Santos Ltd v Delhi Petroleum Pty Ltd
[2005] SASC 242
•30 June 2005
SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master: Civil)
SANTOS LTD & ORS v DELHI PETROLEUM PTY LTD
Judgment of The Honourable Justice Bleby
30 June 2005
PROCEDURE - COSTS - TAXATION
Appeal from decision and order of Master – Refusal to strike out bill of costs and directing issue of interim allocatur – Bill of costs for taxation – Claimed disbursement of interstate solicitors’ costs in excess of $1.9 million – Subsequent lodgment of interstate solicitors’ bill in taxable form for Supreme Court of Victoria – Victorian solicitors were respondents’ principals and Adelaide solicitors were agents – Consideration of entitlement of interstate practitioners to conduct litigation in South Australia at various times between 1997 and the present – Relevant provisions of Mutual Recognition Act 1992 (Cth) and Legal Practitioners Act 1981 (SA) discussed – Whether interstate practitioners’ fees constituted costs for purposes of taxation in South Australia – Whether bill of costs in taxable form in South Australia – Appeal allowed – Interstate solicitors’ bill of costs not in taxable form – Order for issue of interim allocatur set aside – Leave granted to respondent to redraw bill of costs of interstate practitioners in accordance with South Australian Supreme Court rules and scale of costs.
Supreme Court Act 1935 (SA) s 40; Supreme Court Rules 1987 (SA) r 101.01, r 101.07, r 101.09, r 101.10, r 101.13, r 101.16, r 101A.01 and r 101A.02; Legal Practitioners Act 1981 (SA) s 21, s 23A, s 23B, s 23C and s 23D; Mutual Recognition Act 1992 (Cth) s 17, s 19 and s 20; Mutual Recognition (South Australia) Act 1993 (SA); Legal Practitioners Act 1893 (WA) s 76 and s 77; Supreme Court Rules 1971 (WA); Arbitration Act 1895 (WA); Judiciary Act 1903 (Cth) s 55B(4); Legal Practitioners Act 1972 (NT) s 22(4); Supreme Court Rules 1987 (NT); Matrimonial Causes Act 1959 (Cth); Supreme Court Rules 1965 (Tas) O 80 r 9, referred to.
In re Pomeroy & Tanner [1897] Ch D 284; Pickering v Smoothpool (No.6) (Unreported, Gray J) [2001] SASC 440; Minister for Works v Australian Dredging and General Works Pty Ltd [1986] WAR 235, applied.
In re Bill of Costs of Lamrock Brown & Hall [1908] VLR 238; Louthnan v Dalgety & Co Ltd (1897) 16 NZLR 299; Elders Trustee and Executor Company v Herbert (1996) 132 FLR 24; Mitchell v Mitchell (1971) 19 FLR 100; McCullie v Butler [1962] 2 QB 309, distinguished.
Burford v Allan (Unreported, Full Court SASC, 26 May 1998, Judgment No.S6693), discussed.
Wentworth v Lloyd (No.2) 34 Beav 455; 55 ER 711; Mondy v The Bank of New Zealand (1888) 6 NZLR 705; Cachia v Hanes (1994) 179 CLR 403; SDS Corporation Ltd v Pasdonnay Pty Ltd (Unreported, Roberts-Smith J) [2004] WASC 26, considered.
SANTOS LTD & ORS v DELHI PETROLEUM PTY LTD
[2005] SASC 242Appeal from a Master
BLEBY J:
Introduction
Santos Ltd & Ors (“the defendants”) are defendants in the principal action and appellants on this appeal from a decision and order of a Master. The respondent to the appeal, Delhi Petroleum Pty Ltd (“Delhi”), is the original plaintiff in the action. Both Delhi and the defendants were parties to a number of agreements governing the production and sale of oil and gas from the Cooper Basin in South Australia and Queensland. There was a dispute over the application of the agreements. It was resolved at trial, and on appeal to the Full Court, in favour of Delhi. By order of the Full Court the costs of Delhi of the action and of the appeal were ordered to be paid by the defendants.
In due course Delhi’s Adelaide solicitors filed a bill of costs for taxation. A Master refused an application by the defendants to strike out the bill of costs and directed the issue of an interim allocatur in the sum of $500,000 in favour of Delhi. The defendants now appeal against the refusal to strike out the bill and against the interim allocatur.
Relevant history
There were ten defendants. They have head offices in different cities in Australia. However, the law of the agreements was the law of South Australia, and for the purposes of the agreements, the parties submitted to the jurisdiction of the South Australian courts. Delhi’s head office was in Melbourne. Its principal solicitors for many years has been a Melbourne firm, Middletons. Delhi first instructed Middletons in relation to this dispute on 18 July 1997. Over the next 12 months Middletons obtained the advice of counsel and prepared and had settled a draft statement of claim.
On 7 September 1998 Middletons instructed an Adelaide firm, Ian Maitland & Associates, to act for Delhi. That firm has subsequently joined the firm of Wallmans Lawyers. For ease of reference I will refer to Delhi’s Adelaide solicitors as “Maitland”.
Maitland prepared the inter partes summons, being the initiating document of the proceedings, and filed with it the statement of claim prepared by Middletons. The action was commenced in this Court on 24 September 1998.
It is clear from the material before the Master contained in both affidavits and bills of costs filed on behalf of Delhi, that Middletons were at all material times Delhi’s principal solicitors. In effect, they conducted the action. They drew pleadings, took instructions from Delhi and briefed counsel at various stages during the action, including the trial and on appeal. At all material times Maitland was instructed by Middletons to provide an address for service in South Australia and to undertake any legal work necessary to be performed in South Australia in connection with the litigation.
On 17 August 2001 a Judge of this Court gave judgment for Delhi in the action.[1] On 5 March 2003 the Full Court dismissed the appeal of the defendants and made the orders for costs mentioned above.[2]
[1] Delhi Petroleum Pty Ltd v Santos Ltd and Ors [2001] SASC 255
[2] Santos Ltd and Ors v Delhi Petroleum Pty Ltd [2002] SASC 275
In accordance with the requirements of r 101A.02 of the Supreme Court Rules, on 15 June 2004 Maitland served a short form bill of costs with various attachments, a response to which was served by the defendants’ solicitors on 27 July 2004. The response indicated no agreement on any of the items claimed.
On 7 September 2004 Maitland filed the bill of costs now in dispute. In respect of Maitland’s own costs and disbursements, other than the item about to be mentioned, the bill of costs complied in all respects with the Supreme Court Rules and the requirements of the Schedules containing directions and the relevant scales of costs.
Rule 101.10 requires that a bill of costs be endorsed with the name and address of the solicitor by whom it was prepared, and where the solicitor is acting as agent for a principal solicitor, the name and address of that solicitor. The bill bore Maitland’s name but not that of Middletons.
The total amount of solicitor’s fees claimed by Maitland in the bill for both the action and the appeal was $34,335.60. The total disbursements claimed was $1,968,062.39, of which one single item comprised the following:
1323. Middletons’ costs and disbursements in respect of the trial
and appeal $1,946,735.49
In accordance with the requirements of r 101.09(7) the defendants filed and served a notice of dispute on 22 September 2004. That was followed by a notice from the Court dated 23 September 2004 that the bill of costs had been set down for a preliminary appointment on 6 October 2004, and reminding the parties of the requirement of Practice Direction 15 to confer prior to the appointment.
At the request of the defendants’ solicitors the date was changed to 13 October 2004. However, on 12 October 2004 the defendants filed a notice for specific directions seeking an order that the purported bill of costs of Delhi “be struck out and/or be dismissed” as being not in taxable form. The notice for specific directions also sought to have the application specially returnable before the Master on 13 October. By way of alternative the notice for specific directions raised a number of other objections to parts of the purported bill and seeking various clarifying directions in relation to it.
The preliminary appointment before the Master on 13 October resulted in an adjournment of argument on the defendants’ notice for specific directions to 5 November. On 2 November 2004 Maitland lodged a copy of the particulars of the account from Middletons purporting to justify the single line disbursement in Maitland’s bill for in excess of $1.9 million. For the purpose of the hearing it was conceded that that bill was in taxable form for the purpose of taxation of costs in the Supreme Court of Victoria, and that the amounts claimed were based on the relevant Victorian scales of costs. A substantial proportion of that amount related to counsel fees shown as a disbursement in the Middletons’ bill.
The essence of the defendants’ argument before the Master was that the bill as filed did not comply with r 101.09, r 101.10, Practice Direction 15 and note B to the tenth schedule of the Supreme Court Rules. Apart from the alleged non‑compliance with r 101.10, the other complaints related to the item claimed for the disbursement to Middletons and to the form of the Middletons’ bill filed on 2 November 2004.
The Master’s decision
The Master gave very brief reasons for what he did. So far as is material, he said:
I have an application before me which amongst other things puts the view that the taxation of these two large bills cannot proceed, essentially because the Victorian bill is not in taxable form and does not contain sufficient detail in any event. It is in taxable form so I am assured and accept in terms of Victorian practise (sic) and I have looked at it briefly and it does seem to contain sufficient information for this matter to proceed to a conference at least. Whether the Master hearing the final taxation will be satisfied with it is another question and will depend upon what information the plaintiffs can produce, but in essence I reject the application where it seeks to in effect stay any further proceeding on the bills.
He then made some remarks designed to assist the parties to narrow the issues in conference, and directed the issue of an interim allocatur in the sum of $500,000.
Although the reasons were brief, the effect of the Master’s decision appears to be:
1.That the bill submitted by Maitland was in taxable form, and therefore he would not strike it out or dismiss the bill;
2.That the Middletons’ bill was properly included as a disbursement in Maitland’s bill, notwithstanding that, on the material before the Master, it was not a cost incurred by or at the request of Maitland but by the client (i.e. Delhi) directly;
3.That as a disbursement, the Middletons’ bill was to be assessed as to its reasonableness in the same way as any other disbursement;
4.That the reasonableness of the disbursement was to be assessed according to the scale of costs applicable in Victoria and not according to the scale of costs applicable to a solicitor conducting an action in South Australia. This is apparent from the remarks he made designed to assist the parties; and
5.That by implication he had embarked on the taxation, that the taxation (including the assessment of the disbursement) would ultimately result in an allocatur of not less then $500,000, thereby justifying an interim allocatur of $500,000 in favour of Delhi.
The defendants’ appeal
The notice of appeal of the defendants contains a number of grounds and particulars. Distilled to their essence the grounds claim that the Master erred in law in finding that the purported bill of costs was in taxable form; that he could not therefore have embarked upon the taxation and have directed the issue of an interim allocatur; that in any event, even if the bill was in taxable form, he had not, as a matter of procedure, embarked upon the taxation and was thereby deprived of the power to direct the issue of the interim allocatur; and that he erred in the exercise of his discretion in directing the issue of the interim allocatur.
The key question arising on the appeal is whether the bill was in taxable form. If it was not, or if the Master could not be satisfied that it was, he had no power to proceed with the taxation and no power to direct the issue of the interim allocatur, given that under r 101.13 a taxing officer may only direct the issue of interim allocatur “on a taxation of costs”, i.e. after the taxation has begun.
Before deciding whether the bill was in taxable form, there is a preliminary question which must be addressed as to whether the Middletons’ bill constituted “costs” that could be taxed at all. This, in turn, requires an analysis of the status, under the Legal Practitioners Act 1981 (SA) of the partners of Middletons at various times.
The status of Victorian solicitors prior to 16 September 1999
Prior to a significant amendment to the Legal Practitioners Act 1981 which took effect on 1 February 1999, s 21 of that Act relevantly provided as follows:
(1)A person must not practise the profession of the law, or hold himself or herself out, or permit another to hold him or her out, as being entitled to practise the profession of the law unless –
(a) in the case of a natural person, the person –
(i)is enrolled as a barrister and solicitor of the Supreme Court; and
(ii)holds a practising certificate issued and in force under this Act; or
(b) …
(2)Without limiting the generality of subsection (1), but subject to subsection (3), a person practises the profession of the law, if acting for fee or reward on behalf of some other person he or she –
…
(e) represents any party to proceedings in a court or tribunal.
Subsection (3) is not relevant for present purposes. Subsection (4) provided:
(4) For the purposes of this section –
(a) a person practises the profession of the law, or holds himself or herself out as entitled to practise the profession of the law, if the person does so personally, or through the agency or instrumentality of some other person;
(b) …
(c) a person represents a party to proceedings before a court or tribunal if the person –
(i)prepares, on behalf of that party, any legal process relating to the proceedings; or
(ii)gives advice to that party in relation to the conduct of the proceedings; or
(iii)takes, on behalf of that party, any other step in the proceedings.
(d) …
The prohibition on the performance of the work of a legal practitioner by a person not enrolled or holding a practising certificate in South Australia was modified, to some extent, in respect of legal practitioners practising in other States by the combined effect of the Mutual Recognition (South Australia) Act 1993 (SA) and the Mutual Recognition Act 1992 (Cth). The Mutual Recognition (South Australia) Act provided for the adoption in South Australia, under para.(xxxvii) of s 51 of the Constitution, of the Mutual Recognition Act 1992 (Cth). Section 18 of the Mutual Recognition Act 1992 (Cth) provided in effect that s 17 applied to individuals and occupations carried on by them. Section 17 provided:
(1)The mutual recognition principle is that, subject to this Part, a person who is registered in [one] State for an occupation is, by this Act, entitled after notifying the local registration authority of [another] State for the equivalent occupation:
(a) to be registered in the [other] State for the equivalent occupation; and
(b) pending such registration, to carry on the equivalent occupation in the [other] State.
(2)However, the mutual recognition principle is subject to the exception that it does not affect the operation of laws that regulate the manner of carrying on an occupation in the [other] State, so long as those laws:
(a) apply equally to all persons carrying on or seeking to carry on the occupation under the law of the [other] State; and
(b) are not based on the attainment or possession of some qualification or experience relating to fitness to carry on the occupation.
Section 19 provided for the method of seeking registration in another State. Section 20 provided that a person who lodged a notice under s 19 with the registration authority of a State was entitled to be registered in the equivalent occupation “as if the law of the second State that deals with registration expressly provided that registration in the first State is a sufficient ground of entitlement to registration”.
The effect of the Mutual Recognition scheme was that a legal practitioner entitled to practise in Victoria, by giving notice to the admitting authority in South Australia, was entitled to become registered in South Australia and to practise law in South Australia in the same way that a practitioner admitted in South Australia could. However, this did not apply to a legal practitioner who was not so registered. There was no evidence before the Master as to whether the partners of Middletons at any material time were registered in South Australia pursuant to the terms of the Mutual Recognition Act 1992. For reasons which will become apparent, whether the bill was in taxable form will depend in part on whether that had occurred.
The position of Victorian solicitors after 16 September 1999
Significant amendments were made to the Legal Practitioners Act, which amendments took effect on 1 February 1999. There was inserted in the Act a definition of “interstate legal practitioner” as follows:
“interstate legal practitioner” means a natural person –
(a)who has been admitted as a legal practitioner in a participating State; and
(b)who holds an interstate practising certificate issued or given by a regulatory authority in that State or is entitled by admission or otherwise to practise the profession of the law in that State; and
(c)who is not a local legal practitioner; and
(d)whose principal place of legal practice is not this State.
“State” was defined to include a Territory. A local legal practitioner was defined as meaning a legal practitioner who holds a practising certificate issued under Part 3 of the Act. Section 21(1) of the Act was amended to provide as follows:
(1)A person must not practise the profession of the law, or hold himself or herself out, or permit another to hold him or her out, as being entitled to practise the profession of the law unless -
(a) in the case of a natural person, the person –
(i) is a local legal practitioner; or
(ii) is an interstate legal practitioner; or
(b) …
A new Division 3A of Part 3 of the Act was inserted. Section 23A provided that an interstate legal practitioner who practises the profession of the law in this State is an officer of the Supreme Court. Section 23B ensured that any limitations or restrictions on the right of an interstate practitioner to practise in his or her home State would apply in South Australia. Section 23C enabled a regulatory authority of South Australia to impose conditions on the practice of an interstate legal practitioner as a result of disciplinary action taken, and s 23D required an interstate legal practitioner who establishes an office in South Australia to give written notice to the Supreme Court, together with certain incidental and consequential provisions.
The effect of the 1999 amendments was to enable legal practitioners entitled to practise in a participating State to practise as of right in South Australia without the necessity of becoming registered under the Mutual Recognition Act 1992. Victoria, New South Wales and the ACT each became a participating State or Territory by proclamation dated 16 September 1999. Hence, from that date the partners of Middletons were entitled, by virtue of the Legal Practitioners Act 1981 and without more, to practise law in South Australia in the same way as any other practitioner holding a South Australian practising certificate.
Whether the amount of the Middletons’ bill constituted “costs” for the purpose of taxation in South Australia
Whether the bill of costs rendered by Middletons constituted “costs” which could be taxed in South Australia depends ultimately on whether, at the material time, the partners of Middletons were entitled to practise in South Australia. The term “costs” is not defined in the Supreme Court Act1935 (SA) or in the Rules. Section 40(1) of the Supreme Court Act provides:
Subject to the express provisions of this Act, and to the rules of court, and to the express provisions of any other Act whenever passed, the costs of and incidental to all proceedings in the court, including the administration of estates and trusts, shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and to what extent such costs are to be paid.
It follows that the Court does not have power to order the payment of amounts of money which are not “costs” for the purpose of that section.
The awarding of costs is regulated by the Rules, but without the term being defined. Rule 101.01(1) echoes s 40 of the Supreme Court Act by providing:
Notwithstanding the following provisions of this Rule and of the provisions of Rule 101A.01 the costs of any party, the amount thereof, the person by whom, or the fund or estate, or portion of an estate, out of which they are to be paid are in the discretion of the Court, and the Court may:
…
However, r 101.07(6) provides some guidance. It provides that in any rule or order, unless the contrary meaning is indicated by the context or other factors:
(b)costs, or a like expression, means costs as between party and party;
Paragraph (a) provides:
(a)costs as between party and party, or a like expression, means only the costs which have been necessarily and reasonably incurred by the party in the conduct of the litigation;
Similarly, r 101.16 relevantly provides:
The following allowances and general regulations shall apply to all taxations in a proceeding:
(a) …
(b)On every taxation the taxing officer shall allow such charges and expenses as appear to him to have been necessary or proper for the attainment of justice, but save as against the party who incurred the same, no costs shall be allowed which appear to the taxing officer to have been incurred or increased through over caution, negligence or mistake, or by payment of special fees to counsel or special charges or expenses to witnesses or other persons, or by other unusual expenses;
…
Rules 101.07 and 101A.01 provide that costs are to be allowed in accordance with certain schedules to the rules, depending upon when they were incurred. The schedules, in general terms, refer to various items of work carried out by solicitors or their staff. There is a reference in the notes to the schedules which contemplates the allowance of “disbursements”, but this term is not defined.
The question for present purposes is whether the costs of Middletons incurred before 16 September 1999, on the assumption that the partners were not registered in South Australia under the Mutual Recognition Act, come within the concept of “costs” referred to in s 40 of the Supreme Court Act and the rules to which I have referred. This is not a question of the exercise of the discretion of a taxing officer, but is a question of the scope of the Court’s power in relation to costs.[3]
[3] See Burford v Allan, Unreported, Full Court, 26 May 1998, Judgment No.S6693
There can be no doubt that the engagement by a solicitor on the record of a foreign solicitor, not entitled to practise in the jurisdiction, for a legitimate purpose connected with the litigation is not part of the solicitor’s costs but is properly allowable as a disbursement. In re Bill of Costs of Lamrock Brown and Hall[4] was a case where a solicitor’s bill of costs for taxation included as an attachment a cash account setting out the amount paid to English solicitors in respect of an application for leave to appeal to the Privy Council in litigation commenced in Victoria. This was a taxation of costs as between solicitor and client. It was held that the account of the English solicitors should not be treated as included in the bill for the purpose of calculating the one sixth of the costs in order to determine upon whom the costs of taxation of the bill should fall. They were, nevertheless, properly included as a disbursement and could be moderated by the taxing Master. In Louthnan v Dalgety & Co Limited[5] New Zealand solicitors instructed solicitors in England for the examination of a witness on commission. The New Zealand Court of Appeal held that the costs of the English solicitor were to be treated as a disbursement, the amount to be fixed by the Registrar.[6]
[4] [1908] VLR 238
[5] (1897) 16 NZLR 299
[6]Ibid at 317-318
Where such costs are incurred in a foreign jurisdiction the reasonableness of the amount of the disbursement will be assessed according to the scale of costs applicable in the foreign jurisdiction.[7]
[7] See Wentworth v Lloyd (No.2) 34 Beav 455; 55 ER 711; Mondy v The Bank of New Zealand (1888) 6 NZLR 705
The cases I have cited so far were all cases where the principal solicitor practised within the jurisdiction and instructed a foreign solicitor for a subsidiary purpose connected with the litigation. McCullie v Butler[8] was an unusual case. English solicitors were assigned under a legal aid certificate to conduct an action for damages on behalf of a plaintiff in respect of an injury which occurred in England when the plaintiff was resident there. Before the action was commenced the plaintiff moved to Scotland. Instructions were taken by different solicitors in Scotland for the conduct of the action in England. All parties were under the impression that the Scottish solicitors were principals, and the English solicitors were agents. That was held to be a reversal of the true situation, as the plaintiff’s principal solicitors were those assigned under the Legal Aid and Advice Act 1949. The plaintiff’s action was dismissed. A number of questions arose upon taxation of costs under the Legal Aid and Advice Act. In the course of his judgment Diplock J (as he then was) said[9]:
I think it is desirable that I should state what the position of Scottish law agents is when they are employed for the purposes of performing services in Scotland in relation to litigation which takes place in London and Wales. Scottish solicitors are, for the purposes of the Legal Aid and Advice Act, 1949, in no different position from other foreign lawyers or from other foreign professional or ordinary agents who are employed for the purpose of preparing litigation in this country. They are not solicitors within the meaning of that expression in the Act of 1949, which relates only to legal aid and advice in England and Wales. Accordingly, paragraph 2(3) of the Third Schedule to that Act, which provides: “Where a solicitor has acted as agent for another, the sums allowed under the foregoing provisions of this paragraph shall be the aggregate amount allowed them, but may be divided between them as they may agree,” has no application to Scottish solicitors or to any other foreign lawyer. It relates only to the ordinary agency between solicitors of the Supreme Court of England. It follows, therefore, that a Scottish solicitor, employed in the circumstances in which the Scottish solicitors were employed in this case, must be treated, for the purposes of taxation, simply as a foreign agent, and the charges incurred by him and paid to him are charges properly taxable as disbursements in the ordinary course.
Later he said[10]:
It is quite evident … that there are a number of items in that account which are quite inappropriate to the proper position of the Scottish solicitors in this case, namely, as professional agents doing in Scotland on the instructions of the English solicitors those things which were reasonable and necessary to be done in Scotland for the preparation of the case.
Therefore, although in practice the Scottish solicitors were acting as principals, the Court held that, for the purposes of the Legal Aid and Advice Act 1949 they were to be treated nevertheless as if they were agents of the English solicitors, and their account was to be treated accordingly as a disbursement.
[8] [1962] 2 QB 309
[9] Ibid at 312-313
[10] Ibid at 314
I repeat, the cases cited are all cases where the principal solicitor was the solicitor on the record and the foreign solicitor was that solicitor’s agent, or where, as in the unusual circumstances of McCullie v Butler, the foreign de facto principal was required to be treated as an agent for the purpose of taxation. This result is not surprising given that the principal remains responsible to the client and to the Court for the conduct of the litigation. He or she acts through the agent to the extent necessary.
In this case, on the information before the Master, there can be no doubt that the principal solicitors were Middletons, and that Maitland was their agent. That reality cannot be changed merely by Middletons attaching, as they did, a front sheet to their bill addressed to Maitland and describing the bill as “professional charges for acting as your agent” in relation to the proceedings, and by describing Maitland in the itemised bill as “Adelaide principal”. Plainly, the relationship was the opposite.
What then, is the status of the bill of costs of a foreign solicitor acting as principal through another solicitor within the jurisdiction acting as his agent? In order to constitute a disbursement, I do not consider that it requires the solicitors to pay or to incur the cost, despite a dictum to that effect of the Chief Justice in Burford v Allan[11]. That was a case where the Court had to consider the power of the court to allow as an item of costs interest and fees paid to a bank for a loan required by an impecunious plaintiff in order to pay for disbursements associated with a long-running action for damages for personal injuries. The Court decided that the interest did not fall within the concept of “costs” referred to in the Supreme Court Act and Rules. In the course of his judgment the Chief Justice, with whom Millhouse and Nyland JJ agreed, referred to Cachia v Hanes[12] where the High Court decided that a litigant in person, who was not a lawyer, could not by way of costs recover compensation for time spent in preparing and conducting his case. The Chief Justice has then said[13]:
In principle, I can see no difference between the claim made in that case and the claim made in the present case. First of all, in each case the claim is for an expense that does not represent remuneration paid to a legal practitioner or an expense incurred by the practitioner in the course of representing the client. The claim is for a cost to the client, not to the practitioner. Secondly, each claim seems to rest in part on the premise that an award of costs should adequately compensate a litigant for any cost or loss associated with the conduct of the litigation.
It is surprising that no authority has been found by the parties more closely in point. However, in my opinion the principle that underlies the decision in Cachia v Hanes (supra) is that costs recoverable under s40 of the Act are a reimbursement for work done or expenses incurred by a practitioner, and do not extend to an expense of the type claimed in the present case. [Emphasis added]
[11] Unreported, Full Court, 26 May 1998, Judgment No.S6693
[12] (1994) 179 CLR 403
[13] Ibid at 7
The Chief Justice was directing his remarks to the factual situation before the Court in that case. It cannot be the case, however, that in order to constitute disbursements the expense must actually be incurred by the practitioner. It is not unusual for an expert’s report for use in litigation to be commissioned by the client, albeit in consultation with the solicitor, and paid for by the client, or for a client’s travelling expenses in connection with the litigation to be paid for by the client, and to have such expenses properly included as disbursements in a solicitor’s bill of costs for taxation as between party and party. If it were necessary for a disbursement to be an expense incurred by a practitioner, no self-represented litigant would be able to claim on taxation any expenses properly incurred in the conduct of the litigation.
If Middletons’ bill is to be excluded as a disbursement it must be on some ground other than the fact that it was incurred and paid for by Delhi and not Maitland. In my opinion, the answer is to be found in the decision of the Full Court of the Supreme Court of Western Australia in Minister for Works v Australian Dredging and General Works Pty Ltd.[14] In that case there was an arbitration under the Arbitration Act 1895 (WA). The respondent to the arbitration employed a Melbourne firm of solicitors and, through them, counsel, none of whom was a certificated practitioner within the meaning of s 76 and s 77 of the Legal Practitioners Act 1893 (WA). The respondent was successful in the arbitration, and pursuant to powers contained in the Arbitration Act, the arbitrator awarded costs to be taxed by the taxing officer of the Supreme Court. The Melbourne solicitors had instructed Western Australian solicitors at a very late stage in the process and then only in respect of relatively minor activities associated with the actual hearing. The Arbitration Act provided that the award had the “same effect in all respects as if it had been made an order of the Court”, and Item 24 in the Fourth Schedule to the Rules of Court made provision that the costs of arbitration proceedings should be “the same costs as in an action”.
[14] [1986] WAR 235. The situation in Western Australia has since changed, and as with the position in South Australia for a Victorian legal practitioner after 16 September 1999 (see below) this case has no application after that date. See SDS Corporation Ltd v Pasdonnay Pty Ltd, Unreported, Roberts-Smith J [2004] WASC 26 at [107]-[139].
Section 76 of the Legal Practitioners Act 1893 (WA) provided:
No person other than a certificated practitioner shall … sue out any writ or process, nor commence, carry on solicit defend or appear in any action, suit or other proceedings in any court whatever of civil or criminal jurisdiction in Western Australia, nor act as a barrister solicitor attorney or proctor of the Supreme Court of Western Australia in any cause matter or suit information or complaint civil or criminal wheresoever and before whomsoever the same is to be heard, tried or determined.
In holding that the Victorian solicitors and counsel were not entitled to any costs on taxation, the Court expressly declined to make any finding that the non‑certificated solicitors and counsel were in breach of s 76 of the Legal Practitioners Act in conducting the arbitration. Wallace J based his decision on s 77 of the Legal Practitioners Act which is not relevant for present purposes. Burt CJ and Kennedy J based their decision on the implication from the rules that solicitor’s costs and counsel fees could only relate to costs and fees of persons who were certificated practitioners or who otherwise had a right of audience before the Supreme Court, as would be the case when the Court was exercising federal jurisdiction pursuant to s 55B(4) of the Judiciary Act 1903 (Cth). In his reasons, Kennedy J added[15]:
Furthermore, I do not consider that the respondent can rely upon O66, r 19 and seek to have agency charges specially allowed, because it is abundantly clear that the Victorian solicitors were acting throughout as principals and not as agents. The proposed bill of costs indicates that it was the Victorian solicitors who had instructions from the respondent to institute proceedings. The instructions for brief were also given to the Victorian solicitors, and it would seem that the great bulk of the work was performed prior to the date upon which the Western Australian solicitors, who were described in the bill as principals, were initially instructed. They appear not to have been instructed until 8 November 1981, which was apparently the day prior to the first day of hearing and almost two years after the initial instructions were given to the Melbourne solicitors. If that were not enough, Mr B A Ewing, a Victorian solicitor employed by the firm of Melbourne solicitors acting for the respondent, deposed in his affidavit of 27 March 1984 that he had the conduct, on behalf of the respondent, of the arbitration.
In my opinion, the Taxing Master would have no power to allow on taxation any portion of the costs of the Victorian solicitors or of the fees of the Victorian counsel. In an ordinary action, in the Supreme Court, assuming it not to be exercising federal jurisdiction, the Taxing Master would not be empowered to allow the costs of a non-certificated practitioner getting up the case for trial or the fees of counsel who are not certificated practitioners and it follows, I believe, from the terms of Item 24 in the Fourth schedule, that he could not do so in this case.
[15] At 242
Like the Court in Western Australia, it would be unnecessary and unwise to express any view as to whether, if they were not registered in South Australia under the Mutual Recognition Act, Middletons were acting in contravention of the Legal Practitioners Act. The observations I make do not depend on any such finding. However, given the similarity in effect of s 21 of the Legal Practitioners Act 1981 (SA) and s 76 of the Legal Practitioners Act 1893 (WA), I consider that there is a similar necessary implication, or as Kennedy J said[16] of the Western Australian situation “the clear assumption”, to be drawn from the Supreme Court Rules in this State that the reference to costs, insofar as they relate to the charges of a solicitor or counsel, is limited to costs of a legal practitioner entitled to practise in this State, whether by virtue of the provisions of the Legal Practitioners Act 1981 (SA), the provisions of the Judiciary Act 1903 (Cth) in respect of the exercise of federal jurisdiction or by virtue of registration under the Mutual Recognition Act. That is not to say that, where there is a genuine relationship of principal and agent respectively between the South Australian solicitor and the interstate solicitor who is not entitled to practise here, and the South Australian solicitor in that capacity properly instructs the interstate agent to carry out the work of a legal practitioner in that other State in connection with proceedings in South Australia, those costs cannot be properly included as a disbursement, assessed according to the scale of costs applicable in that other State.
[16] Minister for Works v Australian Dredging and General Works Pty Ltd [1986] WAR 235 at 242
It is understandable that interstate solicitors, not registered in this State when such registration was necessary, acting as the principals of solicitors who were, should not have been entitled to claim their costs on taxation in this State. They were not legal practitioners with any standing in this State. They were not officers of the Court and were not subject to any disciplinary or other control by the Court. The interstate practitioners, so far as the law of this State were concerned, were in no better position than a lay client. On the other hand, where the South Australian solicitor was the principal and responsible to the client and to the Court for the proper conduct of the litigation, including the engagement of appropriate expertise to further the cause of the litigation in the interests of the client, then the duty to the client required that that be done, and where that necessarily involved the engagement of a legal practitioner outside the jurisdiction, the fees of that practitioner became one of the reasonable expenses of litigation chargeable on party and party taxation as an expense or disbursement.
There are two cases of which I am aware in which costs of the interstate principals have been allowed to be included as costs for the purpose of taxation but, in my opinion, these cases are to be distinguished. The first is Elders Trustee and Executor Company v Herbert[17]. As a result of litigation over a contested will the Supreme Court of the Northern Territory ordered payment of half the costs of an unsuccessful applicant out of the estate. Solicitors in South Australia had acted as principals for members of the family in the litigation who had paid the South Australian solicitors’ costs. The finding of the primary Judge was that the South Australian solicitors were in fact principals and had instructed another firm of solicitors in Darwin as their agents. The South Australian solicitors had advised the relatives. They had instructed the Northern Territory solicitors, had given directions regarding the gathering of evidence, had taken statements of witnesses, many of them in Darwin, and had drafted many of the Court documents, including affidavits. Documents had been settled by counsel briefed by the South Australian solicitors, who had also played a primary and major role in briefing counsel for conferences and at the trial. In other words, the relationship was very similar to that between Middletons and Maitland in this case. The Full Court[18] reversed a decision of the Chief Justice that the charges of South Australian solicitors up to the point where they were admitted to practice in the Northern Territory were not recoverable from the estates.
[17] (1996) 132 FLR 24
[18] Gallop, Kearney and Thomas JJ
There appears to have been no equivalent in the Northern Territory to s 21 of the Legal Practitioners Act 1981 (SA). Argument was based on s 22(4) of the Legal Practitioners Act 1974 (NT) which prevented recovery of costs and disbursements by a person who was not the holder of a current practising certificate in the Northern Territory. That was held to relate only to a legal practitioner admitted in the Northern Territory but not holding a practising certificate, and then only as a barrier to any remedy against the client for debts owed to the solicitor by the client. The South Australian solicitors were not legal practitioners for the purpose of that section. It is implicit from the reasons of Gallop J, with whom Thomas J agreed, that interstate solicitors not admitted to practice in the Northern Territory could conduct litigation in the Supreme Court of the Northern Territory. Furthermore there was a requirement of the Supreme Court Rules of the Northern Territory that where a bill included a charge for work done by a lawyer practising in a place outside the Territory, the charge was to be shown as a disbursement and was to be allowed at an amount appropriate to the place where the lawyer practised, that rule being consistent with the view expressed by Gallop J that there was no restriction on a lawyer from another State or Territory conducting litigation in the Territory. Any distinction between principal and agent was therefore irrelevant, and that case is distinguishable from the present.
The other case is Mitchell v Mitchell[19], a decision of Neasey J of the Supreme Court of Tasmania. In that case proceedings under the Matrimonial Causes Act 1959 (Cth) had been commenced by a practitioner in the Northern Territory. The respondent was resident in Queensland and instructed Queensland solicitors who in turn instructed agents in the Northern Territory to oppose the petition. The petitioner moved to Tasmania and the proceedings were transferred to the Supreme Court of Tasmania. The Queensland solicitors then instructed solicitors in Tasmania to continue the proceedings. Costs of the proceedings were awarded to the respondent. Two bills of costs were filed for taxation – one from the Hobart solicitors for the respondent and one from the Brisbane solicitors to which was annexed a schedule of costs drawn by the respondent’s Darwin solicitors and paid by the Brisbane firm. At that time no rules had been made under the Matrimonial Causes Act in relation to costs, but provision was made for costs to be regulated by rules of Courts exercising jurisdiction under the Act. The claims for costs therefore fell to be determined in accordance with Tasmanian Rules of Court. Neasey J regarded the guiding principle to be contained in O 80 r 9 of the Rules of the Supreme Court (Tas), which was similar in effect to r 101.16(b) of the Supreme Court Rules (SA). However, the unstated but necessary assumption was that the Supreme Court of Tasmania was exercising federal jurisdiction, and that therefore solicitors in Queensland were entitled to conduct litigation under the Matrimonial Causes Act in Tasmania. That is an obvious ground of distinction and a situation that was indeed recognised as an exception by the three Judges of the Full Court of the Supreme Court of Western Australia in Minister for Works v Australian Dredging and General Works Pty Ltd.[20]
Whether the Court had power to include Middletons’ charges for work done before 16 September 1999 as “costs”
[19] (1971) 19 FLR 100
[20] Supra
For the purpose of conducting the litigation and at all material times, Middletons were acting as the principals of Maitland. It follows from the discussion above that, if Middletons or the counsel they briefed were not registered in South Australia under the Mutual Recognition Act prior to 16 September 1999, I would, with some reluctance, be constrained to hold that this Court has no power to award as costs between party and party their costs and fees for work performed during that period. It is not a matter of ignoring the mandate of r 101.16(b) that such charges and expenses as appear to the taxing officer to have been necessary or proper for the attainment of justice should be allowed. The charges do not fall within the notion of costs that can be allowed. That part of the Middletons’ bill would have to be struck out. The position would have been different if Maitland was the principal who instructed Middletons, although if the scale of costs in Victoria was more generous than in South Australia, there might then be questions on taxation as to whether some of the work, on a party and party taxation, should have been performed in South Australia. But that is not a question of the power to award costs; it is a matter for the taxing officer’s discretion.
On the other hand, if Middletons and the counsel they briefed during this period were registered in South Australia under the Mutual Recognition Act, they must be treated as having the right to practise in South Australia in the same way as any South Australian legal practitioner holding a South Australian practising certificate. Their charges and fees could be awarded as costs on a party and party taxation. Whether Middletons were acting as principals or as agent of Maitland would not matter. The costs would not be treated as a disbursement. For all practical purposes Middletons would be treated as country principals of a town agent within the same jurisdiction.
In re Pomeroy & Tanner[21] the country principals sought to have their client’s costs taxed, and included as a one line disbursement the costs and charges of their London agents. It was held that the amount was improperly charged as a disbursement, that details of the charge should appear in the bill, and that the regular course on the part of the country solicitor where a London agent is concerned is to incorporate the charges in detail of both solicitors. In the course of his judgment Stirling J said[22]:
Let us look at it as a matter of principle. It is well settled that between the client and the London agent of the country solicitor there is no privity. The relationship of solicitor and client does not exist between the client and the London agent. What is done by the London agent is part of the work done by the country solicitor for the client. The Country solicitor does or may do part of the work personally. He does or may do part of his work through clerks whom he employs in the country. Or, if necessary – and the necessity occurred in this case – he may do part of his work though a London agent. But as between the country solicitor and the client the whole of the work is done by the country solicitor. It follows, therefore, that the items which make up the London agent’s bill are not mere disbursements, but are items taxable in the strictest sense as between the client and the country solicitor, just as much as items in respect of work done by the country solicitor personally, or by the clerk whom he employs in the country.
[21] [1897] Ch D 284
[22] At 287
If Middletons and the counsel they briefed were registered in South Australia under the Mutual Recognition Act, costs would be taxed as if they held a South Australian practising certificate and therefore in accordance with the relevant rules and scales applicable from time to time in South Australia.[23]
[23] The same applies in Western Australia since the passing of the Legal Practice Act 2003 (WA): SDS Corporation Ltd v Pasdonnay Pty Ltd, Unreported, Roberts-Smith J, [2004] WASC 26 at [137]-[139].
Whether the Middletons’ bill was in taxable form – the period before 16 September 1999
If Middletons and counsel they briefed prior to 16 September 1999 were not registered in South Australia, there could be no valid claim for their costs and this part of the bill could not even be taxed. It could hardly be described as a bill in taxable form.
The next question to be addressed, on the assumption that for the period prior to 16 September 1999 Middletons and the counsel they briefed were registered in South Australia under the Mutual Recognition Act, is whether the Middletons’ bill as lodged on 2 November 2004 was in taxable form.
I respectfully adopt what Gray J said of the requirements of a bill of costs in taxable form in Pickering v Smoothpool (No.6)[24]:
The trial judge used the expression “taxable form”. This expression has long been used to refer to the form of bill required to be lodged to initiate a taxation of costs. Reference may be found to that expression in legal dictionaries, legal texts and in legal authorities. Conventionally such a bill involves a chronological, item by item list of each attendance. The bill should disclose the nature of the attendance with sufficient particularity to enable the basis of the claim to be ascertained and an assessment of reasonableness to be undertaken.
In Ex Parte Farmers’ Fertilizers Corporation Ltd[25] Cullen CJ said:
“The present is a case not between a solicitor and his own client, but between a solicitor and the mortgagor who was liable for the payment of the proper costs chargeable by the mortgagee’s solicitor. The delivery of an account ... was not a detailed bill which would enable the mortgagor to exercise his judgment on the propriety of the amount of the charges. The word ‘bill’ as used in the Act is defined in s. 21, sub-s(3) as a ‘a bill of fees, charges and disbursements.’ The authorities upon that definition show what is meant is a detailed account showing the specific items of work done, and the specific charges allocated to each of those”.
[24] Unreported [2001] SASC 440 at [6]-[7]
[25] (1916) 16 SR (NSW) 645 at 649
Later in his reasons Gray J observed[26]:
There are sound reasons for requiring that a bill in taxable form as prescribed by the Rules and practice direction 15 be lodged and served. The party against whom the taxation proceeds has no knowledge of much of the work the subject of the taxation. That party is entitled as a matter of procedural fairness to be given full particulars of the claim.
The preparer of a bill of costs in taxable form must reconstruct the file with a view to representing its contents in a chronological and intelligible form. This enables the payee to gain an understanding and an appreciation of the work undertaken and view the services provided. The payee can then assess the reasonableness of the charges against each item in accordance with the statutory scale allowances. Independent advice can also be taken if necessary. [Footnote omitted]
[26] Ibid at [30]-[31]
In order to meet the requirement of sufficient particularity to enable the basis of a claim to be ascertained and an assessment of its reasonableness undertaken, the itemised form of the bill will be dictated by the requirements of the Rules and in particular the nature of the items described in the relevant schedule of costs forming part of the Rules. Each of the relevant schedules contains the following notes which specify the form and content necessary for a bill on taxation:
A.The amount allowed for each of the above items is to be at the discretion of the taxing officer, who shall be at liberty in the particular circumstances of the matter to disallow any item entirely or to allow a greater or lesser amount for any item AND PROVIDED THAT a greater amount may be allowed where the matter is of importance or difficulty.
B.Each bill of costs (other than a short form bill of costs) must show:
(1) the time spent on any attendance;
(2) the number of A4 pages (or the equivalent thereof) contained in any document for which a charge is made;
(3) the name of any solicitor and the status of any clerk in respect of whom any attendance is charged;
(4) a separate identifying number for each item and the date thereof; and
(5) the items of work and disbursements in chronological order.
The “above items” referred to in Note A refers to the items of costs preceding the note in the relevant schedule. Therefore, the items of work will obviously need to relate to the items of costs contained in the relevant schedule.
The Middletons’ bill does not comply with those requirements. It is drawn in taxable form for the purpose of a taxation of costs in the Supreme Court of Victoria. The items are different and the requirements of the Victorian rules are obviously different, and in many respects it is not possible to relate items contained in the bill to an appropriate item of costs contained in the relevant schedule to the Supreme Court Rules (SA). Some attendances and work descriptions are not authorised or recognised under the South Australian scales. Furthermore, it would appear that the scales of costs, where the items are comparable, are also different. When the basis of the claim is formulated in a manner which is not related to the prescription by which the claim is to be assessed, it is not possible for an assessment of reasonableness to be undertaken. It is not necessary to venture into all the detailed criticism of the Middletons’ bill advanced by the defendants. I have said enough to indicate that, for the relevant period, if Middletons’ and other interstate practitioners involved were registered in South Australia under the Mutual Recognition Act, then the bill of costs which has been filed, insofar as it covers the work of interstate legal practitioners, is not in taxable form.
The position after 16 September 1999
As from 16 September 1999 it was not necessary for legal practitioners carrying on business in Victoria, the ACT or New South Wales to become registered under the Mutual Recognition Act if they wished to conduct litigation in a South Australian Court. As “interstate legal practitioners” as defined in the Legal Practitioners Act 1981 (SA) they were entitled, subject to any conditions or restrictions affecting their right to practise in their home State, to practise in the same way in relation to litigation in this State as a practitioner holding a South Australian practising certificate. They enjoyed the same status as an interstate legal practitioner who had previously been registered under the Mutual Recognition Act. It follows that, in respect of the work performed by the interstate legal practitioners after that date, their charges and fees were “costs” which can be awarded by this Court, but in accordance with the requirements of the Supreme Court Rules and relevant schedules, in the same way that a South Australian legal practitioner’s costs would be taxed. However, for reasons set forth above, the Middletons’ bill for this part of their work was not in taxable form.
The interim allocatur
The Master did not cause inquiries to be made or evidence to be placed before him as to the status of the interstate legal practitioners who carried out the work described in the Middletons’ bill prior to 16 September 1999. He could not therefore be satisfied that, in respect of that work, the costs and charges contained in the Middletons’ bill were “costs” that could be awarded by this Court. If they were, the Middletons’ bill of costs was not in taxable form either for that period or for the period after 16 September 1999. Rule 101.13 provides that a taxing officer may direct the issue of any separate or interim certificates or allocaturs, but that he may only do so “on a taxation of costs”. As a bill of costs in taxable form relating to Middletons’ costs had not been lodged, whatever the situation was in relation to Maitland’s bill, the taxation of Middletons’ costs had not commenced.[27] Even if the taxation of Maitland’s bill had commenced, the Master had no power to direct the issue of the interim allocatur which he did, based, as it clearly was, on the amount claimed by Middletons.
[27] Pickering v Smoothpool (No.6) Unreported [2001] SASC 440
It is not necessary to decide whether, if the Middletons’ bill was in taxable form, the Master had entered upon the taxation. If it were necessary to do so I would find that he had not. What was intended originally to be a preliminary conference before the taxation commenced became in fact a hearing of the defendants’ notice for specific directions which was required to be resolved before the Master could embark on the taxation. That is as far as he went.
Conclusion
For these reasons it follows that the appeal must be allowed and the order for the issue of an interim allocatur for $500,000 must be set aside. I am not prepared to strike out or dismiss the bill of costs. The Maitland bill is in taxable form. I would grant leave to Delhi to have its bill of costs for taxation in respect of work performed by interstate legal practitioners redrawn in accordance with the requirements of the Rules of this Court and of the Schedules to the Rules applicable from time to time during the course of the proceedings, and covering such period as Middletons and the counsel they briefed were entitled by law to practise in South Australia. Where the Rules allow some flexibility it will be for the taxing Master to assess fees and allowances appropriate to the litigation and its degree of complexity, importance and difficulty.
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