Moloney v Adams T/As Tri-Meridian Corporate and Commercial Law

Case •

[2016] SASC 177

•

18 November 2016

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

MOLONEY v ADAMS T/AS TRI-MERIDIAN CORPORATE AND COMMERCIAL LAW

[2016] SASC 177

Judgment of The Honourable Justice Stanley

18 November 2016

PROCEDURE - COSTS - TAXATION - PARTICULAR ITEMS - COUNSEL'S FEES - RETAINER

PROFESSIONS AND TRADES - LAWYERS - REMUNERATION - COSTS AGREEMENTS - OTHER MATTERS

In 2011 the respondent, Geoffrey Adams, was retained by the appellant, Brendan Moloney, to represent him in legal proceedings. The appellant executed a costs agreement. Subsequently a dispute arose between the parties as to payment of the fees charged by the respondent to the appellant for the legal work undertaken pursuant to his retainer. There was also a dispute as to whether other parties associated with the appellant were party to the respondent’s retainer. In March 2014 the respondent issued proceedings in the District Court to recover his fees. In April 2014 the appellant filed in this Court an application for fixing legal costs. The application purported to be filed pursuant to s 42(1) of the Legal Practitioners Act 1981 (SA) (the Act). In the appellant’s defence filed in the District Court the appellant challenged the validity of the costs agreement purportedly made pursuant to s 42(6) of the Act and sought an order pursuant to s 42(7) of the Act that the costs agreement be “set aside”.

The District Court proceedings were listed for trial on 12 October 2015.  Those proceedings were compromised by a Deed of Settlement and Release dated 7 October 2015 (the deed). By the deed the parties resolved issues as to the existence of a valid retainer and the identity of the parties to the retainer.  Clause 6.3 of the deed provides:

The parties acknowledge that this Deed does not limit or serve as a bar to any rights that Brendan has with respect to the Supreme Court Action as set out in his application for Fixing Legal Costs. 

Subsequently a dispute arose between the parties as to the meaning and effect of clause 6.3 of the deed. The issue came before a Master of this Court. Critical to the resolution of the application before the Master was whether clause 6.3 of the deed provided that the resolution with respect to the District Court proceedings, recorded in the deed, precluded the appellant from invoking or relying upon the provisions of s 42(7) of the Act in the determination of his application for fixing legal costs in this Court.

The Master decided that the appellant was precluded from invoking or relying upon the provision of s 42(7) of the Act by reason of the compromise of the District Court proceedings by the deed.

This appeal lies from the Master’s decision.

Held, per Stanley J:

1. The appellant’s application to this Court invokes the Court’s jurisdiction pursuant to s 42. Once the application invoked the Court’s jurisdiction the Court has available the panoply of powers conferred pursuant to the section. They include the powers conferred by s 42(7). The appellant’s right to seek and obtain a remedy pursuant to s 42(7) was preserved by the terms of clause 6.3 (at [43] - [44]).

2. Clause 6.3 does not constitute any attempt to oust this Court’s powers pursuant to s 42(7). There is no abuse of process (at [47]).

3.  Allow the appeal (at [48]).

Legal Practitioners Act 1981 (SA) s 42, referred to.
Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; Stanberg Pty Ltd v Tabibi [2012] SASC 187; Commissioner of Police v Channel Seven Adelaide Pty Ltd [2008] SASC 164; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; McNamara Business and Property Law v Kasmeridis & Anor (2005) 92 SASR 382; McNamara Business and Property Law v Kasmeridis (2007) 97 SASR 129, considered.

MOLONEY v ADAMS T/AS TRI-MERIDIAN CORPORATE AND COMMERCIAL LAW
[2016] SASC 177

Appeal from a Master

STANLEY J:

Introduction

  1. In 2011 the respondent, Geoffrey Adams, was retained by the appellant, Brendan Moloney, to represent him in legal proceedings. The appellant executed a costs agreement. Subsequently a dispute arose between the parties as to payment of the fees charged by the respondent to the appellant for the legal work undertaken pursuant to his retainer. There was also a dispute as to whether other parties associated with the appellant were party to the respondent’s retainer. In March 2014 the respondent issued proceedings in the District Court to recover his fees. In April 2014 the appellant filed in this Court an application for fixing legal costs. The application purported to be filed pursuant to s 42(1) of the Legal Practitioners Act 1981 (SA) (the Act). In the appellant’s defence filed in the District Court the appellant challenged the validity of the costs agreement purportedly made pursuant to s 42(6) of the Act and sought an order pursuant to s 42(7) of the Act that the costs agreement be “set aside”.

  2. The application for fixing legal costs filed by the appellant in this Court sought an adjudication pursuant to s 42(1) of the Act of a series of invoices rendered between April 2011 and February 2013. The application stated that the applicant submits the costs in issue “are to be adjudicated on the Supreme Court Scale”.

  3. At the relevant time, s 42 of the Act provided:[1]

    [1] Section 42 was repealed by Amending Act No. 44 of 2013 which commenced operation on 1 July 2014.

    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.

    (6) A legal practitioner may make an agreement in writing with a client for—

    (a)     payment of a specified amount by way of legal costs (which may—but need not—consist of a daily, hourly or other time-related rate for professional work carried out by the legal practitioner on the client's behalf); or

    (b)     payment of legal costs in accordance with a specified scale; or

    (c)     subject to any limitations imposed by the Society's professional conduct rules or the regulations—payment of a contingency fee to be calculated on a basis set out in the agreement on fulfilment of a condition stated in the agreement.

    (7) The Supreme Court may, in proceedings under this section, rescind or vary an agreement under subsection (6) if it considers that any term of the agreement is not fair and reasonable.

  4. The District Court proceedings were listed for trial on 12 October 2015.  Those proceedings were compromised by a Deed of Settlement and Release dated 7 October 2015 (the deed).

  5. By the deed the parties resolved issues as to the existence of a valid retainer and the identity of the parties to the retainer.  The existence of a retainer between the appellant and the respondent is acknowledged in the deed.  The deed provides a mechanism for the adjudication of the appellant’s liability to the respondent for legal fees by a determination of the extant application for fixing legal costs in this Court or, in the alternative, for payment of an amount of $164,825.28.

  6. Clause 6.3 of the deed provides:

    The parties acknowledge that this Deed does not limit or serve as a bar to any rights that Brendan has with respect to the Supreme Court Action as set out in his application for Fixing Legal Costs. 

  7. Subsequently a dispute arose between the parties as to the meaning and effect of clause 6.3 of the deed. The issue came before a Master of this Court. Critical to the resolution of the application before the Master was whether clause 6.3 of the deed provided that the resolution with respect to the District Court proceedings, recorded in the deed, precluded the appellant from invoking or relying upon the provisions of s 42(7) of the Act in the determination of his application for fixing legal costs in this Court.

  8. The Master decided that the appellant was precluded from invoking or relying upon the provision of s 42(7) of the Act by reason of the compromise of the District Court proceedings by the deed.

  9. This appeal lies from the Master’s decision.

    The reasons of the Master

  10. The Master held that, absent consideration of clause 6.3, the appellant’s claim to be entitled to seek an order from this Court rescinding or varying the costs agreement pursuant to s 42(7) constituted an abuse of process given the compromise of the District Court proceedings embodied in the deed.

  11. The Master turned to consider the effect of clause 6.3 of the deed. She held that the Supreme Court action, in respect of which the appellant’s rights were preserved, was an application for an adjudication of costs pursuant to s 42(1) which did not include any claim for an order pursuant to s 42(7) to rescind or vary a costs agreement. The Master held that s 42(1) and s 42(7) are separate and distinct powers. The failure in the Supreme Court application to refer to a claim pursuant to s 42(7) led to the conclusion that the relief sought pursuant to the application did not extend to any claim based on the provisions of s 42(7). The Master found that this conclusion was reinforced by a consideration of the extrinsic materials in evidence relevant to the surrounding circumstances which she received in accordance with the principle in Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales.[2]The evidence of the correspondence between the parties culminating in the execution of the deed evinced an objective intention that all that was being preserved was the appellant’s right to seek an adjudication of costs pursuant to s 42(1).

    [2] [1982] HCA 24, (1982) 149 CLR 337.

    Nature of the appeal

  12. The appeal is a rehearing and not a hearing de novo.[3]   The court is to determine the appeal as the justice of the case requires, and the court has power, in its discretion, to hear further evidence on questions of fact.  The appeal is a rehearing on the documents considered at first instance but with the court having power to receive further evidence.  The court must consider whether the decision under appeal ought to be affirmed or overturned in light of the material before the court at the time it hears the appeal.[4]

    [3]    Stanberg Pty Ltd v Tabibi [2012] SASC 187 at [39].

    [4]    Commissioner of Police v Channel Seven Adelaide Pty Ltd [2008] SASC 164 at [12].

    Submissions of the parties

  13. The appellant submits that the judgment of the Master is premised on an erroneous construction of s 42 of the Act, an erroneous construction of clause 6.3 and an erroneous understanding of the effect of the deed. Properly construed, the deed represented a compromise only with respect to the existence of a retainer and the identity of the parties subject to that retainer. The appellant acknowledged the fact of the retainer and that he, and he alone, was bound by it if it were enforceable. What the deed did not do, in its terms or effect, was compromise the basis of the claim in this Court pursuant to s 42 of the Act. All of the statutory rights provided for by s 42 were excluded from the compromise. By finding otherwise, the Master fell into error.

  14. The respondent submits that the reasons and conclusion of the Master are correct. Clause 6.3 of the deed precluded reliance on s 42(7) of the Act. Section 42(1) and s 42(7) constitute separate and distinct powers that must be expressly invoked and that in the light of the compromise of the respondent’s District Court action seeking to recover its costs, the appellant’s claim to be entitled to pursue an application pursuant to s 42(7) constitutes an abuse of the court’s process.

  15. It is convenient to commence with the construction of clause 6.3. 

    Principles relevant to construction of the deed

  16. The principles of construction of a contract were considered in Electricity Generation Corporation v Woodside Energy Ltd.[5]In a joint judgment, French CJ, Hayne, Crennan and Kiefel JJ reaffirmed the objective theory of contract.  Citing Codelfa Constructions Pty Ltd v State Rail Authority of NSW[6] they said:[7]

    The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption “that the parties … intended to produce a commercial result”.  A commercial contract is to be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.

    [Citations omitted].

    [5] [2014] HCA 7, (2014) 251 CLR 640.

    [6] [1982] HCA 24, (1982) 149 CLR 337.

    [7] [2014] HCA 7 at [35], (2014) 251 CLR 640 at 656 - 657.

  17. In a separate judgment Gageler J said[8] the terms of a commercial contract are construed by a court to mean what reasonable commercial parties in their position can be taken together to have meant.

    [8] [2014] HCA 7 at [53], (2014) 251 CLR 640 at 662.

  18. In Codelfa Construction Pty Ltd v State Rail Authority of NSW[9] Mason J, with whom Stephen and Wilson JJ agreed, stated the true rule governing the admission of evidence of surrounding circumstances in the construction of a contract is that it is admissible if the language of the contract is ambiguous or susceptible to more than one meaning.  But it is not admissible to contradict the language of the contract when it has a plain meaning.  Generally speaking, facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although if the facts are notorious, knowledge of them will be presumed. 

    [9] [1982] HCA 24, (1982) 149 CLR 337 at 352.

  19. In Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd[10] French CJ, Nettle and Gordon JJ said:[11]

    The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

    In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson 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.

    Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

    However, 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. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.

    Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties’ statements and actions reflecting their actual intentions and expectations.

    Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption “that the parties … intended to produce a commercial result”. Put another way, a commercial contract should be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.

    These observations are not intended to state any departure from the law as set out in Codelfa Construction Pty Ltd v State Rail Authority (NSW) and Electricity Generation Corporation v Woodside Energy Ltd. We agree with the observations of Kiefel and Keane JJ with respect to Western Export Services Inc v Jireh International Pty Ltd.

    [Citations omitted].

    [10] [2015] HCA 37, (2015) 256 CLR 104.

    [11] [2015] HCA 37 at [46] – [52], (2015) 256 CLR 104 at 116 – 117.

  20. In the same case Kiefel and Keane JJ said:[12]

    … In Electricity Generation Corporation v Woodside Energy Ltd, French CJ, Hayne, Crennan and Kiefel JJ explained that a commercial contract should be construed by reference to the surrounding circumstances known to the parties and the commercial purpose or objects to be secured by the contract in order to avoid a result that could not have been intended.

    The “ambiguity” which Mason J said may need to be resolved arises when the words are “susceptible of more than one meaning”. His Honour did not say how such an ambiguity might be identified. His Honour’s reasons in Codelfa are directed to how an ambiguity might be resolved.

    In reasons for the refusal of special leave to appeal given in Western Export Services Inc v Jireh International Pty Ltd, reference was made to a requirement that it is essential to identify ambiguity in the language of the contract before the court may have regard to the surrounding circumstances and the object of the transaction. There may be differences of views about whether this requirement arises from what was said in Codelfa. This is not the occasion to resolve that question.

    It should, however, be observed that statements made in the course of reasons for refusing an application for special leave create no precedent and are binding on no one. An application for special leave is merely an application to commence proceedings in the Court.  Until the grant of special leave there are no proceedings inter partes before the Court.

    The question whether an ambiguity in the meaning of terms in a commercial contract may be identified by reference to matters external to the contract does not arise in this case and the issue identified in Jireh has not been the subject of submissions before this Court…

    [Citations omitted].

    [12] [2015] HCA 37 at [109] – [113], (2015) 256 CLR 104 at 132 - 133.

  1. Bell and Gageler JJ said:[13]

    These appeals do not raise an important question on which intermediate courts of appeal are currently divided. That question is whether ambiguity must be shown before a court interpreting a written contract can have regard to background circumstances.

    Until that question is squarely raised in and determined by this Court, the question remains for other Australian courts to determine on the basis that Codelfa Construction Pty Ltd v State Rail Authority (NSW) remains binding authority. That point, which of itself says nothing about the scope of the holding in Codelfa, was made in the joint reasons for judgment in Royal Botanic Gardens and Domain Trust v South Sydney City Council. The point was reiterated, but taken no further, in the joint reasons for refusing special leave to appeal in Western Export Services Inc v Jireh International Pty Ltd. It should go without saying that reasons for refusing special leave to appeal in a civil proceeding are not themselves binding authority.

    [Citations omitted].

    [13] [2015] HCA 37 at [118] – [119], (2015) 256 CLR 104 at 134.

    Consideration

  2. Applying these principles, I turn to a consideration of the terms of clause 6.3. The words “does not limit or serve as a bar” is a preservation of rights pursuant to the deed confined to the appellant. I accept that the expression “any rights” manifests an intention to encompass the full extent of the rights available to the appellant in his application to the Supreme Court for fixing legal costs. At issue is whether that application enables the appellant to rely on s 42(7). That requires a consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the deed. An appreciation of the commercial purpose or objects is facilitated by an understanding of the genesis of the deed, the background to it, and the context in which the parties were operating. That requires consideration of the proceedings in the District Court and the Supreme Court, and the commercial objectives to be achieved by the settlement embodied in the deed.

  3. In the District Court the respondent was suing the appellant for his costs calculated pursuant to a costs agreement made pursuant to s 42(6). By his defence to the District Court action, the appellant pleaded that the costs agreement provided hourly rates and fees which were excessive, that the terms of the agreement were not adequately explained to him, that he had not been given an opportunity to read the agreement or seek independent advice in relation to it, and that as a result the agreement was void at common law on the basis of misrepresentation and unconscionability and should be set aside pursuant to s 42(7) of the Act.

  4. Importantly, the appellant pleaded the following:

    Further, irrespective of whether the Purported Agreement is found to be a valid contract, Brendan seeks to have quantum determined in the Supreme Court, pursuant to his statutory rights under s 42 of the Legal Practitioner’s Act SA (1981).

    Particulars

    Brendan has instituted proceedings in the Supreme Court of South Australia (Brendan Maloney v Geoffrey Keith Adams trading as Tri-Meridian Corporate and Commercial Law, Supreme Court Action No. 424 of 2014) seeking an order for adjudication of costs and asking the Court to set aside the purported agreement. 

  5. That last plea referred to the application brought by the appellant in the Supreme Court for fixing legal costs.  That application was filed in the Supreme Court on 4 April 2014, shortly after the institution of the District Court proceedings by the respondent.

  6. It is necessary to refer to the terms of the application filed in the Supreme Court because of the reliance the parties place on particular terms of the application. 

  7. By paragraph 1 of the application the appellant “applies under s 42(1) of the Legal Practitioner’s Act 1981 (SA) for an adjudication of the following costs”, followed by reference to a series of tax invoices.  By paragraph 5 of the application the appellant “submits that the costs in issue are to be adjudicated on the Supreme Court scale”. 

  8. The terms of the deed in its recitals refer to the District Court action and the Supreme Court action.  The deed records that the parties have negotiated a settlement of the District Court action and the Supreme Court action, the terms of which are embodied in the deed, which is to proceed in stages as set out therein.  The deed in clauses 3, 4 and 5 provides for the adjournment of the District Court action, the transfer of land from the deceased estate of Brian Aloysius Moloney (Deceased) to the appellant and the execution of a mortgage by the appellant in favour of the respondent over the land, together with an indemnity from the appellant in favour of the estate and other associated parties.  The deed in clause 6 provides mutual releases between the respondent and parties associated with the appellant together with the reservation of the appellant’s rights pursuant to clause 6.3. 

  9. By clause 7 of the deed the respondent agrees to sign notices of discontinuance in relation to the District Court action upon the transfer and mortgage of the land.  The appellant agrees to prosecute the Supreme Court action with reasonable diligence and the respondent agrees not to take any steps to enforce the mortgage except upon a default in payment by the appellant in paying any liability for costs as determined upon the resolution of the Supreme Court action.

  10. Clause 8.1 of the deed provides that upon the occurrence of one of three specified conditions, the obligation to make payment of legal costs will come into effect.  One of those specified conditions is the expiry of 21 days following a final determination of the Supreme Court action “of the amount, if any, of Brendan’s liability to Adams in those proceedings.  Separate provisions are made for the costs of the Supreme Court action and for the release of the security in relation to the payment of the costs.  For reasons I will explain shortly I do not consider this to be the case. 

  11. This analysis of the deed might be thought to point to some ambiguity in its provisions.  On the one hand, the deed purports to embody the settlement of the Supreme Court action, yet, on the other hand, clause 6.3 purports to preserve the appellant’s rights with respect to that action “as set out in his application for fixing legal costs”.

  12. The respondent contends that on its proper construction the deed, and in particular clause 6.3, limited the appellant to the pursuit of an adjudication pursuant to s 42(1) of the Act. He submits that this follows from the terms of paragraph 1 of the application for fixing legal costs filed by the appellant in the Supreme Court. The application applied for an adjudication of legal costs “under s 42(1) of the Legal Practitioners Act 1981”. The respondent submits that s 42(1) and s 42(7) are separate and distinct powers. The failure of the appellant to invoke the provisions of s 42(7) on the face of his application precluded him from pursuing the remedies provided by that subsection on his application. Accordingly, the nature of the rights preserved by clause 6.3 are confined to the right to have the bills of costs the subject of the application taxed and settled. He submits that clause 6.3 did not preserve any right to obtain relief from the Supreme Court pursuant to s 42(7) because no such right had ever been invoked by his application. Accordingly, no question arises as to its preservation.

  13. In my view this submission misunderstands the nature and operation of s 42.

  14. Like any statutory provision, s 42 is to be construed by reference to its text, context and purpose.[14]  Those principles require that the Act be read as a whole so that the words of each section are to be construed in light of the Act, but also that subsections are to be read first as part of the whole provision, and second as part of the whole Act.[15] 

    [14]   Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 at [69] – [71], (1998) 194 CLR 355 at 381 – 382, Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41 at [47], (2009) 239 CLR 27 at 46 – 47.

    [15]   McNamara Business and Property Law v Kasmeridis & Anor [2005] SASC 269 at [56] – [57], (2005) 92 SASR 382 at 397.

  15. Section 42(1) confers jurisdiction and power on the Supreme Court to tax and settle a bill of legal costs. That jurisdiction is conditioned upon an application being made either by a person claiming to be entitled to legal costs or a person who is liable to pay, or who has paid, any legal costs. Section 42(1a) provides that the court’s power to tax and settle a bill of costs may be exercised by the registrar of the Court. However, s 42(1a) provides that the Registrar can only exercise that particular power from the range of powers conferred on the Supreme Court by s 42. Those other powers are found in s 42(2), s 42(3) and s 42(7). Section 42(2) empowers the court to restrain a person from commencing an action for recovery of costs or staying any proceedings for the same. Section 42(3) empowers the court, on taxation, to order the refund of any amount overpaid or order payment of legal costs in accordance with the taxed bill. Section 42(7) empowers the court, in proceedings pursuant to s 42, to rescind or vary a costs agreement made pursuant to s 42(6) if it considers that any term of the agreement is not fair and reasonable.

  16. Section 42(5) empowers any court, including the Supreme Court, in which proceedings for the recovery of legal costs have been instituted, to order the plaintiff to apply to have the legal costs taxed in accordance with s 42 and may adjourn the proceedings until the taxation has been completed.

  17. It can be seen that the object and purpose of s 42(7) is concerned with the scrutiny and control of costs agreements and the protection of the clients of legal practitioners in relation to the charging of legal costs.[16] In the context of this case the text of s 42(7) is of considerable importance. As observed, the power conferred on this Court pursuant to s 42(7) is to be exercised “in proceedings under this section”. The only proceedings the section contemplates are either proceedings instituted pursuant to s 42(1) for the court to tax and settle a bill of costs, or proceedings instituted by the Legal Practitioners Conduct Board (as it then was) for the taxation of costs on behalf of a person who is liable to pay, or has paid legal costs, pursuant to s 42(4). If the legislature intended that this Court’s power pursuant to s 42(7) had to be separately invoked, it could have made that clear and plain by the use of a textual formula such as “in proceedings under this sub-section”. It did not do so.

    [16]   McNamara Business and Property Law v Kasmeridis & Anor [2007] SASC 90 at [19] – [32], (2007) 97 SASR 129 at 136 – 139.

  18. While it can be accepted that the power conferred on this Court pursuant to s 42(7) is a power that is separate and distinct from the power conferred pursuant to s 42(1) to tax and settle a bill of costs, it does not follow that the exercise of the Court’s power pursuant to s 42(7) must be expressly invoked by the party which seeks a remedy pursuant to s 42(7). In my view, once the Court’s jurisdiction pursuant to s 42 has been invoked, the Court is empowered to exercise any of those powers conferred by the section. This conclusion is supported by a textual analysis of s 42. Section 42(3) and (4), like s 42(7), employ the language of “under this section”. The powers conferred by s 42(3) and s 42(4) are powers exercisable under s 42. Accordingly, an application made under s 42(1) does no more than invoke the jurisdiction of this Court pursuant to s 42. Once the Court’s jurisdiction has been invoked either by an application pursuant to s 42(1) or an application pursuant to s 42(4), the Court may exercise the powers conferred by s 42(7) because they are, in the words of s 42(7), “proceedings under this section”.

  19. I appreciate the one apparent difficulty arising from this analysis are the terms of s 42(2) which confines the exercise of the powers conferred thereunder to circumstances where the initiating application was “made under sub-section (1)”. On its face that would appear to preclude the court from exercising the powers conferred by s 42(2) in proceedings instituted by the Board pursuant to s 42(4). However, I consider that the difficulty is only apparent. That is because there would be no utility in permitting this Court to exercise the powers conferred by s 42(2) in proceedings instituted by the Board pursuant to s 42(4) because the Board is empowered only to institute proceedings for the taxation of legal costs on behalf of a person who is liable to pay, or has paid, the legal costs. I construe the first category of person to be a person who is liable to pay legal costs by reason of a court order to do so, which is the basis of the liability. The second category of person is a person who has paid legal costs. In those circumstances there would be no room for the operation of s 42(2). That analysis resolves the apparent difficulty.

  20. I accept the submission of Mr O’Leary, counsel for the appellant, that where the court’s power to tax and settle a bill of costs is invoked by an application brought pursuant to s 42(1), if in the course of the taxation the court was confronted with a bill of costs issued in accordance with a costs agreement made pursuant to s 42(6) which contained a term that was not fair and reasonable, it is within this Court’s power to exercise the powers of variation or rescission conferred by s 42(7) in respect of the agreement. Any other construction would be inconsistent with the beneficial and protective purposes of s 42.

  21. This conclusion is supported by the reasons of Doyle CJ, with whom Gray and David JJ agreed, in McNamara Business and Property Law v Kasmeridis & Anor[17] where he said:

    I agree that on a taxation, … it would be open to a master to disallow particular claims on the basis that the hours or time claimed is unreasonable or excessive. I agree that in exercising its powers under s 42(7) of the Act the court does so in the context of the power of the court to tax costs, and to disallow amounts claimed.

    [17] [2007] SASC 90 at [41], (2007) 97 SASR 129 at 140.

  22. Accordingly, I reject the submission of the respondent. 

  23. The appellant’s application to this Court invokes the Court’s jurisdiction pursuant to s 42. Once the application invoked the Court’s jurisdiction the Court has available the panoply of powers conferred pursuant to the section. They include the powers conferred by s 42(7).

  24. The appellant’s right to seek and obtain a remedy pursuant to s 42(7) was preserved by the terms of clause 6.3. It is important to recognise that the remedy provided by s 42(7) can only be granted by the Supreme Court. The relief for which s 42(7) provides could not have been granted in the District Court action. This is a further reason to construe clause 6.3 broadly so as to include the preservation of the right to seek relief pursuant to that subsection. There being no ambiguity in the terms of the deed, including, in particular, clause 6.3, the Court is precluded from having regard to extrinsic evidence, including of prior negotiations and of the parties’ intentions, except for the evidence of the surrounding circumstances known to both parties, namely, the District Court and Supreme Court actions.

  25. In any event, the terms of paragraph 5 of the application, which seeks an adjudication of the costs in issue on the Supreme Court scale, implicitly invokes the court’s jurisdiction pursuant to s 42(7) because the only basis upon which that can occur is if the costs agreement made pursuant to s 42(6) is rescinded.

  26. These reasons are sufficient to dispose of the appeal, however, I should address, at least briefly, the other grounds of appeal. 

  27. For the reasons set out above, clause 6.3 does not constitute any attempt to oust this Court’s powers pursuant to s 42(7). Likewise, there is no abuse of process. The premise for any argument about abuse of process does not exist. The assertion by the appellant of a right to invoke the court’s power pursuant to s 42(7) is not an attempt to re-litigate a matter which is the subject of a compromise between the parties. The compromise between the parties preserved the appellant’s right to invoke the remedies prescribed by s 42(7) as explained above.

    Conclusion

  28. I would allow the appeal.  I would hear the parties as to the orders that should be made in accordance with these reasons.


Cases Citing This Decision

0

Cases Cited

12

Statutory Material Cited

1

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24
Stanberg Pty Ltd v Tabibi [2012] SASC 187