Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Corrs Chambers Westgarth (A Firm) [No 2]

[2015] WASC 408

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   HUNTINGDALE VILLAGE PTY LTD (Receivers and Managers Appointed) -v- CORRS CHAMBERS WESTGARTH (A FIRM) [No 2] [2015] WASC 408

CORAM:   LE MIERE J

HEARD:   23 SEPTEMBER 2015

DELIVERED          :   3 NOVEMBER 2015

FILE NO/S:   LPA 4 of 2010

BETWEEN:   HUNTINGDALE VILLAGE PTY LTD (Receivers and Managers Appointed)

SILKCHIME PTY LTD (Receivers and Managers Appointed)
VANNIN PTY LTD (Receivers and Managers Appointed)
WARWICK ENTERTAINMENT CENTRE PTY LTD (Receivers and Managers Appointed)
PARAGON APARTMENTS LTD (Receivers and Managers Appointed)
Plaintiffs

AND

CORRS CHAMBERS WESTGARTH (A FIRM)
Defendant

Catchwords:

Stay orders - Taxation - Taxation of bills - Costs - Right to compel taxation of a bill of costs - Overlap of issues among different matters

Legislation:

Corporations Act 2001 (Cth)
Legal Practice Act 2004 (WA)
Legal Profession Act 2004 (NSW)
Legal Profession Act 2008 (WA)
Rules of the Supreme Court 1971 (WA)

Result:

The stay should be lifted

Category:    B

Representation:

Counsel:

Plaintiffs:     Mr S Penglis & Mr A Metaxas

Defendant:     Mr B Dharmananda SC & Mr C P K Russell

Solicitors:

Plaintiffs:     Metaxas & Hager

Defendant:     Corrs Chambers Westgarth

Case(s) referred to in judgment(s):

Huntingdale Village Pty Ltd (Receivers and Managers Appointed) ATF Huntingdale Village Unit Trust v Perpetual Nominees Ltd [No 2] [2014] WASC 217

Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Corrs Chambers Westgarth (a firm) [2013] WASC 156

Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Corrs Chambers Westgarth [2013] WASCA 275

Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Corrs Chambers Westgarth [2014] WASC 223

1. LE MIERE J:  The plaintiffs seek an order that the stay ordered by the Master on 2 May 2013 be varied so as to permit the plaintiffs to proceed with their application for taxation of bills rendered by the law firm, Corrs Chambers Westgarth (Corrs) between 24 January 2006 and 31 January 2007 issued to the receivers of the plaintiff companies (the Receivers).  Before addressing the issues raised by this application it is convenient to refer to other proceedings to which the plaintiffs and the Receivers are parties.

COR 223 of 2009

1. The plaintiffs are companies forming part of the Westpoint Group.  The Group was founded by Mr Norman Carey who is a director of each of the plaintiff companies and of Westpoint Corporation which is now in liquidation.  In September 2005 each of the plaintiff companies and Westpoint Corporation granted a fixed and floating charge over the whole of their assets and undertakings or, in the case of Silkchime Pty Ltd, specific assets, in favour of Perpetual Nominees Ltd (Perpetual) as security for funds advanced pursuant to a loan agreement.  The plaintiffs defaulted under the loan agreement.  On 24 January 2006 Perpetual appointed the Receivers as receivers and managers of various entities, including the plaintiffs. 

2. In September 2009 the plaintiffs commenced proceedings in the Victorian registry of the Federal Court of Australia against Perpetual and the Receivers alleging misconduct by the Receivers.  The Federal Court ordered that the proceedings be transferred to this court where they became action COR 223 of 2009.  I have case managed that proceeding since it was transferred to this court.

3. In 2013 the plaintiffs gave notice of their intention to join Corrs as a defendant in COR 223.  However, they did not proceed with that intention.  Corrs is not a party to COR 223.  The current statement of claim in COR 223 was filed in April 2014.   

4. In July 2014 I ordered that the plaintiffs should give security for the Receiver's costs up to the close of pleadings in the sum of $150,000:  Huntingdale Village Pty Ltd (Receivers and Managers Appointed) ATF Huntingdale Village Unit Trust v Perpetual Nominees Ltd [No 2] [2014] WASC 217. In my reasons for judgment I said that the sum of $150,000 included an amount of $70,000 for costs incurred to date and a further $80,000 for costs up to the close of pleadings. The plaintiffs have paid $80,000 into court. They say that they are not required to pay the further $70,000 because the Receivers' costs incurred to date have been paid. That matter remains to be resolved. In any event, it is common ground that COR 223 is presently stayed. Notwithstanding that COR 223 is stayed, on 10 August 2015 the plaintiffs filed a minute of proposed second further reamended statement of claim dated July 2015.

CIV 1940 of 2010

1. On 22 June 2010 the plaintiffs in this action filed an originating summons claiming that the costs agreements made on or about 10 February 2006 between Corrs and the Receivers be set aside pursuant to s 317(3) and s 328 of the Legal Profession Act 2004 (NSW). The costs agreements sought to be set aside were made in New South Wales. The plaintiffs discontinued CIV 1940 on 13 May 2014 which is after the Master made the stay order on 2 May 2013 which the plaintiffs now seek to have lifted.

CIV 1791 of 2012

1. On 7 May 2012 the plaintiffs and Mr Carey commenced proceeding CIV 1791 of 2012 by originating summons. The law firm Mallesons Stephen Jacques is the first defendant and the Receivers are the second defendant. In that action the plaintiff companies seek declarations that they are 'third party payers' as defined in s 295 of the Legal Profession Act 2008 (WA) (LPA) in relation to bills of legal costs rendered by Mallesons to the Receivers as receivers and managers of the plaintiff companies in proceeding COR 147 of 2010 in this court and that Mallesons is required to submit the bills for assessment to a taxing officer in accordance with LPA s 295(3). COR 147 of 2010 is a proceeding in which Mr Carey claimed relief against the Receivers and Perpetual relating to the inspection and copying of financial records relating to the Westpoint companies. The Receivers were represented by Mallesons in that action.

This proceeding commenced

1. The plaintiffs applied by letter of 1 February 2010 for orders under the Legal Practice Act 2003 (WA) (the Act) in relation to bills of costs rendered by Corrs. The plaintiffs seek orders:

   (a)compelling Corrs to provide itemised bills to the plaintiffs pursuant to s 231(3) of the Act or alternatively pursuant to O 66 r 44(c) of the Rules of the Supreme Court 1971 (WA) (RSC); and

   (b)extending the time for the plaintiffs to request taxation of those itemised bills pursuant to s 232(3) of the Act.

The Registrar's orders

1. On 18 February 2013 a registrar of this court, in her capacity as a taxing officer, wrote to the solicitors for the plaintiffs and the solicitors for Corrs in relation to what the registrar described as a 'threshold issue that is the jurisdiction hurdle that has to be overcome before the question of an enlargement of time to bring in bills for taxation can even be addressed'.  The registrar said that the questions which had not been adequately addressed by the plaintiffs are as follows.  First, how do each of the plaintiffs say that they are the party charged and entitled to seek taxation under s 228 of the Act?  Secondly, each of the corporate plaintiffs is in receivership and must establish that they are able to exercise a right to compel taxation of a bill of costs that has been rendered to and paid by the Receivers.  Thirdly, notice of the application must be given to the Receivers as well as Corrs.  The registrar gave directions including the following.  First, the plaintiffs are to file affidavits and submissions that support the contention that they have standing to bring the application for an enlargement of time.  Secondly, the Receivers be given notice of the application.  Thirdly, Corrs file any responsive affidavits and submissions.  Fourthly, the jurisdictional question of standing to request an enlargement of time is set down for hearing on 24 April 2013.  None of those directions were complied with and no hearing took place on 24 April 2013.  The plaintiffs appealed to the Master against the orders made by the registrar.

The Master stays the proceedings

1. By chamber summons dated 12 April 2013 Corrs sought a number of orders, including an order that the proceeding be stayed until final determination of COR 223 of 2009 and CIV 1940 of 2010 or further order of the court.  The Master heard the appeal and the chamber summons together.  On 2 May 2013 the Master dismissed the appeal and ordered that the proceedings be stayed:  Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Corrs Chambers Westgarth (a firm) [2013] WASC 156. The Master's reasons for granting the stay are:

   It is clear the issues raised in this matter are also raised in COR 223 of 2009 and CIV 1940 of 2010. While the issues may not be identical there is a large degree of overlap. If this matter were to proceed the registrar would have to determine what she has referred to as the jurisdiction question. The same question is to be determined in the two proceedings. It is surely appropriate the judge having conduct of those two proceedings determine the matter before the registrar takes the issue any further. The only way to ensure that occurs is to stay this action [26].

Court of Appeal dismisses appeal

1. The plaintiffs then appealed to the Court of Appeal against the stay ordered by the Master.  On 5 December 2013 the Court of Appeal dismissed the appeal on the ground that the appeal was incompetent:  Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Corrs Chambers Westgarth [2013] WASCA 275. The Court went on to say that if the appeal was competent it would in any event have dismissed the appeal because the plaintiffs had not demonstrated that substantial injustice would be done if the decision remained unreversed. The Court explained:

   The appellants' fundamental contention is that leave should be granted because the appeal raises serious issues about the conduct of the matter below and because the appeal is concerned with the taxation of bills totalling $5.8 million. In our view, that does not demonstrate that substantial injustice would be done if the decision remained unreversed. The appellants could, while the stay remains in force, pursue their application to join the respondent to COR 223 of 2009 and seek relief against the respondent in those proceedings. Even if the appeal were competent, the appellants have not satisfied this court that there is a substantial injustice such as to warrant the grant of leave to appeal from the master's decision to order a stay of proceedings [38].

LPA 31 of 2013

1. On 11 October 2013, before the Court of Appeal had delivered its decision, the plaintiffs commenced LPA 31 of 2013.  In that proceeding the plaintiffs say they are third party payers and apply for assessment of the costs for which Corrs rendered invoices to the Receivers between February 2010 and June 2013 in respect of the receiverships of the plaintiffs.

CIV 1791 stayed

1. The Receivers applied to stay CIV 1791 until the resolution of COR 223.  On 5 March 2014 I stayed CIV 1791 until the determination of COR 223.  I held that if the plaintiffs in COR 223 were successful in their contention that the Receivers should have retired in January 2008 then the bills in issue in CIV 1791 would not need to be taxed and the Receivers would simply have to reimburse the plaintiffs the money paid to Mallesons.

Master dismisses application to lift stay

1. Meanwhile, by chamber summons of 19 February 2014, Corrs applied for a stay of proceedings in LPA 31 of 2013 pending determination of other related proceedings.  On 14 May 2014 the plaintiffs filed a chamber summons in this proceeding applying to lift the stay of proceedings ordered by the Master on 2 May 2013.  The two applications were heard together.  The Master ordered that LPA 31 of 2013 be stayed and dismissed the plaintiffs' application to lift the stay in this proceeding:  Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Corrs Chambers Westgarth [2014] WASC 223. The Master referred to the assertion by Corrs that there was an overlap between the relief being claimed in COR 223, being the repayment of allegedly excess moneys paid to Corrs, and the taxations of costs sought in LPA 4 and LPA 31. The Master said that it is not relevant that Corrs are not a party in COR 223. The Master said:

   When it comes to taxing bills of costs in LPA 31 and LPA 4 the taxing officer has to have some basis upon which to conduct the taxation. That is to say costs are either taxed pursuant to an agreement entered into by the parties or they are taxed in relation to the relevant scale. If there is a contest between the parties as to the basis upon which the taxation is to be conducted that issue has to be resolved before the taxation can take place. If LPA 31 and LPA 4 were to proceed the taxing officer would have to make a decision. There is a real prospect that decision might be at odds with the decision reached by a judge when hearing COR 223. That to my mind is an outcome which must be avoided [16].

   The Master further said:

   [T]he proper basis for taxation must be determined before the taxation can proceed. That should be done in COR 223. That conclusion seems to me to be inescapable. It was why I stayed the proceedings in LPA 4. It is to be remembered my decision in that case was an appeal from a decision of Registrar S Boyle. The learned registrar did not feel she was in a position to tax the bills until the legal basis upon which the bills were to be taxed was determined. If LPA 31 was now to proceed there is in my view no doubt the taxing officer would find him or herself in the same position [26].

Plaintiffs seek lift of stay order

1. By chamber summons of 2 June 2015 the plaintiffs now seek an order that the stay ordered by the Master on 2 May 2013 be varied so as to permit the plaintiffs to proceed with their application for taxation of Corrs' bills rendered to the Receivers between 24 January 2006 and 31 January 2007.  The chamber summons states that the grounds of the application are as follows.  The application was stayed on the basis that there are issues to be determined in COR 223 and CIV 1940 which are also to be determined in this application and so those issues should be determined in COR 223.  The application by the plaintiffs in CIV 1940 was discontinued and is no longer relevant.  The plaintiffs will undertake to the court that if the order sought is made then the plaintiffs will not pursue in COR 223 claims relating to the engagement of Corrs by the Receivers and the bills rendered by Corrs to the Receivers.  The effect of the proposed undertaking is that there will be no issues common to this application and COR 223.  There is no right of the plaintiffs to interest so the prejudice of delay cannot be cured.  The prejudice is aggravated in circumstances where the plaintiffs were ordered on 2 July 2014 to provide security for the Receiver's costs in COR 223 on account of their impecuniosity.

Corrs oppose lift of stay

1. Corrs resists the application to lift the stay and advances seven arguments.  First, there is a practical difficulty with the plaintiffs' undertaking; it cannot effectively be enforced and policed in circumstances where Corrs is not a party to COR 223 and Corrs will not have any practical remedy if it is breached after LPA 4 is permitted to proceed.  Secondly, the court's exercise of its power to stay proceedings to ensure an issue that must be decided before the proceedings may continue should not be affected by a party's undertaking that, despite the obvious need for the issue to be decided, the issue will not be agitated elsewhere.  Thirdly, the undertaking offered by the plaintiffs does not address the real issues.  The real issues are:

   (a)the basis of taxation of the bills has to be decided before any taxation can proceed; and

   (b)in any event, regardless of the undertaking, overlap and commonality of issues remain as between LPA 4 and COR 223.

   Fourthly, case management principles require that LPA 4 should await the proper resolution of related issues.  Fifthly, the court should not waste its scarce resources by having judicial time expended on dealing more than once with the same factual controversy merely because the plaintiffs attempt to excise some parts of the controversy by an undertaking to the court.  Sixthly, if the plaintiffs succeed against the Receivers in COR 223 and obtain relief or compensation for an account from the Receivers, a component of that compensation or account would include some of the charges rendered by Corrs to the Receivers.  In that event, the plaintiffs would not need to tax the bills for such charges at all because the plaintiffs would have been fully compensated for those charges.  Therefore, resolution of LPA 4 should await the resolution of COR 223.  Seventhly, the proper basis of any taxation must be determined before any taxation can proceed and cannot be determined by the taxing officer as part of a taxation; it must be determined first in an action.

2. The grounds of the plaintiff's application and Corrs' reasons for opposing the application give rise to three broad issues or groups of issues.  I will deal with each.

Overlap

1. The plaintiffs offered to undertake to amend the statement of claim in COR 223 in accordance with the minute of proposed second further reamended statement of claim dated July 2015 and submitted that the amendments proposed in that minute removed any overlap between the issues in this proceeding and the issues in COR 223.  Senior Counsel for Corrs, Mr B Dharmananda SC, submitted that the issues raised by the plaintiffs' minute of proposed second further reamended statement of claim in COR 223 continue to give rise to an overlap of issues in COR 223 and this proceeding.  Counsel for the plaintiffs, Mr Penglis, conceded that is correct.  Mr Penglis then informed the court that the plaintiffs' intention is not to pursue any matters in COR 223 that will give rise to an overlap of issues in COR 223 and this proceeding.  To that end, during the hearing of this application the plaintiffs offered a further undertaking.  The form of the undertaking is that the plaintiffs undertake in COR 223 not to pursue matters pleaded in specified paragraphs of the existing statement of claim and that they will amend the minute of proposed second further reamended statement of claim in such a manner that they will not pursue any of the issues which they now seek to pursue in this proceeding.  Further, the plaintiffs undertake that they will not amend or seek leave to amend the statement of claim to include any additional claims against the Receivers: 

   (a)which claims relate to the engagement of Corrs or the reasonableness of the bills rendered by Corrs to the Receivers in relation to the receivership of the plaintiffs, Westpoint Corporation, Westpoint Management Ltd and Bayview Port Melbourne Ltd;

   (b)to assert that the Receivers should have ceased to act before 30 June 2007.

   In my opinion those further undertakings offered by the plaintiffs will prevent any relevant overlap between the issues in this proceeding and the issues in COR 223.

2. Corrs submits that the undertaking cannot effectively be enforced because Corrs is not a party to COR 223.  In my opinion, an undertaking by the plaintiffs not to pursue the relevant issues in COR 223 is sufficient to ensure that the issues will not be pursued in that proceeding.  The court should proceed on the basis that an undertaking given to the court will be complied with unless there is good reason to doubt that it will.  There is no reason to doubt that the plaintiffs will not comply with the undertaking they have offered.  The plaintiffs are represented by a solicitor.  Order 4 rule 3(2) prevents the plaintiffs carrying on COR 223 or any other proceeding in this court otherwise than by a solicitor.

1. The court has adequate powers to ensure that the plaintiffs do not pursue issues in COR 223 in breach of an undertaking not to do so.  To do so would be an abuse of the processes of the court.  It may reasonably be assumed that the Receivers will be vigilant to see that the plaintiffs do not attempt to pursue any issues in COR 223 in breach of the undertaking offered by them because it would be contrary to the interests of the Receivers for the plaintiffs to do so.  To ensure that the Receivers know of the undertaking offered by the plaintiffs and that it precludes the plaintiffs from pursuing the relevant issues in COR 223 I will order that the plaintiffs serve on the Receivers a copy of their undertaking, these reasons for decision and the orders made to give effect to these reasons.

The threshold issues

1. Corrs submit that certain threshold issues must be determined before Corrs bills are taxed and before the registrar is able to grant an extension of time for the plaintiffs to serve upon Corrs a written notice under s 232(3) of the Act of their intention to have Corrs' bills taxed. I agree for the following reasons.

2. Section 232(3) of the Act provides that:

   A person charged with a bill of costs that contains detailed items may -

   (a)serve upon the legal practitioner, within 30 days from the service of the itemised bill, a written notice of intention to have the bill taxed; and

   (b)upon service of that notice, have the bill taxed by the taxing officer.

   Section 229 of the Act empowers a taxing officer to enlarge the time prescribed for the taking of any step in pt 13 div 3 of the Act, of which s 232 is a part. It is a threshold requirement for the exercise of the taxing officer's power to enlarge the time for the plaintiffs to serve upon Corrs a written notice of intention to have the bills taxed that the plaintiffs are 'a person charged' for the purposes of s 232(3) of the Act. That is a threshold question which must be determined before the taxing officer can exercise her discretion to extend the time for the service of a notice under s 232(3) of the Act.

3. The plaintiffs and Corrs both say that the threshold issue should be determined by the court and not by a taxing officer. The controversy between the parties is as to the means by which those issues are to come before the court. The plaintiffs submit that the questions might, and properly should, be resolved by the court on a reference by the taxing officer under RSC O 66 r 45. That rule provides that the taxing officer may refer any question arising in the course of a taxation for the direction of the court. Corrs submitted that the threshold question to which I have referred is antecedent to and does not arise 'in the course of a taxation'.

4. The words 'any question arising in the course of a taxation' denote a temporal connection between the question and the taxation. The question must arise during the taxation. That raises the issue of what is encompassed within the 'taxation'. The Rules do not define the temporal ambit of 'taxation' in O 66 r 45. Taxation refers to the process of reviewing a lawyer's bill. In my opinion, the taxation includes a person charged with a bill of costs serving upon the legal practitioner a written notice under s 232 of the Act of intention to have the bill taxed. That is a necessary step in the taxation process. Section 232 is part of pt 13 div 3 of the Act which is entitled 'Taxation and Recovery of Costs'. Order 66 r 45 is in div 2 of O 66 of the Rules and is entitled 'Taxation of Costs' and is directed to taxation of costs in accordance with pt 13 div 3 of the Act. In my view the submission of Corrs involves too narrow a view of the effect of O 66 r 45. The word 'taxation' has a wide and general application and includes an application for an extension of time to give notice under s 232 of the Act. In case of ambiguity, the Rules should be interpreted so as to advance the objects. Order 1 r 4B(2) provides that the rules are to be construed and applied so as best to ensure the attainment of the objects referred to in r 4B(1). The objects referred to in r 4B(1) include disposing efficiently of the business of the court and facilitating the timely disposal of business. Those objects are advanced by construing the power of the taxing officer under O 66 r 45 to extend to the power to refer any question which arises during an application for an extension of time under s 229 of the Act. Otherwise, the taxing officer will have to adjourn the application whilst the applicant commences separate proceedings to determine the question or alternatively the taxing officer may have to determine a question which should properly be determined by the court and a party dissatisfied with the registrar's decision will have to appeal that decision in order to have the matter determined by the court. Either of those courses amount to an inefficient disposal of the business of the court and impede the timely disposal of business. In my opinion, the taxing officer may refer to the court pursuant to O 66 r 45 a question that needs to be determined in deciding whether to enlarge the time within which a person may serve upon a legal practitioner a written notice under s 232(3) of the Act of their intention to have a bill of costs taxed.

5. In Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Corrs Chambers Westgarth [2014] WASC 223 the Master identified the basis upon which the taxation is to be conducted as another threshold issue that has to be resolved before the taxation can take place. That is, it must be determined whether the work for which the costs were rendered was performed pursuant to a written agreement, and if so which written agreement, or if the work was not done pursuant to a written agreement then what is the relevant scale which applies. In my opinion, those are questions arising in the course of taxation and the taxing officer may refer those questions for the direction of the court pursuant to O 66 r 45.

6. The taxing officer may refer the threshold questions identified by the taxing officer and by the Master for the direction of the court pursuant to O 66 r 45. The taxing officer may do that before determining the plaintiffs' application for an extension of time to serve a written notice under s 232(3) of the Act of intention to have the bills taxed. It is not necessary to determine those questions in COR 223 or to commence fresh proceedings in this court to determine those questions. Therefore, the need to determine these threshold questions does not necessitate a stay of this proceeding.

Case management considerations

1. Corrs submit, in effect, that it is appropriate that the threshold questions and, if necessary determination of the reasonableness of the bills, should be determined in COR 223 or in other proceedings commenced by the plaintiffs in this court. It is not appropriate that those matters be resolved in separate proceedings in this court when proceedings have already been commenced and those matters might conveniently be resolved in this proceeding. In my opinion, it is at least as convenient that the relevant issues be determined in this proceeding rather than in COR 223. The issues are raised expressly and discretely in this proceeding. They might more conveniently and expeditiously be resolved in this proceeding rather than being determined in the course of COR 223 which involves many more issues and may involve a two‑stage process. The first stage is whether inquiries should be ordered pursuant to s 423 of the Corporations Act 2001 (Cth). The matters raised by the plaintiffs concerning the conduct of the Receivers are many and varied. If inquiries are ordered then the holding of those inquires would be a second stage.

Stay should be lifted

1. In my opinion, the reasons for the stay ordered by the Master no longer require, or make it appropriate, that the stay continue. In light of the undertakings offered by the plaintiffs there is no longer an overlap between the issues in this proceeding and in COR 223. There is no longer an overlap between the issues in this proceeding and in CIV 1940 because that action has been discontinued. The threshold issues which need to be determined before the registrar can decide whether to grant the extension of time sought by the plaintiffs may be determined by the court on a reference pursuant to O 66 r 45. The stay of proceedings should be lifted. It will then be for the registrar to determine how the matter should proceed including whether or not to refer the threshold questions to the court for direction pursuant to O 66 r 45.