Hancock Prospecting Pty Ltd v Hancock [No 3]
[2016] WASC 423
•23 DECEMBER 2016
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: HANCOCK PROSPECTING PTY LTD -v- HANCOCK [No 3] [2016] WASC 423
CORAM: PRITCHARD J
HEARD: 24 FEBRUARY 2016; FURTHER WRITTEN SUBMISSIONS
DELIVERED : 23 DECEMBER 2016
FILE NO/S: ARB 4 of 2012
BETWEEN: HANCOCK PROSPECTING PTY LTD
Applicant
AND
JOHN LANGLEY HANCOCK
First-named RespondentBIANCA HOPE RINEHART
Second-named RespondentHOPE GEORGINA RINEHART WELKER
Third-named RespondentGEORGINA HOPE RINEHART in her personal capacity and as trustee of the Hope Margaret Hancock Trust
Fourth-named RespondentHANCOCK MINERALS PTY LTD
Fifth-named RespondentHANCOCK FAMILY MEMORIAL FOUNDATION LIMITED
Sixth-named RespondentTADEUSZ JOSEF WATROBA
Seventh-named RespondentWESTRAINT RESOURCES PTY LTD
Eighth-named RespondentHMHT INVESTMENTS PTY LTD
Ninth-named Respondent150 INVESTMENTS PTY LTD
Tenth-named Respondent
Catchwords:
Practice and procedure - Costs - Application for stay of taxation of bill of costs - Jurisdiction to order a stay
Practice and procedure - Costs - Indemnity principle - Successful party's liability to pay costs - Whether non-compliance with costs disclosure requirements under Legal Profession Act 2008 (WA) is relevant to a determination of liability for costs - Whether non-compliance with O 9A Rules of the Supreme Court 1971 (WA) is relevant to a determination of liability for costs - Turns on own facts
Legislation:
Legal Profession Act 2008 (WA)
Rules of the Supreme Court 1971 (WA)
Result:
Application dismissed
Category: B
Representation:
Counsel:
Applicant: Ms B Ashdown
First-named Respondent : No appearance
Second-named Respondent : No appearance
Third-named Respondent : No appearance
Fourth-named Respondent : No appearance
Fifth-named Respondent : No appearance
Sixth-named Respondent : No appearance
Seventh-named Respondent : No appearance
Eighth-named Respondent : No appearance
Ninth-named Respondent : No appearance
Tenth-named Respondent : No appearance
Interested Party : Mr A Sharpe
Solicitors:
Applicant: Corrs Chambers Westgarth
First-named Respondent : No appearance
Second-named Respondent : No appearance
Third-named Respondent : No appearance
Fourth-named Respondent : No appearance
Fifth-named Respondent : No appearance
Sixth-named Respondent : No appearance
Seventh-named Respondent : No appearance
Eighth-named Respondent : No appearance
Ninth-named Respondent : No appearance
Tenth-named Respondent : No appearance
Interested Party : Minter Ellison
Cases referred to in judgment:
Achurch v The Queen [2014] HCA 10; (2014) 253 CLR 141
Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495
Altorfer and Stow (A Firm) v Lindsay [2005] WASCA 73
Angor Pty Ltd v Ilich Motor Company Pty Ltd (1992) 37 FCR 65
Baalman v Dare Reed (1984) 52 ACTR 3
Backhouse v Judd [1925] SASR 395
Beach Petroleum NL v Kennedy (1999) 48 NSWLE 1
Buitendag v Ravensthorpe Nickle Operations Pty Ltd [2012] WASC 425
Cachia v Haines (1994) 179 CLR 403
Catto v Hampton Australia Ltd (In Liq) [2008] SASC 231
Commonwealth of Australia v Albany Port Authority [2006] WASCA 185
Director of the Fair Work Building Industry Inspectorate v Abbott (No 5) [2013] FCA 522
Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) [2015] FCA 969
DJL v Central Authority [2000] HCA 17; (2000) 201 CLR 226
D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1
Grundmann v Georgeson [2000] QCA 394
Halliday v High Performance Personnel Pty Ltd (In Liq) (1993) 113 ALR 637
Hancock Family Memorial Ltd v Porteous [2000] WASC 61
Hancock Prospecting Pty Ltd v Hancock [No 2] [2014] WASC 85
Hawksford v Hawksford [2005] NSWSC 463; (2005) 191 FLR 173
Hugdson v Endrust (Australia) Pty Ltd (1986) 11 FCR 152
In Re Hirst & Capes [1908] 1 KB 982
Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534
Lawrie v Lawler (No 2) [2015] NTSC 46
Marsh v Baxter (No 2) [2016] WASCA 51
Marsh v Baxter [2015] WASCA 179
Noye v Robbins [2010] WASCA 83
O'Connor Partners v Purvis [2005] WASC 248; (2005) 31 WAR 549
Rapoff v Rudder (Unreported, WASC, Library No 9001236, 6 July 1990)
Rogers v The Queen [1994] HCA 42; (1994) 181 CLR 251
Shaw v Yarranova Pty Ltd [2010] VSC 567
Shaw v Yarranova Pty Ltd [2011] VSCA 55
Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 4) [2013] VSC 669
TNT Bulkships Ltd v Hopkins (1989) 65 NTR 1
Tobin v Dodd [2004] WASCA 288
Wentworth v Rogers [2006] NSWCA 145; (2006) 66 NSWLR 474
Windus v Director, Fair Work Building Industry Inspectorate [2013] FCA 1053; (2013) 216 FCR 207
PRITCHARD J: In March 2013, on the application of Hancock Prospecting Pty Ltd (HPPL), a subpoena was issued to Ms Ferguson, requiring that she produce documents said to be relevant to an arbitration or arbitrations between HPPL and the respondents. Ms Ferguson applied to set aside that subpoena (the subpoena application). Following publication of my reasons for decision in another application,[1] HPPL and Ms Ferguson consented to the making of an order setting aside HPPL's subpoena to Ms Ferguson.
[1] Hancock Prospecting Pty Ltd v Hancock [2013] WASC 290.
On 24 September 2013, I made an order that HPPL 'pay the costs, including the reserved costs, of Ms Ferguson in seeking to set aside the subpoena, those costs to include costs of and incidental to the summons to set aside the subpoena, to be taxed if not agreed' (the Costs Order). I subsequently made a special costs order pursuant to s 280(2)(c) of the Legal Profession Act 2008 (WA) (the LP Act) in respect of those costs.[2]
[2] Hancock Prospecting Pty Ltd v Hancock [No 2] [2014] WASC 85.
Ms Ferguson's solicitors, Minter Ellison, subsequently submitted a bill of costs of the costs of the subpoena application (the Bill of Costs) for taxation. In the course of the taxation, HPPL raised an objection to the payment of Ms Ferguson's costs. HPPL claimed that Ms Ferguson was not under any liability to pay the fees charged by Minter Ellison in connection with the subpoena application (the Legal Fees).
HPPL subsequently filed a Chamber Summons seeking orders that the taxation of costs pursuant to, or other enforcement of, the Costs Order be permanently stayed, and that Ms Ferguson pay HPPL's costs of and incidental to the taxation, and of the Chamber Summons (the stay application).
For the reasons set out below, the stay application should be dismissed.
In these reasons for decision I deal with the following matters:
1.The Court's jurisdiction to deal with the stay application;
2.The indemnity principle;
3.The effect of the decision in Director of the Fair Work Building Industry Inspectorate v Abbott (No 7);[3] and
4.Why the stay application should be dismissed:
(a)Whether HPPL has established that Ms Ferguson was not liable for the Legal Fees;
(b)Whether any non-compliance with the requirements of s 260 of the LP Act is relevant to a determination of Ms Ferguson's liability for the Legal Fees; and
(c)Whether any non-compliance with the requirements of O 9A of the Rules of the Supreme Court 1971 (WA) (RSC) is relevant to a determination of Ms Ferguson's liability for the Legal Fees.
[3] Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) [2015] FCA 969.
The Court's jurisdiction to deal with the stay application
I initially had some reservations as to whether I had jurisdiction to deal with the issues raised by the stay application. That was because it initially appeared that the stay application amounted to a collateral challenge to the operation of the Costs Order.
Had the question whether Ms Ferguson was liable for the Legal Fees been raised before me at the time that the Costs Order was sought, there is no doubt I would have had power to consider whether the requirements of the indemnity principle were satisfied, and to conduct a hearing for that purpose if necessary.[4] In this case, however, I have already made the Costs Order, which requires HPPL to pay Ms Ferguson's costs. HPPL does not seek to appeal the Costs Order, but the stay application is nevertheless directed to achieving the same practical outcome, namely that HPPL will not have to pay any of the costs incurred by Ms Ferguson in relation to the subpoena application, that is, the Legal Fees.
[4] Marsh v Baxter [2015] WASCA 179 [15].
Having now the opportunity to consider the question of jurisdiction further, I am satisfied that I have jurisdiction to determine the issues at the heart of the stay application, for the following reasons.
First, the stay application does not seek, directly, to challenge the Costs Order, or to alter or vary the Costs Order, so as to undermine its finality.[5] It is, of course, the case that a stay of the taxation of those costs, if successful, would have the effect of rendering the Costs Order wholly inutile. But the practical effect of the exercise of jurisdiction is not determinative of the existence of the jurisdiction in the first place.
[5] DJL v Central Authority [2000] HCA 17; (2000) 201 CLR 226 [90] (Kirby J); D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1 [34] (Gleeson CJ, Gummow, Hayne & Heydon JJ); Achurch v The Queen [2014] HCA 10; (2014) 253 CLR 141 [14] (French CJ, Crennan, Kiefel & Bell JJ).
Secondly, the Court clearly has jurisdiction to determine the existence of a contract between two parties. The question at the heart of the stay application ‑ namely, whether there is a retainer between Ms Ferguson and Minter Ellison ‑ is clearly a question of that kind.[6]
[6] O'Connor Partners v Purvis [2005] WASC 248; (2005) 31 WAR 549 [18], [31] (Jenkins J).
Thirdly, in so far as the alleged absence of a retainer between Ms Ferguson and Minter Ellison was raised as an objection to the Bill of Costs submitted for taxation, it is doubtful that the taxing officer had jurisdiction to decide if a retainer existed[7] (as opposed to determining the terms of that retainer, in so far as they pertained to the performance of particular legal work by the solicitor).[8] This is therefore not a case where the issue now ventilated should have been determined by the taxing officer.
[7] Cf O'Connor Partners v Purvis [2005] WASC 248; (2005) 31 WAR 549 [31] (Jenkins J), and see the cases to which her Honour referred at [19] ‑ [30], especially Rapoff v Rudder (Unreported, WASC, Library No 9001236, 6 July 1990) 13 (Franklyn J), Baalman v Dare Reed (1984) 52 ACTR 3, and In Re Hirst & Capes [1908] 1 KB 982, 994 (Farwell LJ), 997 (Kennedy LJ).
[8] Cf O'Connor Partners v Purvis [2005] WASC 248; (2005) 31 WAR 549 [36] ‑ [44] (Jenkins J).
Fourthly, in so far as HPPL seeks a stay of the taxation, the Court has an inherent jurisdiction to grant a stay of a proceeding in the Court if that proceeding would constitute an abuse of the Court's process.[9] To permit the continuation of the taxation of the Bill of Costs if Ms Ferguson does not have any liability for the costs that are the subject of the Bill of Costs, would arguably constitute an abuse of process.
[9] Commonwealth of Australia v Albany Port Authority [2006] WASCA 185 [20] ‑ [21] and the cases referred to therein (Steytler P); see also Hunter v Chief Constable of the West Midlands Police [1982] AC 529, 536; [1981] 3 All ER 727, 729 (Lord Diplock); Rogers v The Queen[1994] HCA 42; (1994) 181 CLR 251, 286 (McHugh J).
Fifthly, an alternative way of looking at the substance of the stay application (if not its precise form) is that the underlying question the Court is asked to resolve ‑ namely, whether there was a retainer between Ms Ferguson and Minter Ellison ‑ is ancillary to the Costs Order, in that the answer to that question will determine, or assist in determining, the content of the Costs Order. The same question could have been brought before the Court if the taxing officer had referred a question to the Court in the course of the taxation itself,[10] directed at enabling the taxing officer to determine the quantum of any costs for which HPPL would be liable pursuant to the Costs Order. Viewed from that perspective, no question arises that the Court is functus officio on the basis that it has exhausted its jurisdiction to award costs in these proceedings.
[10] Pursuant to O 66 r 45 of the Rules of the Supreme Court 1971 (WA).
In this respect, it has been accepted in other jurisdictions that even after a costs order has been made, a judge has the power to deal with an application for the provision of information by a party claiming those costs,[11] to confirm the taxation of the costs following the reference of a question by a taxing officer,[12] or to grant a stay of a taxation,[13] in circumstances where a question has arisen as to the existence of a retainer. Those authorities have proceeded on the basis that an order of that kind is properly to be treated as 'ancillary' or 'supplementary' to the court's costs order.[14] Approaching the stay application on that basis arguably also supports the existence of the Court's jurisdiction, but for present purposes it is unnecessary to decide the point, as I am otherwise satisfied that the Court has jurisdiction to deal with the stay application.
[11] Windus v Director, Fair Work Building Industry Inspectorate [2013] FCA 1053; (2013) 216 FCR 207 [31] (Barker J); Director of the Fair Work Building Industry Inspectorate v Abbott (No 5) [2013] FCA 522 [22] (Gilmour J); see also Shaw v Yarranova Pty Ltd [2011] VSCA 55 [9] ‑ [11], [27] ‑ [28] (Redlich & Mandie JJA).
[12] See, eg, Angor Pty Ltd v Ilich Motor Company Pty Ltd (1992) 37 FCR 65 where a question was referred by a taxation officer pursuant to O 62 r 39 of the Federal Court Rules 1979 (Cth), which was in the same terms as O 66 r 45 of the Rules of the Supreme Court 1971 (WA).
[13] Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) [2015] FCA 969 [33] ‑ [37] (Gilmour J).
[14] Director of the Fair Work Building Industry Inspectorate v Abbott (No 5) [2013] FCA 522 [23] (Gilmour J).
The indemnity principle
The rationale for the usual rule that an unsuccessful party should pay the party-party costs of the successful party to an action is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred in respect of those costs.[15] In other words, costs are awarded to indemnify the successful party for their liability for costs ‑ a principle known as the indemnity principle ‑ rather than to punish the unsuccessful party, or to reward the successful party.
[15] Cachia v Haines (1994) 179 CLR 403, 410 (Mason CJ, Brennan, Deane, Dawson & McHugh JJ); Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534, 567 (McHugh J); Altorfer and Stow (A Firm) v Lindsay [2005] WASCA 73 [61] (McLure JA, Wheeler JA agreeing).
The making of a costs order in favour of a party is not dependent upon the party seeking costs producing a costs agreement between that party and their solicitors.[16]
[16] Hancock Family Memorial Ltd v Porteous [2000] WASC 61 [5] ‑ [6] (Anderson J); Buitendag v Ravensthorpe Nickle Operations Pty Ltd [2012] WASC 425 [5] (Le Miere J).
The application of the indemnity principle means that a party (the client) who does not have a liability to his or her solicitors for costs cannot recover costs against an unsuccessful party to the litigation.[17]
[17] Marsh v Baxter (No 2) [2016] WASCA 51 [31] (the Court); Noye v Robbins [2010] WASCA 83 [296] (Owen JA, Pullin & Buss JJA agreeing).
The indemnity principle is flexible, and is designed to allow for a just and fair result.[18] Accordingly, if the client and his or her solicitor reach an agreement that the client will not have to pay the solicitor's costs, the client cannot obtain an award of costs against an unsuccessful party in litigation.[19] Similarly, if the liability of the client to the solicitor is limited, the quantum of costs that can be recovered from the unsuccessful party is also limited to that amount.[20]
[18] Noye v Robbins [2010] WASCA 83 [313], [332] (Owen JA, Pullin & Buss JJA agreeing); Wentworth v Rogers [2006] NSWCA 145; (2006) 66 NSWLR 474 [45], [50], [54] (Santow JA).
[19] Noye v Robbins [2010] WASCA 83 [297] (Owen JA, Pullin & Buss JJA agreeing).
[20] Noye v Robbins [2010] WASCA 83 [297] (Owen JA, Pullin & Buss JJA agreeing).
Similarly, if it is the case that by virtue of the operation of a statutory provision, the solicitor is not entitled to charge the client for the legal work undertaken on the client's behalf, or if any liability on the client's part is precluded or extinguished by statute, the client will not be entitled to recover costs from the unsuccessful party.[21] On the other hand, if, on its proper construction, the statute does not extinguish the client's debt, but merely precludes the solicitor from enforcing it, then provided that the costs have already been paid by the client, the client will be entitled to enforce a costs order against the unsuccessful party to the litigation.[22]
[21] TNT Bulkships Ltd v Hopkins (1989) 65 NTR 1; see also Angor Pty Ltd v Ilich Motor Company Pty Ltd (1992) 37 FCR 65, 73 ‑ 74 (French J) and the cases discussed therein.
[22] Cf, for example, Catto v Hampton Australia Ltd (In Liq) [2008] SASC 231 [38] ‑ [39] (the Court), and see the cases cited therein.
The liability of the client to pay the fees charged by the solicitor for the legal work performed for the client arises by contract, called the retainer.[23] Like any contract, proof of the existence of a retainer can be implied from conduct. Furthermore, once it is established that a solicitor was acting for a client with the client's knowledge and assent, it will be presumed that the retainer existed, and that the client is liable to his or her solicitors for the solicitors' costs.[24] The presumption that a retainer exists is a strong one.[25] So strong is the presumption that it has sometimes been equated to a 'deemed retainer'.[26]
[23] Shaw v Yarranova Pty Ltd [2011] VSCA 55 [17] (Redlich & Mandie JJA).
[24] Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495, 501 (Bankes LJ), 502-3 (Atkins LJ); Halliday v High Performance Personnel Pty Ltd (In Liq) (1993) 113 ALR 637, 639 (Mason CJ), referring to the unreported decision of Dawson J at first instance; Shaw v Yarranova Pty Ltd [2011] VSCA 55 [19] (Redlich Mandie JJA).
[25] Halliday v High Performance Personnel Pty Ltd (In Liq) (1993) 113 ALR 637, 639 (Mason CJ), citing the unreported decision of Dawson J at first instance.
[26] Hugdson v Endrust (Australia) Pty Ltd (1986) 11 FCR 152, 154 (Pincus J).
The indemnity principle will apply even if the instructions to act on behalf of the client have come to the solicitor from another party, or from some non-party interested in the litigation.[27]
[27] Marsh v Baxter (No 2) [2016] WASCA 51 [37] (the Court), and the cases cited therein.
The indemnity principle will not be displaced merely because a third party has undertaken to pay the client's legal costs.[28] Furthermore, the fact that by the time a costs order is sought, the costs of the client have already been paid by a third party does not preclude the recovery of those costs by the client pursuant to the costs order against the unsuccessful party.[29]
[28] Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495, 501 (Bankes LJ), 504 (Atkins LJ); Noye v Robbins [2010] WASCA 83 [299] (Owen JA, Pullin & Buss JJA agreeing).
[29] Noye v Robbins [2010] WASCA 83 [313] ‑ [331] (Owen JA).
It will not be sufficient to displace the indemnity principle that the client never contemplated or considered that he or she would in fact be liable for the costs charged by his or her solicitors,[30] or that the likelihood of the client being called upon to pay those costs is remote.[31]
[30] Backhouse v Judd [1925] SASR 395, 399 - 400 Poole ACJ).
[31] Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495, 508 (Younger LJ); Angor Pty Ltd v Ilich Motor Co Pty Ltd (1992) 37 FCR 65, 71, 72, 74 (French J).
Perhaps it is not surprising that it has been observed that the 'rule that costs cannot be recovered by a party not liable to the solicitors on the record is not applied with excessive rigour'.[32]
[32] Grundmann v Georgeson [2000] QCA 394 [7] (the Court).
To displace the indemnity principle it is necessary to prove either that there was no retainer, or that there was an agreement, either between the client and the solicitors, or between the third party and the solicitors, that under no circumstances would the client be liable for the costs.[33]
[33] Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495, 501 (Bankes LJ), 504 (Atkins LJ); Shaw v Yarranova Pty Ltd [2011] VSCA 55 [20], [24] (Redlich & Mandie JJA).
The onus of establishing that a client had no liability to pay the legal fees charged by his or her solicitors rests upon the party seeking to resist the making of a costs order, or the payment of costs pursuant to a costs order (in this case, HPPL).[34]
The effect of the decision in Director of the Fair Work Building Industry Inspectorate v Abbott (No 7)
[34] Marsh v Baxter (No 2) [2016] WASCA 51 [37] (the Court).
HPPL placed considerable emphasis on the decision of Gilmour J in Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) (Abbott).[35] In Abbott, the Director of the Fair Work Building Industry Directorate had been ordered to pay the costs of the various respondents to that action, and subsequently sought a stay of the assessment of a bill of costs filed by one of the respondents, Mr Windus. The basis for the stay application was that no retainer existed between Mr Windus and each of two firms of solicitors which had acted for him in the action (Gibson & Gibson and Corser & Corser) so that Mr Windus was not liable to pay the legal fees those firms had incurred in acting on his behalf. Justice Gilmour held that Mr Windus was not liable to pay those fees, and consequently granted a stay of the assessment of the bill of costs.
[35] Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) [2015] FCA 969.
In so far as the fees charged by Gibson & Gibson were concerned, Gilmour J relied on a letter from Gibson & Gibson to Mr Windus' union, the AMWU (the letter of instructions) as evidence that Gibson & Gibson acted on the instructions of the AMWU, that the AMWU had agreed that it would fund the legal costs of each respondent to the action (including Mr Windus), that there was no evidence that Mr Windus had provided any letter of instructions to Gibson & Gibson, and that there was no evidence that he had authorised the AMWU to act on his behalf.[36]
[36] Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) [2015] FCA 969 [43] ‑ [50], [55] (Gilmour J).
Justice Gilmour concluded that the letter of instructions established that the liability to pay costs lay solely with the AMWU. That was so because the letter stated that if the AMWU decided not to continue to fund the legal costs, Gibson & Gibson may cease to act for each respondent, after providing that respondent with the opportunity to engage its services on terms in which that party would be responsible for his or her own legal costs.[37]
[37] Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) [2015] FCA 969 esp [58] ‑ [61] (Gilmour J).
Justice Gilmour held that the conclusion that the AMWU was solely responsible for the costs charged by Gibson & Gibson was also supported by the evidence that all of that firm's invoices were sent to the AMWU (and some of those invoices referred to the AMWU as the 'client'), that Mr Windus himself acknowledged that the AMWU was responsible for paying his legal costs, and that Mr Windus had authorised the payment to the AMWU of any costs awarded to him because 'they were responsible for paying [his] legal costs'.[38]
[38] Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) [2015] FCA 969 [62] ‑ [64] (Gilmour J).
After making these factual findings, his Honour then concluded:
I reject Mr Windus' submission … that the fact that accounts for legal costs were sent to the AMWU and not to Mr Windus, and that the payment of legal costs, including payment in full of all legal costs charged so as to discharge the client's obligation, by the AMWU, is insufficient to demonstrate that Mr Windus was excluded from liability.[39]
[39] Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) [2015] FCA 969 [65] (Gilmour J).
Read in isolation, that observation appears to be inconsistent with the authorities that establish that a client's liability to pay his or her solicitor's legal costs is not extinguished merely because a third party agrees to pay those legal costs, or in fact pays those legal costs (see [22] ‑ [23] above). However, as Gilmour J subsequently made clear, it is apparent that his Honour's rejection of Mr Windus' submission was based on the entirety of the evidence, including his findings that Mr Windus had not instructed Gibson & Gibson, that Mr Windus had no liability or obligation to pay the legal fees charged by Gibson & Gibson, and that that liability and obligation lay solely with the AMWU.[40]
[40] Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) [2015] FCA 969 [67] ‑ [68] (Gilmour J).
As for the costs charged by Corser & Corser, Gilmour J held that although Corser & Corser initially intended to create a contractual relationship with Mr Windus, by way of a written costs agreement (pursuant to which Mr Windus would have had liability to pay their costs), the evidence demonstrated that no such contractual relationship was formed. His Honour found that Mr Windus, quite intentionally, did not enter into that costs agreement with Corser & Corser, because 'he did not want to be liable for Corser & Corser's fees'.[41] His Honour also found that Mr Windus arranged for the AMWU to enter into a costs agreement with Corser & Corser, pursuant to which it agreed to pay their fees for acting for Mr Windus, and it was pursuant to that agreement that Corser & Corser acted on behalf of Mr Windus and received instructions from him.[42]
[41] Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) [2015] FCA 969 [71] (Gilmour J).
[42] Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) [2015] FCA 969 [70] ‑ [72], [86] ‑ [88], [104], [112] (Gilmour J).
It is apparent that the result in Abbott is entirely referable to the facts established on the evidence in that case. Justice Gilmour concluded that the evidence, as a whole, displaced the presumption that there was a retainer between Mr Windus and Gibson & Gibson, or between Mr Windus and Corser & Corser.
Further, nothing in the reasons of Gilmour J in Abbott establishes any new point of principle. In particular, nothing in his Honour's reasons is inconsistent with the authorities, such as Noye and Marsh v Baxter (No 2), which establish that in order to displace the indemnity principle, evidence is required to establish either that there was no retainer at all, or to establish the existence of an agreement that the client will not be liable for the costs charged by the client's solicitor.
If I am wrong in that conclusion, then to the extent that the principles applied by Justice Gilmour in Abbott constitute a departure from the principles applied by the Court of Appeal in this State in Noye and Marsh v Baxter (No 2), the latter decisions are binding on me.
Why the stay application should be dismissed
In summary, counsel for HPPL contended that Ms Ferguson was not liable to pay the Legal Fees because:
(a)On the evidence, Ms Ferguson was not liable to pay those fees;
(b)Minter Ellison failed to comply with the requirement for costs disclosure under s 260 of the LP Act, and that failure militated against the conclusion that Ms Ferguson was liable to pay the Legal Fees;
(c)Minter Ellison failed to comply with the requirements of Order 9A RSC and that failure militated against the conclusion that Ms Ferguson was liable to pay the Legal Fees.
I deal with each of these arguments in turn.
(a) Whether HPPL has established that Ms Ferguson was not liable for the Legal Fees
The evidence, and the factual findings supported by that evidence
HPPL and Ms Ferguson relied on affidavit evidence for the purposes of the stay application. The deponents of those affidavits were not cross examined.
Having regard to that evidence, I make the following findings.
After the subpoena was issued, Ms Ferguson discussed it with one of the editors for Fairfax Media Limited (Fairfax) and they agreed that Minter Ellison (which also acted for Fairfax) would act on Ms Ferguson's behalf to oppose the subpoena.[43]
[43] Affidavit of Adele Ferguson sworn 22 December 2015 [6].
Ms Ferguson's evidence was that after that initial meeting with solicitors from Minter Ellison, she was concerned she would have to fund her own legal representation on the subpoena application.[44] She therefore met with another firm of solicitors about the matter. In other words, she was concerned that she would be liable for payment of the Legal Fees.
[44] Affidavit of Adele Ferguson sworn 22 December 2015 [11].
Shortly thereafter, Ms Ferguson 'met with a lawyer at Minter Ellison who told me that Fairfax was backing me'.[45] I infer that that meant that Ms Ferguson understood that Fairfax was likely to pay the Legal Fees.
[45] Affidavit of Adele Ferguson sworn 22 December 2015 [15].
However, Ms Ferguson clearly did not consider it to be certain that Fairfax would pay the Legal Fees because she deposed that 'even after the meeting with the lawyer, [she] still had some nagging doubts'[46] that she might have to pay the Legal Fees. However, she was 'sufficiently confident that Fairfax would support [her]'[47] (by which I understand she meant that she was confident that Fairfax would pay the Legal Fees) that she decided Minter Ellison should act for her, and she did not proceed to instruct the other firm of solicitors.[48]
[46] Affidavit of Adele Ferguson sworn 22 December 2015 [18].
[47] Affidavit of Adele Ferguson sworn 22 December 2015 [19].
[48] Affidavit of Adele Ferguson sworn 22 December 2015 [19].
Clearly, at or by that point, a relationship of solicitor and client existed between Ms Ferguson and Minter Ellison. The existence of that solicitor-client relationship is confirmed by other evidence, including that Ms Ferguson directly provided instructions to, and received advice from, a solicitor at Minter Ellison in relation to the subpoena application.[49] In addition, the Bill of Costs indicates that time was spent on various telephone attendances and emails between solicitors from Minter Ellison and Ms Ferguson in relation to the matter.[50]
[49] Further Affidavit of Kate Alana Marie Rodrigues sworn 27 November 2015 [2].
[50] Annexure MAW2 to the affidavit of Mark Anthony Wilks affirmed 6 October 2015.
At the same time, the evidence establishes clearly that Fairfax also provided instructions to Minter Ellison in relation to the subpoena application.[51]
[51] Affidavit of Kate Alana Marie Rodrigues sworn 9 November 2015 [5].
There was no evidence that Ms Ferguson ever entered into a written costs agreement with Minter Ellison in respect of the subpoena application. Minter Ellison did not provide any costs disclosure to Ms Ferguson.[52]
[52] Affidavit of Kate Alana Marie Rodrigues sworn 9 November 2015 [4].
Minter Ellison's invoices for the legal work Minter Ellison undertook in relation to the subpoena application were addressed to the General Counsel of Fairfax and were paid by Fairfax.[53] There was no evidence that Ms Ferguson paid for, or made any contribution to, the Legal Fees. I find that she did not pay for the Legal Fees.
[53] Affidavit of Kate Alana Marie Rodrigues sworn 9 November 2015 [7]; Annexure KAMR1 to the Further Affidavit of Kate Alana Marie Rodrigues sworn 27 November 2015.
There was no written or oral communication between the staff of Minter Ellison and Ms Ferguson to the effect that Ms Ferguson was not liable for the Legal Fees.[54]
[54] Affidavit of Kate Alana Marie Rodrigues sworn 9 November 2015 [6].
There was evidence from Ms Ferguson that as time went on, she 'became increasingly confident that Fairfax would pay [her] legal costs for opposing the subpoena' because of public support expressed for her by Fairfax executives.[55] However, her evidence was that she 'was never completely certain that Fairfax would pay [her] legal fees'[56] and although she 'felt very confident'[57] that they would do so, she 'still thought it might be possible that I would be asked to pay the legal fees for opposing the subpoena'.[58] That evidence supports the conclusion that there was no agreement between Ms Ferguson and Minter Ellison that she was not liable for the Legal Fees or that she would not be required to pay them under any circumstances.
[55] Affidavit of Adele Ferguson sworn 22 December 2015 [20].
[56] Affidavit of Adele Ferguson sworn 22 December 2015 [24].
[57] Affidavit of Adele Ferguson sworn 22 December 2015 [24].
[58] Affidavit of Adele Ferguson sworn 22 December 2015 [23].
Ms Ferguson also deposed that at no stage was she ever told ‑ either by a representative of Fairfax or by any solicitor or staff member of Minter Ellison ‑ that Fairfax would pay the Legal Fees.[59] Nor had Fairfax given Minter Ellison an undertaking that it would pay, or given Ms Ferguson an indemnity for, any legal costs incurred by Ms Ferguson in connection with the subpoena application.[60] That evidence is also not determinative of the question of Ms Ferguson's liability. However, the fact that there was no evidence of any agreement that Fairfax, and not Ms Ferguson, would be liable for payment of the Legal Fees, means that it cannot be said, on that basis, that Ms Ferguson would not be required to pay the Legal Fees in any circumstances.
[59] Affidavit of Adele Ferguson sworn 22 December 2015 [25(b)].
[60] Affidavit of Kate Alana Marie Rodrigues sworn 9 November 2015 [8].
The evidence before the Court supports the conclusion that Minter Ellison was engaged as the solicitors for Ms Ferguson in relation to the subpoena application, and Ms Ferguson provided instructions to Minter Ellison in respect of the subpoena application. That relationship gives rise to the presumption that there was a retainer between Ms Ferguson and Minter Ellison, or in other words there is a presumption that Ms Ferguson was liable to pay the Legal Fees.
I turn to consider HPPL's contentions, which were to the effect that the evidence, taken as a whole, was sufficient to rebut the presumption that Ms Ferguson was liable to pay the Legal Fees.
HPPL's contentions
Counsel for HPPL advanced the following arguments in support of his case that, on the evidence, Ms Ferguson was not liable to pay the Legal Fees.
Counsel for HPPL submitted that 'while the relationship of solicitor and client is a necessary element of the existence of a retainer, a retainer itself requires something more.'[61] The submission relied on the unremarkable proposition that a 'retainer' is the 'contract between the solicitor and the client for the provision of legal services by the solicitor for a fee'.[62]
[61] Applicant's Supplementary Submissions [4].
[62] Beach Petroleum NL v Kennedy (1999) 48 NSWLE 1, 48 [208]; Shaw v Yarranova Pty Ltd [2011] VSCA 55 [17].
Counsel for HPPL submitted that even if there was a relationship of solicitor and client between Minter Ellison and Ms Ferguson, that was not enough to establish that there existed a retainer between them because that relationship did not, as a matter of law, impose upon Ms Ferguson any legal liability to pay the Legal Fees.[63] Counsel for HPPL relied on the fact that the provision of legal services pursuant to a retainer need not be undertaken directly or exclusively for the client, and may include obligations to provide legal services to third parties.[64] Accordingly, he submitted that the mere fact that a person appears on the record as the solicitor for a party does not necessarily justify the conclusion that there is a contract of retainer (and thus liability for fees) between the party and the solicitor.[65]
[63] Applicant's Written Submissions [29].
[64] See, for example, Tobin v Dodd [2004] WASCA 288 [38] ‑ [39] (EM Heenan J, Murray J agreeing); Beach Petroleum NL v Kennedy (1999) 48 NSWLE 1, 49 [211]; Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) [2015] FCA 969 [26], [43], [72].
[65] Halliday v High Performance Personnel Pty Ltd (In Liq) (formerly SACS Group Pty Ltd) (1993) 113 ALR 637, 639 (Mason CJ).
Counsel for HPPL contended that the Court could only proceed on the basis of a presumption that Ms Ferguson was liable for the Legal Fees in the absence of evidence to the contrary. He submitted that HPPL had adduced sufficient evidence to support the inference that Ms Ferguson was not liable to pay the Legal Fees and that that meant that Ms Ferguson was subject to an evidential burden to adduce evidence to establish the existence of the retainer, and its terms, and that she had not done so. Counsel for HPPL relied on Hawksford v Hawksford[66] and on Director of the Fair Work Building Industry Inspectorate v Abbott (No 5)[67] in support of that proposition.
[66] Hawksford v Hawksford [2005] NSWSC 463; (2005) 191 FLR 173 [54].
[67] Director of the Fair Work Building Industry Inspectorate v Abbott (No 5) [2013] FCA 522 [24] (Gilmour J).
Those authorities highlight the distinction between an evidentiary onus, and an onus of proof. The presumption as to the existence of a retainer (which arises when a solicitor acts for a client with the client's knowledge and assent) may be displaced by evidence inconsistent with the existence of a retainer. In that event, the evidentiary onus will shift to the client to demonstrate the terms of the retainer with his or her solicitors.[68] Consequently, arguments about the evidential burden often arise at the point where an application is made for an order requiring the client to put on evidence as to the existence of a retainer.[69]
[68] Director of the Fair Work Building Industry Inspectorate v Abbott (No 5) [2013] FCA 522 [24] (Gilmour J).
[69] Eg Director of the Fair Work Building Industry Inspectorate v Abbott (No 5) [2013] FCA 522 (Gilmour J).
The distinction between the evidentiary onus and the onus of proof was explained by Campbell J (as his Honour was then) in Hawksford v Hawksford:[70]
The distinction between an onus of proof and an onus of adducing evidence is of particular relevance in the present situation. Where party A has the legal onus of proving a negative proposition, and relevant facts are peculiarly in the knowledge of party B or where party B has the greater means to produce evidence relating to those facts, then provided party A establishes sufficient evidence from which the negative proposition may be inferred, party B then comes under an evidential burden, or an onus of adducing evidence. …
I conclude that in the present case the plaintiffs bear the legal onus of proving that there is no retainer given by the second and third defendants, but that (in the words of Hunt J in Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corp):
provided that the plaintiffs have established sufficient evidence from which the negative proposition may be inferred, the defendant carries what has been called an evidential burden to advance in evidence any particular matters with which (if relevant) the plaintiffs would have to deal in the discharge of their overall burden of proof … the plaintiffs' burden of proof of the negative proposition for which they contend is not as difficult in this case as it might otherwise have been because of the defendants' greater means to produce evidence which contradicts that proposition.
[70] Hawksford v Hawksford [2005] NSWSC 463; (2005) 191 FLR 173 [54] ‑ [55] (Campbell J).
In a case such as the present, where Ms Ferguson and her solicitors have adduced evidence relevant to the relationship between Ms Ferguson and Minter Ellison, which is sufficient to give rise to the presumption of the existence of a retainer between her and Minter Ellison, questions of evidentiary onus are no longer pertinent. Rather, the question for the Court is whether HPPL has met its onus of proving that Ms Ferguson had no liability to pay the Legal Fees.
Counsel for HPPL submitted that in considering that question, the 'entire factual matrix' had to be considered and not just individual components of that factual matrix. Counsel for HPPL contended that the Court should find that Minter Ellison's retainer was with Fairfax, and not with Ms Ferguson, and that Ms Ferguson had no liability for the legal fees. He submitted that conclusion could be reached having regard to the following facts, which he submitted were established on the evidence:[71]
[71] Applicant's Outline of Submissions [91].
(a)Ms Ferguson spoke to another firm of solicitors, but did not proceed to instruct her personal choice of lawyers;
(b)The long standing relationship between Minter Ellison and Fairfax;
(c)Fairfax entered into a retainer with Minter Ellison;
(d)Fairfax would always pay Minters' fees;
(e)No cost disclosure was given;
(f)The absence of cost disclosure is only consistent with s 263(2)(e) of the LP Act being applicable;
(g)All Minter Ellison bills were sent only to Fairfax;
(h)Fairfax made payment of all legal fees charged by Minter Ellison;
(i)There was no separate retainer or cost agreement with Ms Ferguson;
(j)It was within the power of Ms Ferguson, Fairfax and Minter Ellison to document the terms of the retainer and the legal obligations as to liability for legal fees;
(k)There was no undertaking or indemnity by Fairfax as to any personal legal obligation of Ms Ferguson for legal fees;
(l)No notice pursuant to O 9A [RSC] was given.
I deal with the import of the absence of any costs disclosure or of any notice under O 9A RSC separately below. However, with respect to the evidence as a whole, it suffices to say that the evidence established Minter Ellison acted for Ms Ferguson on the subpoena application, and that Minter Ellison was instructed by Ms Ferguson in respect of that matter. While there was no evidence, from Ms Ferguson or otherwise, as to the fees which would be charged by Minter Ellison in acting for her, the absence of any such evidence does not preclude the conclusion that there was a retainer between Ms Ferguson and Minter Ellison.
As I have already mentioned, there was no direct evidence that there was an agreement between Minter Ellison and Ms Ferguson (or between either or both of those parties and Fairfax) that Ms Ferguson would not be liable for the Legal Fees. In my view, the evidence, taken as a whole, does not support an inference that there was such an agreement. The evidence that over time Ms Ferguson became increasingly confident that Fairfax would pay the Legal Fees does not support that inference, and nor does the fact that Fairfax actually paid the Legal Fees. The authorities to which I have already referred make clear that the fact that a third party pays a client's legal fees does not preclude the application of the indemnity principle.
In my view, neither individually nor collectively do the facts relied upon by HPPL discharge its burden of establishing that there was no retainer between Ms Ferguson and Minter Ellison.
(b) Whether any failure to comply with the requirement for costs disclosure under s 260 of the LP Act is relevant to determining Ms Ferguson's liability for the legal fees
Counsel for HPPL placed particular reliance on the absence of any evidence that Minter Ellison had provided a costs disclosure to Ms Ferguson, as required by s 260 of the LP Act, as supporting an inference that Ms Ferguson had no liability to pay the Legal Fees. He submitted that non-compliance with cost disclosure requirements in the LP Act was relevant because that non‑compliance was consistent with the conclusion that Minter Ellison did not consider Ms Ferguson was liable to pay the costs of legal services provided to her.[72]
[72] Cf Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) [2015] FCA 969 [127] (Gilmour J).
I digress to observe that at one point, counsel for Ms Ferguson submitted that the LP Act provisions in relation to costs did not apply to the relationship between Ms Ferguson and Minter Ellison.[73] (That was a curious submission, given that the application of s 280(2) of the LP Act was the basis for the application made by Ms Ferguson for special costs orders earlier in these proceedings.) The submission was subsequently withdrawn,[74] and the parties proceeded on the basis that the LP Act provisions in relation to costs were applicable in this case. I have also proceeded on that assumption. For present purposes, it is not necessary to consider in detail the application of the LP Act provisions, because for the reasons outlined below, even if those provisions apply, the failure to provide a costs disclosure does not warrant the inference that there was no retainer between Minter Ellison and Ms Ferguson.
[73] Subpoenaed Party's Outline of Submissions concerning the Applicability of pt 10 of the Legal Practice Act 2008 (WA) (sic) [4.2].
[74] ts 15.
Section 260 of the LP Act provides that a law practice must disclose to a client various matters which are relevant to the costs which the client will incur, including the basis on which the legal costs will be calculated, including whether a costs determination applies to those costs, the client's right to negotiate a costs agreement, to receive a bill from the law practice, to request an itemised bill, and an estimate of the total legal costs likely to be incurred. The disclosure must be made in writing before, or as soon as practicable after, the law practice is retained in the matter.[75] There are numerous exceptions to the requirement for costs disclosure.[76] The evidence adduced on the stay application did not permit any conclusion to be drawn as to whether those exceptions applied in this case. Accordingly, it cannot be said that there was any failure to comply with the requirements of s 260 in this case, much less that that failure permits an inference that there must have been an agreement that Ms Ferguson was not liable to pay the Legal Fees.
[75] Legal Profession Act 2008 (WA) s 262(1).
[76] Legal Profession Act 2008 (WA) s 263(2).
In any event, it is not necessary to determine whether there was a failure to comply with s 260 of the LP Act in this case because a failure to comply with the requirement to provide a costs disclosure does not have the result that the client is not liable to pay the legal costs incurred by the legal practice. That conclusion follows from s 268(1) of the LP Act which provides that the effect of a failure to comply with the requirement for a costs disclosure is that the client 'need not pay the legal costs unless they have been assessed' under the provisions of the LP Act. That section does not provide that the client is not liable for the costs incurred by the legal practice. Rather, it simply precludes any attempt by the legal practice to recover the costs, and postpones any requirement for the client to discharge their liability for those costs, until those costs have been assessed.
Consequently, the absence of any evidence that Minter Ellison provided costs disclosure to Ms Ferguson does not permit the inference to be drawn that there was any agreement that Ms Ferguson was not liable to pay the Legal Fees. A client may be liable for legal costs incurred by a law practice acting on the client's behalf even if there is no costs disclosure by the law practice.
For completeness, I note that the same point may be made in relation to the evidence that there was no costs agreement between Ms Ferguson and Minter Ellison. Even if there is no costs agreement between a solicitor and a client, legal costs are recoverable by the law practice (or, in other words, the client is liable to pay) those costs assessed in accordance with an applicable costs determination, or according to the fair and reasonable value of the legal services provided.[77]
[77] Legal Profession Act 2008 (WA) s 271.
Finally, it is appropriate to observe that while non-compliance may limit the quantum of the fees able to be recovered by the solicitor from the client to those which are assessed under applicable cost scales,[78] that is a matter for the client. The provisions of the LP Act in relation to costs exist to protect clients. Especially in a case where the fees have already been paid to the solicitors, compliance with the requirements of the LP Act is not a proper issue of inquiry at the behest of a party who seeks to avoid liability to pay those costs pursuant to a costs order.[79]
(c) Whether any failure to comply with the requirements of O 9A RSC is relevant to determining whether Ms Ferguson is liable for the legal fees
[78] Cf Lawrie v Lawler (No 2) [2015] NTSC 46.
[79] See Shaw v Yarranova Pty Ltd [2010] VSC 567 [25] (Beach J); Shaw v Yarranova Pty Ltd [2011] VSCA 55 [30] ‑ [32] (Redlich & Mandie JJA); Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 4) [2013] VSC 669 [99] (Wood AsJ).
Counsel for HPPL submitted that if Ms Ferguson was liable to pay the legal fees and if Fairfax was meeting that obligation in whole or in part, then that arrangement would amount to an arrangement for the provision of funding or other financial assistance to a party to a case, with the result that Fairfax would be an 'interested non-party' for the purposes of O 9A RSC. If that was so, he submitted, Ms Ferguson would have been obliged, pursuant to O 9A r 2 RSC, to provide a notice, in writing, to the Court and to HPPL, identifying Fairfax as an interested non-party in relation to the case, as soon as practicable.
Order 9A r 2 RSC provides that a party to a case must notify the Principal Registrar and each other party, in writing, of the identity of any person who is an 'interested non-party' in relation to that party to the case. An 'interested non‑party' is a person, other than a legal practitioner acting for that party 'who provides funding or other financial assistance to the party for the purposes of conducting the case'[80], and 'exercises direct or indirect control or influence over the way in which the party conducts the case'.[81]
[80] Rules of the Supreme Court 1971 (WA) O 9A r 1(a).
[81] Rules of the Supreme Court 1971 (WA) O 9A r 1(b).
Counsel for HPPL submitted that the failure to provide any such notice 'would have been a breach of O 9A r 2 [RSC] unless Fairfax was not paying legal fees in respect of which Ms Ferguson had a legal obligation or liability to pay'.[82] As I understood the argument, it was that the absence of such a notice supported the conclusion that there was no retainer between Ms Ferguson and Minter Ellison, but only a retainer between Fairfax and Minter Ellison pursuant to which Minter Ellison provided representation to Ms Ferguson (in which case O 9A RSC would have no application). That argument must be rejected for two reasons.
[82] Applicant's Submissions [65].
First, the evidence does not permit any conclusion to be drawn as to whether Fairfax exercised 'direct or indirect control or influence' over the way in which Ms Ferguson conducted the subpoena application, so as to permit the conclusion that O 9A was applicable.
Secondly, even if O 9A was applicable, non-compliance with that Order does not permit the inference that there was no liability on Ms Ferguson's part to pay the Legal Fees. Non-compliance with O 9A is equally consistent with other conclusions, such as an oversight by a party, or by a party's solicitors.
Conclusion
HPPL has failed to establish that Ms Ferguson was not liable to pay the legal fees. Consequently, the stay application should be dismissed. I will hear from the parties about the orders which should be made.
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