Hospital Products Limited v United States Surgical Corporation

[1993] HCA 82

HIGH COURT OF AUSTRALIA

Gaudron J.

HOSPITAL PRODUCTS LIMITED v. UNITED STATES SURGICAL CORPORATION AND ORS

(1993) 116 ALR 218

3 September 1993

Orders

Order that the applicant have leave to file a bill of costs for taxation in this Court, in respect of judgment of 25 October 1984.

Leave reserved to the first respondent to take such action as it may be advised in r4espect of any set-off against costs.

Order that the applicant pay the costs of this application. Certify that the matter was proper for the attendance of counsel.

Decision

GAUDRON J Hospital Products Limited ("HPL") has filed a summons seeking leave (under O.60, r.12(2) of the High Court Rules ("the Rules")) to take a fresh step in these proceedings ((1) See Hospital Products Ltd. v. United States Surgical Corporation (1984) 156 CLR 41.). The proceedings are, or were, an appeal and cross-appeals from the Court of Appeal of the Supreme Court of New South Wales. The step involved is the filing of a bill of costs for taxation. The application is opposed by the first respondent, United States Surgical Corporation ("USSC"). The summons was not directed to the other respondents.

2. It was also argued on the return of the summons, without objection from USSC, that O.60, r.12(2) has no application to an appeal and that, accordingly, it should be declared that HPL is entitled to file a bill of costs for taxation without leave.

3. Order 60, r.12(2) of the Rules provides:

"When six years have elapsed from the time when the last step in a proceeding was taken, a fresh step shall not be taken without an order of the Court or a Justice, which may be made either ex parte or upon notice."

By O.1, r.5, "proceeding" is defined as "includ(ing) action, cause, matter and suit".

4. It was argued on behalf of HPL that, despite the inclusive nature of the definition of "proceeding", O.60, r.12(2) should be construed as not applying to appeals. It was said, by way of support for that argument, that O.1, r.2 ((2) Order 1, r.2 provides:

"These Rules shall come into operation on the first day of January, 1953, and shall apply to all proceedings and appeals commenced or instituted on or after that date.")

acknowledges that "proceeding" does not include an appeal, for that rule provides that the Rules are to apply to "all proceedings and appeals" (emphasis added) commenced or instituted on or after 1 January 1953. The wording of O.1, r.2 seems to have been dictated by the need to identify, by reference to steps taken in this Court, the matters governed by the Rules as then formulated. It does not, in my view, disclose an intention to distinguish between appeals and other proceedings for any other purpose.

5. The meaning of O.60, r.12(2) must be ascertained by having regard to O.60 as a whole. In very many respects O.60 is clearly intended to be of general application. For example, r.3, which is concerned with time requirements for doing an act or filing a document where time expires on a Saturday, Sunday or other day on which the Registry is not open, is clearly a rule of general application. And, r.4 (taking of proceedings in vacation), r.5 (time for giving security for costs), rr.6 and 7 (enlargement and abridgment of time), rr.2 and 9 (filing and service on Sunday, Christmas Day, Good Friday, etc.) and rr.10 and 11 (reckoning of time and computing the number of days) are also rules of general application. In the case of r.8, which applies to Admiralty actions, that rule is expressly confined by its terms. So too is r.13, which concerns applications to set aside awards. In this context, O.60, r.12(2) must be construed as applying generally and, thus, as governing appeals as well as other proceedings. That was the approach taken in Australian Broadcasting Commission v. Industrial Court (S.A) ((3) (1985) 159 CLR 536, a case which concerned the taking of a fresh step in an appeal from the Supreme Court of South Australia; see (1977) 138 CLR 399.) and, in my view, it is the correct approach.

6. It is necessary, in order to consider whether HPL should be granted leave to file a bill of costs, to note the outcome of the proceedings in this Court so far as they involve HPL and USSC. Judgment was given on 25 October 1984 and it was ordered that HPL's appeal be allowed, that USSC's cross-appeal be dismissed and that USSC pay HPL's costs of the appeal and the cross-appeal. There were consequential orders with respect to HPL's costs of the proceedings in the Court of Appeal and at first instance. The costs of those earlier proceedings are relevant to, but are not involved in, the present application.

7. The judgment of this Court in 1984 did not resolve all matters in dispute between HPL and USSC. There were later proceedings, notably in Connecticut, U.S.A. Receivers and managers were appointed to HPL before the Connecticut proceedings concluded. Those proceedings resulted in a judgment for USSC in the sum of $(U.S.)73 million. HPL has since gone into liquidation.

8. At different stages of the proceedings which eventually came to this Court, USSC paid various sums of money into a bank account in Australia, by way of security for costs. That account is in the name of two solicitors, being the individual solicitors who were at that stage responsible for the conduct of the proceedings on behalf of HPL and USSC. The money in that account now exceeds $(A.)1 million.

9. It is necessary to mention that there were different receivers and managers of HPL at different times and, it seems, with respect to different assets. In 1988, Pittsburg National Bank appointed receivers of HPL, in respect of HPL's entitlement to recover the costs of these proceedings from USSC, including the proceedings at first instance and in the Court of Appeal. Those receivers instructed Messrs Baker and McKenzie, the solicitors who bring the present application, to take steps to recover those costs and, at or about the same time, Pittsburg National Bank agreed with various firms of solicitors who, at one time or another, had represented HPL in proceedings here and overseas as to the division between them of any sum ultimately recovered.

10. There were various negotiations between Messrs Baker and McKenzie, representing HPL, and the solicitors representing USSC with a view to reaching agreement as to the amount of costs recoverable with respect to the proceedings in this Court, in the Court of Appeal and at first instance. Not surprisingly, no attempt was made to produce an itemised bill while negotiations were under way.

11. The negotiations were not successful and they came to an end in June 1990. The solicitor who was responsible for the day-to-day conduct of the proceedings and who had conducted the costs negotiations left Messrs Baker and McKenzie soon afterwards. In 1991, a decision was made to proceed with the taxation of costs and steps were taken to have itemised bills prepared with respect to the proceedings in this Court and the courts below. After a bill was prepared with respect to the proceedings in this Court, O.60, r.12(2) was brought to the attention of Mr Beatty, a partner in the firm of Baker and McKenzie and the solicitor who has overall responsibility for the matter. It is common ground that there is no similar rule affecting the taxing of the costs of the proceedings below.

12. USSC opposes the grant of leave on the basis that there does not appear "some positive reason for concluding that as between the parties it would be just to extend the period", as was required in Sophron v. The Nominal Defendant ((4) (1957) 96 CLR 469, at p 475.). That case concerned an application for extension of time within which to give a notice of intended action against the nominal defendant under the Motor Vehicles (Third Party Insurance) Act 1942-1951 (N.S.W.). By s.30(2)(b)(ii) of that Act, extension of time could only be granted "upon sufficient cause being shown". Whatever may be the position in other circumstances, the test of "positive reason" does not seem to me to be appropriate in a case which has proceeded to judgment and in which leave is sought to take a step to give effect to the judgment, or some aspect of it. Rather, it seems to me that the matter should be resolved by a consideration of the prejudice involved in the step proposed.

13. There can be no doubt that, at all times up until June 1990, USSC was aware that HPL was intending to recover its costs of the proceedings in this Court, in the Court of Appeal and at first instance. It was not suggested that anything that happened thereafter led USSC to believe that HPL's claim for costs was abandoned. And, as already indicated, there is nothing to stop HPL from taxing its costs of the proceedings below. Moreover, there is sufficient money in the account established with the funds provided by way of security for costs to meet the likely costs of the proceedings in this Court, even if it may not be sufficient to meet all the costs to which HPL is entitled under this Court's order.

14. It was argued on behalf of USSC that it would suffer prejudice if costs were now to be taxed because of the imperfect recollection, due to the passage of time, of the solicitor who was responsible for the conduct of proceedings. However, the files are available and it may be assumed that a perusal of them, no matter how tedious that may be, will disclose most, if not all, matters bearing on taxation of costs. Moreover, much will appear from the Court's own records. In my view, this is not a consideration which should prevent the grant of leave under O.60, r.12(2).

15. The only other matter, and the substantial basis on which USSC asserts prejudice, is the Connecticut judgment in its favour in the sum of $(U.S.)73 million ((5) See above at p.2.). USSC claims that it is entitled to a set-off for that amount. In this regard it points to O.71, r.12 of the Rules, which is as follows:

"(1) A set-off for damages or costs between parties may be allowed by the Court or a Justice and, as to costs, by the taxing officer, notwithstanding the solicitor's lien for costs in the particular proceedings in which the set-off is sought. (2) A set-off for damages or costs between parties may be allowed by the Court or a Justice in cases where the set-off arises as the result of different proceedings either notwithstanding or subject to the liens of the respective solicitors of the parties for their costs."

16. The question whether USSC is entitled to a set-off is one of some complexity and one which would seem to involve a consideration of Pittsburg National Bank's authority to enter into an agreement with the various firms of solicitors for the payment of their fees out of any sum eventually recovered for the costs of these proceedings. And it may be one in which the liquidator of HPL has some interest. Certainly, it is not a question that can be resolved on the material presented on this application.

17. The proper course, in my view, is to grant leave to HPL to file a bill of costs for taxation, reserving leave to USSC to take such action as it may be advised in relation to its claimed set-off. It will be ordered accordingly. HPL should pay USSC's costs of the application. I certify that this was a proper matter for the attendance of counsel.