Sandy v Yindjibarndi Aboriginal Corporation (ICN 4370) [No 6]
[2021] WASC 297
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: SANDY -v- YINDJIBARNDI ABORIGINAL CORPORATION (ICN 4370) [No 6] [2021] WASC 297
CORAM: LE MIERE J
HEARD: 19 JULY 2021
DELIVERED : 31 AUGUST 2021
PUBLISHED : 31 AUGUST 2021
FILE NO/S: CIV 2072 of 2011
BETWEEN: AILEEN SANDY
SYLVIA ALLAN
Plaintiffs
AND
YINDJIBARNDI ABORIGINAL CORPORATION (ICN 4370)
First Defendant
STANLEY WARRIE in his capacity as representative of persons purportedly appointed as directors of the First Defendant on or after 15 December 2010
Second Defendant
Catchwords:
Costs - Special costs order - Indemnity principle - Whether legal costs agreement or retainer existed between party and solicitors
Costs - Special costs order - Costs incurred exceed scale rates - Whether costs inadequate by reason of the importance, complexity and unusual difficulty of the matter
Costs - Special costs order - Costs incurred exceed scale rates - Work after judgment - Whether costs of executing or implementing orders can be claimed
Legislation:
Bankruptcy Act 1966 (Cth)
Legal Profession Act 2008 (WA)
Legal Profession (Supreme Court) (Contentious Business) Determination 2016
Moratorium Act 1932 (NSW)
Result:
Application for special costs order to lift scale granted
Application for special costs order for work performed after judgment refused
Application for costs order to lift scale amounts granted
Category: B
Representation:
Counsel:
| Plaintiffs | : | Mr M L Bennett |
| First Defendant | : | Ms M L Coulson & Ms A Pascoe |
| Second Defendant | : | Ms M L Coulson & Ms A Pascoe |
Solicitors:
| Plaintiffs | : | Bennett + Co |
| First Defendant | : | HWL Ebsworth |
| Second Defendant | : | HWL Ebsworth |
Case(s) referred to in decision(s):
Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495
Allen v Gangrove Pty Ltd [1993] 2 Qd R 589
Armitage v Jessop [1866] LR 2 CP 12
Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S)
Director of the Fair Work Building Industry Inspectorate v Abbott (No 5) [2013] FCA 522
Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd [2014] WASC 469 (S)
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S)
Halliday v SACS Group Pty Ltd (Unreported, High Court, Dawson J, 23 December 1992)
Hancock Prospecting Pty Ltd v Hancock [No 3] [2016] WASC 423
Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
Marquis of Salisbury v Ray [1860] 29 LJ CP 225
Marsh v Baxter [No 2] [2016] WASCA 51
Noye v Robbins [2010] WASCA 83
Re Smith; ex parte Sydney Investments Ltd (1932) 4 ABC 187
LE MIERE J:
The trial of this matter was heard for ten days between 5 December 2016 and 9 February 2017 before Pritchard J.
On 4 May 2018, following the judgment of her Honour determining the matter, the court made orders, amongst other things, that the defendants pay 70% of the plaintiffs' costs of this action, to be assessed if not agreed.
On 15 June 2018, the plaintiffs made an application for special costs orders and reserved costs. The application was not heard until 19 July 2021.
This application was supported by affidavit evidence, including a bill of costs submitted by the plaintiffs' solicitors, Bennett + Co.
Broadly, the plaintiffs' application gives rise to two issues.
First, are the plaintiffs entitled to the costs of work performed by Integra Legal (Integra) from early 2012 to 21 July 2016, at which time Bennett + Co became the solicitors on record?
Secondly, should special costs orders be made regarding the costs of work performed by Bennett + Co from 21 July 2016?
For the reasons which follow, I find the plaintiffs are entitled to the costs of work performed by Integra, and that special costs orders lifting the scale maxima should be awarded.
The claim
The plaintiffs seek orders in the following terms:
Special Costs Orders
1.Pursuant to section 280(2) of the Legal Professions Act 2008 (WA) the taxing officer, in assessing the plaintiff's bill of costs, is directed to assess costs as if this action were an action commenced by writ of summons:
1.1the plaintiff's notice of originating motion (as amended) as if it was a writ;
1.2the parties' statements of issues, facts and contentions (as amended) as if they were pleadings.
2.Pursuant to section 280(2) of the Legal Professions Act 2008 (WA) the taxing officer, in assessing the plaintiff's bill of costs, is directed to make reasonable allowances in relation to:
2.1work performed by Mr Martin Bennett on or after 21 July 2016, without limitation of the hourly rate limits imposed under the relevant legal costs determination.
2.2preparation and attendance at trial by 2 counsel;
2.3the following items without limitation of the scale maxima imposed by the relevant legal costs determination in relation to the following items, where the work was performed by Bennett + Co on or after 21 July 2016:
2.3.1Item 1(a) - Writ of summons;
2.3.2Item 1(c) - Statement of claim;
2.3.3Item 7(a) - Notice requiring discovery;
2.3.4Item 10 - Proceedings in chambers
2.3.5Item 17 - Preparation of case;
2.3.6Item 20(a) - Counsel fees: fee on brief, i.e. first day of trial and preparation (including submissions)
2.3.7Item 20(c) - Counsel fee for the second and each successive day of hearing;
2.3.8Item 20(g) - Preparation of written closing submissions; and
2.3.9Item 20(h) - Attending on reserved judgment; and
2.4the plaintiffs' costs of implementing the orders made upon judgment delivery in relation to meetings of the Advisory Committee.
Reserved costs
3.The defendants pay the plaintiff's costs the subject of reserved costs orders made on:
3.116 April 2013;
3.211 November 2014; and
3.31 November 2016.
The defendants oppose orders 2.3.4, 2.3.6, 2.3.7, 2.3.8, 2.3.9, 2.4, 3.2 and 3.3.
Indemnity Principle
Justice Pritchard recently described the application of the indemnity principle in Hancock Prospecting Pty Ltd v Hancock [No 3].[1] I agree with her Honour's analysis of the principle, of which I summarise some principles below.
[1] Hancock Prospecting Pty Ltd v Hancock [No 3] [2016] WASC 423 [16] - [27].
In short, the indemnity principle operates to ensure that party-party costs are awarded to reimburse a party who actually incurred a liability for those costs.
The indemnity principle is flexible and is designed to allow for a just and fair result.
The liability for a party to pay for their legal costs arises from an agreement between that party and their solicitors. That agreement is called a retainer. The retainer can be express or implied.[2] Section 271 of the Legal Profession Act 2008 (WA) ('the LPA') recognises the existence of implied or deemed retainers.
[2] Hancock Prospecting Pty Ltd v Hancock [No 3] [2016] WASC 423 [21].
Costs can be awarded under the indemnity principle even if a third party has undertaken to pay, or in fact paid, the client's costs. Further, the indemnity principle will be applied even if the instructions to act on behalf of the client have come from a third party.
Two clients may have co-existing obligations to pay a solicitor for work performed.[3]
[3] Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495, 504 (Atkin LJ).
However, a party may not recover legal costs under the indemnity principle if either:
(a)there is no retainer between the party and solicitors; or
(b)there is an agreement between the party and a third party, or the party and the solicitors that under no circumstances will the party to the matter be responsible for payment.[4]
[4] Hancock Prospecting Pty Ltd v Hancock [No 3] [2016] WASC 423 [26]; Marsh v Baxter [No 2] [2016] WASCA 51 [32] quoting Adams v London Improved Motor Coach Builders [1921] 1 KB 495
Noye v Robbins [2010] WASCA 83 [297], [303].
The party opposing an application for costs under the indemnity principle bears an evidentiary onus to show either one of the two circumstances I have described above. Once that onus has been discharged, the evidentiary onus shifts to the claiming party to show that there either is a retainer or that there is no agreement that the claiming party will under no circumstances be responsible for payment. Ultimately, the onus of proof then rests with the opposing party.
There is a strong presumption in favour of the claiming party that a retainer exists between them and their solicitor on record.[5] That presumption is strengthened if it can be shown that a solicitor was acting for a client with that client's knowledge and assent.[6]
Can the plaintiffs claim costs for work performed by Integra?
[5] Halliday v SACS Group Pty Ltd (Unreported, High Court, Dawson J, 23 December 1992).
[6] Hancock Prospecting Pty Ltd v Hancock [No 3] [2016] WASC 423 [21].
Over the course of this matter the plaintiffs have been represented by three different solicitors. From 29 November 2011 to 20 February 2012, Corser & Corser were the plaintiffs' solicitors on record. From 21 February 2012 to 21 July 2016, Integra were the plaintiffs' solicitors on record. From 22 July 2016 to present, Bennett + Co have been the plaintiffs' solicitors on record.
In the current application, the plaintiffs do not claim any costs for the work performed by Corser & Corser. Further, the defendants do not dispute the plaintiffs' entitlement to costs for work performed by Bennett + Co.
The plaintiffs seek costs for legal work performed by Integra. The defendants dispute this claim under the indemnity principle. The ultimate onus is therefore on the defendants to prove that there was either no retainer, or an agreement that under no circumstances would the plaintiffs be responsible for payment to Integra.
Before dealing with the ultimate onus of proof, the defendants first bear an evidentiary onus.
The defendants submit that the existence of a costs agreement between Integra and Wirlu-murra Yindjibarndi Aboriginal Corporation (WMYAC), together with an absence of evidence of any written agreement between the plaintiffs and Integra, is evidence of no retainer between the plaintiffs and Integra for the same work. The defendants do not submit any further positive evidence as to the absence of a retainer.
The defendants further submit that I should draw a negative inference under the rule in Jones v Dunkel on the basis that Ms Sandy has not sworn an affidavit to the effect that she had a retainer with Integra.
I find this evidence sufficient to discharge the evidentiary onus.
In response, the plaintiffs submit that work performed by Integra included the preparation of three affidavits sworn by the second-named defendants which were tendered at trial, and the attendance at mediations and negotiations, which the plaintiffs also attended and in respect of which the plaintiffs provided instructions. Further, the plaintiffs have adduced evidence of affidavits sworn by the second-named plaintiff in 2015 in which they refer to Integra as 'my solicitors'.
Additionally, annexed to those affidavits are notices of default signed by Integra on behalf of the plaintiffs as 'their solicitors and duly authorised agent'. I find that the totality of this evidence is sufficient to discharge the evidentiary onus that a retainer existed between Integra and the plaintiffs for this action.
As to whether the plaintiffs were party to an agreement that under no circumstances would they be liable to pay for Integra's services, the plaintiffs adduce evidence in Taleesha Jane Conlan Elder's affidavit sworn 1 April 2021. Ms Elder swears that to the best of her knowledge, there are no records of any agreement or board resolution between WMYAC and the plaintiffs regarding payment for Integra's services. I find that this evidence is sufficient to discharge the evidentiary onus that no agreement between WMYAC and the plaintiffs that under no circumstances would the plaintiffs pay for Integra's services existed.
At the hearing, Ms Coulson, appearing for the defendants, submitted that in addition to producing evidence that a retainer existed between the plaintiffs and Integra, the plaintiffs also had to prove the terms of that agreement, citing Gilmour J in Director of the Fair Work Building Industry Inspectorate v Abbott (No 5) (Abbott (No 5)).[7]
[7] Director of the Fair Work Building Industry Inspectorate v Abbott (No 5) [2013] FCA 522 [24].
I reject Ms Coulsen's submission on this issue. In Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) (Abbott (No 7)), Gilmour J clarified his statement in Abbott (No 5) when his Honour stated:
The relevant inquiry is as to what were the terms of any agreements as between [the claiming party] and each of his Solicitors. Importantly, was there an agreement, in effect, in each case, that he would not be liable for their respective costs of representing him.[8]
I consider this to be in line with the other leading authorities on the issue such as Noye v Robbins,[9] which Gilmour J cited in Abbott (No 7).
[8] Director of the Fair Work Building Industry Inspectorate v Abbott (No 7) [2015] FCA 969.
[9] Noye v Robbins [2010] WASCA 83 [315].
It would not make sense to require the plaintiffs to positively prove the terms of their retainer with their solicitors for two reasons. First, that party merely has an evidential burden to show that the retainer exists. Secondly, it would not make sense to have a two limbed test that allowed the opposing party to show either that there is no retainer, or that the claiming party would under no circumstances pay. If the claiming party was required to prove the exact terms of their retainer, including showing an obligation to pay, then there would be no need for the second limb of the test.
The plaintiffs having adduced evidence of the possible existence of a retainer, and the absence of an agreement that the plaintiffs would under no circumstances pay Integra's fees, have discharged their evidential onus.
Following the plaintiffs' discharge, the defendants are unable to produce any further evidence to prove their case. Ms Coulsen submitted that the plaintiffs' evidence was not enough to establish a retainer, or put another way, that the defendants' evidence was sufficient to cast doubt on the existence of a retainer. This submission is not enough to discharge the onus of proving that no retainer existed between the plaintiffs and Integra.
The plaintiffs can recover their claimed costs for work performed by Integra.
Special Costs
Section 280 of the LPA provides that the taxation of bills, as well as any other aspect of the costs charged by law practices, is regulated by an applicable costs determination.
However, if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court may remove limits on any costs fixed in the determination.[10]
[10] Legal Profession Act 2008 (WA) s 280(2)(c).
The threshold test for invoking s 280(2) of the LPA is set out in Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) (Heartlink).[11] In addressing a predecessor to the LPA, Chief Justice Martin determined that two requirements must be satisfied.
[11] Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S).
First, the court must be satisfied that the costs allowable in respect of a matter under a costs determination would be inadequate. This is usually established by establishing that there is a fairly arguable case that the bill to be put before the taxing officer may tax at an amount greater than the limit imposed by the relevant costs determination.[12]
[12] Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S) [4].
Secondly, this inadequacy must arise due to the unusual difficulty, complexity, or importance of the matter.[13]
[13] Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [11].
Both requirements are a matter of the court's overall impression, rather than the subject of detailed evaluation.[14] However, the court should take into account the nature and magnitude of the issues which have been determined.[15] Because the quantum of costs to be allowed is to be determined by taxation, the powers conferred on the court by s 280(2) of the LPA are to be exercised as matters of impression rather than science, taking into account the greater expertise of the taxing officer in fixing the amount of costs properly and reasonably allowed.[16]
Was the matter unusually difficult, complex, or important?
[14] Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [20].
[15] Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S) [43].
[16] Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd [2014] WASC 469 (S) [4].
Both the plaintiffs and defendants acknowledge that the court has already declared this matter to be 'unusually difficult'.
In her orders dated 4 May 2018, Pritchard J stated that, for the purposes of assessing the plaintiffs' costs, the proceedings were to be declared 'unusually difficult' within the meaning of s 280(2) of the LPA.
This satisfies the second limb of the Heartlink test.
Would the costs be inadequate?
The central source of disagreement between the plaintiffs and defendants concerns the first limb of the Heartlink test.
The defendants concede that most of the plaintiffs' items will either exceed the scale maxima by an amount significant enough to be taxed without regard to the relevant items of the Legal Profession (Supreme Court) (Contentious Business) Determination 2016. However, the defendants contend that some items do not exceed the limit at all. The plaintiffs' proposed orders regarding these items are not opposed.
However, the defendants submit that some items on the plaintiffs' draft bill have not exceeded the limit by an amount significant enough to render the costs inadequate. They take objection to four items:
(a)The defendants' chamber summons for order as to costs thrown away, filed 29 August 2016 (Item 10(a)(i));
(b)The plaintiffs' application for inspection of subpoenaed documents, heard 4 November 2016 (Item 10(a)(ii));
(c)Ms Elder's fees as counsel on brief (Item 20(a)); and
(d)Ms Elder's fees as counsel for the second and each successive day of hearing (Item 20(c)).
The plaintiffs had initially suggested that the provisional schedules of costs relied upon to determine the draft bill, and upon which the defendants had based their objection, was based on incomplete information. This was attributed to the transfer of the matter between Corser and Corser, Integra and Bennett + Co, and the absence of some invoices relevant to preparing a bill of costs.
However, Ms Elder's affidavit provided the true copy of the schedule of costs, inclusive of this missing information. The defendants rely on this updated information in their written submissions.
I reject the defendants' submissions on this issue. The amount by which the draft bill in its entirety exceeds the limit is way in excess of the maxima, such that the taxing officer will likely tax at an amount greater than the limit imposed by the relevant costs determination.
The individual items identified by the defendants vary in whether they exceed, or indeed even meet, the scale maxima. Their calculations are as follows:
(a)Item 10(a)(i) - $14,751.49 likely claimable, which is $2,871.49 in excess of the maximum;
(b)Item 10(a)(ii) - $13,452.51 likely claimable, which is $1,572.51 in excess of the maximum;
(c)Item 20(a) - $12,408.03 likely claimable, which is $5,411.97 less than the maximum; and
(d)Item 20(c) - as the plaintiffs have not sought an uplift in Ms Elder's hourly rate, Ms Elder's fees would not exceed the maximum of $3,960 per day.
However, the total amount of the draft bill - $1,046,028.05 - is over 10% more than the calculated scale maximum of $893,570.60. I am of the view that this is enough to render costs inadequate, irrespective of the amounts of each individual item.
I therefore find that the first limb of the Heartlink test is satisfied.
The plaintiffs can claim special costs for the contested items in their amended minute of proposed orders filed 1 April 2021.
Work After Judgment
Order 2.4 of the plaintiffs' amended minute of proposed orders seeks a reasonable costs allowance for the plaintiffs' costs of implementing Pritchard J's orders made upon judgment delivery in relation to the meetings of the Advisory Committee of Yindjibarndi Elders (the Advisory Committee).
Orders 6 to 13 of Pritchard J's orders provide for the establishment of the Advisory Committee, the management of membership applications and the making of membership recommendations to directors.
The plaintiffs submit that the costs of work performed by Bennett + Co solicitors pertaining to the Advisory Committee should be claimable as special costs, despite being incurred after both judgment delivery and the filing of their special costs application on 15 June 2018. They argue that this is because the formation and meeting of the Advisory Committee was required by order of the court.
The nature of this work includes correspondence with the defendants' solicitors regarding instructions to the Advisory Committee, preparation for and attendance at conferrals and meetings, and travel to Roebourne.
The defendants submit that it is not appropriate for the costs of this work to be claimed as special costs, as the costs are outside the scope of Pritchard J's orders. This is because her Honour's orders provide the plaintiffs with an entitlement to their costs of the action; as opposed to any costs incurred after the action was completed. The plaintiffs' work, in the defendants' submission, did nothing to advance the action as judgment had already been delivered.
Neither the plaintiffs nor defendants have provided any authorities which consider this issue.
Professor Dal Pont writes that, as an action ends with judgment, an order for 'costs of the action' excludes costs incurred after final judgment (emphasis in original).[17] Any costs of executing a judgment are not costs of the action, or of the trial, but are payable out of the execution.
[17] Dal Point, Law of Costs (2008, 4th edition) 10.
Professor Dal Pont cites Re Smith; ex parte Sydney Investments Ltd ('Re Smith') as authority for this principle. In this case, the applicant, a judgment debtor, sought orders to set aside a bankruptcy notice issued against him by the respondent creditor. The applicant's primary ground suggested that s 25 of the predecessor to the Moratorium Act 1932 (NSW) should operate as a stay of execution within the meaning of s 52 of the predecessor to the Bankruptcy Act 1966 (Cth). The respondent submitted that the phrasing of s 25 intended to limit the operation of the section, such that it cannot operate as a stay of execution.
Justice Lukin stated that, for a stay of execution to arise under the section, the action or proceeding 'must be one that is continued'.[18] After consideration of authorities, his Honour determined that an action and execution are two separate events; an action is said to continue until judgment is given, after which the process of execution begins. Citing Chief Justice Earl in Armitage v Jessop,[19] his Honour affirmed that costs of an execution are not costs of an action.
[18] Re Smith; ex parte Sydney Investments Ltd (1932) 4 ABC 187.
[19] Armitage v Jessop [1866] LR 2 CP 12; see also Marquis of Salisbury v Ray [1860] 29 LJ CP 225.
As judgment had already been obtained, no action was being continued within the meaning of s 52 of the Bankruptcy Act's predecessor. The bankruptcy notice was not set aside, and the application was dismissed.
Chief Justice Earl's decision in Armitage v Jessop was followed by Mackenzie J in the Queensland Supreme Court case of Allen v Gangrove Pty Ltd.[20]
[20] Allen v Gangrove Pty Ltd [1993] 2 Qd R 589.
Applying this authority to the facts at hand, I find that Bennett + Co are not entitled to special costs for implementing the orders set out by Pritchard J. Although both Re Smith and Allen v Gangrove concern the costs of warrant execution, I am of the view that such costs are analogous to the costs of implementation Bennett + Co seeks to claim.
The action in this instance was completed upon the delivery of her Honour's final judgment on 20 April 2018. Any further costs incurred after that point, whilst implementing that judgment - including the implementation of the Advisory Committee - are not costs of the action and are not claimable pursuant to her Honour's orders dated 4 May 2018.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
BR
Associate to the Honourable Justice Le Miere
31 AUGUST 2021
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