Magarey Farlam Lawyers Trust Accounts (No 5)

[2008] SASC 42

SUPREME COURT OF SOUTH AUSTRALIA

(Civil: Application)

Re: MAGAREY FARLAM LAWYERS TRUST ACCOUNTS  (No 5)

[2008] SASC 42

Judgment of The Honourable Justice Debelle

21 February 2008

PROCEDURE - COSTS

Costs of appeal – Attorney-General granted permission to appeal on condition that he pay claimants’ costs of appeal in any event – whether costs of appeal should be paid on party and party basis or on solicitor and client basis – claimants’ costs to be paid on solicitor and client basis – Attorney-General to pay claimants’ costs of appeal on party and party basis and difference between costs on party and party basis and solicitor and client basis to be paid out of Guarantee Fund.

RE: MAGAREY FARLAM LAWYERS TRUST ACCOUNTS  (No 5)
[2008] SASC 42

Civil

1. DEBELLE J:        A question has arisen as to the proper meaning and intent of the order herein made on 16 January 2007 when I granted the Attorney-General permission to appeal against my decision made on 15 December 2006. The issue concerns the question of the costs of the appeal. The order made on 16 January 2007 included the following as paragraph 2 of the order:

   The grant of permission to appeal is made on the condition that the Attorney-General pay the claimants’ costs of the appeal in any event.

   The question is whether those costs should be paid on a party and party basis or on a solicitor and client basis.

2. The claimants contend that the costs should be paid on a solicitor and own client basis. The Solicitor-General, who appears for the Attorney-General, contends that the order means costs on a party and party basis. The claimants have applied for an order amending the terms of the order of 16 January 2007. That course is opposed by the Solicitor-General on the footing that the meaning of any costs order is, in the absence of any expression to the contrary, that the costs are paid on a party and party basis.  The Attorney-General has acted on that footing, says the Solicitor, and should not now be faced with a variation of the orders requiring him to pay costs on a more adverse footing.

3. In my ex tempore reasons delivered on 16 January granting permission to appeal, I referred to the fact that the claimants should not be out of pocket in consequence of the appeal. I said:

   These proceedings result from defalcations in a trust account of a firm of solicitors.  The clients of the firm are the innocent victim of the defalcations.  This current issue is an issue upon which neither the supervisor nor the manager have sought to take an active role.  On the face of the matter their costs in any event fall within the term of s 47(2).  The real issue is whether the costs of the clients who are involved in these proceedings also fall within the terms of s 47(2).  The clients are therefore placed in the position of being the contradictors so far as any argument of the Attorney-General is concerned.  More accurately, they were the prosecutors of this application. 

   As they have been placed in that position because they are the victims of these defalcations and as the matter is a matter of general and public importance, it is appropriate that it be a condition of the grant of leave to appeal that the Attorney-General pays the costs of the proceedings in any event. 

   No party present on the hearing at 16 January raised any question as to the basis upon which the costs should be paid. A payment of costs on a party and party basis would leave the claimants out of pocket in respect of costs paid to their advisers on a solicitor and client basis.

4. In my view, the appropriate means by which to resolve this issue in a manner which is at the same time fair to both the Attorney-General and to the claimants, as well as ensuring that the intent of the remarks I made on 16 January 2007 are fulfilled, is to vary paragraph 2 of the order made on 16 January 2007 so that the Attorney-General is liable only for the party and party costs of the appeal and the difference between party and party costs and solicitor and client costs is paid out of the Guarantee Fund.  No party opposes that course. 

5. In my view, the appropriate basis upon which the claimants should be paid their costs is on the footing of solicitor and client costs and not on solicitor and own client costs.

6. For these reasons, there will be an order varying para.2 of the order made on 16 January 2007, so that the order now reads:

   The grant of permission to appeal is made on the condition that the costs of the claimants are paid on the basis of solicitor and client costs and on the further condition that the Attorney-General pay the claimants’ costs of the appeal in any event on a party and party basis and that the difference between costs on a party and party basis and costs on a solicitor and client basis be paid out of the Guarantee Fund.

   There will be an order to that effect.