Huntingdale Village Pty Ltd (receivers and managers appointed) v Corrs Chambers Westgarth (a firm) [No 3]
[2016] WASC 366
•11 NOVEMBER 2016
HUNTINGDALE VILLAGE PTY LTD (Receivers and Managers Appointed) -v- CORRS CHAMBERS WESTGARTH (A FIRM) [No 3] [2016] WASC 366
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASC 366 | |
| Case No: | LPA:4/2010 | 21 JULY & 31 AUGUST 2016 | |
| Coram: | LE MIERE J | 11/11/16 | |
| 45 | Judgment Part: | 1 of 1 | |
| Result: | Referred questions answered Second defendants' application refused | ||
| B | |||
| PDF Version |
| Parties: | 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) NORMAN PHILLIP CAREY CORRS CHAMBERS WESTGARTH (A FIRM) MARK ANTHONY KORDA DAVID JOHN WINTERBOTTOM OREN ZOHAR |
Catchwords: | Choice of law Referred questions of a registrar Whether NSW or WA Act governs cost agreements Where both may apply Where neither Act is a mandatory Act Proper law of the obligation Turns on own facts Contracts Construction of costs agreements Principles of construction Whether later agreement extinguishes earlier agreement Whether consideration given Turns on own facts Corporations Power of board of directors under receivership Whether use of power will interfere with ongoing conduct of receivership Director's ability to seek enlargement of time Turns on own facts Practice and procedure Stay application Principles when considering stay application Application refused Turns on own facts Statutory interpretation Legal Practice Act 2003 (WA) Meaning of 'party charged' Where persons under general obligation to pay Turns on own facts |
Legislation: | Corporations Act 2001 (Cth), s 421 Court Procedures Rules 2006 (ACT) Interest Reduction Act 1931 (NSW) Legal Practice Act 2003 (WA), s 3, s 90, s 228, s 229, s 231, s 232, s 235 Legal Profession Act 2004 (NSW), s 4, s 301, s 303, s 305, s 306, s 308, s 350 Legal Profession Regulation 2005 (NSW), reg 5 Rules of the Supreme Court 1971 (WA), O 1 r 4B, O 4A r 1, O 66 r 45 Transport Accident Act 1986 (Vic) |
Case References: | Andrew Koh Nominees Pty Ltd v Receiver & Manager of the Balneum Joint Venture [2007] WASCA 152; (2007) 33 WAR 561 Aon Risk Services Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 British and Benningtons Ltd v NW Cachar Co [1923] AC 48 Commissioner of Taxation (Cth) v Sara Lee Household & Body Care (Aust) Pty Ltd [2000] HCA 35; (2000) 201 CLR 520 D'Allessandro & D'Angelo (A firm) v Cooper (Unreported, WASC, Library No 960334C, 21 June 1996) Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 Equuscorp Pty Ltd v Short Punch & Greatorix [2000] QCA 407; [2001] 2 Qd R 580 Huntingdale Village Pty Ltd (Receivers and Managers Appointed) ATF Huntingdale Village Unit Trust v Perpetual Nominees Ltd [2013] WASC 352 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 (A Firm) [2013] WASCA 275 Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Corrs Chambers Westgarth (A Firm) [2014] WASC 223 Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Corrs Chambers Westgarth (A Firm) [No 2] [2015] WASC 408 Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Mallesons Stephen Jacques [No 2] [2014] WASC 60 Huntingdale Village Pty Ltd as Receiver and Manager of Huntingdale Village Pty Ltd v Corrs Chambers Westgarth [2013] WASCA 275 Huntingdale Village Pty Ltd v Mallesons Stephen Jacques [2013] WASC 48 MacMillan Inc v Bishops Gate Trust Plc [No 3] [1995] EWCA Civ 55; [1996] 1 WLR 387 Morris v Baron & Co [1918] AC 1 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 57; (2015) 256 CLR 104 Q Coal Pty Ltd v Cliffs Australia Coal Pty Ltd [2010] QSC 479 Re Barber (1845) 153 ER 665 Sweedman v Transport Accident Commission [2006] HCA 8; (2006) 226 CLR 362 Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd [1957] HCA 6; (1957) 98 CLR 93 United Dominions Corporation (Jamaica) Ltd v Shoucair [1969] 1 AC 340 Wanganui-Rangitikei Electric Power Board v AMP Society [1934] HCA 3; (1934) 50 CLR 581 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- 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)
First Plaintiffs
NORMAN PHILLIP CAREY
Second Plaintiff
AND
CORRS CHAMBERS WESTGARTH (A FIRM)
First Defendant
MARK ANTHONY KORDA
DAVID JOHN WINTERBOTTOM
OREN ZOHAR
Second Defendants
Catchwords:
Choice of law - Referred questions of a registrar - Whether NSW or WA Act governs cost agreements - Where both may apply - Where neither Act is a mandatory Act - Proper law of the obligation - Turns on own facts
Contracts - Construction of costs agreements - Principles of construction - Whether later agreement extinguishes earlier agreement - Whether consideration given - Turns on own facts
Corporations - Power of board of directors under receivership - Whether use of power will interfere with ongoing conduct of receivership - Director's ability to seek enlargement of time - Turns on own facts
Practice and procedure - Stay application - Principles when considering stay application - Application refused - Turns on own facts
Statutory interpretation - Legal Practice Act 2003 (WA) - Meaning of 'party charged' - Where persons under general obligation to pay - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 421
Court Procedures Rules 2006 (ACT)
Interest Reduction Act 1931 (NSW)
Legal Practice Act 2003 (WA), s 3, s 90, s 228, s 229, s 231, s 232, s 235
Legal Profession Act 2004 (NSW), s 4, s 301, s 303, s 305, s 306, s 308, s 350
Legal Profession Regulation 2005 (NSW), reg 5
Rules of the Supreme Court 1971 (WA), O 1 r 4B, O 4A r 1, O 66 r 45
Transport Accident Act 1986 (Vic)
Result:
Referred questions answered
Second defendants' application refused
Category: B
Representation:
Counsel:
First Plaintiffs : Mr S Penglis
Second Plaintiff : Mr S Penglis
First Defendant : Mr B Dharmananda SC & Mr C P K Russell
Second Defendants : Mr J A Thomson SC
Solicitors:
First Plaintiffs : Coulson Legal
Second Plaintiff : Coulson Legal
First Defendant : Corrs Chambers Westgarth
Second Defendants : King & Wood Mallesons
Case(s) referred to in judgment(s):
Andrew Koh Nominees Pty Ltd v Receiver & Manager of the Balneum Joint Venture [2007] WASCA 152; (2007) 33 WAR 561
Aon Risk Services Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
British and Benningtons Ltd v NW Cachar Co [1923] AC 48
Commissioner of Taxation (Cth) v Sara Lee Household & Body Care (Aust) Pty Ltd [2000] HCA 35; (2000) 201 CLR 520
D'Allessandro & D'Angelo (A firm) v Cooper (Unreported, WASC, Library No 960334C, 21 June 1996)
Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Equuscorp Pty Ltd v Short Punch & Greatorix [2000] QCA 407; [2001] 2 Qd R 580
Huntingdale Village Pty Ltd (Receivers and Managers Appointed) ATF Huntingdale Village Unit Trust v Perpetual Nominees Ltd [2013] WASC 352
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 (A Firm) [2013] WASCA 275
Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Corrs Chambers Westgarth (A Firm) [2014] WASC 223
Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Corrs Chambers Westgarth (A Firm) [No 2] [2015] WASC 408
Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Mallesons Stephen Jacques [No 2] [2014] WASC 60
Huntingdale Village Pty Ltd as Receiver and Manager of Huntingdale Village Pty Ltd v Corrs Chambers Westgarth [2013] WASCA 275
Huntingdale Village Pty Ltd v Mallesons Stephen Jacques [2013] WASC 48
MacMillan Inc v Bishops Gate Trust Plc [No 3] [1995] EWCA Civ 55; [1996] 1 WLR 387
Morris v Baron & Co [1918] AC 1
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 57; (2015) 256 CLR 104
Q Coal Pty Ltd v Cliffs Australia Coal Pty Ltd [2010] QSC 479
Re Barber (1845) 153 ER 665
Sweedman v Transport Accident Commission [2006] HCA 8; (2006) 226 CLR 362
Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd [1957] HCA 6; (1957) 98 CLR 93
United Dominions Corporation (Jamaica) Ltd v Shoucair [1969] 1 AC 340
Wanganui-Rangitikei Electric Power Board v AMP Society [1934] HCA 3; (1934) 50 CLR 581
- LE MIERE J:
Summary
1 The first plaintiffs are companies in the Westpoint Group which also includes Westpoint Corporation which is now in liquidation. The second plaintiff, Mr Carey, is the founder of the Westpoint Group and a director of each of the plaintiff companies. The second defendants (the Receivers) are the receivers and managers of the plaintiff companies. The Receivers engaged the first defendant firm of solicitors (Corrs) to provide legal services in relation to the receiverships. Corrs have issued invoices to the Receivers for work done in relation to each of the receiverships. The registrar and the parties refer to the invoices issued by Corrs as bills. I will use the same description. The Receivers have paid the bills. The plaintiffs want Corrs to serve on them bills of costs detailing items charged in the bills so that the plaintiffs may have the bills of costs taxed.
2 In this proceeding the plaintiffs seek orders compelling Corrs to provide itemised bills of costs to the plaintiffs pursuant to s 231(3) of the Legal Practice Act 2003 (WA) (the WA Act) and extending the time for the plaintiffs to request taxation of those itemised bills pursuant to s 232(3) of the WA Act. The registrar who is seized of this proceeding pursuant to O 66 r 45 of the Rules of the Supreme Court 1971 (WA) (RSC) has referred questions arising in the course of the taxation for the direction of the court. The principal question referred is whether each of the plaintiffs is a person or party charged within the meaning of s 228(2)(a) of the WA Act. The plaintiffs are not entitled to make the application for an extension of time if they are not a party charged.
3 Corrs say that to answer the questions referred the court must determine three sub-issues. The sub-issues raise two questions. The first question is whether the WA Act or the Legal Profession Act 2004 (NSW) (NSW Act) governs the taxation of Corrs' bills because if the WA Act does not apply to the taxation of the bills then the plaintiffs are not parties charged with respect to the Corrs' bills. The second question is whether costs agreements made between Corrs and the Receivers cover the work done for which the bills were rendered. Whether the work the subject of the bills is covered by the relevant costs agreements informs the choice of law because the costs agreements provide that they are governed by the law of New South Wales.
4 The Receivers have applied for an order that this proceeding be stayed until the final determination of another proceeding in this court, COR 223 of 2009.
5 For the reasons which follow the stay should not be granted and the questions referred to the court should be answered as follows:
1. None of the plaintiffs is 'a person or party charged' within the meaning of s 228(2)(a) of the WA Act, and none of them is entitled to make an application under s 232(2) of the WA Act for an extension of time to require itemisation of all the bills rendered by Corrs to the companies.
2. It is unnecessary to answer question 2 because the answer to the first question is not that each plaintiff is a party charged. However, if the answer to the first question had been that each plaintiff is a party charged then the answer to the second question would be:
Mr Carey as the sole director of each of the plaintiff companies has authority to cause that company to seek the enlargement of time for the taxation of Corrs' bills.
6 The Receivers' stay application and the referred questions were directed to be heard at the same time. However, the plaintiffs were unable to deal with the referred questions at the fixed hearing date. I heard the stay application and reserved my decision and then heard the referred questions. Both applications have now been heard and it is appropriate to deal with them together. I heard full argument on the referred questions. The efficient and expeditious resolution of this proceeding is advanced by answering those questions.
Questions in sub-issues should be answered
7 The questions raised by the sub-issues should be answered for the following reasons. The first question referred by the registrar is whether each of the plaintiffs is a person or party charged within the meaning of s 228(2)(a) of the WA Act, 'entitling each of [the plaintiffs] to make this application for an extension of time to require itemisation of all the bills rendered by Corrs …'. If the WA Act does not apply to the taxation of the Corrs' bills, the plaintiffs are not persons charged entitling them to make the application for an extension of time to require itemisation of the Corrs' bills notwithstanding that they would be persons charged if the WA Act applied to the taxation of the bills. Therefore, it is necessary to decide whether the application is governed by the WA Act or, as Corrs argue, by the NSW Act.
8 Whether the WA Act or the NSW Act govern the application depends upon the proper construction of each Act and upon the appropriate choice of law rule. In this case the appropriate choice of law rule is that applicable to an obligation to restore the benefit of an enrichment obtained at another person's expense. The obligation to restore the benefit of an enrichment obtained at another person's expense is governed by the proper law of the obligation. If the obligation arises in connection with a contract, the proper law of the obligation is the law applicable to the contract. The obligation of Corrs to repay to the Receivers the amount, if any, by which the legal costs paid by the Receivers to Corrs exceeds the amount at which Corrs' bills are allowed on taxation arises in connection with the contract between Corrs and the Receivers for the provision of legal services. It is therefore necessary to determine whether the legal services provided by Corrs to the Receivers which are the subject of Corrs' bills are covered by the costs agreements as asserted by Corrs and denied by the plaintiffs. Therefore, it is necessary to determine whether any costs agreements made between Corrs and the Receivers would apply, and to what extent, and would need to be given effect, and to what extent, in any taxation of or costs assessments of each of the bills the subject of the application.
Retainers and costs agreements
9 It will be necessary to make findings about the terms on which the Receivers retained Corrs to carry out the legal services for which Corrs charged in the bills. However, before doing so it is convenient to make some observations about retainers and costs agreements.
10 The lawyer-client relationship is constituted through a contract, commonly called a retainer. The legal profession legislation in all States makes specific provision that a lawyer and client may enter into a written agreement as to the manner in which the lawyer is to be remunerated for providing legal services (costs agreement) and regulates such agreements. A costs agreement, as defined, is not the same as a contract for the provision of legal services. A retainer, or contract for the provision of legal services, may exist independently of a costs agreement.
11 Where a client engages a law firm, that is a partnership of legal practitioners, to provide legal services, the contract or retainer is between the client and the law firm. There is not a separate contract between the client and each partner or employee of the law firm who carries out legal work pursuant to the retainer. Where a client enters into a cost agreement with a law firm, the agreement is between the client and the law firm, not each partner or employee who carries out work under the costs agreement.
12 When a client has engaged a lawyer to perform legal services, the client impliedly undertakes to pay costs. The quantum of those costs is determined either by the terms of the retainer or an associated costs agreement, an applicable scale or otherwise according to the fair and reasonable value of the services provided, that is on a quantum meruit basis. To ascertain the lawyer's entitlement to costs, it is necessary to determine the existence and scope of the retainer and the associated costs agreement, if any. First, where the lawyer has performed a range of legal services over a period of time, it is necessary to determine whether the services have been provided pursuant to a single retainer or pursuant to multiple retainers. Secondly, assuming there is a retainer agreement or a costs agreement, it must be determined whether the legal services for which the lawyer has rendered an invoice comes within the scope of the retainer or costs agreement.
13 The WA Act and NSW Act, and indeed legislation in all States and Territories in Australia, regulate both the implementation and content of costs agreements. The WA Act and the NSW Act provide for the lawyer to provide an itemised bill of costs and for the review, by taxation or assessment, of lawyer-client bills of costs. Section 235 of the WA Act and s 361(1) of the NSW Act provide that when taxing a bill of costs a taxing officer must give effect to any costs agreement made as to the costs specified in the bill. The NSW Act refers to the assessment of a bill rendered by a law practice, which includes a sole practitioner, a law firm or an incorporated legal practice. The WA Act refers to bills of costs of a legal practitioner. Where the retainer or costs agreement is between a client and a law firm, the legal practitioner is the law firm not each partner or employee of the law firm who has performed legal services for the client pursuant to the retainer or costs agreement.
14 Corrs is a national law firm. It has offices in Perth, Sydney and Melbourne. The Receivers when they were appointed were each partners of Korda Mentha. Korda Mentha is a national insolvency firm. Mr Korda was based in Korda Mentha's Melbourne office, Mr Winterbottom in Korda Mentha's Sydney office and Mr Zohar in Korda Mentha's Perth office.
Receivers retain Corrs
15 Oren Zohar, Mark Korda and David Winterbottom, the Receivers, were appointed as receivers and managers over the Westpoint Group, that is the plaintiff companies and Westpoint Corporation, Westpoint Management Ltd, Bayview Port Melbourne Ltd and Emu Brewery Developments Pty Ltd, on 24 January 2006. On the same day, that the Receivers were appointed, 24 January 2006, Mr Zohar telephoned Dominic Emmett in Sydney. Mr Emmett was a partner of Corrs who worked in the Sydney office and specialised in corporate restructuring and insolvency law. During the telephone conversation Mr Zohar instructed Mr Emmett to act on behalf of the Receivers in respect of the Westpoint Group receiverships. Mr Zohar told Mr Emmett that the receiverships would involve the realisation of real property assets in Melbourne, Perth and Sydney. That same day Mr Emmett sent an email to all Corrs' partners informing them that Corrs will be acting for the Receivers, out of Melbourne, Perth and Sydney where the relevant properties are situated.
16 Mr Emmett then put together a team of partners and lawyers from across Corrs' offices to work with him for the Receivers on the Westpoint Group. Corrs' Westpoint Group team included partners and lawyers who were members of the Corrs' insolvency group, including Mr Husband and Ms Sutherland from the Perth office, and partners and lawyers who were members of the Corrs property law group in its Melbourne, Sydney and Perth offices. The team also included Mr Stragalinos, a commercial litigation and insolvency law partner from Corrs Melbourne office.
17 On 2 February Mr Emmett emailed to Ms Sutherland that Corrs had instructions to get on the record for the company acting by the Receivers in the winding up application for Westpoint Corporation. In late January and early February the team carried out work in relation to properties and litigation in which the Westpoint Group companies were involved.
18 On 8 February Mr Emmett sent an email to the team setting out the files that Corrs had opened. There was one file in respect of each receivership, or each company in the Westpoint Group of which the Receivers had been appointed receivers and managers.
19 On 27 January Mr Emmett sent an email to Mr Winterbottom, the Sydney based Receiver, giving him contact details for Corrs' lawyers who will deal with the property aspects that will arise in relation to Barcoo Street, that is a property in New South Wales in which one of the plaintiff companies, Vannin Pty Ltd, was interested.
20 On 30 January Mr Emmett travelled to Perth to meet with Mr Korda and Mr Zohar in relation to the Westpoint Group engagement. During this visit Mr Emmett worked in the Perth office Korda Mentha had set up for the Westpoint Group receiverships. Mr Emmett assisted the Receivers with various ad hoc urgent queries and assigned work amongst members of the Corrs' Westpoint Group team.
21 Mr Emmett returned to Sydney on 6 February and finalised the opening of the head file for each of the Westpoint Group engagements on Corrs accounts/billing system (known within Corrs as CMS). Mr Emmett says that the head file and all further files and sub-files were treated by Corrs as forming part of each of the Westpoint Group engagements and the ability to open further files or sub-files in respect of each of the Westpoint Group engagements was for internal Corrs reporting purposes. On 8 February 2006 Mr Emmett sent an email to the Corrs Westpoint Group team advising them of the unique CMS code for each of the Westpoint Group engagements as well as the files and sub-files under each of those codes. He also gave instructions regarding the opening of further files or sub-files and the billing procedure to follow the Westpoint Group engagements.
22 Mr Emmett caused formal engagement letters in identical form to be sent to the Receivers confirming and covering each of the Westpoint Group engagements - the 2006 Engagement Letters. A copy of each of the 2006 Engagement Letters was signed by Mr Zohar on behalf of the Receivers and returned to Corrs. The 2006 Engagement Letters is each dated 10 February 2006 and signed by Mr Emmett on behalf of Corrs and Mr Zohar on behalf of the Receivers.
Corrs issues invoices to Receivers
23 Corrs issued invoices to the Receivers on a regular, usually monthly, basis. The invoices were prepared from the CMS system. The invoices were sent to the Receivers in respect of each of the companies in receivership. The invoices were generated using data entered into CMS in relation to time spent by fee earners undertaking chargeable work and disbursements incurred in performing that work. For example, the invoices sent to the Receivers in respect of the Huntingdale receivership were for work performed by partners and solicitors in the Sydney, Perth and Melbourne offices. The invoices the subject of this proceeding were for work done between January 2006 and 30 June 2007.
This proceeding
24 The plaintiffs applied by letter of 1 February 2010 for orders under the WA Act in relation to the bills rendered by Corrs. The plaintiffs seek orders:
(a) compelling Corrs to provide itemised bills to the plaintiffs pursuant to s 231(3) of the WA Act; and
(b) extending the time for the plaintiffs to request taxation of those itemised bills pursuant to s 232(2) of the WA Act.
The referred questions
25 The referral of questions by the registrar for the direction of the court is as follows:
In 2010 the companies listed as plaintiffs applied to me pursuant to s229(a) of the Legal Practice Act 2003. I am asked to exercise a discretion that I have under the statute to grant an extension of time to permit the plaintiff companies to seek itemisation of bills rendered by the defendant, a legal practice. The bills were rendered by the defendant to each of the plaintiff companies for, as I understand it, legal work done by the defendant, at the request of the receivers and paid for by the companies in receivership.
REFERRAL:
I refer to a Judge for determination the threshold, jurisdictional questions as follows:
1. Is each of the plaintiffs 'a person or party charged' within the meaning of section 228(2)(a) of the Legal Practice Act 2003, entitling each of the companies to make this application for an extension of time to require itemisation of all the bills rendered by Corrs Chambers Westgarth to the companies?
If the answer to the first question is that each plaintiff is a party charged then the following has to be asked:
2. Does Mr Carey as the sole director of a company in receivership have authority to cause that company to seek the enlargement of time? Or, is such a request in direct conflict with the receivers' authority to give instructions to the lawyers, receive the advice and services and then cause the company to pay for it?
The represented parties are aware that they will have to receive directions from the Judge in respect to the submissions and arguments they wish to make in regard to the questions I refer.
26 On 12 April 2016, after the registrar had referred the questions to the court, at the request of and by the consent of the parties, I directed that the following sub-issues be addressed in answering question 1 referred by the registrar:
(a) whether any costs agreement or costs agreements (together the Costs Agreements) made between respectively:
(i) the Defendant; and
(ii) the Receivers
would apply (and to what extent) and would need to be given effect (and to what extent) in any taxation or costs assessment (under either the Legal Practice Act 2003 (WA) (the 2003 WA Act) or the Legal Profession Act 2004 (NSW) (NSW Act) of each of the bills of costs the subject of the Application (the taxation or assessment of which is not stayed) (together Bills). In particular:
(i) whether the retrospective costs agreements made between the defendant and the Receivers on or about 8 February 2016 apply (and, if so, to what extent) in any taxation or costs assessment of the Bills;
(ii) if the answer to (i) is 'no' or 'in part only', what was the scope of the work the subject of the various costs agreements dated 10 February 2006? In particular:
(A) do the words 'general advice', where used in the agreements, restrict the scope of the agreements such that the agreements apply to only some advice given by Corrs to the Receivers or do the agreements apply to any advice given to, and work done for, the Receivers in relation to their realization of the various companies' assets on behalf of the mortgagee and in the exercise of their powers and performance of their duties in relation to the receivership in question?
(B) whether it makes any difference as to the applicability of the agreements (and to what extent) that the work performed by Corrs was performed for the Receivers acting in their personal capacity or for the Receivers acting as agents for the Companies?
(i) the 2003 WA Act; or
(ii) the NSW Act.
In particular:
(i) insofar as the bills of costs relate to the work within the scope of a written costs agreement, should the taxation of those bills or parts thereof occur in Western Australia (as opposed to New South Wales)?
(ii) insofar as the bills of costs relate to work that is outside the scope of any applicable written costs agreement, should the taxation of those bills or parts thereof occur in Western Australia (as opposed to New South Wales)?
(c) having regard to the answers to issues (a) and (b) above, whether, for the purposes of the Application, or any subsequent taxation or costs assessment of the Bills, the Plaintiffs are each (whichever is applicable):
(i) a 'party charged' under s 228(2) of the 2003 WA Act; or
(ii) a 'third party payer' under s 302A of the NSW Act.
2006 Agreement
28 As I have said, on 24 January 2006 Perpetual Nominees appointed the Receivers as receivers and managers of various companies in the Westpoint Group, including the plaintiff companies. That same day Mr Zohar instructed Mr Emmett to act on behalf of the Receivers in respect of the receivership of Westpoint Corporation and other companies including the plaintiff companies. Mr Emmett sent a letter dated 10 February 2006 to the Receivers as receivers and managers of each of the plaintiff companies (Engagement Letter) in respect of each of the plaintiff companies. Engagement Terms and a Schedule of Rates and Expenses were attached to each Engagement Letter. Mr Zohar accepted the terms of the Engagement Letter, Engagement Terms and Schedule of Rates and Expenses by signing each Engagement Letter and returning it to Corrs. Each Engagement Letter is in materially the same terms. The Engagement Letter in respect of the first named plaintiff, Huntingdale, is in these terms:
Thank you for instructing us to provide general advice on this receivership.
This letter sets out the scope of legal services we are to provide and other important information about our legal costs.
This letter and the attached Engagement Terms and Schedule of Rates and Expenses state the terms of our offer to enter into a client engagement agreement (including a costs agreement) with the client stated below for this matter.
Client and matter details
Client: Huntingdale Village Pty Ltd (Receivers and Managers appointed)
Matter name: General Advice
Matter no: HUNT11808 - 9028235
Scope of legal services
General advice
Professional staff
Our people who may be providing the legal services for this matter and their current hourly rates are:
…
Basis for calculation of our legal costs
We will calculate and charge our fees and expenses as set out in the Engagement Terms. Our fees are based on the time spent by our professional staff (including graduate lawyers and paralegals) at their hourly rates current from time to time. Our current hourly rates and expenses are set out in the Schedule of Rates and Expenses.
We are not in a position to provide an estimate of our costs at this stage.
Next steps
…
29 Between January 2006 and 30 June 2007 Corrs provided a range of legal services to the Receivers including advising them in relation to their realisation of the companies' assets and in the exercise of their powers and the performance of their duties as receivers and managers of the companies and carried out work in and incidental to effecting the sale of assets of the companies. Corrs commenced to act for the Receivers in the proceedings for the winding up of Westpoint Corporation. Corrs rendered invoices to the Receivers on the basis that all of the work it carried out was governed by the 2006 Agreements.
30 The plaintiffs assert that the work covered by the 2006 Agreement is confined to the giving of advice and does not extend to other work such as work in and incidental to the realisation of assets of the plaintiffs or acting for the Receivers or companies in litigation.
31 Corrs and the Receivers made further agreements (2015 Agreements) in relation to the receivership of each of the plaintiff companies. Each of the 2015 Agreements is in materially the same terms. Each consists of a letter with two schedules. The first schedule describes the work carried out by Corrs on the Receivers' instructions and a summary of the invoices rendered by Corrs. The second schedule consists of a copy of the relevant 2006 Agreement together with the attached Engagement Terms and Schedule of Rates and Expenses. The letter is signed by Ian Dallen, a partner of Corrs, and Mark Korda, one of the Receivers.
32 The letter in relation to the Huntingdale receivership is entitled 'Confirmation of Terms of Costs Agreement Mr Mark Korda and Mr David Winterbottom Huntingdale Village Pty Ltd (ACN 085048531) (Receivers and Managers Appointed)' and states that the letter is to confirm the terms of the costs agreement between them. The letter includes:
(1) Since on or about 24 January 2006, there has been an agreement in place between Corrs and the Receivers (in their own right and in relation to the receivership of Huntingdale) regarding the provision of legal services by Corrs to the Receivers (in their own right and in relation to the receivership of Huntingdale) which remains on foot … The parties intended that, and have acted on the basis that, all work to be carried out by Corrs for the Receivers (in their own right and in relation to the receivership of Huntingdale) would be governed by the 2006 Agreement and that agreement has been treated by the parties as an umbrella agreement, in that the parties intended, and have acted on the basis that, the 2006 Agreement applies to each of the separate tasks Corrs were instructed to carry for the Receivers (in their own right and in relation to the receivership of Huntingdale).
(2) To avoid any doubt, the Receivers and Corrs do not accept that the 2006 Agreement does not cover all of the work carried out by Corrs.
(3) The Receivers and Corrs acknowledge that the 2006 Agreement was made in Sydney under the NSW Act and the 2006 Agreement is governed by NSW law.
(4) The purpose of this letter is to clarify and record in writing the terms of the agreement between the parties to ensure that the costs agreement applies in respect of all the work carried out by Corrs for the Receivers in relation to the receivership of Huntingdale. It is intended that this written costs agreement will have retrospective effect and prospective effect.
(5) The Receivers are not obliged to enter into this written costs agreement.
(6) Since 24 January 2006 there has been an agreement in place between Corrs and the Receivers (in their own right and in relation to the receivership of Huntingdale) regarding the provision of legal services by Corrs to the Receivers (in their own right and in relation to the receivership of Huntingdale). Fees since that date have been paid on that basis.
(7) In addition to the Receivers' right not to sign this written agreement the Receivers have the right to negotiate the terms of this costs agreement if they do not accord with their understanding of the agreement that has been in place between the Receivers and Corrs since 24 January 2006.
(8) Prior to signing this agreement, Corrs recommend that the Receivers obtain independent legal advice as to their rights and as to the effect of signing this document.
(9) This costs agreement applies to all work carried out in relation to the receivership of Huntingdale including the work described in schedule 1 between 24 January 2006 and the date of this letter and continues to apply prospectively after the date of this letter to all work in relation to the receivership of Huntingdale.
The contending constructions of 2006 Agreements
33 The plaintiffs submit that the text of each of the 2006 Agreements states that the scope of the legal services to be provided pursuant to the agreement is confined to advice in the sense of giving a professional opinion or opinions and hence does not extend to other work and in particular does not cover work in and incidental to the realisation by the Receivers of the companies' assets or representing the Receivers or the companies in litigation.
34 Corrs says that on the proper construction of the 2006 Agreements they apply to all of the work undertaken by Corrs for the Receivers in relation to the receiverships, including work in and incidental to the realisation of the companies' assets and the conduct of litigation. It is sufficient to consider only the construction of the 2006 Agreement in relation to the Huntingdale receivership because each of the 2006 Agreements are in materially the same terms.
Principles of construction
35 The High Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract: Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 57; (2015) 256 CLR 104 [47], [49]. In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable business person would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract. Sometimes recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding of the genesis of the transaction, the background, the context and the market in which the parties are operating. It may be necessary in determining the proper construction where there is a constructional choice.
36 In construing the scope of the work to which the Engagement Letter applies, the court may consider the Engagement Terms and Schedule of Rates and Expenses which together with the Engagement Letter constitute the 2006 Agreement. Furthermore, the court may consider each of the other 2006 Agreements which were executed contemporaneously with the 2006 Agreement in relation to Huntingdale and form part of the same transaction.
2006 Agreements are ambiguous or susceptible of more than one meaning
37 The instructions 'to provide general advice on this receivership' is in context ambiguous or susceptible of more than one meaning and therefore evidence of surrounding circumstances is admissible to assist in the interpretation of the scope of the agreement. The 2006 Agreement is ambiguous whether the Receivers retained Corrs in their capacity as principals or as agents of the company. As receivers and managers of Huntingdale the Receivers may engage solicitors in their capacity as principals and as agents of the company. The Engagement Letter was addressed to 'Oren Zohar and Mark Korda Huntingdale Pty Ltd (Receivers and Managers appointed)' and described the client as 'Huntingdale Pty Ltd (Receivers and Managers appointed)'.
38 The matter or matters in respect of which the Receivers had retained Corrs which was covered by the 2006 Agreement is susceptible of more than one meaning. The Engagement Letter said that the Receivers instructed Corrs 'to provide general advice on this receivership' and the scope of the legal services is 'general advice'. 'General' means including or involving all, or nearly all, of the things referred to. The Engagement Letter does not refer to any particular matter or factual situation or situations in relation to which Corrs were instructed to provide legal services other than 'the receivership'.
39 The circumstances addressed by the 2006 Agreement are that the Receivers had just been appointed as receivers and managers of a number of companies in the Westpoint Group by a secured creditor of the companies. The Receivers were partners of Korda Mentha, a firm that practices in corporate insolvency. Mr Korda was based in Korda Mentha's Melbourne office and Mr Zohar was based in Korda Mentha's Perth office. The Receivers' primary duty was to realise the assets charged by the companies with a view to liquidating the debt owing to the secured creditor. Corrs is a commercial law firm with offices in Sydney, Melbourne and Perth.
40 The 2006 Agreement includes the Engagement Terms and the Schedule of Rates and Expenses. The Engagement Terms starts by saying that the Engagement Letter sets out the scope of legal services you have requested. Under 'Professional fees' the terms include:
(1) Our current hourly rates are set out in the attached Schedule of Rates and Expenses.
(2) Times spent can include … drafting documents (including court documents) attending settlements, …
41 Under the heading 'Expenses' the terms include:
(1) Except as otherwise specified in the Engagement Letter, we will charge you for services supplied by us or our associated entities in the course of working on your matter. The services may include … services provided by our registration clerks including searching, lodging, filing, collection, stamping and enquiry services. The services and applicable charges are set out in the attached Schedule of Rates and Expenses.
(2) You must pay us any other expenses which we incur in acting for you … such expenses include … stamp duty, court filing fees and registration fees.
42 Under the heading 'Barristers, experts in litigation' the terms include:
(1) If during litigation a court orders a person to pay your costs, a cost ordered to be paid will almost always be less (and sometimes substantially less) than those which will be payable by you under this agreement. Any such court order does not affect your obligation to pay our costs as set out in this agreement. (emphases added)
43 The 'Schedule of Rates and Expenses' specify expenses including:
• Registration clerk services (includes searching, lodging, filing, collection, stamping and inquiry services).
• Registration fees.
• Court fees.
• Stamp duty.
• Barristers and experts' fees.
• Advertising expenses.
• Bank charges.
- The emphasised activities, fees and expenses relate to work which is not encompassed within advice in the narrow sense of giving an opinion regarding the substance or procedure of the law in relation to a particular factual situation or situations. Those activities, fees and expenses relate to a range of legal services that are likely to be used by receivers in the course of realising assets of the companies in receivership and repaying the debt owed to the secured creditor and in litigation which the receivers might commence or be involved in in the course of the receiverships.
44 There is a constructional choice. The 2006 Agreement may be confined to providing legal advice in the sense of opinions regarding the substance or procedure of the law in relation to particular factual situations or it might extend to providing legal services in relation to all of the matters upon which the Receivers are likely to require legal services in carrying out the receiverships of the companies including effecting transactions which involves the services of searching, lodging, filing, collection, stamping and enquiry services which is the sort of work involved in realising assets and work 'during litigation'. Therefore, recourse to events, circumstances and things external to the agreement is necessary in this case in determining the proper construction of the 2006 Agreement. In this case identifying the commercial purpose or objects of the 2006 Agreements is facilitated by an understanding of the genesis of the transaction, its background and context.
Surrounding circumstances
45 The surrounding circumstances known to the parties, the genesis of the transaction, the background and the context includes the characteristics of the parties and the business or enterprise on which each was engaged to which I have already referred. The surrounding circumstances also include the telephone conversation and other events which preceded and led to the 2006 Agreements.
46 On 24 January 2006 Mr Zohar telephoned Mr Emmett, a partner of Corrs who worked in the Sydney office. Mr Emmett specialised in corporate restructuring and insolvency law. During the telephone call Mr Zohar instructed Mr Emmett to act on behalf of the Receivers in respect of the Westpoint Group receiverships. Mr Zohar advised Mr Emmett that the Westpoint Group receiverships would involve the realisation of real property assets in Melbourne, Sydney and Perth. On 30 January 2006 Mr Emmett met with Mr Korda and Mr Zohar in Perth. Before the Engagement Letters were signed or indeed prepared, Mr Emmett assisted the Receivers with various ad hoc urgent queries and assigned work amongst members of the Corrs Westpoint Group team which he had assembled. Each of the Engagement Letters lists Corrs' professional staff 'who may be providing the legal services for this matter'. The professional staff include six partners, a special counsel, three senior associates, four solicitors, a graduate and a law clerk.
47 The genesis, background and context of the 2006 Agreements show that the commercial purpose or object of the agreements was to have in place a costs agreement for each of the receiverships to cover all the work to be performed by Corrs in relation to each of the receiverships which work would include all work in relation to the receiverships, including work done for the Receivers as principals and as agents of each of the companies and include work in and incidental to the realisation of real property assets in Melbourne, Perth and Sydney and in the conduct of litigation. On their proper construction, each of the 2006 Agreements cover all of the work to be done by Corrs for the Receivers as principals and as agents of each of the companies in accordance with instructions to be given by the Receivers to Corrs from time to time including work in and incidental to the realisation of real property assets.
48 Reasonable business people in the position of Corrs and the Receivers would have understood the 2006 Agreements to cover all legal services which Corrs delivered pursuant to instructions on specific issues or matters given to Corrs in relation to the receivership of each of the companies.
49 I find that the 2006 Agreements cover all of the work performed by Corrs which is the subject of the invoices issued by Corrs to the Receivers for work done between January 2006 and 30 June 2007.
2015 Agreements
50 Corrs say the 2015 Agreements cover all work done by Corrs on behalf of the Receivers, as principals and as agents of each company, prospectively and retrospectively since January 2006. The plaintiffs say that the 2015 Agreements are ineffective for a number of reasons relating to the construction of the 2015 Agreements, whether they are supported by consideration and whether they were made in breach of Corrs' fiduciary duty owed to the Receivers. I will first address the construction point.
Construction of 2015 Agreements
51 In Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd [1957] HCA 6; (1957) 98 CLR 93 Kitto J - dissenting but not on this point - said:
… a long line of authorities has committed the law to an acceptance of the doctrine that an agreement which deals with subsisting rights and obligations of the same parties under an earlier contract may vary that contract without terminating it, and that whether it effects a variation on the one hand or a discharge on the other is a question depending upon the intention of the parties as appearing from the new agreement (135).
52 In Commissioner of Taxation (Cth) v Sara Lee Household & Body Care (Aust) Pty Ltd [2000] HCA 35; (2000) 201 CLR 520, 533 - 534 Gleeson CJ, Gaudron, McHugh and Hayne JJ said:
When the parties to an existing contract enter into a further contract by which they vary the original contract, then, by hypothesis, they have made two contracts. For one reason or another, it may be material to determine whether the effect of the second contract is to bring an end to the first contract and replace it with a second, or whether the effect is to leave the first contract standing, subject to the alteration. For example, something may turn upon the place, or the time, or the form, of the contract, and it may therefore be necessary to decide whether the original contract subsists …(533) - (534).
In Tallerman & Co Pty Ltd v Nathan's Merchandise (Vict) Pty Ltd Taylor J said:
'It is firmly established by a long line of cases … that the parties to an agreement may vary some of its terms by a subsequent agreement. They may, of course, rescind the earlier agreement altogether, and this may be done either expressly or by implication, but the determining factor must always be the intention of the parties as disclosed by the later agreement.'
That passage was cited with approval by Wilson and Dawson JJ in Dan v Barclays Australia Ltd. It accords with principle and with authority.” (Citations omitted).
- The 'authority' to which their Honours referred at the conclusion of that passage are the cases of Morris v Baron & Co [1918] AC 1; British and Benningtons Ltd v NW Cachar Co [1923] AC 48; and United Dominions Corporation (Jamaica) Ltd v Shoucair [1969] 1 AC 340. In the British and Benningtons Ltd case Lord Sumner (69) said that the discharge of the old contract must depend on intention, tested in the manner settled in Morris v Baron & Co. Lord Sumner had previously posed the question (67) as follows:
… whether the common intention of the parties 'was to ‘abrogate', 'rescind', 'supersede' or 'extinguish' the old contracts by a 'substitution' of a 'completely new' and 'self contained' or 'self subsisting' agreement, 'containing as an entirety the old terms, together with and as modified by the new terms incorporated' (67).
54 As a matter of construction, the intention of the parties is that the 2015 Agreements do not extinguish the 2006 Agreements and that the two sets of agreements are to operate concurrently and both apply to the work carried out by Corrs for the Receivers from January 2006. There is no reason in principle why parties should not agree for two agreements covering the same subject matter to operate concurrently. Questions of construction will arise if there is any inconsistency between the two agreements. However, there is no relevant inconsistency between the 2006 Agreements and the 2015 Agreements.
55 The 2015 Agreements did not extinguish the 2006 Agreements. Therefore, all of the work carried out by Corrs for the Receivers in relation to each of the receiverships between January 2006 and 30 June 2007 is governed by the 2006 Agreements and it is unnecessary to give further consideration to the 2015 Agreements. However, in case the matter should go on appeal and it is found that I am wrong in my finding that the 2006 Agreements cover all of the work done by Corrs I will consider whether the 2015 Agreements are effective to cover the work done by Corrs on the assumption that the 2006 Agreements are confined to legal advice in the sense of giving opinions and do not cover the rest of the work carried out by Corrs for the Receivers.
2015 Agreements and consideration
56 The plaintiffs, in effect, contend that the 2015 Agreements to the extent they are intended to have retrospective effect and cover work already done are ineffective because they are bad for past consideration. Corrs submits that there was consideration for the 2015 Agreements, namely executed consideration and the consideration was not past consideration.
57 If services are rendered by a plaintiff at the defendant's request and there is a subsequent promise to pay, because the arrangement was never intended to be gratuitous, the consideration for the promise to pay is the performance of the services by the plaintiff and such consideration is not past consideration but valuable executed consideration: D'Allessandro & D'Angelo (A firm) v Cooper (Unreported, WASC, Library No 960334C, 21 June 1996) 9 - 13; Q Coal Pty Ltd v Cliffs Australia Coal Pty Ltd [2010] QSC 479 [25] - [31].
58 The plaintiffs say that the 2006 Agreements were complete in their terms, and so too were any subsequent retainers arising out of instructions subsequently provided by the Receivers not governed by the 2006 Agreements. I do not accept that argument. The issue whether the 2015 Agreements extend the scope of work covered by the 2006 Agreements and contain a promise of payment for that work only arises if it is found or assumed that the 2006 Agreements are limited in scope such that they do not fix the quantum of remuneration for the extended scope of work. In that event the 2015 Agreements are supported by executed consideration. If the 2006 Agreements do not extend beyond advice in the sense of giving opinions regarding the substance or procedure of the law in relation to factual situations, there was no implied agreement that the Receivers would pay the scale costs for the work done on instructions not covered by the 2006 Agreements: D'Allessandro & D'Angelo v Cooper (10 - 11). Therefore, in that event the subsequent retrospective agreements were not unsupported by new consideration.
No issue of fiduciary duty arises
59 The final matter raised by the plaintiffs in their written submissions is that because of the fiduciary relationship between a legal practitioner and the client, the conflict which arises between the interest of the practitioner and the interest of the client when a retrospective costs agreement is made requires the practitioner to ensure that the client's consent is fully informed which will usually require the full extent of the practitioner's interest and how it does or may conflict with the client's interests to be clearly spelt out and understood by the client and preferably to include the client obtaining independent advice. The plaintiffs did not press their earlier written submission that the Receivers' agreement to the 2015 Agreements were not with the fully informed consent of the Receivers but did not withdraw the statements concerning the need for fully informed consent to which I have referred.
60 There is no evidence that the Receivers agreed to make the 2015 Agreements without fully informed consent. The Receivers are parties to this proceeding and have not made such a submission. In the absence of any evidence that the Receivers did not make the 2015 Agreements with their fully informed consent, the matter is not properly raised as an issue.
2015 Agreements - conclusion
61 I find that the 2006 Agreements cover all of the work performed by Corrs for the Receivers in relation to the receiverships and those agreements were not discharged by the 2015 Agreements. Therefore, it is unnecessary to consider whether the 2015 Agreements also apply to any taxation of Corrs' bills of costs. However, if I am wrong in that conclusion then I find that if the 2006 Agreements cover only advice in the sense of giving opinions regarding the substance or procedure of the law in relation to particular factual situations, then the remainder of the work carried out by Corrs for the Receivers between January 2006 and 30 June 2007 is covered by the 2015 Agreements and the 2015 Agreements apply to the taxation of Corrs' bills of costs to that extent.
Answers to sub-issue (a)
62 For the reasons which I have given the answers to sub-issue (a) are as follows. Each of the 2006 Costs Agreements and 2015 Costs Agreements apply to the whole of the work done by Corrs for the Receivers in their capacity as principals and in their capacity as agents of each of the companies. The 2006 Costs Agreements and 2015 Costs Agreements must be given effect in any taxation or costs assessment under either the WA Act or the NSW Act of each of the bills of costs the subject of the application and in relation to all of the work the subject of the bills.
Does NSW Act apply to the exclusion of WA Act?
63 Corrs says that the 2006 Agreements, and indeed the 2015 Agreements, give rise to a choice of law issue, that is whether the WA Act or the NSW Act applies to the taxation of Corrs' bills of costs. I will consider the position on the assumption that the 2006 Agreements apply to all of the work done by Corrs between January 2006 and 30 June 2007 for the Receivers in relation to the receiverships but if I am wrong in that conclusion and the 2006 Agreements apply to only part of the work and the 2015 Agreements apply to the remainder of the work then the same conclusions follow in relation to whether the WA Act or the NSW Act applies to the taxation of Corrs' bills of costs.
64 The work carried out by Corrs which is the subject of their bills was carried out in part in Western Australia, in part in New South Wales and in part in Victoria, in part by practitioners who practice in Western Australia, in part by practitioners who practice in New South Wales or Victoria and not in Western Australia. The 2006 Agreements provide that the law of New South Wales applies to legal costs in relation to the matter the subject of the Agreements.
65 Part 13 div 3 of the WA Act provides for taxation and recovery of costs. Section 231(3) entitles a party charged to require a 'legal practitioner' to serve upon the party charged an itemised bill. Section 232(3) entitles a person charged to serve upon a 'legal practitioner' notice of intention to have the bill taxed. Part 3.2 of div 11 of the NSW Act deals with costs assessment of bills of costs of law practices. Section 303 provides that pt 3.2 applies to a matter if the client first instructs the law practice in relation to the matter in New South Wales. Corrs say that the relevant matter is, in relation to each of the plaintiff companies, the receivership of each company and Corrs first received instruction in relation to each matter in New South Wales. On the face of it both the WA Act and the NSW Act may apply to the taxation of the legal costs in the Corrs' bills.
Choice of law principles
66 Where two statutes potentially apply to the same events or circumstances, the orthodox approach to resolving the problem of which statute applies in a given case is by using jurisdiction selecting choice of law rules. The principle was explained by Dixon J in Wanganui-Rangitikei Electric Power Board v AMP Society [1934] HCA 3; (1934) 50 CLR 581. The Board, incorporated under the laws of New Zealand, borrowed money from the Society which was incorporated in New South Wales under an agreement embodied in deeds which provided that the monies were to be repaid with interest secured by debentures on property of the Board. The monies were paid by the Society to the Board in New Zealand but the debentures were made payable in New South Wales. The Board sought to repay the debentures in New South Wales with the amount of interest reduced in accordance with the provisions of the Interest Reduction Act 1931 (NSW). The Interest Reduction Act referred to the 'obligation to pay interest' but did not expressly provide any relevant limitation to the obligations to pay interest to which it applied. The High Court held that the provisions of the Interest Reduction Act did not apply to the Board's obligation. Dixon J held that the operation of the general words of the Act should be confined to those obligations which arise under the law of New South Wales and should not be extended to include an obligation which arose under, and was governed by, the law of New Zealand:
The rule is that an enactment describing acts, matters or things in general words, so that, if restrained by no consideration lying outside its expressed meaning, its intended application would be universal, is to be read as confined to what, according to the rules of international law administered or recognized in our courts, it is within the province of our law to affect or control. The rule is one of construction only, and it may have little or no place where some other restriction is supplied by context or subject matter. But, in the absence of any countervailing consideration, the principle is, I think, that general words should not be understood as extending to cases which, according to the rules of private international law administered in our courts, are governed by foreign law. As the present statute deals with the discharge pro tanto of obligations, it ought to be understood as confined to those obligations which arise under the law of New South Wales (601).
67 The principle that statutory provisions have no application to matters governed by the law of another State because of the application of choice of law rules is a presumptive principle only and will not apply in circumstances where the statute manifests a contrary intention. A statute that operates to override what would otherwise be the applicable law in accordance with the choice of law rules of the forum is commonly referred to as a mandatory law of the forum.
68 The High Court considered which of two statutes potentially applied in Sweedman v Transport Accident Commission [2006] HCA 8; (2006) 226 CLR 362. The Transport Accident Commission (TAC) paid compensation to two Victorian residents who were injured in a collision between motor vehicles in New South Wales. The TAC sued in Victoria to recover an indemnity under the Transport Accident Act 1986 (Vic) from the New South Wales driver whose negligence was assumed to have caused the collision. The New South Wales driver argued that the Victorian Act did not apply in relation to liability arising in New South Wales under New South Wales law. The High Court held, by majority, that the TAC was entitled to an indemnity under the Victorian Act. The plurality, Gleeson CJ, Gummow, Kirby and Hayne JJ, observed at [18] that the legislation of one State may have legal consequences for persons or conduct in another State. Their Honours said there are three relevant corollaries to that general proposition. The first is that it is sufficient for the validity of a law that it has any real connection between its subject matter and the State. The second is:
… as to adjudication of the legal consequences referred to above, the choice of law rules have the important function, in the absence of an effective statutory overriding requirement, of selecting the law to be applied to determine the consequences of acts or omissions which occurred in a State … other than that where action is brought. This means that questions of alleged 'inconsistency' between the laws of several States must be considered not at large, but first with allowance for the operation of applicable choice of law rules. This may remove the necessity in a given case to answer those questions of inconsistency [19]. (citation omitted)
- The third observation is that because there is a single common law of Australia there will be no difference in the party's rights or obligations no matter where in Australia those rights or obligations are litigated.
69 Their Honours then went on to consider the applicable choice of law rule. Their Honours said at [25] that two essential steps should be taken to resolve the choice of law question. The first step concerns the character in law of the claim made by the claimant, in that case a claim for indemnity under s 104(1) of the Victoria Act, and the identification of the choice of law rule applicable to that claim. The second step concerned the operation upon the indemnity claim of the Federal jurisdiction which was engaged in that case but has no application in this case. As to the first step, their Honours said that the obligation of the appellant to indemnify was distinct from any underlying claim in tort and hence the choice of law rule in tort has no direct role to play. Their Honours said that 'the requirement to fix the appropriate degree of attribution to the negligence of the tortfeasor before quantification of the amount recoverable by the Commission on the indemnity, suggests a characterisation more akin to indebitatus assumpsit than to the old action of debt' and that the description by Nettle JA in the Victorian Court of Appeal of the right of indemnity as 'enforceable as a quasi-contractual cause of action in the nature of a quantum meruit' was consistent with the view of Bray CJ on analogous provisions in other legislation. Their Honours said that on that classification, for the purposes of the choice of law rules, the law applicable to the action will be the law of the state with which the obligation of the appellant to indemnify the Commission has the closest connection. Their Honours went on to decide that the applicable law was the law of Victoria because that was the source of the compulsion on the Commission to make payments. It was unnecessary to decide the nature of the governing choice of law since Victorian law was the preferable law regardless of how the obligation to indemnify was categorised.
The NSW Act
70 Corrs submits that the NSW Act is prima facie applicable. Section 301 of the NSW Act provides that the purpose of pt 3.2 of the Act is, among other things, to provide a mechanism for the assessment of legal costs. Division 11 of pt 3.2 provides for costs assessments. Section 303 provides that pt 3.2, including div 11 which deals with costs assessments, applies to a matter if the client first instructs the law practice in relation to the matter in New South Wales. 'Law practice' is defined in s 4 to include a law firm which in turn is defined as a partnership consisting of Australian legal practitioners. That is, Corrs submits, s 303 explicitly provides that pt 3.2 applies whenever an Australian law firm is first instructed in New South Wales.
71 Corrs says that the difficulty identified by the definition of legal practitioner in the WA Act does not arise under the NSW Act such that, if the costs assessment regime under the NSW Act should apply to the exclusion of the WA Act, the whole of the bills may be the subject of costs assessment under the NSW Act if an extension of time is granted under s 350(5) of the NSW Act.
72 Section 306 of the NSW Act provides that a client first instructs a law practice in relation to a matter in New South Wales if the law practice first receives instructions from or on behalf of the client in relation to the matter in New South Wales, whether in person or by post, telephone, fax, email or other form of communication. That is, Corrs submits, the focus is on the place where instructions are first received, not on the place from where instructions are initially provided. Corrs first received instructions with respect to the receivership of the Westpoint Group including the plaintiff companies by Mr Emmett in New South Wales.
73 Section 305(1) provides that s 305 applies if pt 3.2 applies to a matter by the operation of, relevantly, s 303. Section 305(2) provides that pt 3.2 ceases to apply if:
(i) the legal services are or will be provided wholly or primarily in another State or Territory, and/or
(ii) the matter has a substantial connection with another State or Territory; and
(I) the client enters under the 'corresponding law' of the other State or Territory into an agreement with the law practice that the corresponding provisions of the corresponding law apply to the matter; or
(II) the client notifies under the corresponding law of the other State or Territory the law practice in writing the client requires the corresponding provisions of the corresponding law to apply to the matter.
- Section 4 defines 'corresponding law' as a law of another State or Territory that corresponds to the relevant provisions of the NSW Act or, if a regulation is made declaring a law of the other State or Territory to be a law that corresponds to the NSW Act, the law so declared. By reg 5(e) of the Legal Profession Regulation 2005 (NSW), the WA Act is prescribed as 'corresponding law'.
74 Thus, Corrs submits, by s 305(2) of the NSW Act, if legal services were wholly or primarily provided in Western Australia and/or the matter had a substantial connection to Western Australia, the Receivers could have made costs agreements with Corrs making the WA Act apply or could have notified Corrs under the WA Act that the Receivers required the WA Act to apply. In that way the WA Act could have been made applicable to the exclusion of the NSW Act. However, no such agreement was made nor notification given by the Receivers. Hence, Corrs submits, pt 3.2 of the NSW Act continues to apply to the costs agreements. Furthermore, s 308 expressly deals with what happens when different laws apply in different periods. Other than making it plain that the NSW Act intends that only one regime should apply at any given time, s 308 does not directly answer the choice of law question posed by the prima facie applicability of both the WA Act and the NSW Act.
The WA Act
75 The plaintiffs submit that the WA Act applies to the taxation of the bills. Section 235(1) of the WA Act provides that when taxing an itemised bill of costs a taxing officer must give effect to any costs agreement made as to the costs specified in the bill. Section 3 defines 'legal practitioner' to mean either a person who is admitted as a legal practitioner and whose name is on the roll of practitioners or a person who is an 'interstate practitioner' who practices in Western Australia. 'Interstate practitioner' is defined as a person who has been admitted to legal practice in another State, is not a 'local practitioner', holds a current interstate practice certificate and whose principal place of practice is in that other State. 'Local practitioner' is defined to mean a person who holds a current practice certificate and whose principal place of practice is in Western Australia. Section 90 provides that an interstate practitioner is entitled to engage in legal practice in Western Australia and must comply with the WA Act when engaging in legal practice in Western Australia.
WA Act is not a mandatory law
76 The WA Act does not expressly or by necessary implication override what would otherwise be the law governing the right of a non-client to tax a legal practitioner's bill selected by the application of the choice of law rules applicable in Western Australia.
77 The language of the WA Act does not expressly or impliedly state that the right of persons to tax legal practitioners' bills of costs under the WA Act is to apply and to operate irrespective of the applicable choice of law rules. The WA Act does not manifest an intention to apply to the taxation, by a client or non-client, of bills for work done in Australia including but not confined to Western Australia.
78 Corrs submits the WA Act manifests an intention to regulate bills with respect to legal work done in Western Australia and does not expressly address legal work done across Australia including in Western Australia. The right to give notice under s 232(3) to a legal practitioner to have a bill taxed is a right given to a 'person charged' only against a person admitted as a legal practitioner in Western Australia or an 'interstate practitioner' who practices in legal practice in Western Australia. No right to taxation of bills rendered by an interstate practitioner, for work carried out outside Western Australia, is given by s 232(3) of the WA Act. Corrs submits that this is an indication that the WA Act does not permit the taxation of all bills rendered for all legal work done both within and outside Western Australia where bills indiscriminately refer to work done inside and outside Western Australia. This is particularly so, it was submitted, if another regime in another State would apply. In that circumstance, Corrs submits, the WA Act is not intended to regulate work carried out across the country which is the subject of one bill of costs. This, Corrs says, leads to the conclusion that the taxation regime in the WA Act is not intended to be mandatory and is not intended to apply to the exclusion of any other taxation regime in other States. I accept that argument. The WA Act does not explicitly deal with bills of costs that involve legal work in Western Australia and in other States by legal practitioners practising principally in different States by a national law firm. The WA Act does not explicitly deal with bills rendered by national or international firms where the work on a particular matter crosses State boundaries and is done across the country.
79 The WA Act is not a mandatory Act. It is necessary to determine whether the WA Act or the NSW Act applies to the taxation of bills by a client or non-client by applying the relevant choice of law rule.
Relevant choice of law rule
80 The court must decide upon the appropriate choice of law rule. Whether the plaintiffs' claims are governed by the WA Act or the NSW Act must be decided in relation to the particular issue in dispute: MacMillan Inc v Bishops Gate Trust Plc [No 3] [1995] EWCA Civ 55; [1996] 1 WLR 387.
81 Corrs submit that the relevant issue is as to the rights given by statute to a third party to obtain a taxation or costs assessment. In my view that is taking too narrow a view of the issue in dispute. In my view, the legal issue between Corrs and the plaintiffs is the amount at which Corrs' bills of costs should be allowed and consequentially whether Corrs is liable to repay any to the Receivers any part, and if so what part, of the legal costs paid to it by the Receivers.
82 In my view the issue in dispute should be characterised as one concerning a restitutionary obligation or a quasi-contractual statutory claim. That approach is supported by the judgment of the plurality in Sweedman. The applicable common law choice of law rule stated in the 14th edition of Dicey, Morris & Collins on the Conflict of Laws (2006), page 1863 and reproduced with apparent approval in the 9th edition of Nygh's Conflict of Laws in Australia (2014) at [21.5] is as follows:
(i) The obligation to restore the benefit of an enrichment obtained at another person's expense is governed by the proper law of the obligation.
(ii) The proper law of the obligation is (semble) determined as follows:
(a) if the obligation arises in connection with a contract, its proper law is the law applicable to the contract;
(b) if it arises in connection with the transaction concerning any moveable (land), its proper law is the law of the country where the immovable is situated (lex situs);
(c) if it arises in any other circumstances its proper law is the law of the country where the enrichment occurs.
- A number of authorities are cited in support of the principle that if the obligation arises in connection with a contract, the proper law of the obligation is the law applicable to the contract.
83 The proper law of the obligation of Corrs to refund the amount, if any, of the legal costs paid to it by the Receivers in excess of the amount at which its bills of costs are allowed arises in connection with the 2006 Cost Agreements. It is the 2006 Cost Agreements which determine the amount of legal costs to which Corrs are entitled and therefore the amount at which its bills of costs will be allowed. The proper law of the 2006 Costs Agreement is the law of New South Wales. That is because the 2006 Costs Agreement expressly provide that 'the law of New South Wales applies to legal costs in relation to your matter'.
Answer to referred question 1 and sub-issues (b) and (c)
84 The answer to sub-issue (b) is that the plaintiffs' application is or will be governed by the NSW Act. I find it unnecessary to answer the further matters raised in sub-issue (b). The answer to the questions posed in sub-issue (c) is that none of the plaintiffs is a party charged under s 228(2) of the WA Act because the taxation of Corrs' bills is or will be governed by the NSW Act. The answer to referred question 1 is:
No. None of the plaintiffs is 'a person or party charged' within the meaning of s 228(2)(a) of the Legal Practice Act 2003 (WA), and none of them is entitled to make an application under s 232(2) of the WA Act for an extension of time to require itemisation of all the bills rendered by Corrs to the companies.
Legal Practice Act 2003 (WA Act)
85 It is not necessary to decide whether, as a matter of construction, any of the plaintiffs is a 'person or party charged' within the meaning of s 228(2)(a) of the WA Act entitling them to make the application to the court they have made for an extension of time to require itemisation of all the bills rendered by Corrs to the companies. That is because the taxation of the Corrs' bills is governed by the NSW Act and not the WA Act. However, in case I am found on appeal to be wrong in that conclusion I will consider whether the plaintiffs are a party charged for the purposes of the WA Act assuming that the taxation of Corrs' bills of costs is governed by the WA Act.
86 Section 231(3) of the WA Act provides that at any time within 30 days from the service of a bill of costs for a lump sum the party charged may require the legal practitioner to serve upon the party charged, in lieu of the lump sum bill, a bill containing detailed items. Section 232(3) provides that a person charged with a bill of costs that contains detailed items may 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 upon service of that notice, have the bill taxed by the taxing officer. Section 229(1) provides that a taxing officer may enlarge the time prescribed by s 232(3)(a) or any other provision of pt XIII div 3 for the taking of any step.
87 The plaintiffs may require Corrs to serve on them itemised bills of costs and request taxation of those itemised bills if they are a 'party charged'. Section 228(2) of the WA Act provides that a reference to the person or party charged includes a reference to:
(i) a person who has paid the bill to which the charge relates;
(ii) any other person who is authorised to administer the estate or affairs of any such person who is deceased, incapable or insolvent;
(iii) a person liable to pay or to reimburse another for costs in a bill; or
(iv) a person who is a beneficiary of a trust estate or fund against which costs may be chargeable.
- The plaintiffs say that they are a party charged as defined in s 228(2)(a)(iii), that is 'a person liable to pay or to reimburse another for costs in a bill'.
Liable to pay
88 The expression 'liable to pay' is capable of more than one meaning. In Andrew Koh Nominees Pty Ltd v Receiver & Manager of the Balneum Joint Venture [2007] WASCA 152; (2007) 33 WAR 561 (Andrew Koh) the Court of Appeal held that 'a person liable to pay' is to be given a wide meaning. Buss JA, with whom Steytler P agreed, said that s 228(2)(a) of the WA Act is a remedial provision and its apparent object is to enable a person upon whom the financial burden of a legal practitioner's bill of costs falls to require that the bill be taxed. The costs in question were the legal costs incurred by the receiver and manager appointed by a joint venture and they were challenged by the appellant which was one of the joint venturers. The costs had been paid from money in a bank account in the name of the joint venture. The question was whether the appellant was a party 'charged with a bill of costs' which it was only if it was 'liable to pay' those costs. The court held that the joint venturers were persons liable to pay the costs in the bills of costs rendered by the legal practitioner and therefore a party charged.
89 The Receivers say that this case is distinguishable from Andrew Koh on the ground that the Court of Appeal there addressed the position of a court appointed receiver not a privately appointed receiver. The Receivers say that the distinction is material for the following reasons. A secured creditor has a proprietary right over the assets of the borrower. Consequently, where the assets of a company in private receivership are applied to paying the legal costs of the receivers, the receivers apply assets which belong in equity to the secured creditor subject to the borrower having a right of redemption to the extent that there is any surplus. The payment of legal costs by the receiver in a private receivership does not involve the use of any property beneficially owned by the borrower. The costs are paid from assets owned in equity by the secured creditor.
90 The ratio decidendi of Andrew Koh is in [35] and [36] of the reasons of Buss JA. Buss JA said in [35] that the appellants are persons liable to pay costs in the bills of costs rendered by the practitioner because the receiver was lawfully empowered by the orders of the court appointing the receiver to apply the joint venturers' property in the payment of the costs (assuming they are reasonable and have been properly incurred). In [36] his Honour contrasted Andrew Koh from cases such as Equuscorp Pty Ltd v Short Punch & Greatorix [2000] QCA 407; [2001] 2 Qd R 580 and Re Barber (1845) 153 ER 665 on the ground that in Andrew Koh at all material times the credit balance from time to time in the joint venture bank account which the receiver applied in payment of the bills of costs rendered by the legal practitioner was the joint venturers' property.
91 The plaintiffs rely upon the statement of the relevant law by Buss JA in Andrew Koh where his Honour said:
In my opinion, a person will be 'liable to pay' costs in a bill, within s 228(2)(a)(iii), if, relevantly:
(a) the person is under a legally enforceable personal obligation to pay the legal fees in a bill of costs to the legal practitioner who rendered the bill;
(b) the person is under a legally enforceable personal obligation to reimburse another person for the legal fees in a bill of costs which that other person has paid to the legal practitioner who rendered the bill; or
(c) the person's property may lawfully be applied in paying the legal fees in a bill of costs to the legal practitioner who rendered the bill, or in reimbursing another person for the legal fees in a bill which that other person has paid to the relevant practitioner.
It is not essential that there be a contractual or other relationship between the person who is under a legally enforceable personal obligation to pay or reimburse the legal fees, or whose property may lawfully be applied in paying or reimbursing the legal fees, on the one hand, and the legal practitioner in question, on the other. Where a person's property may lawfully be applied in paying the legal fees in a bill of costs etc, that person will in substance be 'liable to pay' costs in a bill, within s 228(2)(a)(iii). It would be inconsistent with the evident intention of the Parliament and with the remedial character of s 228(2)(a) to hold that such a person was not 'liable to pay'. The reasoning in Debney, at 394, 396 - 397, is, with respect, persuasive and should be applied, by analogy, in the present case. Also see Parramatta River Lodge at 12,040. The examples I have given of a person who will be 'liable to pay' costs in a bill, within s 228(2)(a)(iii), are not intended to be exhaustive.
92 In so far as Buss JA said that a person will be liable to pay costs in a bill if the person is under a legally enforceable personal obligation to reimburse another person for the legal fees in a bill of costs which that other person has paid to the legal practitioner who rendered the bill, that part of the judgment was wider than necessary to dispose of the case and in that sense is obiter dicta which I am not bound to follow. However, that would be an unrealistic view to take. When two members of the Court of Appeal have said, after careful examination of the authorities, that a person will be liable to pay costs in a bill within s 228(2)(a)(iii) of the WA Act if they are under the specified obligation, I think that a first instance judge should follow that statement of the law and proceed on the basis that a person will be liable to pay costs in a bill if they are under the specified obligation.
93 The plaintiffs submitted that each of the plaintiff companies and Mr Carey is under a legally enforceable obligation to reimburse the Receivers for the legal fees in the bills of costs which the Receivers have paid to Corrs. That was not disputed by the Receivers, in my view correctly.
94 Clause 11.2(b) of the Loan Agreement provides that the Borrower must on demand pay and if paid by the Lender reimburse to the Lender the Lender's costs and expenses in relation to, amongst other things, the exercise or attempted exercise of any of the rights of the Lender under the Transaction Documents. The Transaction Documents include the Loan Agreement, the Guarantee, the Charges and any agreement or instrument created under any of them. Clause 12.1 provides that the Borrower indemnifies the Lender, that is Perpetual Nominees, on demand against any liability, loss, cost or expense caused or contributed to by the exercise or attempted exercise of any right by the Lender or any Receiver under the Transaction Documents. Clause 12.2 provides that the Borrower indemnifies each Receiver against any liability, loss, costs and expense caused or contributed to by anything the Lender is indemnified against under cl 12.1 and the Lender holds the benefit of that clause on trust for those persons.
95 Clause 3.1 of the Guarantee provides that the Guarantor, which includes Mr Carey, unconditionally and irrevocably guarantees to the Lender the punctual payment to it by the Borrower of the Guaranteed Money. The Guaranteed Money includes all money and damages which the Borrower is or at any time may become actually or contingently liable to pay to or for the account of the Lender for any reason whatsoever. Clause 9 of the Guarantee provides for the Guarantor to indemnify the Lender in essentially the same terms as cl 12.1 of the Loan Agreement.
96 Clause 5.1 of each Charge provides that the Chargor must pay the Secured Money to the Lender in accordance with any agreement which obliges the Chargor to pay it. Secured Money includes all money which the Chargor (whether alone or with another person) is or at any time may become actually or contingently liable to pay to or for the account of the Lender for any reason whatsoever. Clause 11 provides that the Lender, Perpetual Nominees, may appoint a receiver or receiver and manager of the property of the Chargor. Clause 12.1 provides that the receiver is the agent of the Chargor who is responsible for the receiver's acts and omissions and remuneration. Clause 18.1 of the Charge provides that the Chargor indemnifies the Lender on demand against any liability, loss, cost or expense in essentially the same terms as cl 12 of the Loan Agreement. Clause 18.2 provides that the Chargor indemnifies each Receiver against any liability, loss, cost and expense caused or contributed to by anything the Lender is indemnified against under cl 18.1 and the Lender holds the benefit of this clause on trust for those persons.
97 The effect of the various instruments is that each Borrower and each Guarantor is obliged to indemnify the Receiver for loss, cost and expense incurred by the Receiver acting as such. As regards each Borrower, cl 12.2 of the Loan Agreement applies. As regards each Guarantor, by cl 3.1 a Guarantor covenants to pay the Guaranteed Money which the borrower is liable to pay to the Lender. Neither the Borrower's nor the Guarantor's obligation to indemnify is conditional on demand being made.
98 It is not necessary that to be a person liable to pay the costs a person must be under a legal obligation to pay the specific legal costs in question rather than under a general obligation which included payment of the costs in question. Buss JA drew no such distinction in Andrew Koh.
99 I find that if the WA Act applies to the taxation of Corrs' bills of costs then each of the plaintiff companies and Mr Carey is a person liable to pay or reimburse the Receivers for costs in the bills rendered by Corrs and are therefore each a party charged within the meaning of s 228(2)(a) of the WA Act.
Does Mr Carey have authority to cause plaintiff companies to bring application?
100 The second question referred by the registrar is conditioned on the answer to the first question being that each plaintiff is a party charged entitled to make the application. The second question does not strictly arise because my answer to the first question is that each plaintiff is not a party charged and is not entitled to make the application for an extension of time under s 232(3) of the WA Act. However, in case the matter goes on appeal I will set out my answer to question 2 in a summary way on the assumption that each of the plaintiffs is a person or company charged within the meaning of s 228(2)(a) of the WA Act and is entitled to make the application for an extension of time under the WA Act.
101 The appointment of a receiver and manager reduces but does not wholly destroy the powers of the board of directors. The question is whether the appointment of the Receivers has displaced Mr Carey's authority, as director, to instruct solicitors to apply for an extension of time and if granted, the delivery of itemised bills notwithstanding the opposition of the Receivers to such an application. The appointment of receivers and managers displaces or limits director's powers. The question of the extent to which it does so depends, first, on the statutory framework and the terms of the instruments of their appointment and secondly, on the extent to which the action taken by the director will adversely affect the Receivers' performance of their functions.
102 The Receivers have not pointed to any provision of the Corporations Act 2001 (Cth) or of the instruments under which they were appointed as relevantly displacing or limiting the director's powers to bring the application.
103 In an interlocutory decision on a similar question I said that whether the director has residual power to cause the companies to cause the bills to be taxed depends upon whether the taxation is likely to interfere with the ongoing conduct of the relationship: Huntingdale Village Pty Ltd v Mallesons Stephen Jacques [2013] WASC 48 [44] - [50]. Both the plaintiffs and the receivers adopted that test.
104 I am not satisfied that the evidence adduced or arguments advanced by the Receivers establishes that the plaintiffs making and proceeding with this application will interfere with the Receivers' conduct of the Receivership.
105 The answer to question 2 referred by the registrar is as follows:
The question does not arise because the answer to the first question is that each plaintiff is not a party charged within the meaning of s 228(2)(a) of the Legal Practice Act 2003 (WA). However, if each of the plaintiffs is a person or party charged within the meaning of s 228(2)(a) of the Legal Practice Act, Mr Carey as the sole director of each of the plaintiff companies in receivership has authority to cause that company to seek the enlargement of time.
The stay application
106 The Receivers have applied for an order that this proceeding be stayed until the final determination of COR 223 of 2009. It is convenient at this time to refer to matter COR 223 of 2009.
COR 223 of 2009
107 In September 2005 Perpetual Nominees Ltd as lender and Westpoint Corporation and the first to fourth plaintiffs (together the Borrowers) as borrower entered into a loan agreement (Loan Agreement). Perpetual Nominees as lender and Mr Carey, the fifth plaintiff, Paragon Apartments Pty Ltd, and others as guarantors entered into a guarantee and indemnity (Guarantee) by which the guarantor guaranteed to the lender the payment to it by the Borrowers under the Loan Agreement of the Guaranteed Money, that is all money and damages which the Borrowers are liable to pay to the lender. By way of materially identical instruments of fixed and floating charge (Charge) each of the Borrowers and each of the corporate guarantors (together the Chargors) granted a fixed and floating charge in favour of Perpetual Nominees over the whole of their assets and undertaking or, in the case of the second plaintiff, Silkchime Pty Ltd, specific assets, to secure the borrowings under the Loan Agreement.
108 The plaintiffs defaulted under the Loan Agreement. On 24 January 2006 Perpetual Nominees appointed the Receivers as receivers and managers of the Chargors, including each of the plaintiff companies. Since 24 January 2006 the Receivers have realised assets and caused the Chargors to repay amounts due to Perpetual Nominees. The first defendant, Corrs, have been engaged by the Receivers to carry out legal services in relation to a range of matters in Western Australia, New South Wales and elsewhere concerning the receiverships.
109 In September 2009 the plaintiffs commenced proceedings in the Victorian registry of the Federal Court of Australia against Perpetual Nominees and the Receivers alleging misconduct by the Receivers. The Federal Court ordered that the proceedings be transferred to this court where they became matter COR 223 of 2009. I have case managed that proceeding since it was transferred to this court.
110 The plaintiffs filed a statement of claim and amended statements of claim. The Receivers applied to disallow amendments to a large number of the paragraphs of the plaintiffs' re-amended statement of claim. In September 2013 I ordered that a large number of paragraphs of the plaintiffs' re-amended statement of claim be disallowed: Huntingdale Village Pty Ltd (Receivers and Managers Appointed) ATF Huntingdale Village Unit Trust v Perpetual Nominees Ltd [2013] WASC 352.
111 Though the plaintiffs' re-amended statement of claim has been substantially struck out, that pleading and a minute of proposed further amended statement of claim (minute of proposed second further re-amended statement of claim) disclose the nature of the claims which the plaintiffs pursue in that proceeding. The plaintiffs allege that the Receivers realised assets of the Borrowers and the Guarantors and as from 23 January 2008 the Secured Money has been completely paid. The Secured Money is the amount in which the Borrowers and the Guarantors were liable to Perpetual Nominees at the appointment of the Receivers. The plaintiffs say that since at least 23 January 2008, wrongfully and in breach of the relevant Charge, Perpetual Nominees has failed and refused to discharge the relevant security interest and remove the Receivers. The plaintiffs say that the Receivers' conduct in continuing the receiverships after the Secured Money had been repaid was a trespass to the property of the plaintiffs and the Receivers and Perpetual Nominees have forfeited all rights of indemnity from the plaintiffs in respect of the receiverships from at least 24 January 2008. The plaintiffs make other wide ranging challenges to the Receivers' remuneration and expenses and to fees paid by the Receivers to Corrs for legal services. Corrs are not a party to COR 223 of 2009.
The previous stay applications
112 Corrs applied for an order that the proceeding be stayed until final determination of COR 223 of 2009. On 2 March 2013 the Master 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 stayed the proceeding on the basis that there were issues to be determined in COR 223 which are also to be determined in this application and those issues should be determined in COR 223. Further, the Master found that there was an overlap between issues to be determined in this matter and in another proceeding brought by the plaintiffs in this court - CIV 1940 of 2010. The Court of Appeal dismissed an appeal by the plaintiffs against the stay ordered by the Master: Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Corrs Chambers Westgarth (A Firm) [2013] WASCA 275. The Master subsequently dismissed an application by the plaintiffs to lift the stay: Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Corrs Chambers Westgarth (A Firm) [2014] WASC 223.
113 By chamber summons of 2 June 2015 the plaintiffs applied for an order that the stay ordered by the Master 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 plaintiffs undertook to the court that if the stay was lifted the plaintiffs will not pursue in COR 223 of 2009 claims relating to the engagement of Corrs by the Receivers and the bills rendered by Corrs to the Receivers. The plaintiffs said that the effect of the undertaking is that there would be no issues common to this application and COR 223. Corrs opposed the lifting of the stay for a number of reasons which gave rise to three broad issues. First, Corrs submitted that the issues raised by the plaintiffs' minute of proposed second further re-amended statement of claim in COR 223 continued to give rise to an overlap of issues in COR 223 and this proceeding. In response, the plaintiffs undertook in COR 223 not to pursue matters pleaded in specific paragraphs of the existing statement of claim and that they will amend the minute of proposed second further re-amended 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. Secondly, Corrs submitted 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 WA Act of their intention to have Corrs' bills taxed. Thirdly, Corrs submitted that it was 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 and not in separate proceedings.
114 I ordered that the stay be lifted: Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Corrs Chambers Westgarth (A Firm) [No 2] [2015] WASC 408. I said:
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 [28].
115 On 12 February 2016 the registrar, pursuant to O 66 r 45 RSC, referred questions for the direction of the court. On 12 April 2016 I ordered that the Receivers be joined as the second defendants to the action. On 17 May 2016 I ordered that Mr Carey be joined as a plaintiff to the action.
116 By chamber summons of 22 April 2016 the Receivers applied for an order that the proceeding be stayed until the final determination of COR 223 of 2009.
Power to stay proceeding
117 The taxation application made by the plaintiffs pursuant to the WA Act is an action cause or matter to which RSC O 4A r 1 applies: Huntingdale Village Pty Ltd as Receiver and Manager of Huntingdale Village Pty Ltd v Corrs Chambers Westgarth [2013] WASCA 275 [32] (Newnes and Murphy JJA).
118 The court has power to stay one action, cause or matter until another related action has been resolved either pursuant to its inherent jurisdiction or its powers to make case management directions. In Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Mallesons Stephen Jacques [No 2] [2014] WASC 60 I said:
The inherent power of the court to control the conduct of its proceedings and the power of the court to make case management directions under Supreme Court Rules 1971 (WA) O 4A r 2(1) confers on the court power to stay one action before the court until another related action before the court has been resolved. A case management direction, and the exercise of the court's inherent powers, should have regard to the objects set out in O 1 r 4A and 4B of the Rules. Order 1 r 4A in effect provides that the practice, procedure and interlocutory process of the court shall have as their goal the elimination of unnecessary delay in the resolution of proceedings. Order 1 r 4B provides that the court should exercise its powers of case management with the objects there specified. Sometimes there is, or may appear to be, a tension between some of those objects. For example, the objects include:
(b) disposing efficiently of the business of the court; and
(d) facilitating the timely disposal of business.
The court should use its case management powers to ensure the quick, inexpensive and efficient resolution of proceedings before the court. The only effective means for reducing the costs of the parties are measures which result in less work being done by lawyers over the course of a proceeding. Where, as here, separate proceedings are related, the court should consider whether it should use its case management powers to achieve efficiency by ensuring that issues are resolved in one proceeding before costs are incurred in preparing for and conducting a trial of the same issues in another proceeding. However, at the same time the court must be mindful to ensure that each proceeding is resolved as quickly as is consistent with the efficient and just resolution of the proceeding [20] - [21].
119 Senior counsel for the Receivers, Mr Thomson SC, says that the court should use its case management powers to ensure the quick, inexpensive and efficient resolution of matters before this court and to that end the court should use its case management powers to achieve efficiency by ensuring that proceedings are resolved in a logical order so that costs are not unnecessarily incurred in preparing for and conducting a trial in another proceeding.
The Receivers' argument
120 The Receivers' application is made on the basis of the futility of progressing this proceeding before a final determination in COR 223 of 2009. To understand the Receivers' futility argument it is necessary to refer to the payment of Corrs' invoices and the state of the receiverships.
121 The amount of the invoices issued by Corrs to each of the Chargors between 24 January 2006 and 30 June 2007 totals $1,300,668.75. The Receivers paid the invoices from the relevant Receivership Accounts. The Receivership Accounts are the bank accounts opened by the Receivers in relation to each of the companies pursuant to s 421 of the Corporations Act. Mr Morgan has had the day-to-day conduct of the receiverships since August 2006 subject to the supervision of the Receivers. Mr Morgan estimates that the receiverships will ultimately be in deficit and that the amount of the deficit will range between approximately $1.6 million and $8.9 million subject to the outcome of this proceeding and COR 223 of 2009. Any amount recovered from the Receivers in COR 223 of 2009 or Corrs in this proceeding will reduce the deficit in the receiverships or, if sufficient funds are recovered, put them into surplus. The amount of the bills that are to be taxed in this proceeding is $1,300,668. Therefore, even if the total amount of every bill was taxed off the receiverships would still be in deficit and there would be no surplus for return to the plaintiff companies. Therefore, Mr Thomson submits it is pointless to tax Corrs' bills unless and until COR 223 of 2009 has been resolved and resolved in favour of the plaintiffs in an amount so as to put the receiverships into surplus allowing for a return to the plaintiff companies.
Plaintiffs' arguments against stay
122 Counsel for the plaintiffs, Mr Penglis, advances four reasons why this proceeding should not be stayed. First, the Receivers' application rests on case management principles. Whilst the court must have regard to case management principles it must also have regard to, and give priority to, substantive rights. In my opinion it is a conceptual error to approach the resolution of procedural matters such as the present application on the basis that substantive rights trump case management principles. RSC O 1 r 4B(1) says that actions will be managed in accordance with a system of positive case flow management with the objects of promoting the just determination of litigation, disposing efficiently of the business of the Court and maximising the efficient use of available judicial and administrative resources. Order 1 r 4B(2) requires the court to construe and apply the rules and conduct the processes and procedures of the Court so as best to ensure the attainment of those objects. In Aon Risk Services Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 the plurality stated that while a just resolution is the paramount purpose of r 21 of the Court Procedures Rules 2006 (ACT), which corresponds to RSC O 1 r 4B, what is a just resolution is to be understood in light of the purposes stated, including minimising costs.
123 The plaintiffs' second point is that if, following taxation, Corrs is required to refund part of the amounts paid to it, the Receivers, or ultimately the plaintiffs if and when there is a return of funds to them, will receive no interest in relation to the period between the payment of the invoices and the refund after taxation. Thirdly, the questions referred to me by the registrar are in relation to the plaintiffs' application for an extension of time. If and when I answer those questions and the registrar extends time, that enables a taxation of the bills but the taxation itself remains to be dealt with subsequently.
124 The plaintiffs' fourth point is that the futility argument does not apply to Mr Carey. Mr Carey is a guarantor and is obliged to indemnify the Receivers and Perpetual Nominees for any loss, cost and expense incurred. Mr Penglis says that Mr Carey has an interest in the taxation of the bills because he is liable for any deficiency in the receiverships and it is therefore to his benefit that an amount be refunded by Corrs to the receiverships and thereby diminish the amount of the deficiency.
Stay refused
125 Having regard to my answers to the referred questions the registrar will proceed to consider the plaintiffs' application for an extension of time. Having regard to my answers to the referred questions the registrar will not grant an extension of time. If that extension is refused the proceeding will be at an end.
126 The efficient and expeditious resolution of this proceeding will be advanced by refusing a stay and allowing the registrar to deal with and refuse the extension of time and thereby resolve the proceeding.
127 For that reason it is unnecessary to consider the arguments advanced by the Receivers for staying the proceeding.
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