Kowalski v Stanley & Partners & Anor - [2014] SASC 198

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
KOWALSKI v STANLEY & PARTNERS & ANOR
[2014] SASC 198
Reasons of Judge Dart a Master of the Supreme Court
17 December 2014
PROCEDURE - COSTS - TAXATION
Application for a taxation pursuant to Section 42 of the Legal Practitioners Act 1981 - judgment previously obtained in respect of costs, doctrine of res judicata considered - application stayed as an abuse of process.
Legal Practitioners Act 1981 s 42; Trade Practices Act 1975 (Cth) , referred to.
Attorney-General v Kowalski [2014] SASC 1; Blair v Curran (1939) 62 CLR 464; Huddersfield Banking Co Ltd v Henry Lister & Son Ltd [1895] 2 Ch 273; Kinch v Walcott [1929] AC 483; King William Law Chambers and Williamson & Co v Mobitel (International) Pty Ltd (1982) 29 SASR 316; Kowalski v Bourne [2012] SASC 6; Kowalski v R J Cole & Partners [2014] SASC 137; Nagy v Ryan (2003) 225 LSJS 432, considered.

KOWALSKI v STANLEY & PARTNERS & ANOR
[2014] SASC 198

The firm of Stanley & Partners acted for the applicant between 1988 and 1991 in relation to a workplace injury. There was both a common law claim and worker’s compensation claim against the applicant’s employer.
In 1991 the applicant instructed R J Cole & Partners to take over the conduct of both matters. The applicant has applied for a taxation of the costs charged by the respondent firm. The matter has a lengthy history.
There were initial discussions about releasing the Stanley & Partners file to R J Cole & Partners. Stanley & Partners indicated they were prepared to provide the file on the basis that costs be agreed in the amount of $2000 plus disbursements. The applicant, by his new solicitors, rejected that proposition and requested that the costs be taxed. Stanley & Partners retained a cost consultant to prepare a bill in taxable form. The prepared bill estimated the costs in the amount of $6311.11. It was never the subject of a taxation.
Stanley & Partners then issued proceedings in the Magistrate's Court claiming, with the addition of Court costs, the sum of $6684.11. The applicant consented to judgment which was entered on 29 January 1993. The judgment sum was paid on 26 July 1993.
In 1995 the applicant made three separate applications in the Magistrate's Court to set aside the consent judgment. Each of those applications was dismissed. The applicant purported to appeal against the three Magistrate's Court decisions. The appeal was dismissed by Williams J on 25 July 1997.
In May 2010 Mr Kowalski issued proceedings in the Federal Magistrate's Court against Mr Bourne seeking to recover the costs paid on the basis, inter alia, of alleged breaches of the Trade Practices Act 1975 (Cth). On 24 August 2010 Federal Magistrate Lindsay dismissed the application and ordered the applicant pay Mr Bourne’s costs fixed in the amount of $9675. Those costs have not been paid.
The applicant appealed the finding of the Federal Magistrate to a single Justice of the Federal Court of Australia. On 28 March 2011 Logan J dismissed the appeal and ordered that Mr Bourne have his costs on an indemnity basis. Those costs have not been taxed.
The applicant then issued an Information and Summons against Mr Bourne in the Magistrate's Court by way of a private prosecution. The Information was dismissed by a Magistrate on 7 October 2011. The applicant appealed against the dismissal. Kourakis J, as he then was, heard the appeal on 13 January 2012.[1] His Honour dismissed the appeal and permanently stayed the prosecution as an abuse of process.
[1] Kowalski v Bourne [2012] SASC 6.
The appellant has been found to be a vexatious litigant. [2] He has been given permission to pursue this taxation.
[2] Attorney-General v Kowalski [2014] SASC 1.
Mr Bourne is the second respondent in these proceedings. He was a partner of Stanley & Partners, the first respondent, at all material times. It is not clear why he is separately named as a party. The partnership ceased trading in the year 2000.
Mr Bourne, by application FDN9, seeks an order that the application for a taxation be dismissed or permanently stayed, inter alia, on the basis that it is an abuse of process. These reasons deal with that application. As the argument developed, Mr Cogan, counsel for Mr Bourne, made three points, which were that:
1The doctrine of res judicata applies and this application for taxation is an abuse of process.
2Section 42 of the Legal Practitioners Act 1981 (“the LPA”) provides the Court with a discretion and, in circumstances where the last of the costs were incurred 23 years ago, the Court should, in the exercise of its discretion, decline to proceed with the taxation.
3The application is an abuse of process because what is being sought is not a taxation; rather the applicant is seeking on the taxation to deny all liability for the costs and seeks a refund of all of the costs paid.
When dealing with the question of res judicata in Blair v Curran Dixon J said:[3]
A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies.
[3] Blair v Curran (1939) 62 CLR 464 at 531.
The fact that this was a judgment by consent does not make any difference. In Kinch v Walcott[4] Lord Blanesburgh said:
An order by consent, not discharged by mutual agreement, and remaining unreduced, is as effective as an order of the court made otherwise than by consent and not discharged on appeal.
[4] [1929] AC 483 at 493.
A consent judgment may be set aside on the same basis as a simple contract. Thus, if there was relevantly mistake, fraud or the like, a consent judgment can be set aside.[5]
[5] Huddersfield Banking Co Ltd v Henry Lister & Son Ltd [1895] 2 Ch 273 at 284.
The solicitors sued for an amount of costs. A judgment in relation to the amount of those costs was consented to by Mr Kowalski and that judgment subsists. The issue of the liability for costs and the quantum of such costs merged into the judgment. It no longer has a separate existence.[6] I do not doubt that if the applicant had challenged the Bill of Costs in 1993, a number of items may have been taxed off. However, by consenting to a judgment, the right to do so was lost. To attempt to go behind the judgment, by way of a taxation of costs, to achieve a different result is an abuse of process. Strictly, that is enough to dispose of this matter, but I propose to consider the further points raised by Mr Cogan.
[6] Blair v Curran (1939) 62 CLR 464 at 532.
The second argument put was that a taxation pursuant to s 42 of the LPA is discretionary and that, in this matter, circumstances exist which mean the Court’s discretion should be exercised against the carrying out of a taxation.
At the relevant time, that is prior to 1 July this year, s 42 of the LPA provided as follows:
42—Costs
(1)     On the application—
(a)     of a person claiming to be entitled to legal costs; or
(b)     of a person who is liable to pay, or who has paid, any legal costs,
the Supreme Court may tax and settle the bill for those costs.
(1a)The Supreme Court's power to tax and settle a bill of costs (but no other power of the Supreme Court under this section) may, subject to any rule, order or direction of the Court, be exercised by the Registrar of the Court.
(1b)Subject to the rules of the Supreme Court, an appeal lies to a judge against a decision of the Registrar pursuant to subsection (1a).
(2)Where an application has been made under subsection (1), the Supreme Court may—
(a)     restrain a person claiming to be entitled to the costs from commencing an action for recovery of the costs; or
(b)     stay any proceedings for recovery of the costs.
(3)     The Court may, on taxation of a bill of costs under this section—
(a)     order the refund of any amount overpaid; or
(b)     where the proceedings have been instituted by the person seeking recovery of the costs—order payment of legal costs in accordance with the taxed bill.
(4)The Board may institute proceedings for the taxation of legal costs under this section on behalf of a person who is liable to pay, or has paid, the legal costs and must institute such proceedings if ordered to do so by the Tribunal.
(5)Any court in which proceedings for the recovery of legal costs have been instituted may order the plaintiff to apply to have the legal costs taxed in accordance with this section, and may adjourn the proceedings until the taxation has been completed.
In Nagy v Ryan[7] Gray J accepted a submission that s 42(5) was discretionary by reason of the use of the words “may order” and “may adjourn”. It would follow from the wording in s 42(1) that the conduct of a taxation pursuant to that provision is also discretionary.
[7] (2003) 225 LSJS 432.
It has to be accepted that it would be a rare case in which the Court exercised the discretion against an applicant seeking a taxation. However, the facts in this case are extreme. The costs were incurred, at the latest, in 1991. There is no material explaining why the applicant did not make an application for taxation until this year. The amount of costs is comparatively small. Even though there was, until recently, no time limit for the bringing of an application for a taxation, the longer the period before a taxation is requested, particularly without proper explanation, the more likely it is that the Court might exercise its discretion against permitting a taxation to be conducted.
It is now 23 years since the last of the costs were incurred. The respondent firm has not traded since 2000. The partners of the firm are entitled, after such a lengthy period, to regard the affairs of the firm as finalised. In my opinion, there is considerable force in Mr Cogan’s submissions that the Court should exercise its discretion against permitting the taxation to proceed. If I had not held that the matter was an abuse of process, I would, in any event, have declined to proceed with the taxation.
The third point is that the application for a taxation is an abuse because it is being used as a vehicle by the applicant to contest liability issues, rather than simply for an actual taxation of the costs. A taxation is simply a quantification process. A taxation is not the vehicle for determining questions of liability.[8] The position of the applicant is that he never had any liability for costs to the respondent.
[8] King William Law Chambers and Williamson & Co v Mobitel (International) Pty Ltd (1982) 29 SASR 316.
In an unrelated recent taxation the applicant was using the taxation process to dispute liability. I held that that was an abuse of process. On appeal that finding was upheld.[9] In this matter where the applicant is again using the taxation process as a vehicle to dispute his liability to pay any costs at all, the same result would follow.
[9] Kowalski v R J Cole & Partners [2014] SASC 137.
For the reasons set out above, I order that this application for a taxation is to be permanently stayed as an abuse of process.