White v Webb - [2012] SASC 4

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
WHITE v WEBB & ANOR
[2012] SASC 4
Reasons of Judge Lunn a Master of the Supreme Court
20 January 2012
PROCEDURE - COSTS
Existing plaintiff and a non-party made a joint application to join the non-party as an additional plaintiff - application later withdrawn - application by defendants for costs of application to be paid by plaintiff's solicitor personally - plaintiff's solicitor continued to act for plaintiff - order for costs of joint application made against the plaintiff, but refused against the plaintiff's solicitors, although with liberty to reapply if costs not recovered from the plaintiff.

PROCEDURE
Application brought by non-party who was a person under disability through mental infirmity without her having a litigation guardian - held under 6R 78(4) application could continue unless shown that the non-party was substantially prejudiced and no automatic right for other parties to recover costs against the solicitors for the person under disability.

WHITE v WEBB & ANOR
[2012] SASC 4
JUDGE LUNN:
Reasons on defendants’ application for costs

The dispute which is the subject of the present application concerns a relatively small amount of costs, but the effort and expense involved in litigating it has far exceeded the monetary amount at stake. As I made clear to the first defendant during the course of argument, I am only dealing with a specific application for the costs of two applications and not with any wider issues of any damage which might have been suffered by the defendants or the alleged professional misconduct by the plaintiff’s solicitors.[1] Regrettably, much of the evidence and argument was focussed on a false issue, which need not be determined, about whether the plaintiff’s solicitors knew, or should have known, about the mental incapacity of Ms Rissetto.
[1] If the defendants wish to pursue their allegations of professional misconduct, they should do so by a complaint to the Legal Practitioners Conduct Board. Except as stated below, I make no determination about these allegations.
The plaintiff and the first defendant are respectively the daughter and the son of Ms Rissetto. The defendants are husband and wife.[2]
[2] During the periods in the action in which the defendants have been legally unrepresented, the first defendant has presented the case for them both and I presume with the authority of the second defendant.
On 8 February 2010 Ms Rissetto executed an enduring power of attorney in favour of the defendants. Acting under that power of attorney the defendants then dealt with her financial affairs. There was an evolving history of antagonism between the plaintiff and the defendants about the affairs of Ms Rissetto.
On 1 December 2010 the plaintiff instituted this action seeking orders under s 11 of the Powers of Attorney and Agency Act 1984 that the defendants account for their conduct of the financial affairs of Ms Rissetto. Throughout these proceedings the plaintiff has been represented by the legal firm of Ouwens Lawyers, and in particular by Ms Amabili, a solicitor within that firm.
Early in 2011 Ms Rissetto revoked the power of attorney in favour of the defendants. At a directions hearing on 4 March 2011 a solicitor, Matthew Thompson, announced that he was acting for Ms Rissetto and said he was awaiting a medical report on her mental capacity, but the appointment for the examination by Dr Schultz was not to occur until 12 July. At that hearing Ms Amabili indicated a desire of the plaintiff to join Ms Rissetto as an additional plaintiff in the action, but said she was not intending to do so at that stage.
On 20 April 2011 Ms Rissetto executed another enduring power of attorney, which was prepared and witnessed by Mr Thompson, appointing the plaintiff and Amy White as her attorneys.
On 23 June 2011 Ouwens Lawyers, as the solicitors for the plaintiff and for Ms Rissetto, issued an application (FDN6), the relevant parts of which were as follows:
The Applicant, Yvonne Pamela White and
Non Party, Audrey Eleanor Rissetto
Apply for the following orders or directions:-
…
2.An order pursuant to Rule 74 of the Supreme Court Rules 2006 that Audrey Eleanor Rissetto be joined to the within action as the Second Plaintiff;
3.An order pursuant to Rule 79(3) of the Supreme Court Rules 2006 that Yvonne Pamela White, be appointed the Litigation Guardian of Audrey Eleanor Rissetto for the purpose of the within proceedings.
This application was supported by an affidavit of the plaintiff sworn on 23 June 2011 (FDN7) in which she deposed that the joinder of Ms Rissetto as a party to the action would ensure that all matters in dispute could be determined and avoid a multiplicity of proceedings. She said that she did not believe she was in a position of conflict to be appointed as the litigation guardian of Ms Rissetto. Ouwens Lawyers also filed on that day an affidavit (FDN8) of Ms Rissetto, which had been sworn before Ms Amabili, in support of the application. Other solicitors, who by then were representing the defendants, informed me that FDN6 was strongly opposed.
On 23 and 24 August 2011 the defendants respectively filed affidavits (FDNs 10 and 11) giving an account of their administration of the affairs of Ms Rissetto. The adequacy of this accounting has not yet been determined. It is not known whether any claims are to be made by Ms Rissetto against the defendants arising out of their administration of her affairs.
On 23 September 2011 the defendants took out an application (FDN13) seeking the following orders:
To the Applicant, YVONNE PAMELA WHITE
…
2.That pursuant to Rule 246 Ouwens Lawyers be restrained from acting for Audrey Rissetto.
3.That pursuant to Rule 23 the Court records be altered to record Ouwens Lawyers as no longer acting for Audrey Rissetto.
4.That until further order, the applicant in this action be restrained from dealing with the affairs of Audrey Rissetto …
5.That until further order, the applicant be restrained from acting as, or holding herself out as the attorney of Audrey Rissetto.
6.That pursuant to Rule 192, the Application filed on 1 December 2010 for orders in terms of Paragraph 3 of that Application in the within matter be dismissed, as the pleadings, being the affidavit in support of that application, disclose no reasonable cause of action.
7.That the Further Application in the within action filed 23 June 2011 be dismissed in its entirety as it amounts to an abuse of process.
8.That the applicant pay the respondents’ costs of and incidental to this application.
…
Application made pursuant to Rules No. 23, 192, 193, 246 of the Supreme Court Rules.
On 6 October 2011 FDN6 and FDN13 came on before me for argument. By that time there were proceedings pending before the Guardianship Board in relation to the affairs of Ms Rissetto. The plaintiff’s counsel indicated that FDN6 was not pursued and I dismissed it. There was apparently a consensus that this meant that FDN13 need not be dealt with, except as to costs. I made no order on FDN13 and, as far as I am aware, I was not requested to do so. The defendants did not pursue paragraphs 6 and 7 of FDN13. I directed the defendants to file any application they wished to make for the costs of FDN6 and FDN13, together with any supporting affidavit. I adjourned any argument on costs to 14 November 2011. On 28 October the defendants issued an application (FDN19) which sought orders as follows:
2.An order that the Respondents have the costs of and incidental to the Application filed on 23 June 2011 (FDN 6) and the costs of and incidental to the orders sought in paragraphs 2,3, 7 and 8 of the Application filed on 23 September 2011 (FDN 13).
3.An order that the costs referred to in paragraph 2 above be paid on an indemnity basis.
4.An order that costs be paid by the Applicant’s Solicitors personally.
…
Application made pursuant to Section 40 of the Supreme Court Act and Rule Nos. 13, 165, 263 and 264 of the Supreme Court Rules.
On 14 November 2011 the matter was adjourned to await the determination of the Guardianship Board. On 5 December 2011 the Guardianship Board appointed the Public Trustee as the administrator of the estate of Ms Rissetto and the Public Advocate to represent her. The substantive issues in this action have not proceeded further and await a decision of the Public Trustee and/or the Public Advocate on whether they will apply to be joined as additional plaintiffs on behalf of Ms Rissetto.
On 18 November 2011 the defendants filed a Notice of Acting in Person and have since represented themselves. At a directions hearing on 13 December 2011 the plaintiff submitted that FDN19 should be held over until the completion of the action and be dealt with as part of the overall costs of it. The first defendant opposed this and insisted upon it being listed for argument as soon as practicable. Accordingly, I listed it for 11 January 2012, heard the arguments on that day and reserved my decision.
The whole of the argument on FDN19 centred on whether costs should be ordered to be paid by Ouwens Lawyers. However, for the reasons which follow it is not necessary to deal with this issue, or at least not at the present time.
As FDN6 was dismissed there is no reason why 6R 263(1) should not apply, and its costs follow the event. The plaintiff did not submit to the contrary. Accordingly, the defendants will have an order for their costs of FDN6, but only insofar as that involves work properly referable to issues directly arising on FDN6.
FDN6 was a joint application by the plaintiff and purportedly by Ms Rissetto. There is no proper basis to order costs against Ms Rissetto and I did not understand the defendants to seek such an order. An order for the costs on FDN6 against the plaintiff is likely to be a sufficient remedy for the defendants. There is the possibility that these costs may be set off against other costs ordered against the defendants in this action. Under 6R 265(2) those costs are not to be adjudicated or payable until the conclusion of these proceedings.[3] FDN19 did not seek any order to the contrary. If the defendants are unable to recover the costs from the plaintiff after the conclusion of the action, they are to be at liberty to seek to renew their application that they be paid by Ouwens Lawyers.
[3] The principal proceedings have not yet been concluded, as orders have not yet been made allowing or refusing all of the relief sought in the Summons. There is also the possibility the Summons may be amended to claim additional relief.
Paragraph 2 of FDN13 was an order sought only against the plaintiff. The application was not also directed to Ouwens Lawyers. The decision of the plaintiff not to pursue FDN6 was also an implied concession by her which resolved paragraph 2 of FDN13 in favour of the defendants. Therefore, the defendants should also have their costs of that paragraph 2 as against the plaintiff,[4] but on the basis there should be one set of costs with those ordered on FDN6.
[4] As Ouwens Lawyers have continued to act for the plaintiff after their own professional conduct was called into question by the defendants, I presume that there is no conflict of interest between them and the plaintiff on these issues. It is always open to the plaintiff to apply under 6R 13 that she should be indemnified by Ouwens Lawyers for any costs ordered to be paid by her.
Paragraph 7 of FDN13 was not pursued and no basis has been made out for any order for costs to be made in respect of it.
Paragraph 3 of FDN19, which sought that the costs ordered against the plaintiff be paid on an indemnity basis, was not addressed in the submissions, but I infer that it was opposed by her. No proper basis for any order for indemnity costs has been made out. As the holder of an apparently valid power of attorney the plaintiff was entitled to instruct Ouwens Lawyers in the name of Ms Rissetto to act on her behalf and the application for the appointment of a litigation guardian for her in that action was a proper step to take, even though it may have been contentious whether the plaintiff should be that guardian. It was not a hopeless cause of action as would be needed to justify an order for indemnity costs.
Paragraph 4 of FDN19 in seeking an order that the costs be paid by Ouwens Lawyers invokes s 40 of the Supreme Court Act which gives the Court a wide judicial discretion about who should be ordered to pay the costs of legal proceedings. However, it is a discretionary remedy and not one to be granted where an order has been made for those costs against a party to the action which is likely to result in the recovery of those costs. If the plaintiff was contending that she should not be ordered to pay the costs personally, or that she should be indemnified by Ouwens Lawyers, it would be necessary to pursue the point, but that is not the case. As 6R 265(2) would apparently apply to any order for these costs against Ouwens Lawyers, no good purpose is served in now pursuing the point until it is shown that the defendant cannot recover them from the plaintiff.
FDN19 also invoked 6R 13 in support of its paragraph 4. That enables the Court to order costs where there has been a procedural irregularity. “Procedural irregularity” is defined in 6R 4. The defendants have not identified precisely what procedural irregularity they rely upon. In any event, the same discretionary factors apply as those referred to above in respect of s 40. No such order is to be made under Rule 13.
In initiating paragraph 4 of FDN19 I suspect that the solicitors then acting for the defendants were seeking to invoke a line of authority that where lawyers institute an action for a person under a disability[5] that the proceedings should be dismissed and the solicitor personally ordered to pay the costs.[6] No reference was made to these authorities in the course of argument. In my view, these authorities are not applicable in this State insofar as they hold that the costs are automatically payable by the solicitor if no litigation guardian is appointed. 6RR 78(1) and (4) provide:
78—Representation of party under disability
(1)     As a general rule, a person under a disability (a protected person) may only take or defend proceedings through a guardian who has authority to represent the interests of the protected person (a litigation guardian).
…
(4)     A judgment or proceeding of the Court is not invalid because a party was not represented by a litigation guardian as required by this rule, but the Court may set aside the judgment or proceeding if satisfied that the party has been substantially prejudiced through the lack of such representation.
[5]    The cases are all concerned with infants, but there is no reason in principle why it should not extend to a person under disability by reason of mental incapacity.
[6]    Sartori v McLeod (1897) 22 VLR 498; Cooper v Dummett 91930) WN 248; Spellson v George (1987) 11 NSW LR 300 at 313.
Sub-r 78(4) overcomes the uncertainty on the common law authorities about whether an action commenced in the name of a person under disability without the appointment of a litigation guardian is a nullity or only an irregularity.[7] It provides that the proceeding is not to be set aside for the lack of a litigation guardian unless the court is satisfied that the party is being substantially prejudiced through the lack of such an appointment. Whether Ms Rissetto would have been substantially prejudiced cannot be determined on the present evidence, and it probably would have to await the outcome of the action. The converse to the common law position now applies by virtue of sub-r (4) and the action can continue without a litigation guardian if no substantial prejudice is established.[8] Accordingly, I do not consider that there was a proper basis for the application of these common law authorities which operated without the need to establish negligence on the part of the lawyer. The order for costs which has been made on FDN6 is based on the decision of the plaintiff not to pursue it with the result that the costs followed the event.
[7] See Civil Procedure South Australia Volume 1 [6R 78.35].
[8] The plaintiff would have been within 6R 78 if she had sought the appointment of a proper litigation guardian for Ms Rissetto by an interlocutory application in the action and had only brought the application for joinder after that litigation guardian was appointed. Alternatively, she could have brought FDN6 in her own right without making Ms Rissetto a joint applicant. The joinder, if allowed, would have been conditional on a suitable litigation guardian being appointed.
I have today made the following orders:
1That the defendants have their costs as against the plaintiff of FDN6 (but only of the issues properly raised by it) and paragraph 2 of FDN13.
2Liberty to the defendants to renew their application for those costs to be paid by the plaintiff’s solicitors personally if after the allowance of any proper set-offs for costs they are not recovered from the plaintiff after they become due and payable by her.
3Otherwise paragraphs 2, 3 and 4 of FDN19 are dismissed.
4Question of the costs of FDN19 is reserved.
5FDN19 certified fit for counsel.
6Further directions hearing set for Friday 17 February 2012 at 9.30am.