Court of Appeal (WA)|2007-07-19|Before: Buss JA, Roberts-Smith J, Steytler P

ANDREW KOH NOMINEES PTY LTD & ANOR -v- RECEIVER & MANAGER OF THE BALNEUM JOINT VENTURE [2007] WASCA 152 (19 July 2007)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : ANDREW KOH NOMINEES PTY LTD & ANOR -v- RECEIVER & MANAGER OF THE BALNEUM JOINT VENTURE [2007] WASCA 152

BETWEEN : ANDREW KOH NOMINEES PTY LTD (ACN 009 067 761)

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : ANDREW KOH NOMINEES PTY LTD -v- PACIFIC CORPORATION LTD [2006] WASC 117

Costs - Taxation of costs - Receiver and manager appointed by court over joint venture property - Receiver and manager applied to court for approval of legal costs incurred by it, which had been paid out of joint venture property - Participants in the joint venture applied for the bills of costs to be taxed pursuant to Pt 13 Div 3 of the Legal Practice Act 2003 (WA) - Whether the participants in the joint venture were a "party charged" as defined in s 228(2)(a) of the Legal Practice Act - Characterisation of a person "liable to pay" in s 228(2)(a)(iii) of the Legal Practice Act - Status of receiver and manager and his relationship to the joint venture property - Nature and object of s 228(2)(a) of the Legal Practice Act

2 BUSS JA: By a written agreement made in 2002 ("the Joint Venture Agreement") between the appellants, the appellants agreed that, as joint venturers, they would carry out the staged development and sale of residential apartments on land within the local government district of the City of Belmont. The joint venture is known as the "Balneum Joint Venture".

3 The appellants fell into dispute and in 2003 the first appellant, Andrew Koh Nominees Pty Ltd, commenced proceedings in the Supreme Court (CIV 2545 of 2003) against the second appellant, Pacific Corporation Ltd. By summons dated 17 February 2004, the first appellant made application for the appointment of a receiver and manager of the property of the Balneum Joint Venture. On 24 March 2004, Roberts-Smith J (as his Honour then was) appointed Garry John Trevor to be the receiver and manager of the joint venture property.

4 By summons dated 19 January 2006, Mr Trevor made application in CIV 2545 of 2003 (which had, by then, been consolidated with a related proceeding, CIV 1335 of 2004) for his remuneration and expenses as receiver and manager to be approved and fixed. The orders sought included an order that legal fees which Mr Trevor had incurred in the course as acting as receiver and manager between 16 February 2005 and 25 October 2005, in the sum of $65,538.21 (inclusive of disbursements and goods and services tax), be approved retrospectively. The amount in question had been paid, on various dates, from moneys standing to the credit of a joint venture bank account in the name "Balneum Joint Venture".

5 On 11 April 2006, Mr Trevor's application was partly heard before Master Sanderson. At that hearing the appellants objected to the approval of the legal fees on the ground that the amount of the fees was unreasonable, and the appellants made an oral application under Pt 13 Div 3 of the Legal Practice Act 2003 (WA) for the solicitors' bills of costs to be taxed. Mr Trevor's application was adjourned to a special appointment for the purpose of the learned Master hearing argument and determining whether the appellants were a "party charged" as defined in s 228(2)(a) of the Legal Practice Act. If the appellants were not a "party charged", they were not entitled to apply under Pt 13 Div 3 for the bills of costs to be taxed. On 10 May 2005, the learned Master heard argument on the point in issue and reserved his decision. On 21 June 2006, the learned Master dismissed the appellants' oral application that the

solicitors' bills of costs be taxed on the ground that the appellants were not a "party charged".

Legal Practice Act: relevant statutory framework****

6 Section 232(3) of the Legal Practice Act provides:

"A person charged with a bill of costs that contains detailed items may -

(a) serve upon the legal practitioner, within 30 days from the service of the itemised bill, a written notice of intention to have the bill taxed; and

(b) upon service of that notice, have the bill taxed by the taxing officer."

Also see s 233, in relation to a lump sum bill. By s 229(1), a taxing officer may enlarge the time prescribed by s 232(3)(a), or any other provision of Pt 13 Div 3, for the taking of any step.

7 Section 228(2)(a) provides that, for the purposes of Pt 13 Div 3:

"a reference to the person or party charged includes a reference to -

(i) a person who has paid the bill to which the charge relates;

(ii) any other person who is authorised to administer the estate or affairs of any such person who is deceased, incapable or insolvent;

(iii) a person liable to pay or to reimburse another for costs in a bill_;_ or

(iv) a person who is a beneficiary of a trust estate or fund against which costs may be chargeable;"

8 The learned Master, in his reasons, reviewed several authorities which were decided in different statutory contexts including Parramatta River Lodge Pty Ltd v Sunman (1991) 5 BPR 12,038; Re Taylor [1854] EngR 126; (1854) 52 ER 65; Re Early [1897] 1 IR 6; Debney v Semerdziev [1982] 2 NSWLR 391; Cholditch v Jones [1896] 1 Ch 42; Littlewood v George Wimpey & Co Ltd [1953] 2 QB 501; and Deputy Commissioner for Taxation v Moore Bank Pty Ltd [1987] 1 Qd R 414.

9 The learned Master relied principally on the decisions in Equuscorp Pty Ltd v Short Punch & Greatorix [2001] 2 Qd R 580 and Re Barber [1845] EngR 1265; (1845) 153 ER 665.

10 The salient facts of Equuscorp were these. Equuscorp Pty Ltd owned the majority of the units in a unit trust. Permanent Trustee Company Ltd was the trustee and Hallcorp Management Pty Ltd was the manager. Equuscorp Pty Ltd commenced proceedings against the trustee and the manager. Solicitors retained by the trustee and the manager rendered bills of costs to their respective clients. Equuscorp Pty Ltd sought to challenge those bills. The Queensland Law Society Act 1952 (Qld) contained mechanisms for a costs assessor to review a solicitor's bill of costs. A costs assessor reviewed the bills challenged by Equuscorp Pty Ltd. Subsequently, Equuscorp Pty Ltd applied to the District Court under s 6ZF of the Act asking that Court "to decide the reasonableness of the fees and costs charged". The entitlement to apply to the court under s 6ZF was limited, relevantly, to "the client" of the solicitors. The term "client" was defined in s 3 to include "a person who has paid, or is liable to pay, the account of a client". The Court of Appeal of Queensland held that the words "liable to pay" in s 3 carried their usual meaning, namely, "responsible in law". The Court also held that Equuscorp Pty Ltd, as the holder of units in a unit trust, was not liable to pay the legal costs of the trustee or the manager, within s 3, merely because Equuscorp Pty Ltd, in its capacity as a holder of units, was obliged to meet a levy designed to facilitate payment by the trustee and the manager of the relevant bills of costs. The Chief Justice said, at 582 [10]:

"... was the applicant shown to be 'liable to pay (the client's) account' to the solicitors, the matter agitated before the learned judge and comprehensively developed before us? The liabilities to the solicitors were in the immediate sense borne by the manager and the trustee, the entities I have called the true clients. The words 'liable to pay' in s 3 carry their usual meaning, 'responsible in law' (Littlewood v George Wimpey & Co Ltd [1953] 2 QB 501, 515), and a person liable to pay is 'a person against whom payment of the (costs) can be enforced' (Deputy Commissioner for Taxation v Moore Bank Pty Ltd [1987] 1 Qd R 414, 416). Neither the solicitors nor the true clients could successfully have sued the applicant for the amounts of these costs (qua costs)."

McPherson JA said, at 585 [27], that the unit holders were not liable to pay the bills of costs, but liable to pay the amount of the levy to the trustee or manager, who was the person or persons liable to pay that account. Accordingly, there was no power to order an assessment of the bills of costs.

11 In Equuscorp, McPherson JA referred to the decision of the Court of Exchequer in Re Barber. In that case the parish surveyor for the township of Rastrick incurred costs in the course of legal proceedings commenced to remove an obstruction to a local highway. For the purpose of meeting those costs, he exercised his statutory power to levy the ratepayers to obtain funds from which to pay the solicitor. The Court held that a ratepayer was not entitled to apply to refer the solicitor's bill for taxation. Pollock CB said that the question was whether a person who contributed to a fund out of which a solicitor's bill was to be paid was "liable to pay" the solicitor. The Chief Baron said, at 724:

"... the ratepayer is not liable to pay the bill, but only to pay the rate out of which the bill may by possibility be paid."

"This is a mixed fund in the hands of the surveyor consisting partly of the contributions of the ratepayers already in his hands and partly of the rates which he is empowered to make under the [statutory power] and out of which he is to pay not only the attorney's bill, but also other expenses, penalties, and forfeitures which may be payable out of it. He is, however, the party liable to the attorney for his bill, and the ratepayers are not in any sense the person liable to pay it within the meaning of s 38."

12 In the present case, the learned Master said, at [27]:

"In a situation such as this, I am not satisfied that there is a sufficiently direct connection between the [appellants] and the fund to enable the [appellants] to require the solicitors to have their bills taxed. The party liable to pay those bills is the Receiver. Even if the [appellants] are regarded as the 'true clients', it cannot be said that they have the right to call for the solicitors to tax their costs. Payment to the solicitors is made out of a fund collected by the Receiver. It is for the Receiver to deal with the solicitors and it is for him, if he sees fit, to require the solicitors to tax their costs."

For those reasons, the learned Master held that the appellants were not a "party charged", within s 228(2)(a) of the Legal Practice Act, and he therefore dismissed their application.

13 The appellants seek leave to appeal to this Court against the learned Master's decision. On 31 October 2006, I ordered that the application for leave be heard together with the appeal. The grounds of appeal are these:

"(a) the learned master erred in finding that the Appellants were not 'parties charged' within the meaning of s 228(2)(a)(iii) of the Legal Practice Act 2003; and

(b) the learned Master erred in finding that the Appellants were not entitled to call for the Respondent's solicitors to tax their costs pursuant to s 232 of the Legal Practice Act 2003."

14 In general, an applicant for leave to appeal must demonstrate that the relevant decision was wrong or at least attended with sufficient doubt to justify the grant of leave, and that substantial injustice would occur if the decision were left unreversed. See Wilson v Metaxas [1989] WAR 285 at 294. It must be emphasised, however, that these are not rigid or exhaustive requirements, and leave may be granted if, in all the circumstances, it is in the interests of justice to grant leave. See The State of Western Australia v Bond Corporation Holdings Ltd (1991) 5 WAR 40 at 56 - 57.

The parties to the proceedings before this Court

15 The parties to the proceedings before this Court comprise the appellants (being the joint venturers) and Mr Trevor (being the receiver and manager). The solicitors who rendered the bills of costs in question, Phillips Fox, were not joined as a party, either in the proceedings before the learned Master or in the proceedings before this Court.

16 At the hearing before this Court, this Court raised with counsel whether the solicitors should have been joined in that, if this Court were to grant leave to appeal and allow the appeal, there would be no issue estoppel binding upon the solicitors. After a short adjournment to obtain instructions, counsel for Mr Trevor informed this Court, as follows:

"I've managed to speak to the Executive Committee of Lavan Legal and the partnership of Phillips Fox as it was constituted at the time of the rendering of the bills and they have agreed to be bound by whatever decision this honourable court makes today."

Counsel also informed this Court that he was satisfied he had authority to give that undertaking.

17 It became apparent, in argument before this Court, that the learned Master had informed the parties, in the course of the proceedings before him, that as a result of the dispute concerning the amount of the relevant bills of costs, the Master proposed:

(a) to refer the bills for taxation; and

(b) after taxation, to decide whether to approve the bills or not.

18 During argument before this Court, this Court raised with counsel whether the appellants had acted reasonably in seeking leave to appeal (in circumstances where the learned Master proposed, in any event, to refer the bills for taxation before deciding whether to approve them or not) and whether Mr Trevor had acted reasonably in refusing to submit the bills for taxation (in view of the appellants' objection to the amount of the bills, and the bills having been paid from funds to which they would otherwise be entitled upon Mr Trevor completing the discharge of his functions and duties as receiver and manager). This Court will deal with those matters in the course of determining the orders which should be made in relation to the costs of the proceedings.

The relevant terms of the order appointing Mr Trevor to be the receiver and manager

19 Paragraph 5 of the orders made by Roberts-Smith J provides:

"Without limiting the generality of the power in the previous order, the Receiver [shall] have the following powers:

...

(e) (to the extent that the Project Loan is insufficient to meet the Joint Venture Costs) the power, by notice to each of the [appellants], to require the [appellants] to contribute all necessary funds in accordance with the terms of clauses 7 and 13 of the Joint Venture Agreement."

"(a) The Receiver shall be entitled to reasonable remuneration and reasonable costs and expenses properly incurred in the performance of his duties and the exercise of his powers as set out in this Order, to be calculated on the basis of the time reasonably spent by the Receiver, his partners and staff in accordance with the scale of fees charged from time to time by the firm Ferrier Hodgson or such other scale as the Registrar may decide (the 'Receiver's fees').

(b) The Receiver's fees are to be paid from the assets of the Balneum Joint Venture, unless otherwise ordered by the Court."

The relevant terms of the Joint Venture Agreement and the extent of the joint venture property

21 The Joint Venture Agreement provides, relevantly, as follows:

(a) By cl 3.1:

"On and from the Date of Commencement the Participants will be joint venturers for the Purpose."

(b) By cl 4:

"The Joint Venture will continue in force until:

(a) the Purpose is fulfilled or the Joint Venture Assets disposed of under this Document;

(b) all the Participants agree in writing to terminate the Joint Venture; or

(c) the Joint Venture is otherwise terminated in accordance with this Document."

(c) By cl 6.1:

"Each Participant will share in the profits and contribute to the losses of the Joint Venture in proportion to that Participant's Share."

(d) By cl 7.5:

"Each Participant must:

(a) contribute by cleared funds paid into the Bank Account as and when necessary, the Share of any shortfall in the funding obtained from the provider of the Project Loan necessary to pay all Joint Venture Costs from time to time as and when required in the manner set out in clause 13; or

(b) where such shortfall is demonstrably as a result of a Participant being unable to provide adequate security to the provider of the Project Loan for that Participant's Share of the Project Loan, then it must pay the whole of that shortfall to the Joint Venture as and when required in the manner set out in clause 13."

(e) By cl 15:

"The Joint Venture Income will be:

(a) first, applied towards payment of the outstanding Joint Venture Costs;

(b) then, subject to:

(1) clause 16.2; and

(2) any amount determined by the Committee to be held in the Bank Account in reserve for payment of anticipated Joint Venture Costs not then payable,

distributed to the Participants PROVIDED THAT any amount payable by a Participant to the Joint Venture pursuant to clause 13.4(b) will first be deducted from that Participant's distribution and paid pro rata to the other Participants."

(f) By cl 20.1:

"On termination of the Joint Venture, after payment of, or provision for, all liabilities of the Joint Venture, the remaining Joint Venture Assets will be distributed to the Participants in proportion to their respective Shares."

(g) By cl 20.2:

"If the Joint Venture Assets are insufficient to pay and discharge all the liabilities of the Joint Venture, each Participant will promptly contribute to those liabilities in proportion to that Participant's respective Share."

22 It is unnecessary, in these reasons, to reproduce the meaning ascribed by the Joint Venture Agreement to the defined terms contained in the provisions I have set out at [21] above. It is sufficient, for present purposes, to note that under the Joint Venture Agreement:

(a) the appellants are entitled to share equally in any profits of the joint venture;

(b) the appellants are obliged to contribute equally to any losses of the joint venture;

(c) on termination of the joint venture, and after the payment of, or provision for, all liabilities of the joint venture, the appellants are entitled to an equal share of any remaining joint venture property; and

(d) any reasonable legal fees and other costs and expenses which Mr Trevor might properly incur from time to time in the course of acting as receiver and manager of the joint venture property would be "Joint Venture Costs", as defined in the Joint Venture Agreement, in that they would fall within this part of the definition of that term:

"... costs, expenses, charges, fees and outgoings whatsoever properly incurred or accrued by the Joint Venture ... in relation to the Joint Venture Land, the Property and the Joint Venture Development, the Project Management Agreement, the servicing and repayment of the Project Loan and the administration generally of the Joint Venture and the Joint Venture Development including the Preliminary Costs and all costs incurred in connection with the books of account, financial statements and Budgets by whomsoever prepared on behalf of the Joint Venture ..."

See Item 4 of the Schedule to the Joint Venture Agreement.

23 In the proceedings before the learned Master, there was evidence that the assets of the Balneum Joint Venture currently comprise, amongst other things, funds held in three separate bank accounts. The total amount at bank exceeds $1,150,000. See par 7 of the affidavit of Robert Allan Jacobs sworn 9 May 2006. Also, Mr Jacobs deposed at par 10 of his affidavit:

"... the assets of the Balneum Joint Venture far exceed the likely costs of completing the receivership of the Balneum Joint Venture."

The status of Mr Trevor as the receiver and manager and his relationship to the joint venture property

24 Mr Trevor, on his appointment as receiver and manager, became an officer of the Court. He is not the servant or agent of the appellants or the party who made application for his appointment (that is, the first appellant). Mr Trevor is authorised by the Court to act in accordance with the terms of his appointment, and otherwise as directed from time to time by the Court. See Gardner v London, Chatham and Dover Railway Co (No 1) (1867) LR 2 Ch App 201 per Cairns LJ at 211; Re Flowers & Co [1897] 1 QB 14 per Lord Esher MR (with whom Lopes and Rigby LJJ agreed) at 15; Rosanove v O'Rourke [1988] 1 Qd R 171 per Connolly J (with whom Carter and de Jersey JJ agreed) at 172 - 173; Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd [2006] FCA 1415; (2006) 60 ACSR 447 per Finkelstein J at 455 [29].

25 Mr Trevor's appointment as receiver and manager directed him to take possession of the joint venture property, but that property did not vest in him by virtue of his appointment. He did not become a trustee of the joint venture property. See Re Sartoris's Estate; Sartoris v Sartoris [1892] 1 Ch 11 at 14 - 15; Boehm v Goodall [1911] 1 Ch 155 per Warrington J at 161; Evans v Clayhope Properties Ltd [1987] 1 WLR 225 per Vinelott J at 229; Rosanove at 174 - 176; GDK Financial Solutions at 455 [30]; Kerr and Hunter on Receivers and Administrators (18th ed, 2005) at [6-1], [6-4], [6-8], [8-12].

26 Although Mr Trevor is not the agent of, or a trustee for, the appellants, he does owe them (and all other persons with an interest in the joint venture property) duties of a fiduciary character. See Cape v Redarb Pty Ltd [1992] HCA 28; (1992) 107 FLR 362 at 372; State Bank of New South Wales Ltd v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587 at 625 [867].

27 Mr Trevor paid the bills of costs in question from a credit balance in a bank account in the name of the Balneum Joint Venture.

28 The credit balance in the joint venture bank account (before and after the payment of the bills of costs) was a debt owing by the bank to the joint venturers. See Foley v Hill [1848] EngR 837; (1848) 2 HL Cas 28; Re Head; Head v Head (No 2) [1894] 2 Ch 236. In other words, the credit balance from time to time was personal property of the appellants, namely, a chose in action against the bank.

29 Pursuant to par 7 of the orders made by Roberts-Smith J, Mr Trevor was empowered to apply, relevantly, any credit balance of the appellants in a joint venture bank account or any of the appellants' other joint venture property in payment of the bills of costs (assuming the costs are reasonable and have been properly incurred). Upon application of the appellants' joint venture property for that purpose, any rights or liabilities in relation to the bills of costs were, in general, discharged, and the appellants' joint venture property was diminished by the amount paid.

30 The effect of pars 5(e) and 7 of the orders made by Roberts-Smith J was, relevantly:

(a) to confer on Mr Trevor a right to apply the appellants' joint venture property in payment of any reasonable legal fees and other costs and expenses which Mr Trevor might properly incur from time to time in the course of acting as receiver and manager; and

(b) to subject the appellants to a liability to contribute any and all amounts required to pay any reasonable legal fees and other costs and expenses which Mr Trevor might properly incur from time to time in so acting, to the extent that the appellants' joint venture property was insufficient to discharge those fees, costs and expenses.

31 In Debney, the appellants, a firm of solicitors, acted for a first mortgagee on the sale of a piece of land. The appellants' costs of the first mortgagee's sale were paid from the proceeds of sale. By reason of that deduction, there was a deficiency in the amount paid to the respondent, the second mortgagee. The respondent requested the appellants to provide a detailed bill of the costs retained by them out of the proceeds of sale. The appellants refused. Cross J, at first instance, ordered the appellants to prepare a bill of costs and furnish a copy of it to the respondent, and that the bill be taxed in accordance with the rules of court which would be applicable if the respondent had been the appellants' client. The appellants appealed on the ground that the respondent did not fall within any relevant category of persons who were entitled to apply for an order for taxation under s 32 of the Legal Practitioners Act 1898 (NSW). As Hope JA (with whom Reynolds and Glass JJA agreed) noted, at 392:

"The appellants' case is hardly meritorious, for they are officers of the court, and undoubtedly it was the respondent who bore the burden of the whole or most of their costs. Nobody else has any interest in testing the amount of those costs, by taxation or otherwise."

Section 32(1) of the New South Wales Act provided, relevantly:

"Where any person not the party chargeable with a bill within the meaning of the provisions hereinbefore contained is liable to pay or has paid such bill either to the solicitor or to the party chargeable with such bill, such person ... may make such application for a reference for the taxation and settlement of such bill as the party chargeable therewith might himself make ..."

The appellants argued that the respondent was not "liable to pay" any such bill and had not "paid" any such bill within the meaning of s 32(1). Hope JA said, in relation to that argument, at 394:

"As is apparent from the facts which I have described, the respondent, as second mortgagee, bore the burden of either the whole or the greater part of the costs retained by the appellants, for their amount was deducted from the proceeds of sale and thus from the amount which remained available for payment of the debt to the respondent after the first mortgagees had been paid out. The result was that the costs having been paid out of the fund, the respondent, being entitled (to the extent of his debt) to the residue of the fund received, by reason of the deduction of the costs, an amount which was deficient by approximately the amount of the costs. It can thus be said that in substance it was his money that was liable to pay the costs and which in fact paid the costs."

Hope JA held that the respondent came within s 32 of the New South Wales Act because he was "liable to pay" a bill of costs if it was in fact prepared and delivered. His Honour's reasoning, at 396 - 397, was as follows:

"The section is a remedial provision in respect of costs charged by officers of the court. It is not concerned with the person directly liable to the solicitor, that is, the party chargeable; other provisions of the Act deal with his right to taxation. It is concerned with persons upon whom the burden of costs falls although they are not the solicitor's clients. It is not necessary, although of course it may be relevant, that the third party be subject to an independent obligation to pay the costs, as the mortgagor was in the present case bound to pay the first mortgagee. It may be that the third party cannot succeed if he is 'a mere volunteer', but it is not possible to place a person such as the respondent in that category. If in substance the third person is liable to pay or has paid the bill, he comes within the scope of the section."

Also see Parramatta River Lodge per Young J at 12,040.

32 Section 228(2)(a) of the Legal Practice Act is a remedial provision. The evident intention of the Parliament was that the persons who are entitled to require that a legal practitioner's bill of costs be taxed should not be confined to the practitioner's clients in relation to the work for which the bill was raised. The apparent object of s 228(2)(a) was, in general, to enable persons upon whom the financial burden of a legal practitioner's bill of costs falls, to require that the bill be taxed. A legislative provision which is remedial in character should be construed beneficially. As Isaacs J observed in Bull v The Attorney-General for New South Wales [1913] HCA 60; (1913) 17 CLR 370 at 384:

"... this is a remedial Act, and therefore, if any ambiguity existed, like all such Acts should be construed beneficially (per Lord Loreburn LC in Bist v London and South Western Railway Co [1907] AC 209, at p 211). This means, of course, not that the true signification of the provision should be strained or exceeded, but that it should be construed so as to give the fullest relief which the fair meaning of its language will allow."

Also see Bird v The Commonwealth of Australia [1988] HCA 23; (1988) 165 CLR 1 per Deane and Gaudron JJ at 9.

33 The focus of s 228(2)(a) is on the person who has paid a bill of costs, or is liable to pay costs in a bill, or is liable to reimburse another for costs in a bill, or is a beneficiary of a trust estate or fund against which costs may be chargeable. Section 228(2)(a) does not focus on the person who receives or is entitled to receive the relevant payment or reimbursement. No contractual or other relationship is specified between the person who has paid a bill of costs, or is liable to pay costs in a bill, or is liable to reimburse another for costs in a bill, or is a beneficiary of a trust estate or fund against which costs may be chargeable, on the one hand, and the person who receives or is entitled to receive the relevant payment or reimbursement, on the other.

34 In my opinion, a person will be "liable to pay" costs in a bill, within s 228(2)(a)(iii), if, relevantly:

(a) the person is under a legally enforceable personal obligation to pay the legal fees in a bill of costs to the legal practitioner who rendered the bill;

(b) the person is under a legally enforceable personal obligation to reimburse another person for the legal fees in a bill of costs which that other person has paid to the legal practitioner who rendered the bill; or

(c) the person's property may lawfully be applied in paying the legal fees in a bill of costs to the legal practitioner who rendered the bill, or in reimbursing another person for the legal fees in a bill which that other person has paid to the relevant practitioner.

It is not essential that there be a contractual or other relationship between the person who is under a legally enforceable personal obligation to pay or reimburse the legal fees, or whose property may lawfully be applied in paying or reimbursing the legal fees, on the one hand, and the legal practitioner in question, on the other. Where a person's property may lawfully be applied in paying the legal fees in a bill of costs etc, that person will in substance be "liable to pay" costs in a bill, within s 228(2)(a)(iii). It would be inconsistent with the evident intention of the Parliament and with the remedial character of s 228(2)(a) to hold that such a person was not "liable to pay". The reasoning in Debney, at 394, 396 - 397, is, with respect, persuasive and should be applied, by analogy, in the present case. Also see Parramatta River Lodge at 12,040. The examples I have given of a person who will be "liable to pay" costs in a bill, within s 228(2)(a)(iii), are not intended to be exhaustive.

35 In the present case, the appellants are persons "liable to pay" costs in the bills of costs rendered by Phillips Fox to Mr Trevor in that, at all material times, Mr Trevor has been lawfully empowered, by cl 7 of the orders made by Roberts-Smith J, to apply the appellants' joint venture property in the payment of the costs (assuming they are reasonable and have been properly incurred).

36 The present case is distinguishable from cases such as Equuscorp and Re Barber. In those cases, the person who sought to have the solicitors' costs taxed or assessed merely contributed, with others, to a fund out of which the solicitors' account was to be paid. The fund in question was not the property of the party seeking taxation or assessment, even though it was comprised of amounts which, before payment into the fund, had been the property of that person and others. By contrast, in the present case, at all material times the credit balance from time to time in the joint venture bank account which Mr Trevor applied in payment of the bills of costs rendered by Phillips Fox was the appellants' property.

37 In my opinion, the grounds of appeal have been made out.

38 The grounds of appeal raise a question of some importance as between the parties (in that Mr Trevor's duties as the receiver and manager have not yet been completed and other legal fees have been, and will be, incurred) and generally. Also, the grounds of appeal have merit. I am therefore satisfied that it is in the interests of justice to grant leave to appeal. I would grant leave and allow the appeal.

Law Society Act 1952

Practitioners Act 1898

ANDREW KOH NOMINEES PTY LTD & ANOR -v- RECEIVER & MANAGER OF THE BALNEUM JOINT VENTURE [2007] WASCA 152 (19 July 2007)

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Judgment (89 paragraphs)

ANDREW KOH NOMINEES PTY LTD & ANOR -v- RECEIVER & MANAGER OF THE BALNEUM JOINT VENTURE [2007] WASCA 152 (19 July 2007)

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