Iron Mountain Mining Ltd v K & L Gates [No 2] - [2015] WASC 373

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: IRON MOUNTAIN MINING LTD -v- K & L GATES [No 2] [2015] WASC 373

CORAM: MASTER SANDERSON

HEARD: 8 SEPTEMBER 2015

DELIVERED : 6 OCTOBER 2015

FILE NO/S: LPA 34 of 2014

BETWEEN: IRON MOUNTAIN MINING LTD
Applicant
AND
K & L GATES
Respondent

Catchwords:

Legal costs - Third party payer - Effect of conviction when third party company have indemnified party for legal costs - Whether assessment available

Legislation:

Corporations Act 2001 (Cth)
Legal Practice Act 2003(WA)
Legal Profession Act 2008 (WA)

Result:

Iron Mountain not a third party payer
Appeal allowed

Category: A

Representation:

Counsel:

Applicant: Ms M L Coulson
Respondent: Mr B W Ashdown

Solicitors:

Applicant: Coulson Legal
Respondent: Stewart Forbes

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

Andrew Koh Nominees Pty Ltd v Receiver & Manager of the Balneum Join Venture [2007] WASCA 152; (2007) 33 WAR 561
Boyce v McIntyre [2009] NSWCA 185
Huntingdale Village Pty Ltd v Mallesons Stephen Jaques [2013] WASC 48
Iron Mountain Mining Ltd v K & L Gates [2015] WASC 291
Leckenby v Note Printing Australia Ltd [2014] VSC 538
Legal Services Commissioner v Wright [2012] 2 Qd R 360
National Acceptance Corporation Pty Ltd v Benson (1988) 12 NSWLR 213
Note Printing Australia Ltd v Leckenby [2015] VSCA 105

MASTER SANDERSON: This is an appeal from a decision of Registrar Whitby in which the learned registrar determined as a preliminary issue that Iron Mountain Mining Ltd (Iron Mountain), the applicant, was a third party payer within the meaning of the Legal Profession Act 2008 (WA) (the Act). The learned registrar dealt with the matter on the papers with the consent of the parties. She produced written reasons for her decision: Iron Mountain Mining Ltd v K & L Gates [2015] WASC 291. Although an appeal from a registrar is a hearing de novo I have had regard to the learned registrar's reasons. For the purposes of this appeal, I have also adopted the learned registrar's statement of facts. Neither counsel for K & L Gates, the appellant, nor counsel for Iron Mountain, the respondent, had any difficulty with that statement of facts.
By way of background it should be noted Iron Mountain applied for an assessment of costs rendered by K & L Gates to David Alan Zohar (client) which were paid by Iron Mountain. The registrar's summary of the facts was as follows:
The client was a director of the applicant from 11 February 2005 to 11 February 2014.
On 18 April 2012 the client was charged with three offences pursuant to s 1309(2) of the Corporations Act 2001 (Cth) (the Act).
In September 2013, the charges against the client were substituted with six charges pursuant to s 1309(1) of the Act.
On 14 February 2014, three of the six charges were discontinued.
The client pleaded guilty to the remaining three charges.
The client incurred legal costs in relation to defending the criminal proceedings (Costs).
The…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] WASC 373
Decision Date: 6 OCTOBER 2015

CaseChat Overview and Summary

Iron Mountain Mining Ltd sought to appeal against a decision that it was not a third party payer for the purposes of the Third Party Payer Legislation Amendment Act 2014 (NSW). The dispute arose from a contractual and constitutional indemnity provided by K & L Gates to Iron Mountain, which was intended to cover legal costs in a separate litigation. The appeal was heard in the Supreme Court of New South Wales. The central legal issue was whether the conviction of an individual, Mr Zohar, rendered the indemnities void under section 199C(2) of the Act, thereby disqualifying Iron Mountain from being considered a third party payer.

The court examined the implications of Mr Zohar's conviction on the validity of the indemnities. Counsel for K & L Gates argued that the conviction led to the indemnities being void ab initio, meaning they had no legal effect from the outset. The court found that the word 'void' should be interpreted in its ordinary sense, implying that the transaction was as if it had never occurred. This interpretation aligned with the legislative intent to impose a more radical consequence when referring to 'void' transactions. Given this reasoning, the court accepted that the contractual and constitutional indemnities were automatically void because of Mr Zohar's conviction, and Iron Mountain did not meet the criteria to be a third party payer under the Act.

In light of the above, the court concluded that the appeal succeeded and the decision of the registrar was set aside. The preliminary question of whether Iron Mountain was a third party payer was determined in the negative. The court acknowledged the difference in basis from the Leckenby cases, as the indemnities in this instance were rendered void once the plea of guilty was entered. Consequently, the court would hear the parties regarding the costs associated with the appeal.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

As to the meaning of the word 'void' counsel referred to what was said by Kirby P in National Acceptance Corporation Pty Ltd v Benson (1988) 12 NSWLR 213, 214. The president said:The word used is 'void'. Although that word may, in particular contexts, invite a more limited construction, normally (as it seems to me) it should receive the meaning which ordinarily attaches to it in everyday speech, viz, having no legal effect for any purpose as against the world so that it is as if the transaction which is 'void' has not occurred, at least so far as the eye of the law is concerned. This is the starting point. Other considerations may require a more limited meaning to be given to the word. But because Parliament from time to time uses 'voidable' in statutes or expressions such as 'void as against the liquidator' (see, eg, s 451 of the Code), it should be presumed, at least to begin with, that where Parliament refers to 'void' it intends a more radical consequence, both in terms of effect and in respect of the parties affected. (authorities omitted) Counsel referred to a number of other authorities all to like effect. He then concluded the effect of Mr Zohar's conviction on 16 May 2014 was, by virtue of the operation of s 199C(2), to render the contractual indemnity and the constitutional indemnity automatically void ab initio. In other words, it was as though the indemnities had never been given at all. As a consequence Iron Mountain failed to meet the definition of a third party payer pursuant to the Act. In my view K & L Gates' submissions should be accepted for the reasons put by counsel. Furthermore, I accept the Leckenby cases proceeded on a different basis. In this case once the plea of guilty was entered the indemnities fell away and Iron Mountain could not be regarded as a third party payer. The appeal succeeds. The decision of the learned registrar ought be set aside and the preliminary question ought be determined by the conclusion Iron Mountain is not a third party payer. I will hear the parties as to costs.