Mineral Resources Limited v Mesa Minerals Limited (Administrators Appointed)
[2020] WASC 36
•7 FEBRUARY 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: MINERAL RESOURCES LIMITED -v- MESA MINERALS LIMITED (ADMINISTRATORS APPOINTED) [2020] WASC 36
CORAM: REGISTRAR C BOYLE
HEARD: 7 FEBRUARY 2020
DELIVERED : 7 FEBRUARY 2020
FILE NO/S: COR 13 of 2017
BETWEEN: MINERAL RESOURCES LIMITED
Receiving Party
AND
MESA MINERALS LIMITED (ADMINISTRATORS APPOINTED)
First Defendant
DANIEL BREDENKAMP
Second Defendant
MIGHTY RIVER INTERNATIONAL LIMITED
Paying Party
FILE NO/S: CACV 31 of 2017
BETWEEN: MIGHTY RIVER INTERNATIONAL LIMITED
Paying Party
AND
MESA MINERALS LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
First Second Respondent
BRYANHUGHES as administrator of MESA MINERALS LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
First Third Respondent
DANIEL BREDENKAMP as administrator of MESA MINERALS LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
Second Third Respondent
MINERAL RESOURCES LIMITED
Receiving Party
Catchwords:
Taxation of costs – Whether retrospectively of costs agreement fatal – Whether rule in Re Blyth & Fanshawe applies as between party and party
Legislation:
Legal Profession Act 2008, s 280(2)
Representation:
COR 13 of 2017
Counsel:
| Receiving Party | : | N Ebbs |
| First Defendant | : | |
| Second Defendant | : | |
| Paying Party | : | B Ashdown |
Solicitors:
| Receiving Party | : | Bennett + Co |
| First Defendant | : | |
| Second Defendant | : | |
| Paying Party | : | Nova Legal |
CACV 31 of 2017
Counsel:
| Paying Party | : | B Ashdown |
| First Second Respondent | : | |
| First Third Respondent | : | |
| Second Third Respondent | : | |
| Receiving Party | : | N Ebbs |
Solicitors:
| Paying Party | : | Nova Legal |
| First Second Respondent | : | |
| First Third Respondent | : | |
| Second Third Respondent | : | |
| Receiving Party | : | Bennett + Co |
Case(s) referred to in decision(s):
Cook v Cook (1986) 162 CLR 376
Eastwood v Kenyon (1840) 11 Ad & E 438
Huntingdale Village Pty Ltd (ACN 085 048 531) (Receivers and Managers Appointed) v Corrs Chambers Westgarth [2018] WASCA 90
Mighty River International Ltd v Hughes & Bredenkamp [2017] WASC 69
Mighty River International Ltd v Mineral Resources Ltd [2017] WASCA 72
Re Blyth & Fanshawe, Ex parte Wells (1882) 10 QBD 207
Roscoria v Thomas (1842) 3 QB 234
Stobbart v Mocnaj [1999] WASC 252
REGISTRAR C BOYLE:
I will refer to the parties by abbreviated versions of their names rather than by either or both of the roles they successively played at different stages of the proceedings. Mighty River International Limited was a defendant in a Corporations Act application at first instance.[1] It was unsuccessful. It appealed.[2] It was again unsuccessful. It was ordered to pay costs in both places and in each case an order was made pursuant to s 280(2) of the Legal Profession Act 2008 that the costs be taxed without reference to the limits that would otherwise apply under the relevant directions made under that Act. The party entitled to payment in both cases is Mineral Resources Limited.
[1] Mighty River International Ltd v Hughes & Bredenkamp [2017] WASC 69.
[2] Mighty River International Ltd v Mineral Resources Ltd [2017] WASCA 72.
There were other parties entitled to costs. The taxation of the various bills took very many appointments over a lengthy period and was inordinately hard‑fought and complicated, mostly because of objections raised by Mighty River. The taxations relevant to these parties was completed by 9 May 2018 but I withheld the allocatur to deal with objections that had already been articulated but which were later amplified in written submissions. For the purpose of these reasons and with the agreement of the parties I treat all the objections of Mighty River as before me pursuant to Rules of the Supreme Court O 66 r 53 and r 54. At the date when I withheld the allocatur there was pending a decision in the Court of Appeal that was expected to determine certain points in controversy. It was subsequently delivered[3] and both parties have made submissions on its effect.
[3] Huntingdale Village Pty Ltd (ACN 085 048 531) (Receivers and Managers Appointed) v Corrs Chambers Westgarth [2018] WASCA 90.
There are two objections. One is described in submissions as the retrospective costs agreement point. The other is described as the Re Blyth & Fanshawe point.
Retrospective costs agreements
The solicitors for Mineral Resources entered into costs agreements after they had done work for the receiving party, both at first instance and on appeal. The agreements were made, in the submissions of Mighty River, after the respective retainers had been discharged. The bills before me were drawn by reference to the rates provided for in those agreements, rather than the rates under the determinations. Mighty River argues that those agreements fail for want of consideration, on the principle that past consideration is not good consideration.[4]
[4] Citing Roscoria v Thomas (1842) 3 QB 234 and Eastwood v Kenyon (1840) 11 Ad & E 438.
In my view the decision of the Court of Appeal in Huntingdale is authoritatively dispositive of this objection for my purposes. Martin CJ (Mitchell JA and Beech JA concurring on these matters) upheld the reasoning of the trial judge (omitting references):[5]
The judge at first instance rejected the plaintiffs' contentions with respect to lack of consideration for two reasons. First, the judge relied upon authorities to the effect that where services are rendered at the request of a party in circumstances in which it is clear that the services were not intended to be gratuitous, a subsequent promise to pay for those services by their recipient is supported by consideration in the form of the provision of the services, which is not past consideration but valuable executed consideration.
[5] Huntingdale [2018] at [78].
The second reason for the trial judge's rejection of the plaintiffs' contentions is not relevant for present purposes, being concerned with the detail of what was covered by the agreements in question. What Le Miere J at first instance had written as to the first reason was:
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].
Mighty River submits that the Court of Appeal's reasons are obiter. That is because Martin CJ prefaced the passage quoted above with this:[6]
Ground 3 relates to the 2015 agreements. This ground only has any significance to the outcome of this appeal if, by reason of the success of one or other of ground 1 or 2, it is concluded that the 2006 agreements do not apply to all the legal services the subject of these proceedings. As that conclusion has not been reached, it is not strictly necessary to deal with ground 3. However, for the sake of completeness, I will deal with the ground, albeit briefly.
[6] Huntingdale [2018] at [73].
I do not accept Mighty River's submission. In my view, it is a distraction to debate whether that part of the Court of Appeal's reasons is obiter. The proper analysis is that on appeal the trial judge's decision was upheld, alternatively it was not disturbed and therefore stands. That means that the reasons and reasoning of Le Miere J at first instance in Huntingdale remain binding on me.
Indeed, it might be said (and it was, by the receiving party) that D'Allesandro & D'Angelo v Cooper, which was a decision of the then Full Court (Kennedy, Anderson and Rowland JJ) is dispositive on the question. I would hesitate to rely on that case alone, were it not for the imprimatur given it by Huntingdale [2018]. Only Anderson J dealt with the point explicitly, and then briefly. His Honour simply said:
In my opinion, the first question should be answered by stating that if the costs agreement does have retrospective operation, it should not be held unenforceable on the ground that it expresses a past consideration.
The other members of the bench concurred in the result, but there is no detailed analysis of the underlying legal doctrine. Also, the case was concerned with the application of the Legal Practitioners Act 1893, s 59(1) of which expressly provided for costs agreements in relation to 'any past or future services, fees, charges, or disbursements in respect of business done or to be done by such practitioner'. Despite forming part of a statute that has 714 sections as opposed to the 85 of the earlier legislation, s 282 of the Legal Profession Act 2008 does not provide such clarity.
Applying the reasoning in Huntingdale at first instance and on appeal, it would be fanciful to imagine that when Mineral Resources, a listed public company, engaged solicitors to act in this litigation it could have been intended that the arrangement was gratuitous. Even if the costs agreements were entered into after the retainers were fully discharged, the solicitors provided good consideration.
There is a coda. Mighty River conceded[7] its objections to a 'retrospective' costs agreement would not avail against an agreement that was a deed. Mighty River has now entered into a deed a copy of which is annexure 'CAT‑3' to the affidavit of Chloe Tolley affirmed 2 July 2018.
[7] Submissions of 1 June 2018 par 21.
Mighty River's consideration objection fails.
The 'rule' in Re Blyth & Fanshawe
The paying party submits that the decision in Re Blyth & Fanshawe[8] affects the taxation by the following reasoning.
[8] Re Blyth & Fanshawe, Ex parte Wells (1882) 10 QBD 207.
First, it is said that the case is authority for a rule that a solicitor who proposes to incur 'unusual' expenses in the course of an action must point out to his client that such expenses might not be allowed on taxation as between party and party and therefore might have to be borne by the client. If the solicitor does not give that warning, and the unusual expenses are disallowed on a party‑party taxation, then the solicitor will not be able to recover those unusual expenses from the client.
Secondly, it is said that the indemnity principle applies: a successful litigant may be recover on a party‑party taxation only those costs that he is legally obligated to pay his solicitor: the authority proferred for that is Stobbart v Mocnaj.[9]
[9] Stobbart v Mocnaj [1999] WASC 252 [8].
Therefore, the argument goes, if a solicitor has failed to give the Blyth v Fanshawe warning, anything that is an 'unusual' expense should not be allowed on a party‑party taxation.
Re Blyth & Fanshawe was a decision of the Court of Appeal of England and Wales. It was never binding on this Court, although as a matter of history for many years the Supreme Courts of Australian colonies, and then States and Territories, habitually regarded themselves as at least constrained to follow them.[10] Mineral Resources submits that no authority has been cited demonstrating the application of the supposed rule in this Court. That is particularly so in relation to party‑party taxations, as opposed to solicitor‑client taxations or, latterly, assessments.
[10] But see Cook v Cook (1986) 162 CLR 376 at 390 and 394.
I do not think it is necessary to delve deeply into either the doctrine of precedent or the differences between the regime regulating legal professional charges in England in 1880 and that applying in 2020 in Western Australia. Mighty River's Re Blyth v Fanshawe objection can be disposed of more simply.
The objection is circular and illogical. If the rule has any continuing application (which I doubt, since the disclosure obligations of lawyers are now codified by the Legal Profession Act 2008), it is as a rule concerning the recoverability of expenses as between lawyer and client. It can only have any operation once unusual expenses have been disallowed on a party‑party taxation. It cannot have any operation on a party‑party taxation. Mighty River submits that I must disallow certain items because they are 'unusual' and if I do, then they would not be recoverable by its lawyers from Mineral Resources, and because Mineral Resources would therefore have no liability for them, the indemnity principle means that they are not recoverable as between party and party. If I pull hard enough on my bootstraps my head will touch the ceiling.
It is not a proper question on a party‑party taxation whether the lawyer for the receiving party gave a Re Blyth & Fanshawe warning to the receiving party. The question on a party‑party taxation is whether the item should be allowed as between party and party. That question has been decided.
The objections of Mighty River are disallowed and I will sign the allocaturs as previously indicated. Costs should follow the event. I express the hope, without any great expectation that it will happen, that costs of taxation should be agreed. Should they need to be taxed they will be very substantial. Mighty River should have no illusions about that.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AP
Court Officer7 FEBRUARY 2020
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