. But when the

prima facie presumption is that there is such an

agreement and that insurance companies are

obviously entitled to be involved and the law quite

clearly is stated that there must be an agreement

that no costs be paid, the burden is cast upon the

appellants to show what, in fact - - -

HIS HONOUR:  I appreciate the use of the word "burden" of

proof in Miller's case, for example, but I must say

in this area I have some real difficulty about

talking about "burdens" of proof. This is an

administrative exercise; it is the exercise of an

administrative power, so at the moment I see no

more reason why the taxing officer has to have any

evidence before him any more than the Commissioner
of Taxation has to have any material before him
before he exercises his powers under 264 and 265 of

the Income Tax Act.

MR BERGLUND:  That might be so, Your Honour. We would

simply say that as with a taxation officer, he

ought to have some grounds, he ought not to do it

capriciously; the taxing officer ought to have some

grounds, he ought not to do it capriciously; he

ought to have some grounds which he thinks are

reasonable and he ought not to do it capriciously,

and we say - - -

HIS HONOUR:  I do not think anyone would dispute the

question of the capricious - it is just it is a

very difficult area of saying, well, the power is

not being exercised for the purpose of taxation if

the taxing officer genuinely thinks it is being
exercised for the purpose of taxation.	You inject
an objective test into it.

MR BERGLUND:  The question we have posed, and the question

which has been posed by the taxing officer in

question 1 is really on the basis of the evidence

before the taxing officer and we would say that

there has to be - the only evidence before the

taxing officer was evidence which supported in all ways the status quo, the ordinary situation, being applicable. There was only one way in which the

appellants could have challenged the bill on its

general objections and that was to show that there

Giannarelli(3) 23 13/12/90

was an agreement that no costs be paid. It is not,
we would say, an appropriate task to be undertaken

by the taxing officer, to pick up that baton that

was thrown down by the appellants without some

further evidence before him that would tend to

rebut or cast serious doubt upon what was going on.

Now, the affidavit of Mr O'Donahoo quite clearly showed bills paid, bills rendered. It goes

directly to that issue of whether there was an

agreement that no costs be paid. It would be open

to the taxing officer, if he had some credible

evidence, to doubt that evidence and not accept it.

But there was only that evidence before him. Put

that against the background of the deemed retainer,

the general principles involved, we say that in the circumstances on the evidence before him the taxing

officer was not entitled to require production of

those documents.

It may be, as Your Honour said, that if he

decided that he did not think that evidence was

sufficient he could require production, but there

was also a capacity for him to summons and examine

witnesses. He could have called Mr O'Donahoo, he

could have called Mr Robson who was the principal,

but he chose to do one thing.

HIS HONOUR:  I know. He is not bound by the rules of

evidence. He can inform himself in what manner he

thinks fit, so long as he observes the rules of

natural justice.

MR BERGLUND:	And indeed, as is said in several of the cases, if the solicitor was attending at the costs
taxation he could have said, and as it was said by
counsel, look, there is just no agreement of that kind. Against all of that, one then says, well,
what is there being produced by the appellants to
rebut that proposition. There is stony silence except from the bar table and the assertion that, well, maybe there is, but we say that that is
really not enough to embark upon this exercise.

We then get to the second question, though,

and that is if in fact such was the position, and

we are turning to point 6 - - -

HIS HONOUR:  There does not seem to be any dispute about

question 2.

MR BERGLUND:  I am not quite sure whether there is or is not

a dispute. We say that quite simply, as Mr Walsh

did say at one stage, there is a simply no show, no

pay proposition.

Giannarelli(3)	24	13/12/90
HIS HONOUR:	That is another question.	That deals with 3(b)

really.

MR BERGLUND:  But we would say quite simply that if there is

a claim for legal professional privilege, then we

do not produce.	The question then becomes, what
are the consequences of the non-production.	One

could perhaps anticipate that the appellants in

this instance might say, look, we are asking for
documents which are going to the very general

nature of the retainer. If you do not produce

them, then the

no show, no pay principle generally applies. It is not a

case of someone claiming $20 for a particular letter which

was written; it is someone who is claiming $44,000 for the

whole action and the no show, no pay principle may, they

say, apply in general. We say that quite clearly there is

an ability to refuse to discover privileged documents and

the issue is not whether these are in fact privileged but

they are claimed at this stage to be privileged and on the

assumption that they are we do not have to show them.

Indeed, even if they were not privileged and

we chose not to show them, we would not be able to claim costs in relation to them. That is the only penalty which would flow from the non-production of

documents. The issue, we would submit, though, is

that no adverse conclusions can be drawn at all

from the non-production and to that extent we just

refer to the decision of O'Donnell v Reichard, the

Victorian decision which refers to the High Court

and quite succinctly summarizes at page 929 the

conclusions one can draw from not providing a
witness to give evidence. We say that you can only

draw conclusions for the non-production of anything

when in fact there is evidence which is available

to the Court upon which the Court can act.

Now, in this case again we get to a situation

where there is no evidence at all before the Court

to suggest that anything other than the normal

situation applies. For those reasons we say if we

do not produce the documents which we claim are

privileged, no adverse conclusions can be drawn and

we are back to the same position we are before we

come, that is that the general objections are still

there. The general objections have to be dealt

with. There is nothing to suggest other than the

normal situation applies. The general objections

should be refused.

We then come to the question of whether or

not, if we are claiming privilege and we produce
those documents, we have the balancing exercise of
whether or not there is a question of whether the
appellants have access to those documents, if they
are in fact produced and that, we say, is a

Giannarelli(3) 25 13/12/90

question which perhaps the Court need not answer in
this case, although the questions have been posed,
if the Court gets to a position that it concludes,
first, that there is an answer to question 1 in the

negative and an answer to question 2 in the

positive, then we come to question 3: "is the

taxing officer empowered to compel production", we

say "No", because again answer to question 2 really

carries with it the answer to question 3(a), and

answer to question 3(b) is again, "No", because we

say that, again, the taxing officer has to assess

the information available to him and there is

nothing to suggest the basis of the objections have

any ground at all.

Then we come to, if we have to produce them, and that really is question 4, there is that

problem about the balancing of the interests of the

other party to hear or put forward cases, the

natural justice case against the privilege. Both

in Pamplin v Express and Goldman v Hesper it would

appear, we would submit, that the courts have

rarely not resolved the conflict between those two principles but have hoped that that conflict would never ever arise and has left it to the discretion

of the taxing officer or taxing master to try and
find a way around that conflict and suggested ways

such as the solicitor, perhaps, giving evidence,

because there is always that capacity to overcome a

problem and we would submit that there is no

obligation on the part of the taxing officer to

provide the documents to the other side if the
taxing officer can consider and conclude that there

are other ways of addressing the issue raised and

enabling the appellants to have an ability to

counter any arguments without reference to those

documents. If in fact he considers that there is

no way in which it can be addressed without

reference to those documents, then it should be

again referred back to the submitting party, in

this case the respondents, to say, well, do you

wish to rely on that document or do you not, and

then again it comes back to the question of answers

to 1, 2 and 3.

But there is no obligation on the part of the

taxing officer to make the document available and the taxing officer should exercise his discretion and at least find another way around the problem, again oral evidence, affidavit material, cross-

examination and what have you. It is not a case

where it is the only way in which the question can

be resolved by reference to the documents.

We say, for those reasons, that there is no

obligation to make those documents available. We

Giannarelli(3) 26 13/12/90

have submitted in point 9 the answers that we would

submit are appropriate. If Your Honour pleases.

HIS HONOUR:  Thank you, Mr Berglund. Mr Walsh, have you

anything in reply?

MR WALSH:  Yes, briefly. The authorities that my learned

friend referred to do have some merit particularly

in relation to actions for maintenance and a

distinction must be drawn between a maintenance

case where a party alleges maintenance either in

civil proceedings or in criminal proceedings and -

there is a difference between that and where the

question of damnification comes up in taxation.

Point 1 of the respondents' summary of

argument relies on Inglis v Moore but the ratio of

that case was that there is an exception where the

Crown is involved and it says in the headnote to

that case on page 453 of the report in the

Australian Law Reports:

A successful party who is represented by the

Crown Solicitor in litigation in which the
Crown has an interest is not disentitled to

costs from an unsuccessful party merely

because he is not under a personal liability

to the Crown Solicitor for costs.

And the Court found in that case that the Crown did

have a sufficient interest in the subject-matter of

the proceedings which is not the case here. This

is an action between private individuals. The

Crown has no interest in the proceedings at all.

Paragraph 2 of the respondents' summary refers

to the Archbishop of Canterbury case for authority
for the proposition that an insurance company which

has agreed to indemnify a person has an interest in

the outcome of the legal proceedings. That is not
being contested. We do not say that the insurer of

the respondents did not have a sufficient interest.

They had an interest in the proceedings to the

extent that they could not be charged with

maintenance but it does not go to the question of

costs. And the Archbishop of Canterbury case is

authority for the proposition that if the solicitor
of the Treasury at the instance of the Crown is
directed to take up the case, and in that case on

behalf of the Archbishop, that it was an exception

to the general rule.

Paragraph 3 of the respondents' summary refers to Adams' case and on page 503 of the report of

Adams' case, the last paragraph, it is stated:

Giannarelli(3) 27 13/12/90

The only other question is whether or not

there was any agreement proved by the

defendants that the solicitors were not

entitled to receive remuneration from the

plaintiff.

Miller's case, which is also referred to to

support paragraph 4 in relation to the burden of
proof, does not go to the issue of whether, in law,
there was no liability to the individual
respondents. Miller's case, in the Weekly Law

Reports on page 1057G, says:

Was the taxing master right in holding as a

matter of law that the liability of a client

to his solicitor for payment of his

solicitor's costs, which is implied in the

normal retainer of a solicitor by his client,

might be excluded where "it was never

realistically anticipated that the client

would have to bear any costs at all."

That statement there talks about the factual

question of an insurer having an interest in the

proceedings and as a matter of practice and in
probably most cases the insurer would pick up the

tab, as my learned friend puts it, and that is to

be distinguished from what the appellants say was

the case here, that as a matter of law the

respondents never had any liability. It was not

just a pious hope on their part that the insurer

will pick up the costs at the end of the day but as

a matter of law and direction from the insurer,

the arrangement was that it was the insurer's case

and, in fact, the privilege that is being claimed,

the documents that are being sought to be protected

by the privilege are, in fact, documents to do with

the insurer.

When one looks further at the Miller case, on page 1062, between line A and line B, His Honour

Mr Justice Lloyd says:

Nothing I have said on the burden of proof affects the general rule that where	there is a dispute between solicitor and client as to the solicitor's retainer, then
the burden is on the solicitor to establish the validity and extent of his retainer.

And he goes on on line E to talk about the primary

liability for costs.

Perhaps the most instructive part of that case

is on page 1063 where His Honour concludes by

saying:

Giannarelli(3) 28 13/12/90

As Lord Denning M.R. pointed out in Storer v

Wright (1981) QB 336 it is the duty of the

taxing officer in legal aid taxations to bear
the public interest in mind, and disallow any

items which are unreasonable in amount or

which are unreasonably incurred. He must act

as a watchdog, since there is no one else to

perform that function.

And although in this case we are not asking him to act as a public watchdog, the appellants are asking

him to act as a watchdog in the interests of

natural justice as it relates to the appellants.

In Miller's case on page 1061, my learned friend referred to, and it is quoted in the case on

line H:

In practice, of course, the taxing

officer will have before him on the taxation

the whole of the solicitor's file.

"The whole of the solicitor's file". Now, what is

being asked for is nothing out of the ordinary,

that the appellants support the Registrar's view

that to form a proper view he needs to have the

whole of the solicitor's file before him.

One authority was not referred to. It is a

Victorian case of Blackall v Trotter, (1969) VR

939, which is authority for the proposition that

where the Crown had an interest in legal

proceedings and instructs a solicitor - and in that

particular case it was a solicitor for the
insurance commissioner - the party is entitled to

recover costs. It is not - and the authorities

that have been referred to which either prove an

exception in relation to maintenance or give the

Crown an interest in proceedings are not authority

for the proposition that an insurance company on

behalf of a private person goes beyond having just

an interest in the proceedings but can recover

costs in a case where the respondents were never

liable for costs.

The lynch case on the liability for costs is

the one referred to in the supplementary list of

authorities that the appellant put up of Gundry v

Sainsbury, (1910) 1 KB 645, and as the headnote

says:

the plaintiff could not recover from the

defendant more costs than he was liable to pay

his solicitor, inasmuch as party and party

costs were awarded as an indemnity only;

secondly, upon the construction of the Act,

that for the purpose of applying the proviso

Giannarelli(3) 29 13/12/90

to s. 5 it was not necessary that the

agreement should be in writing -

and section 5 of the Act referred to is reproduced

on page 646 of that report. It is the Attorneys

and Solicitors Act 1870. The wording of it is

similar to, apart from a change in a few words,
section 64 of the Supreme Court Act to which I

form in Victoria the Attorneys and Solicitors Act of England which reflects the common law position.

referred Your Honour earlier. Section 64 of the

Perhaps it is expressed in a nutshell on page 651 of Gundry v Sainsbury:

The principle that party and party costs are

only an indemnity - an imperfect indemnity, it

is true, but never more than an indemnity - is

so deeply rooted in our law that the proviso

is put in for the purpose of preventing the

earlier part of s.5 from ever giving rise to a

case in which costs could be made a profit.

And on page 653 of the report, towards the end of the page:

the Court says "True, you are entitled to such

indemnity, but inasmuch as you have nothing to

pay by reason of your agreement with your

solicitor there is nothing for which to

indemnify you."

That case has been expressed as being trite law and

one would gather from that expression that
everybody knows what it is and accepts the fact.

There is a further authority which helps to distinguish maintenance as a cause of action in

itself or as a criminal offence and that is the

case of Neville v London "Express" Newspapers,

(1919) AC 368. On page 386 it is stated by

Lord Chancellor Finlay:  As I have said, maintenance is a common

law offence.

And on page 415, Lord Shaw says, in the second

paragraph:

Finally, Hawkins considers the general point, "how far offences of this kind are restrained

by the common law. " And of this he says:	"It
seemeth, that all maintenance is strictly
prohibited by the common law .... "

Giannarelli(3) 30 13/12/90

What the authorities to which my learned friend has referred say is that maintenance is

prohibited by the common law but there are

exceptions and the exceptions include the Crown

having an interest and instructing a solicitor; an

insurance company having a legitimate interest in

proceedings and being involved but they do not

answer the question that if the - in this case, the

respondents - party does not have a liability for

costs in any event, the losing party cannot then be

compelled to pay costs because to compel a losing

party to pay costs where the respondents, as in

this case, might not have had any liability to pay

costs, would be to impose a punishment on the

losing party and to give a bonus to, in this case,

the insurer. If Your Honour pleases.

HIS HONOUR:  Thank you very much. This case raises a number

of interesting and, for that matter, important

points. I will consider my decision and give it as

soon as I can but having regard to the time of the

year it is unlikely that it will be given before

the commencement of term.

AT 11.55 AM THE MATTER WAS ADJOURNED SINE DIE

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