Re Henderson Trout's Bill of Costs

[1993] QCA 389

IN THE COURT OF APPEAL	[1993] QCA 389
SUPREME COURT OF QUEENSLAND	Appeal No. 229 of 1992
Brisbane
Before Mr Justice Davies Mr Justice Pincus Mr Justice Dowsett

[Henderson Trout v Graeme Cooper Holdings Pty Ltd & ors]

BETWEEN:

GRAEME COOPER HOLDINGS PTY LTD., GRAEME
ROBERT COOPER, RALPH DUNCAN COOPER and

LEONE MARGARET COOPER

(Applicants) Respondents

AND:

HENDERSON TROUT

(Respondent) Appellant

REASONS FOR JUDGMENT - DAVIES J.A.

Judgment delivered 13/10/1993

This is an appeal from an order made in the Supreme Court that the appellant, a firm of solicitors, deliver bills of costs in taxable form with respect to memoranda of costs, twelve of them in all, bearing specific dates commencing 15 January 1990 and ending 31 July 1991, and that each bill, when delivered, be referred to taxation. Some of the costs have been paid. The order was made pursuant to s. 26 of the Costs Act 1867. Both below and in this Court the appellant opposed the making of the order on the ground that the costs were the subject of an agreement in writing pursuant to s. 3 of the Solicitors Act 1891 ("the Act") and so exempt from taxation by s. 15 of that Act. Sections 3 and 15 are in the following terms:

"3. The remuneration of solicitors may be fixed by agreement. 33 & 34 Vic. c. 28 s. 4. A solicitor may make an agreement in writing with his client respecting the amount and manner of payment for the whole or any part of any past or future services, fees, charges, or disbursements in respect of business done or to be done by such solicitor in any capacity, either by a gross sum or by commission or percentage or by salary or otherwise, and either at the same or at a greater or at a less rate as or than the rate at which he would otherwise be entitled to be remunerated subject to the provisions and conditions in this part of this Act contained:

Amount payable under agreement not to be paid until allowed by taxing officer. Provided always that, when any such agreement is made in respect of business done or to be done in any action in the Supreme Court of Queensland, the amount payable under the agreement shall not be received by the solicitor until the agreement has been examined and allowed by the taxing officer, and if it appears to the taxing officer that the agreement is not fair and reasonable, he may require the opinion of the court or a judge to be taken thereon by motion or petition, and such court or judge shall have power either to reduce the amount payable under the agreement or to order the agreement to be cancelled, and the costs, fees, charges, and disbursements in respect of the business done to be taxed in the same manner as if no such agreement had been made."

"15. Agreements shall be exempt from taxation. 33 & 34 Vic. c. 28 s. 15. Except as in this Part of this Act provided, the bills of a solicitor for the amount due under an agreement made in pursuance of the provisions of this Act shall not be subject to any taxation nor to the provisions of the Costs Act of 1867."

By an agreement dated 7 September 1990 between the respondents of the one part and the appellant and Messrs Gilshenan and Luton, solicitors, of the other, the respondents agreed, amongst other things, that there were costs then due and owing to the appellant in the sum of $58,619.72, that further costs incurred by them to the appellant would be calculated at specified rates and that the costs then due and further costs would be paid by specified dates. The learned trial judge held, and it was not argued to the contrary before us, that this was an agreement respecting the amount and manner of payment for past and future services, fees, charges and disbursements in respect of business done and to be done by the appellant within the meaning of s. 3.

Before turning to the main question argued before this Court it is convenient to dispose of another. The appellant sought to argue that the agreement and s. 15 could and did apply to amounts paid before the agreement was made. I do not think that there is any substance in that contention.

The agreement on its proper construction does not apply to such amounts; it relates only to costs then due and owing and to future costs. And amounts paid before the agreement was made could not be "amounts due" under the agreement within the meaning of those words in s. 15.

The main question in issue in this appeal is whether it is sufficient to exempt the agreement from taxation pursuant to the Costs Act that it be one of the kind described in the first paragraph of s. 3 or whether, as well, the agreement must have been examined and allowed by a Taxing Officer pursuant to the second paragraph of that section before the appellant received any money payable under it. Her Honour held that the latter of these was the correct view.

Consequently, as the agreement had not been examined and allowed by a Taxing Officer and the appellant had received money payable under the agreement, her Honour made the order to which I have already referred.

The question is one of construction of ss. 3 and 15 in their context in Part I of the Act. Upon their literal construction, s. 15 would apply to exempt from taxation under the provisions of the Costs Act amounts due under the agreement of 7 September. An "agreement made in pursuance of the provisions of this Act" means an agreement made pursuant to s. 3 and an agreement is made pursuant to that section when it is entered into. There is nothing in the proviso to s. 3 from which it could be inferred that the submission of the agreement to the Taxing Officer was part of its making. On the contrary, it is an express prohibition upon receipt of payment under the agreement; that is upon its performance, not its making.

Her Honour was persuaded nevertheless to reach the conclusion that, if a solicitor is to have the benefit of s. 15, the costs agreement with the client must be examined and allowed by a Taxing Officer before the solicitor receives money payable under it. She was persuaded to that view by, amongst other things, what she described as the weight of authority, in particular the decision of the English Court of Appeal in Re Simmons and Politzer [1954] 2 Q.B. 296.

However it cannot be said that the relationship between ss 3 and 15, or their analogues elsewhere, has been settled by any course of authority and views have so far been divided in Queensland as to the correctness of the decision in that case: Re Central Queensland Developments Pty Ltd [1988] 2 Qd.R. 476 at 477; Re Walsh Halligan Douglas' Bill of Costs [1990] 1 Qd.R. 288 at 291-2. The rationale for the conclusion reached in Re Simmons and Politzer and by the learned primary judge in this case is that otherwise there does not appear to be any sanction in the Act for a breach by a solicitor of the express prohibition in the proviso to s. 3.

It is necessary to consider whether this rationale is valid.
Part I of the Act appears on its face to be a discrete set
of provisions, commencing with s. 3 and ending with s. 15,
dealing with costs agreements between solicitors and their
clients and the consequences of making those agreements,
including taxation of costs, when any such agreement has
been set aside or re-opened. Sections 7 and 8 prohibit any
action being brought on any such agreement, but provide an
alternative means by which it may be enforced or set aside
or its validity otherwise determined. Whether it is
enforced or set aside depends on whether it appears to the
court to be fair and reasonable between the parties. If it
is set aside the court may direct that the costs dealt with
by the agreement be taxed. Section 9 then provides that the
court may, on the application of any person who has paid
money under an agreement, within twelve months of such
payment re-open it and order taxation and repayment, but
only if the special circumstances of the case require re-
opening. The second paragraph of s. 9 deals with the
specific case where the client is a guardian or trustee or
committee of a person. It is in the following terms:

"Where any such agreement is made by the client in the capacity of guardian or of trustee under a deed or will, or of committee of any persons or persons whose estate or property will be chargeable with the amount payable under such agreement, or with any part of such amount, the agreement shall before payment be laid before the taxing officer of a court having jurisdiction to enforce the agreement, and such officer shall examine the same and may disallow any part thereof, or may require the direction of the court or a judge to be taken thereon by motion or petition, and if in any such case the client pays the whole or any part of the amount payable under the agreement without the previous allowance of such officer or court or judge as aforesaid, he shall be liable at any time to account to the person whose estate or property is charged with the amount paid, or with any part thereof, for the amount so charged, and if in any such case the solicitor accepts payment without such allowance, any court which would have had jurisdiction to enforce the agreement may, if it thinks fit, order him to refund the amount so received by him under the agreement."

In In re Simmons and Politzer the court was considering s. 60 of the Solicitors Act 1932 (U.K.), one of a series of provisions analogous to Part I of the Act. Those provisions and Part I come from Part I of the Attorneys and Solicitors Act 1870 (U.K.). After remarking on the fact that sub-ss. (7) and (8) of s. 60, together the analogue of the second paragraph of s. 9 of the Act, expressly provided a sanction upon a solicitor for infringement of s. 60 whereas sub-s. (5), the analogue of the proviso to s. 3 of the Act, did not, the court went on to imply as the sanction for such an infringement that that solicitor be deprived of the advantage which the analogue of s. 15 conferred. In reaching that conclusion it was influenced by the fact that otherwise a solicitor could "disregard section 60(5) with impunity": at 306.

In the course of reaching that conclusion, the court rejected the argument that the sanction was to be found in the analogue of the first paragraph of s. 9 because, it said, that provision could be invoked even though approval had been obtained under the analogue of the proviso to s. 3.

That is undoubtedly true. However, it is possible to infer, consistently with the literal meaning of ss. 3 and 15, that the sanction upon a solicitor for failing to have the agreement examined and allowed by the Taxing Officer before receiving payment is that that failure is sufficient to provide the special circumstances for re-opening under s. 9. Furthermore, allowance of the agreement by the Taxing Officer or, on reference by him, a court or judge, pursuant to the proviso to s. 3 makes it less likely that a contrary view will be taken under s. 8. The view that these together provide sufficient disincentive to disobey the prohibition contained in the proviso not only accords with the literal construction of ss. 3 and 15 but with what appears to be the evident intention of Part I of the Act, and Part I of the Attorneys & Solicitors Act, that it should provide a self- contained scheme for costs agreements made between solicitors and their clients.

In my view, therefore, the respondents had no right to require, either pursuant to the Costs Act or pursuant to the court's inherent jurisdiction, delivery of bills of costs in taxable form in respect of any matters the subject of the agreement. Their remedies lay in ss. 8 and 9 of the Act.

The respondents submitted that if the appeal succeeds on the construction question this Court ought to determine that the agreement was not fair and reasonable and consequently to make orders for taxation of the costs due under the agreement. Notwithstanding that submission the respondent argued, not that it was not fair and reasonable, but that it was impossible to say whether memoranda of costs rendered pursuant to it were fair and reasonable. On the other hand there was uncontradicted evidence that the rates stated in the agreement were commensurate with those charged by other firms and that the fees actually charged were reasonable.

As the question whether the agreement was fair and reasonable does not appear to have been properly litigated below, I do not think it appropriate to decide that question. However, in view of the appellant's intimation that it would not oppose the matter being remitted to the learned chamber judge for that purpose, I would be prepared to make that order if it is sought by the respondents.

The appellant did not argue that, in respect of those memoranda of costs paid prior to 7 September 1990, there were any other reasons precluding taxation. However, the evidence does not establish which, if any, memoranda of costs the subject of her Honour's order were paid, in whole or in part, prior to that date. If a memorandum of costs the subject of her Honour's order had been paid in part before that date then, unless the amount unpaid at that date can be identified as part of the sum of $58,619.72 referred to in the agreement and can be attributed to specific past services, fees, charges or disbursements, then the whole of the amount, paid and unpaid, would fall outside the protection of s. 15 and be subject to orders for taxation under the Costs Act. It seems to me that the only course is to remit the matter to her Honour to receive further evidence and hear further argument on that question and to make orders in accordance with that evidence and these reasons. However, I would be prepared to hear further argument on whether that is the appropriate course and on costs.

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

No. 229 of 1992

Brisbane

[Henderson Trout v Graeme Cooper Holdings Pty Ltd & ors]

BETWEEN:

GRAEME COOPER HOLDINGS PTY LTD., GRAEME
ROBERT COOPER, RALPH DUNCAN COOPER and

LEONE MARGARET COOPER

(Applicants) Respondents

AND:

HENDERSON TROUT

(Respondent) Appellant

____________________________________________________________
_____

DAVIES J.A. PINCUS J.A. DOWSETT J.

____________________________________________________________

_____

Reasons delivered 13/10/1993

SEPARATE REASONS OF DAVIES AND PINCUS JJ.A. AND DOWSETT J.
____________________________________________________________

_____

Counsel:	Mr. H. Fraser Q.C. for the Appellant Mr G. Robinson for the Respondents
Solicitors:	Clayton Utz for the Appellant Baker Johnson & Partners for the Respondents
Hearing Date(s):	28 April 1993

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

C.A. No. 229 of 1992

Brisbane

[Re: Graeme Cooper Holdings]

BETWEEN:

GRAEME COOPER HOLDINGS PTY. LTD., GRAEME ROBERT COOPER,

RALPH DUNCAN COOPER AND LEONE MARGARET COOPER

(Applicants) Respondents

AND:

HENDERSON TROUT

(Respondent) Appellant

Mr. Justice Davies Mr. Justice Pincus Mr. Justice Dowsett

Judgment delivered 13/10/93

Reasons for Judgment

Counsel:	Mr. D. Fraser Q.C. for the appellant Mr. G. Robinson for the respondent
Solicitors:	Clayton Utz for the appellant
Baker Johnson & Partners for the respondent
Hearing Date:	28/4/93

THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

C.A. No. 229 of 1992

Brisbane

Before Mr. Justice Davies Mr. Justice Pincus Mr. Justice Dowsett

[Re: Graeme Cooper Holdings]

BETWEEN:

GRAEME COOPER HOLDINGS PTY. LTD., GRAEME ROBERT COOPER,

RALPH DUNCAN COOPER AND LEONE MARGARET COOPER

(Applicants) Respondents

AND:

HENDERSON TROUT

(Respondent) Appellant

REASONS FOR JUDGMENT - DOWSETT J.

Judgment delivered 13/10/93

This is an appeal from an order that the appellant firm of solicitors deliver bills of costs in taxable form and for taxation of such bills. The matter originated in very complex litigation involving a company, Nessale Pty. Ltd. in which the respondents had an interest. For present purposes it is sufficient to say that on 7 September, 1990 the appellant and the respondents entered into an agreement described as a "Costs Agreement" pursuant to which the respondents agreed to be responsible for two-thirds of the costs incurred by the appellant in acting for Nessale. The agreement acknowledged the amount of previous indebtedness and stipulated that certain hourly rates be applicable for the future. It also provided for payment of interest upon outstanding amounts and security. Numerous accounts had been delivered prior to 7 September and others were delivered thereafter. Large amounts remain outstanding pursuant to these accounts, and the appellant seeks to enforce the security available under the Costs Agreement.

The application for taxation is the respondents' answer to that attempted enforcement.

The Costs Act of 1867 prohibits a solicitor from suing for his costs until one month after delivery of an appropriate bill. The client may seek to tax such bill within that month or later, if the Court so permits. There is also power to order taxation after payment. The orders made in the present case were made in exercise of one or more of the discretions conferred by the Costs Act.

In response to the application for taxation, the appellant sought to rely upon the Costs Agreement. Given the statutory provisions of the Costs Act, such an agreement would be no more than one consideration in the exercise of the various statutory discretions were it not for the Solicitors Act, 1891. Section 3 thereof provides:-

"A solicitor may make an agreement in writing with his client respecting the amount and manner of payment for the whole or any part of any past or future services, fees, charges, or disbursements in respect of business done or to be done by such solicitor in any capacity, either by a gross sum or by commission or percentage or by salary or otherwise, and either at the same or at a greater or at a less rate as or than the rate at which he would otherwise be entitled to be remunerated subject to the provisions and conditions in this part of this Act contained:

Provided always that, when any such agreement is made in respect of business done or to be done in any action in the Supreme Court of Queensland, the amount payable under the agreement shall not be received by the solicitor until the agreement has been examined and allowed by the Taxing Officer, and if it appears to the Taxing Officer that the agreement is not fair and reasonable, he may require the opinion of the Court or a Judge ..."

Although the proviso applies to the appellant's
accounts, no step has been taken to obtain the Taxing
Officer's approval.
Subsequent provisions of Part I of the Solicitors Act deal

with the enforcement or setting aside of any such agreement.

Section 15 provides:-

"Except as in this part of this Act provided, the bill of a solicitor for the amount due under an agreement made in pursuance of the provisions of this Act shall not be subject to any taxation nor to the provisions of the Costs Act of 1867."

The position prior to the enactment of the English equivalent of the Solicitors Act appears from the judgments of the Court of Appeal in Clare v. Joseph [1907] 2 KB 369, especially at pp. 372-3, 376 and 378. It is clear that prior to that Act, solicitors experienced considerable difficulty and uncertainty in enforcing agreements for costs, especially (but not only) where the agreement was to pay more than the amount payable upon taxation. Those difficulties arose from the possibility of conflict of interest and duty where the solicitor advised a client to pay his bill. The Act provided a method by which a solicitor could avoid these difficulties, although subject to quite strict limitations.

In Re: Walsh, Halligan Douglas' Bills of Costs [1990] 1 Qd.R. 288 at pp. 291-2, I quoted from the judgment of Buckley LJ in Clare v. Joseph and observed:-

"In that case the Court of Appeal held that the requirement for an agreement in writing applied only to an agreement which a solicitor sought to set up in answer to a request to tax. ... However, if the agreement were favourable to the client, and the client sought to set it up against the solicitor, no writing was required.

In the light of that decision, it is easer to understand the decision of the Court of Appeal in In re Simmons and Politzer [1954] 2 QB 296 in which it was held that a solicitor who received payment without the Taxing Officers having first allowed the agreement, was disqualified from claiming immunity from taxation under the section and was required to deliver a bill in taxable forms. The requirement for the approval of the Taxing Officer was seen as a condition precedent to the provision enabling the solicitor to enter into such an agreement ..."

It was submitted that in quoting only from the judgment of Buckley LJ, I had misstated the effect of the decision in Clare v. Joseph, because although his Lordship considered that prior to the English Act, a solicitor was absolutely prohibited from charging more than the taxable amount, the other members of the Court (Lord Alverstone CJ and Fletcher Moulton LJ) said only that there was considerable difficultly in a solicitor enforcing such an agreement.

Whilst it may be true that Buckley LJ differed from the other two members of the Court in this respect, that was not the point of my citation. My point was that for a solicitor to have the benefit of the legislation, it was necessary that he comply with its terms. All three judges in Clare v. Joseph took that view:- p. 372, per Lord Alverstone CJ; p. 377, per Fletcher Moulton LJ, and p. 378, per Buckley LJ.

Once it is accepted that a solicitor obtains the benefit of a costs agreement pursuant to the Solicitors Act only if he complies with the terms of the Act, the present problem is easily resolved. The appellant may only rely on the agreement in response to an application for taxation under the Costs Act if it is an agreement within the meaning of Part I of the Solicitors Act, so invoking the protection of s.15.

The appellant accepted as much but submitted that an agreement to which the proviso applies and which has not been approved by the Taxing Officer is sufficient to disentitle the client to taxation until such time as the agreement has been set aside. This argument relies upon the distinction between making an agreement and allowing it.

Section 15 refers to an agreement made, "in pursuance of the provisions of this Act", and not to an agreement allowed by the Taxing Officer. Thus, it was submitted, any agreement will be sufficient to invoke the protection of s.15, at least in the absence of an order setting aside that agreement.

This argument deprives the proviso of any point and is inconsistent with the views expressed in Clare v. Joseph that to have the benefit of the Act, a solicitor must comply with its terms. It implies that the proviso only operates to bar payment, but it is unlikely that Parliament intended that a solicitor should be protected from taxation but barred from receiving payment. In such a situation, necessity would compel the solicitor to abandon the agreement. Obviously, the intended effect is to exclude taxation only where the parties have provided an alternative system of remuneration, subject to that system being approved by the Taxing Officer where the proviso applies.

In other words, in such a case, there is only an agreement for the purposes of Part I of the Act where the agreement in question has been allowed. This conclusion is consistent with the decision of the Court of Appeal in In re Simmons & Politzer [1954] 2 QB 296 at p. 306. The appellant sought to distinguish that decision by reference to some variations in wording between the English and Queensland sections. It is sufficient to say that the argument was unconvincing.

Finally, it was submitted that, "The code of provisions in Part I ... is inconsistent with the survival of a broad inherent power, or a broad power under the Costs Act ... to order taxation in respect of costs agreements." This argument misunderstands the purpose of the Act. The point is that Part I operates to exclude taxation only when there has been compliance with the terms therein prescribed.

There are three other problems closely associated with
this question, but not presently requiring resolution. I
mention them only because I suspect that their shadows have
confused the parties' thinking about the present problem.
The first is the remedy available to a client who pays money
pursuant to an agreement which has not been approved under
the Act. Section 33 of the Costs Act suggests that such a
person may recover amounts paid in excess of the eventual
taxed amount, but can he also simply recover the amount paid
as moneys paid pursuant to some sort of mistake? The second
issue is whether an approval, belatedly obtained, operates
retrospectively. The third issue is whether there is a
point after which approval will not be given, for example
after the making of an order for taxation, and if so,
whether such limitation is absolute or discretionary.

We should not now enter into any enquiry as to the reasonableness of the agreement, nor should we ask the Taxing Officer to do so. It is for the appellant to take appropriate steps to obtain approval of the agreement, if that is still possible despite the orders below. I should add that there was no challenge to the way in which the learned Chamber Judge exercised the various discretions under the Costs Act, assuming that the jurisdiction to do so was enlivened. I would dismiss the appeal with costs.