Hudgson v Endrust (Australia) Pty Ltd

[1986] FCA 190

Re: JEFFREY NORMAN HUDGSON and REX IAN HALLYBURTON trading as NOOSA FUN WAGON
4 x 4 HIRE
And: ENDRUST (AUSTRALIA) PTY. LTD.; KERRY WILLIAM FITZGERALD trading as ENRUST
(BRISBANE)
No: QLD G95 of 1983
Costs

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Pincus J.

CATCHWORDS

Costs - solicitor engaged by first of two respondents to act for both - order in favour of second respondent - whether deemed retainer - legal fiction.

Federal Court Rules, Order 62.

HEARING

BRISBANE

#DATE 6:5:1986

COUNSEL: for the applicants Mr. C. Newton instructed by Ryan and Archer Coutts

COUNSEL: for the respondents Mr. A. Philp instructed by Feez Ruthning

ORDER

The reconsideration of the relevant bill of costs be remitted to the taxing officer to be dealt with in the light of these reasons.

NOTE: Settlement and entry of orders is dealt with in Order 36

of the Federal Court Rules.

JUDGE1

This is an application to review a decision of the taxing officer on reconsideration of objections to a bill of costs. For simplicity I shall call the parties by the names appropriate to the principal proceedings. The application is by the second respondent in those proceedings, which sought relief against both respondents under s.52 of the Trade Practices Act 1974.

1. In the principal proceedings, on 27 August 1984, an order was made giving the applicants liberty to discontinue against the second respondent and ordering that the applicants pay his costs, to be taxed.

2. The dispute is as to whether there is any liability in the second respondent, in whose favour this order for costs was made, to pay the solicitor who is on the record in the principal proceedings as acting for both respondents.

3. Being in some doubt about that question, the taxing officer asked the second respondent for some evidence to be placed before him and that request produced an affidavit which did not clarify the matter much, if at all. On the application for review before me, the second respondent sought, and was given, leave to adduce further evidence. The facts are not in dispute, but the legal inference to be drawn from them is.

4. The principal proceedings were brought against a Sydney company as first respondent, and against a natural person resident in Brisbane as second respondent. The first respondent engaged its Sydney solicitors, Messrs. Westgarth Baldick, to contest the proceedings and they in turn instructed Messrs. Feez Ruthning & Co. of Brisbane to file an appearance on behalf of both respondents. Subsequently, the second respondent was, from time to time, in touch with Messrs. Feez Ruthning & Co. about the matter, but there is no reason to think that any of those contacts affect the present question.

5. The partner of Messrs. Westgarth Baldick who is handling the matter has made an affidavit deposing to the fact that his firm has rendered all accounts to the first respondent and none to the second respondent. There is evidence that a deed was recently made between the two respondents under which the second respondent assigned to the first his interest in the order for costs. There appears to me to be no other evidence bearing upon the question in issue. In particular, there is no evidence that there was any communication between the second respondent and either set of solicitors relevant to the question of liability for costs, nor is there any evidence of any contact between the two respondents on that subject.

6. It is clear enough, from the fact that Messrs. Westgarth Baldick sent all accounts to the first respondent and none to the second respondent, that they looked, at least primarily, to the first respondent for their costs. As the four authorities referred to below demonstrate, however, that is not conclusive with respect to the matter before me. While not abolishing the rule that an order for costs may be entered only by a person who is liable to pay costs, the courts have greatly mitigated its practical effect.

7. In Blackall v. Trotter (No. 1) (1969) VR 939, the Full Court of the Victorian Supreme Court was concerned with a similar dispute, where a solicitor employed by the Crown had acted for a party other than the Crown in proceedings in which his employer had an interest. It was held that, even if there were no personal liability to the solicitor for costs, the Crown could recover on an order for costs against the opposite party. The Court said at p.941, with reference to two prior cases:
   
   

"Both cases, in our opinion, decided that in the

circumstances the Crown by virtue of its interest

in the subject-matter of the litigation was

entitled to make its solicitor available to act for the party on the record, and that as the Crown

incurred the expense of his employment the party he represented was entitled to recover the costs

awarded to him."

At p.942, the Court said that it was not to be taken as deciding that the principle was limited to cases involving a Crown-employed solicitor. In my view, it would be unfortunate if the Crown had a special judge-made privilege as to recovery of costs, one denied to citizens.

1. In McCullum v. Ifield (1969) 90 WNNSW (Part 1) 525, Taylor J. had to consider a motor collision case where the Government Insurance Office, by its employed solicitor, undertook the defence of the action on behalf of the defendant, who was successful. The judge held that the defendant could tax his costs against the plaintiff, although there was no evidence that the defendant had any liability to the G.I.O.'s solicitor. Indeed, the G.I.O. was under a statutory obligation to indemnify the defendant in respect of costs.

2. Taylor J. relied (p.527) on the fact that the solicitor had not made any agreement with the defendant that he would act for him for nothing. That seems rather artificial; it was surely clear enough, from the fact that the G.I.O. was obliged by statute to indemnify the defendant against the costs, that the solicitor, as an employee of the G.I.O., would not charge the defendant for his services.

3. The third case is the decision of the House of Lords in Davies v. Taylor (No. 2) (1974) AC 225. That was another motor accident case where the issue was similar to that in the case before Taylor J., just discussed, except that the question arose under a statute and was whether costs had been "incurred" by the successful insured defendant and the insuring liability for costs was not one imposed by the general law. Viscount Dilhorne said at p.230:
   
   

"In this case the solicitors, no doubt first

instructed by the insurance company, were the

solicitors on the record as solicitors for the

respondent. They acted for him and, in the absence of proof of an agreement between him and them or

between them and the insurance company that he

would not pay their costs, they could look to him

for payment for the work done and his liability

would not be excluded by the fact that the

insurance company had itself agreed to pay their

costs."

Lord Cross of Chelsea, who gave the only other substantial judgment, expressed himself similarly at p.234.

1. The last case I shall mention is a decision of the Full Court of this Court in Inglis v. Moore (No. 2) (1979) 25 ALR 453 where the Court followed the same line of cases as had been applied by the Victorian Full Court in Blackall v. Trotter (above), but without considering whether the principle is applicable to litigants other than the Crown.

2. Before me, counsel for the applicants argued that there is an onus upon the party on the record seeking to enforce an order for costs to show the existence of a retainer, which onus had not been discharged. The trend of the authorities, and in particular the decision of the House of Lords in Davies v. Taylor (above) is, in my view, to the contrary; the court will hold, in the absence of proof of an express agreement to the contrary, that a solicitor who acts upon instructions for a party on the record is taken to be entitled to look to that party for costs, even if the instructions have come to the solicitor from another party or from some non-party interested in the litigation. The doctrine is one of a deemed retainer. Cases such as Davies v. Taylor and McCullum v. Ifield almost reduce the requirement that the solicitor hold a retainer from the party claiming the costs to the status of a legal fiction; as was pointed out in Davies v. Taylor (above) at p 234, it would be most unusual for there to be an express agreement that in no circumstances would the solicitor look to the party on the record for his costs. Since in that sort of case it is evident that the solicitor will not in fact look to the nominal "client" for his costs, the latter would not think of bothering about an express agreement.

3. The rule with respect to solicitors employed by private persons has, in the relevant aspect, substantially been assimilated to that relating to solicitors employed by the Crown and for that reason this application must succeed; the authorities to which I have referred require that the taxing officer treat the second respondent as if he had engaged the solicitors, there being no evidence of an express agreement that the solicitors would not charge him.

4. It was agreed between counsel that if I came to that view the matter should be remitted to the taxing officer. The order will be that the reconsideration of the bill be remitted to the taxing officer to be dealt with in the light of these reasons.

5. The only remaining question is as to the costs of the hearing before me. It was contended that the response to the taxing officer's request for information about the retainer was inadequate and that the taxing officer should have been supplied with such material as was admitted on the application to me. There is substance in that contention and I will make no order as to the costs of the application to me.