Batterham v Goldberg

The claimed inconsistency 26 Mr King, of counsel, appeared for the appellant in the hearing in the FCC, as he did on the present appeal. 27 Mr King argued that, given that Mr Kenzie QC's fees related to work carried out in connection with the appeal to the High Court, the proper place for determination of any liability the appellant has in respect of those fees is the High Court itself. He contended that Chapter 5 of the HCR is an exercise of the High Court's power with respect to both costs as between party and party and as between solicitor and client in respect of proceedings before that Court. In addition he contended that certain provisions in the HCR are inconsistent with the provisions in the LPA concerning costs assessments. 28 The FCC Judge rejected the inconsistency for which Mr King contended, saying: [19] … I accept the submission made by Mr King that, if the proper place for adjudicating the assessment of costs as between solicitor and client in respect of matters heard in the High Court was the High Court, then that would trump the provisions of the Act in New South Wales by virtue of section 109 of the Constitution. [20] But I have not made that finding. I do not believe that the Rules of the High Court have the effect of giving to that Court those powers. In fact, my view is to the contrary; that everything in those Rules tends to a view that they are designed for party and party costs. … The FCC Judge had earlier referred to the decision of Dixon J in Woolf v Snipe (1933) 48 CLR 677, to which I will refer shortly. 29 By Ground One of the Notice of Appeal, the appellant claimed that the FCC Judge had erred in determining that the HCR do not confer jurisdiction or power upon the High Court to assess or determine costs on a solicitor-client basis, or on any basis other than a party-party basis in respect of a matter in that Court. This ground as stated involves a misunderstanding of the FCC Judge's reasons in the passage at [20] quoted above. The Judge was not there referring to the basis upon which party-party costs may be awarded but to the distinction between an award of costs as between party and party, on the one hand, and an award as between solicitor and client, on the other. Mr King's submissions were however made on the correct understanding of this passage. 30 By Ground Two, the appellant claimed that the FCC Judge had erred "in determining the jurisdiction and power of the High Court of Australian with respect to costs of a matter decided by that Court." The ground did not indicate the basis for the error which it imputed to the Judge. 31 Mr King indicated that the issue which the appellant sought to raise by Grounds One and Two was the invalidity of the costs assessment provisions in the LPA because of their inconsistency with the provisions in Chapter 5 of the HCR. 32 The appellant gave notice under s 78B of the Judiciary Act 1903 (Cth) of the appeal to the Attorneys-General of the Commonwealth and of the States and Territories. However, no Attorney-General intervened in the hearing. 33 The resolution of this appeal does not require detailed reference to the principles relating to the application of s 109 of the Constitution. It is sufficient for present purposes to note the propositions stated by Dixon J in Victoria v The Commonwealth (1937) 58 CLR 618 at 630: When a State law, if valid, would alter, impair or detract from the operation of a law of the Commonwealth Parliament, then to that extent it is invalid. Moreover, if it appears from the terms, the nature or the subject matter of a Federal enactment that it was intended as a complete statement of the law governing a particular matter or set of rights and duties, then for a State law to regulate or apply to the same matter or relation is regarded as a detraction from the full operation of the Commonwealth law and so as inconsistent. Section 109 also operates with respect to delegated legislation made under a Commonwealth law: O'Sullivan v Noarlunga Meat Ltd (1954) 92 CLR 565. 34 The submissions of the appellant seemed to involve two separate but related propositions. First, that because the costs in issue related to proceedings in the High Court, it was that Court, and that Court only, which had the power to resolve disputes concerning those costs. Secondly, that the resolution of disputes about solicitor-client costs in relation to proceedings of the High Court is governed by Chapter 5 of the HCR which, having regard to s 109, prevails over the costs assessment provisions in the LPA. 35 The resolution of these issues requires this Court to construe Chapter 5 of the HCR. That is a task to be carried out with some circumspection as, ordinarily, the construction of the HCR should be a matter for the High Court itself. However, the proper construction of the HCR is necessarily raised by the appellant's appeal to this Court. 36 The power of the High Court to determine issues arising with respect to the costs as between solicitor and client in relation to proceedings in that Court cannot be doubted. In Woolf v Snipe (1933) 48 CLR 677 at 678-9, Dixon J identified three separate sources of the jurisdiction of a superior court with respect to solicitor-client costs: the court's supervisory jurisdiction with respect to legal practitioners as officers of the court; the ordinary jurisdiction of the court with respect to contested claims; and the jurisdiction concerning costs arising from statute. 37 Part of the statutory jurisdiction of the High Court with respect to costs derives from s 26 of the Judiciary Act: The High Court and every Justice thereof sitting in Chambers shall have jurisdiction to award costs in all matters brought before the Court, including matters dismissed for want of jurisdiction. In addition, s 86 of the Judiciary Act authorises the High Court to make rules of court which are necessary or convenient to be made for carrying into effect the provisions of the Judiciary Act. See also s 48 of the High Court of Australia Act 1979 (Cth). Chapter 5 of the HCR is an exercise of that power. 38 The question on this appeal is not whether the High Court has jurisdiction or power with respect to the costs as between solicitor and client in respect of proceedings before it, but whether it has exercised that power in a way which precludes the costs provisions in the LPA having application. 39 It has been customary for issues arising between solicitor and client in respect of proceedings in the High Court to be determined under State or Territory legislation. Woolf v Snipe is an example. In that case, Dixon J considered the inter-relationship between the High Court Rules 1928 (Cth) and the cost provisions in the Supreme Court Act 1928 (Vic) when holding that, absent an order of the Court, Order LIV r 10 of the 1928 Rules did not authorise the Principal Registrar to tax a bill of costs rendered by a solicitor against his own client in respect of proceedings in the High Court. Dixon J drew attention to a number of provisions in the regime under the Victorian statute in respect of which there was no counterpart in the High Court Rules 1928, and noted the inconvenient consequences which could ensue if r 10 was construed as entitling a solicitor to a taxation of solicitor-client costs. Dixon J also held at 681: The relations of the solicitor and his client are, apart from r 10, governed by these provisions of State law whether the services for which remuneration is claimed include work in the High Court or not. The HCR, which replaced the High Court Rules 1928, do not contain any counterpart of Order LIV r 10. Accordingly, Woolf v Snipe is not decisive of the present case, but it does indicate that a State legislative regime concerning costs may be operative despite the High Court having jurisdiction with respect to those same costs. 40 The position is the same in respect of the proceedings in this Court. In Keith Hercules & Sons v Steedman (1987) 17 FCR 290, the Full Court accepted that a taxation of the costs between solicitor and client in respect of proceedings in this Court may be undertaken in accordance with the applicable regime in Victoria. Although, in the particular circumstances of that case, the Court ultimately ordered that the taxation be carried out by a District Registrar of this Court, the Court regarded that course as exceptional. Lockhart J said at 300: In my opinion s 23 [of the Federal Court of Australia Act 1977 (Cth)] confers power upon this Court to direct the taxation of a bill of costs as between a solicitor and his client when the costs are incurred in connection with a proceeding in this Court; but it would be in a comparatively rare case that the occasion would arise for the exercise of the power. Similarly, Sheppard J said at 303: The power is not one which the Court would exercise very often. Usually the matter would be left to be dealt with in the more conventional way under statutes such as the Supreme Court Act 1986 (Vic). 41 Accordingly, the mere fact that Turner Freeman's account relates to Mr Kenzie's appearance in the High Court does not mean of itself that the costs regime in the LPA is inapplicable. That regime could be inapplicable if the High Court had made a particular order in the appellant's appeal that the costs as between he and his solicitors be determined in that Court, or if the HCR evince an intention to exclude the application of costs regimes such as that contained in the LPA. 42 Mr King did advance a submission in the FCC which he repeated, albeit faintly, on the appeal that the order of the High Court that the appellant's appeal be dismissed "with costs" encompassed costs as between solicitor and client. Unsurprisingly, the FCC Judge rejected that submission (at [12]) holding, correctly, that the order related only to costs as between party and party. 43 Mr King's submission that the costs assessment provisions in the LPA are inconsistent with Chapter 5 of the HCR focused on rr 54.02.4, 56.09.3 and 56.09.6. Rule 54.02.4, which concerns the content of a bill of costs prepared for taxation, provides: Every bill of costs shall contain or be accompanied by proof of payment of all disbursements claimed. Rule 56.09 provides (relevantly): 56.09.3 Subject to rules 56.09.4, 56.09.5 and 56.09.6, no disbursement, whether as a fee to counsel or otherwise, shall be allowed unless: (a) it has been paid before the filing of the bill of costs; and (b) unconditional payment of the disbursement is proved to the satisfaction of the Taxing Officer. … 56.09.6 If a fee would have been allowed to counsel for drawing or settling a document or for appearing as counsel, the Taxing Officer may allow to a party a sum that the Taxing Officer considers reasonable as counsel's fee if: (a) the party is represented by counsel; and (b) the party is unable to provide proof of payment of the fee to counsel; and (c) the party's solicitor gives an unconditional undertaking to the Court to pay the fee from any costs recovered. 44 Mr King emphasised the requirement that disbursements, including counsel fees, must be paid before a bill of costs is filed for taxation unless, in the circumstances to which subr 56.09.6 apply, an unconditional undertaking has been given by the party's solicitor that counsel's fees will be paid from any costs recovered. 45 In contrast, under the LPA, a costs assessor may allow a disbursement even when the solicitor has not yet paid the disbursement and has not given an undertaking to do so. This follows from s 367 of the LPA and from the definitions of "costs" and "legal costs" in s 4. Hence, there is a direct inconsistency between the two costs regimes in relation to disbursements, and that inconsistency goes directly to the question of whether Turner Freeman were entitled to an assessment in their favour in respect of Mr Kenzie's fees. 46 This means that the resolution of this part of the appeal turns on whether Chapter 5 of the HCR, of which rr 54 and 56 form part, is directed to the costs as between solicitor and client of proceedings in the High Court. 47 There are some rules in Chapter 5 which, on their face and read in isolation, are capable of being understood as referring to costs as between solicitor and client. In addition to rr 54.02.4, 56.09.3 and 56.09.6, Mr King referred to rr 50.01 and 50.02 with which Chapter 5 commences: 50.01 Subject to the provisions of any law of the Commonwealth and to these Rules, the costs of and incidental to all proceedings in the Court are in the discretion of the Court or a Justice. 50.02.01 The Court or a Justice may order that costs: (a) be taxed; (b) to fixed in an amount specified in the order or by these Rules; or (c) be assessed by such other method as the Court or a Justice directs. 50.02.02 Unless the Court or a Justice orders that costs be fixed or assessed, a party entitled to costs shall be entitled: (a) to costs taxed in accordance with these Rules; and (b) to tax those costs without an order for taxation. Mr King also referred to r 52 concerning the scale at which costs are to be taxed: 52.01 Subject to these Rules, where the Court or a Justice orders that costs fixed in an amount specified in the order or in these Rules are to be paid: (a) those costs shall not be taxed; and (b) the solicitor for the party in whose favour the order is made is entitled to charge and be allowed an amount not exceeding that sum in respect of the matter or part of a matter dealt with by that order. 52.02 Subject to these Rules, where rule 52.01 does not apply, solicitors are entitled to charge and to be allowed the fees set out in Schedule 2 in respect of the matters referred to in that Schedule, and higher fees shall not be allowed in any case except as these Rules provide. There are other rules as well which, considered in isolation and without regard to their context, could be construed as applicable to costs as between solicitor and client as well as to costs between parties. 48 However, when Chapter 5 is read as a whole, it is evident that its subject matter is the costs ordered by the High Court to be paid by one party to another, whether on a party-party basis or some other basis, and not costs as between solicitor and client. It is noteworthy that none of the Rules refer expressly to the issue of costs as between solicitor and client. On the contrary, the Rules contain numerous references to the costs of "a party" or of "parties" in a context indicating that they are speaking of party-party costs. There are numerous references to the costs to which a party is entitled but none to the costs to which a solicitor is entitled against his or her client. There is a reference to costs "in the cause" (r 50.03) and to "costs of the cause" (r 51.02.2). These expressions have no application to costs as between solicitor and client. The Rules refer to the commencement of a taxation of costs by a "party" (for example, r 54.01) but do not refer at all to the commencement of a taxation by a solicitor with respect to solicitor-client costs. The matter of expression in r 56.09.6, on which Mr King relied, is itself not apt for a taxation of costs between solicitor and client. 49 As Mr King acknowledged, r 50.02.2 does not assist his submission. The appellant is not "a party entitled to costs" to whom the subrule refers and neither Turner Freeman or Mr Kenzie was a party to the proceedings in the High Court so as to have the entitlement to which the Rule refers. This means that, absent an order from the High Court, a solicitor does not have an entitlement to have costs taxed as between solicitor and client. 50 In my opinion, Chapter 5 of the HCR should be regarded as an exercise of the High Court's rule making power with respect to party-party costs only, with effect that the particular rules to which Mr King referred are not directed to costs as between solicitor and client. One would expect the High Court to have used much clearer language if the latter was intended, especially having regard to the observation of Dixon J in Woolf v Snipe at 681: Rules of Court ought not to be construed as enlarging or conferring jurisdiction or affecting substantive rights. Many difficulties would ensue if this general principle were neglected and the rule were read, not as operating only within the existing jurisdiction of the Court, but as conferring upon both solicitor and client a new right to taxation in this Court. 51 It is not to the point that, on an application in a particular case, the High Court may order that costs as between solicitor and client be taxed in that Court and may, in doing so, order that some provisions in Chapter 5 be applied for that purpose. 52 As is evident from the passage in Victoria v The Commonwealth set out earlier in these reasons, s 109 of the Constitution operates only when there are valid Commonwealth and State laws each having application to the given subject matter. In this case, s 109 is not engaged because Chapter 5 of the HCR does not have application to the assessment of costs as between Turner Freeman and the appellant. 53 The only submission presented by Mr King in support of Ground Two was that contained in [30] of his Outline of Submissions, namely: Insofar as the Primary Judge concluded as it appears he did that the costs assessment was reasonable he had no power to do so. Ground 2 is made out. 54 As can be seen, this submission is not directed to the issue raised by Ground Two. For the reasons given earlier, just as the appellant's submissions have required this Court to construe Chapter 5 of the HCR, so also did they require the FCC to determine the effect of those rules. The FCC Judge did not err in doing so. 55 For these reasons, Grounds One and Two fail.

The proper creditor 56 By Ground Four, the appellant contended that Turner Freeman should not have been held to have been the creditor in respect of Mr Kenzie QC's fees. Mr King submitted that it was Mr Kenzie himself who was the proper creditor. 57 Mr King relied for this submission on Abigroup Ltd v Abignano (1992) 39 FCR 74. Abignano concerned the question of whether a guarantor which had not yet met its liabilities under a guarantee could issue a bankruptcy notice to another entity which, in turn, had agreed to indemnify it in respect of its liabilities. The Full Court held that no bankruptcy notice could be issued because, until the guarantor had met its liability, there was no debt due to it by the indemnifier. In respect of the position at law, the Full Court said at 81: Until a guarantor is called upon to pay and does pay something under his guarantee he has no debt or right at law at all. … [T]he right to an indemnity which the surety has against the principal debtor does not arise at law until the surety has discharged the debt. In respect of the position in equity, the Full Court said at page 83: It is well and long established in equity that a person entitled to an indemnity may obtain relief from the indemnifying party as soon as the person's liability to the third person arises and before he has made payment himself, except where the contract otherwise provides or certain exceptional circumstances exists… But … the equitable right to enforce an indemnitee does not constitute a debt … 58 The FCC Judge rejected the submission made to him concerning Abignano saying: 10. … Although Mr Kenzie is the person who performed the work and although that work was performed for Mr Batterham, in the absence of a negotiated agreement between Mr Batterham and Mr Kenzie, either evidenced by a costs agreement and disclosure statement or in some other way that would establish a contract between them directly, the usual situation that has applied in excess of 100 years would apply in this case. Namely, counsel looks to the solicitor for payment of his fees and the solicitor looks to his client. In that way the Abignano decision is not relevant to these proceedings. I respectfully agree with the reasoning of the FCC Judge in this passage. 59 Mr King accepted that Mr Kenzie QC had not entered into a costs agreement with the appellant, and had not entered into any contract with the appellant of the kind which s 83 of the LPA permits counsel to make with a client. Despite this, he submitted that the FCC Judge should have found that an implied or inferred contract existed between Mr Kenzie and the appellant. That being so, Mr King submitted that it was open to Mr Kenzie to have sought his own costs assessment with the effect that he, and not Turner Freeman, would have been the proper judgment creditor. 60 In my opinion, this submission fails for two independent reasons. First, although it is possible for a contract to be inferred from the acts and conduct of the party (Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110 at 11,117), there is no basis upon which such a contract could be inferred in the present case. A finding that there was an inferred contract between the appellant and Mr Kenzie QC would require, at the least, detailed evidence of the circumstances giving rise to the relationship between them. However, the appellant did not give oral evidence at all in the proceedings at first instance and his affidavits did not address the question. In particular, the appellant did not depose to any facts on the basis of which the existence of a contract between he and Mr Kenzie QC could be inferred. 61 The FCC Judge found as a fact at [10] that there was no contract between the appellant and Mr Kenzie and that the conventional arrangement by which counsel is retained by a firm of solicitors for a client applied, namely, that it is the solicitor retaining counsel who is responsible for payment of counsel's fees and for the solicitor to recover those fees from the client. The appellant did not establish any basis upon which this Court could hold that the FCC Judge had been in error in so holding. 62 Secondly, as noted earlier, Mr Kenzie QC was originally a co-applicant with Turner Freeman for the costs assessment. However, by letter dated 15 June 2011, the Manager of the Costs Assessment Unit in the Supreme Court of New South Wales rejected that application on the basis of the evidence that Mr Kenzie had been instructed by Turner Freeman, and not the appellant. Turner Freeman then lodged an amended application to which Mr Kenzie was not a party. The appellant did not seek any review of the Manager's decision and, as noted earlier, did not exercise any review or appeal rights in respect of the later assessment by Ms Hutley. It appears therefore that the appellant is now seeking, inappropriately, to make a collateral challenge to the decision of the Manager of the Costs Assessment Unit, despite the subsequent costs assessment now having merged into a judgment of the Local Court. 63 Mr King also referred to Franks v Equititrust Ltd [2012] FMCA 1180 in which a Federal Magistrate had set aside a bankruptcy notice based on an unsatisfied judgment resulting from the registration of a certificate of a costs assessor. However, the decision in Franks concerned circumstances in which one of several entities entitled to costs had not been a party to the costs assessment. In my opinion, Franks v Equititrust cannot be regarded as authority for the proposition that both counsel and solicitors should join in the application for a costs assessment which includes a claim in respect of counsel's fees. The decision in Franks does not assist the appellant presently. 64 This ground of appeal fails.

Appeal Ground Five 65 By Ground Five, the appellant complained of three findings by the FCC Judge: (a) That at the time of the High Court hearing, Mr Kenzie QC had replaced Mr Rothman SC as counsel; (b) That in all the circumstances it was reasonable for senior counsel to rely on the credit of Turner Freeman and the appellant having regard to s 345 of the LPA; (c) That despite the absence of cost disclosure by Turner Freeman and Mr Kenzie and of any costs agreement under the LPA, Mr Kenzie's fees were nevertheless payable. 66 In my opinion, each of these complaints lacks merit. It is pertinent that the appellant did not make any substantive submissions in support of the complaints. 67 It is plain that Mr Kenzie QC appeared as senior counsel for the appellant on the appeal in the High Court and it is evident that he took Mr Rothman QC's place some time after the latter's appointment to the Supreme Court of New South Wales. 68 As to the second, the FCC Judge did not make the finding imputed to him. 69 A finding as to the third matter is implicit in the FCC Judge's reasons but the appellant did not establish any basis upon which this Court could find that Judge's conclusion was made in error.

Conclusion 70 For the reasons given above, I would dismiss the appeal. I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.

Associate: Dated: 15 October 2014 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 239 of 2014

ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA

AND: MR TERENCE LOUIS GOLDBERG TRADING AS TURNER FREEMAN

JUDGE: GLEESON J DATE: 15 OCTOBER 2014 PLACE: SYDNEY

GLEESON J 71 The appellant appeals from the decision of a single judge of the Federal Circuit Court ("FCC") on 13 February 2014 dismissing his application to set aside bankruptcy notice BN166203 issued on 18 October 2013 ("the bankruptcy notice"): Batterham v Goldberg & Ors [2014] FCCA 302. 72 The debt claimed in the bankruptcy notice is a judgment debt obtained in the Local Court of New South Wales ("Local Court") in March 2012. 73 The appellant contends that the FCC judge erred in failing to find that the bankruptcy notice is founded on a judgment obtained in reliance on a costs assessment under Part 3.2 of the Legal Profession Act 2004 (NSW) ("Legal Profession Act"), which assessment was made pursuant to laws that are inconsistent with provisions of the High Court Rules 2004 (Cth) ("Rules") contrary to s 109 of the Constitution. 74 The relevant inconsistency is said to arise from powers under the Legal Profession Act to assess disbursements for barristers' fees even though the fees are unpaid, and to obtain a judgment for those fees following a costs assessment. In contrast, under the Rules, no allowance may be made for unpaid disbursements on a taxation of costs, except where the solicitor gives an undertaking to pay the disbursements. 75 The appellant also contends that the respondents, on whose application the bankruptcy notice was issued, are not the creditor of the appellant and were therefore not entitled to obtain the bankruptcy notice pursuant to s 41 of the Bankruptcy Act 1966 (Cth) ("Bankruptcy Act").

Background facts 76 Except by ground 5 in the notice of appeal, the appellant did not dispute the facts as found by the primary judge. In summary, the appellant was involved in litigation against QSR Limited. In that litigation, he had been represented by Clayton Utz but he withdrew their instructions and then retained Turner Freeman Lawyers ("Turner Freeman") to represent him in the High Court: Batterham v QSR Ltd (2006) 225 CLR 237 ("QSR"). Mr Kenzie QC appeared in the High Court as senior counsel for the appellant on 8 and 9 November 2005. 77 In 2009, Turner Freeman submitted a tax invoice to the appellant for payment of Mr Kenzie QC's fees. The invoice covered work done by Mr Kenzie QC from 2 November 2005 (when instructions were withdrawn from Clayton Utz) until 24 May 2006. The circumstances of the delay in the submission of Turner Freeman's invoice were not explained. 78 Mr Kenzie QC's fees were not paid by either the appellant or Turner Freeman and have still not been paid. 79 Turner Freeman sought an assessment of Mr Kenzie QC's fees under the Legal Profession Act. The assessment was carried out by Ms Hutley. She issued a determination dated 23 November 2011 ("costs determination"). In her accompanying statement of reasons, Ms Hutley said: 1.5 The [appellant] does not dispute the amount of fees claimed… The [appellant] argues that he has no responsibility of arrangements between senior counsel and Clayton Utz and that any such arrangement should have included senior counsel's fees while appearing for him after he had withdrawn instructions from that firm. He states that he has no liability for fees as he did not retain him and did not instruct [Turner Freeman] to retain him. 80 Ms Hutley found that the appellant did not inform the respondents that he was not going to be responsible for senior counsel's fees, and that it was reasonable for senior counsel to rely on the credit of his instructing solicitors who in return relied on the credit of the appellant. She did not accept that senior counsel should look to Clayton Utz for his fees as they related solely to the work he performed for the appellant after the appellant withdrew instructions from Clayton Utz and retained Turner Freeman. 81 Ms Hutley allowed the full amount of the costs in the respondent's invoice, being $42,625.00 inclusive of GST. 82 In March 2012, the Local Court of NSW gave judgment against the appellant and in favour of the respondents in the sum of $42,625 ("Local Court judgment"). The judgment was entered on 8 October 2013 and, on 18 October 2013, the bankruptcy notice was issued.

Primary judge's reasons 83 According to the primary judge's reasons, the appellant put two arguments in support of the relief he claimed. 84 The first argument was that the respondents were not a proper party to the bankruptcy notice, based on the decision of Abigroup Ltd v Abignano (1992) 39 FCR 74 ("Abigroup"). The primary judge said (at [10]): I propose to deal with that point very shortly. Although Mr Kenzie is the person who performed the work and although that work was performed for Mr Batterham, in the absence of a negotiated agreement between Mr Batterham and Mr Kenzie, either evidenced by a costs agreement and disclosure statement or in some other way that would establish a contract between them directly, the usual situation that has applied in excess of 100 years would apply in this case. Namely, counsel looks to the solicitor for payment of his fees and the solicitor looks to his client. In that way the Abignano decision is not relevant to these proceedings. 85 The second argument was that that the respondents' costs should have been assessed in the High Court, and not under the Legal Profession Act. 86 At [11] of his reasons, the primary judge noted the appellant's contention that the judgment upon which the bankruptcy notice is founded was "void" by reason of s 119 of the Constitution. This must be read as a reference to s 109 of the Constitution. 87 The primary judge referred to several provisions of the Rules. He then considered the contention that the appellant's argument was supported by the decision of Dixon J in Woolf v Snipe (1933) 48 CLR 677 ("Woolf"). In that case, Dixon J held that the relevant provision of the High Court Rules 1928 (Cth) did not authorise the Registrar of the High Court, on the application of a solicitor, to tax a bill of costs rendered by the solicitor against his own client in respect of work done on proceedings in the High Court. The primary judge concluded (at [16]) that Woolf did not support the appellant's case. 88 He next considered a submission that rule 50.02(2) permitted Mr Kenzie QC or Turner Freeman to apply to the Registrar of the High Court for an order for taxation. The primary judge did not accept that rule 50.02(2) extends to permit the Registrar to tax costs other than on a party and party basis. It is unnecessary to analyse this aspect of the primary judge's reasons as, before this Court, Mr King accepted that rule 50.02.2 is not engaged in this case. 89 The primary judge said (at [18]) that the appellant needed the FCC to decide that the High Court had power to tax costs as between solicitor and own client in order to obtain the benefit of rule 56.09.03 of the Rules, by which no certificate would be issued since Mr Kenzie QC has not been paid. 90 The primary judge concluded (at [20]) that the Rules did not empower the High Court Registrar to assess solicitor and own client costs. He said: I do not believe that the Rules of the High Court have the effect of giving to that court those powers. In fact, my view is to the contrary; that everything in those rules tends to a view that they are designed for party and party costs. I mention only Rule 56.09.5. This is a rule which deals with the situation where counsel is appearing pro bono without a fee but is successful. The rule allows some award of costs to counsel in those circumstances, even though he or she has not rendered a bill or had it paid. This could not possibly be the case with respect to solicitor and own client matters because the agreement between the practitioner and her or his client excluded payment by the client. The other provisions of Rule 56 are, in my view, similarly consistent with a view that they refer only to party and party costs.

Grounds of appeal 91 The notice of appeal contains five grounds of appeal. The first two grounds of appeal concern whether a law of a State (the Legal Profession Act) is inconsistent with a law of the Commonwealth (the Rules), with the result that the former are invalid pursuant to s 109 of the Constitution. 92 The third ground of appeal was not pressed. 93 The fourth ground of appeal concerns whether the respondents were the proper parties to obtain the bankruptcy notice ("the Abigroup point"). 94 The fifth ground of appeal complains of factual errors allegedly made by the primary judge. 95 The power to set aside a bankruptcy notice arises from s 30 of the Bankruptcy Act, which specifies the general powers of courts in bankruptcy. The Act confers no general discretion to set aside a bankruptcy notice that is valid in form and not an abuse of process: Re Briggs; Ex Parte Briggs v Deputy Commissioner of Taxation (WA) (1986) 12 FCR 310 at 311-312; Re Athans; Ex Parte Athans (1991) 29 FCR 302 at 310; Australian Securities and Investments Commission v Forge (2003) 133 FCR 487; 48 ACSR 474 at [27]. 96 In written submissions lodged on his behalf, the appellant said that the question is whether a contested and contestable debt should have been made the subject of the bankruptcy notice. This statement of the issue is not reflected in the grounds of appeal A bankruptcy notice is founded on a judgment debt: Bankruptcy Act s 41. Time for compliance with a bankruptcy notice may be extended on the ground that proceedings to set aside the judgment debt have been instituted: Bankruptcy Act s 41(6A) and (6C). The appellant's question pays no regard to the general principle that, while a court of bankruptcy has power to go behind a judgment to determine for itself whether the debt is in truth owed by the judgment debtor, it will not do so as a matter of course. It will only do so where "substantial reasons are given for questioning whether behind that judgment there was in truth and reality a debt due to the petitioner": Wren v Mahony (1972) 126 CLR 212 at 225 (Barwick CJ). See also Corney v Brien (1951) 84 CLR 343 at 347 (Dixon, Williams, Webb and Kitto JJ). 97 The primary judge's reasons do not record any argument about whether the FCC has power to set aside a bankruptcy notice upon the basis of the invalidity of the Local Court judgment upon which the notice is founded. However, in the result, it is unnecessary to resolve this issue. 98 The appellant noted that the Local Court judgment has been stayed, pending a review of the costs assessment. That is a factor that may be relevant to a decision to extend time for compliance with a bankruptcy notice, but is not a reason for setting aside a bankruptcy notice. The appellant did not seek to explain how the stay of the Local Court judgment was relevant to his appeal.

Inconsistency between Commonwealth and State laws (appeal grounds 1 and 2) 99 The appellant contends that the primary judge erred in determining: a. that the Rules do not confer jurisdiction or power upon the High Court to assess or determine costs on a solicitor client basis or on any other basis than a party to party basis in respect of a matter in that Court; b. the jurisdiction and power of the High Court with respect to costs of a matter decided by that Court.

Possible sources of the High Court's jurisdiction to assess solicitor client costs 100 The first plank in the appellant's case is that the High Court had jurisdiction to assess the respondent's unpaid disbursements comprising Mr Kenzie QC's fees. 101 In written submissions filed on his behalf, the appellant put the following propositions about the High Court's jurisdiction: a. Turner Freeman could have had the fees assessed under the processes of the High Court pursuant to the Rules; b. The primary judge accepted that solicitor client costs were once assessable in the High Court under the High Court Rules 1928 (Cth) and so "[the] only question was whether the [Rules] contained a similar power in relation to costs in matters before it". The appellant referred, in particular, to rules 50.02, 52.02 (and item 55), 53.04.2, 56.09.03, 57.01 and 6.01; c. It would be odd and perverse if the High Court did not have the power to assess the costs of lawyers appearing before it; d. The inherent jurisdiction of the High Court includes jurisdiction over solicitor client costs. The Court's jurisdiction is also derived from ss 71, 73 and 77 of the Constitution, s 26 of the Judiciary Act 1903 (Cth) and ss 17, 30 and 48 of the High Court of Australia Act 1979 (Cth). 102 Orally, Mr King submitted: a. The appellant could have made an application under s 26 of the Judiciary Act 1903 (Cth) and rule 50.01 of the Rules for an assessment of solicitor client costs, both invoking the inherent jurisdiction of the court over its own processes and under its rules; b. The High Court's jurisdiction was engaged by a matter in the High Court, namely, QSR; c. Rules 53.02, 53.05, 54 and 57.03 of the Rules provide additional support for the High Court's statutory jurisdiction to assess solicitor client costs.

Consideration 103 The Local Court judgment concerns the appellant's costs of conducting the proceedings in the High Court. Such costs are commonly referred to as "solicitor client" costs, to differentiate them from the legal costs of another party to litigation, payable pursuant to a court order. The latter are commonly referred to as "party party" costs. 104 In Woolf, a solicitor applied for an order directing the Principal Registrar to take his bill of costs against his clients in respect of business transacted in the High Court in proceedings in that Court. Dixon J dismissed the application. He identified three sources of the jurisdiction of superior Courts of law and equity to "ascertain, by taxation, moderation, or fixation, the costs, charges, and disbursements claimed by an attorney or solicitor from his client". They are: a. A jurisdiction founded upon the relation to the Court of attorneys and solicitors considered as its officers "commonly called the general jurisdiction of the Court" (at 678); b. When a contested claim for costs comes before the Court, jurisdiction to determine by taxation or analogous proceeding the amount of costs (at 679); and c. A statutory jurisdiction derived at first from 2 Geo. II. C. 23, and afterwards from 6 & & 7 Vict. C. 73, ss 37-43, the provisions of which were said by Dixon J to form the foundation of Part V of the Legal Practitioners Act 1898 (NSW) and certain provisions of the Supreme Court Act 1928 (Vic). 105 Dixon J concluded that the High Court had no relevant statutory jurisdiction. He said (at 681): …if, in the exercise of its general jurisdiction, the Court referred a solicitor's costs for taxation, [rule 10 of Order LIV of the High Court Rules 1928 (Cth)] would enable it to order him to deliver a bill. But it is not expressed in such a way as to confer upon the High Court the independent statutory jurisdiction of the Supreme Court to order the delivery of a bill, much less the powers of that Court relating to the taxation of bills already delivered. Rules of Court ought not to be construed as enlarging or conferring jurisdiction or affecting substantive rights. Many difficulties would ensue if this general principle were neglected and the rule were read, not as operating only within the existing jurisdiction of the Court, but as conferring upon both solicitor and client a new right to taxation in this Court. Under State law a client may tax his solicitor's bill as of course within a month of its delivery. Thereafter within twelve months an order may be made for taxation upon the application of solicitor or client. After twelve months, or after payment, or the entry of judgment, an order for taxation may be made only if special circumstances appear. Terms may be imposed. Payment into Court may be directed. In every case the solicitor may be restrained from taking proceedings to recover the costs. Further, where the retainer is not disputed, judgment may be directed for the amount shown by the certificate or allocatur. The relations of the solicitor and his client are, apart from rule 10, governed by these provisions of State law whether the services for which remuneration is claimed include work in the High Court or not….the general jurisdiction of this Court is adequate to protect the client. 106 It follows from the decision in Woolf that, subject to any change to the applicable law since that case was decided, neither the appellant nor the respondents had any right to an assessment of Mr Kenzie QC's fees under the Rules. 107 The appellant's contention that Turner Freeman could have had the fees assessed under the processes of High Court pursuant to the Rules requires the appellant to identify the basis for Turner Freeman's ability or entitlement to have the fees assessed in accordance with the Rules. 108 None of the possible bases identified by Mr King withstand scrutiny.

First ground of appeal 109 Mr King concentrated on the Rules as a source of the claimed entitlement, consistent with the first ground of appeal. 110 The appellant's written submissions identified the six rules as sources of jurisdiction, of which part of one (rule 50.02.02) was conceded in oral argument not to apply in this case. The identified rules (excluding rule 50.02.02) are: 1. 50.02.1, which provides that: The Court or a Justice may order that costs: (a) be taxed; (b) be fixed in an amount specified in the order or by these Rules; or (c) be assessed by such other method as the Court or a Justice directs. 2. 52.02, which provides that, subject to the Rules, where rule 52.01 (which is concerned with fixed costs) does not apply, solicitors are entitled to charge and to be allowed the fees set out in Schedule 2 to the Rules in respect of the matters referred to in that Schedule, and higher fees shall not be allowed in any case except as these Rules provide. Item 55 states "All Court fees, counsel's fees and other fees and payments, to the extent to which they have been properly and reasonably incurred and paid, shall be allowed" 3. 53.04.02, which provides that: Where a party entitled to costs refuses or neglects to have those costs taxed, and thereby prejudices another party, the Taxing Officer may, so as to prevent another party being prejudiced by that refusal or neglect: (a) certify the costs of the other party and the refusal or neglect; or (b) allow a nominal or other sum to the party refusing or neglecting to have that party's costs taxed. 1. "those costs" appears to refer to costs that are to be taxed: see rule 53.02. 4. 56.09.03, which provides that: Subject to rules 56.09.4, 56.09.5 and 56.09.6, no disbursement, whether as a fee to counsel or otherwise, shall be allowed unless: (a) it has been paid before the filing of the bill of costs; and (b) unconditional payment of the disbursement is proved to the satisfaction of the Taxing Officer. 5. 57.01, which concerns assessment. Rule 57.01.01 provides: A party filing a bill of costs for taxation may indorse on the bill a request that a Taxing Officer, in the absence of the parties and without making any determination of any individual item in the bill, make an estimate of the approximate amount of professional charges and disbursements that, in the opinion of the Taxing Officer, would be allowed if the bill of costs were taxed. 6. 6.01, which provides: 6.01.1 Where the manner or form of procedure for commencing or taking any step in a proceeding or exercising the jurisdiction of the Court is not prescribed by these Rules or there is any doubt about the manner or form of that procedure the Court, a Justice or the Registrar shall determine what procedure is to be adopted and may give directions. 6.01.2 A step taken in accordance with directions given by the Court, a Justice or the Registrar is regular and sufficient 111 The written submissions did not seek to explain how any of these rules, whether read separately or together, conferred statutory jurisdiction to assess solicitor client costs. None of them expressly mention solicitor client costs, as opposed to party party costs. However, rules 53.04.2 and 57.01 are clearly directed to circumstances in which the relevant issue involves more than one party to litigation. Applying Dixon J's injunction in Woolf that rules of Court ought not to be construed as enlarging or conferring jurisdiction or affecting substantive rights, nothing in the rules set out above appears to confer jurisdiction on the High Court to assess solicitor client costs. 112 In oral submissions, Mr King referred additionally to rules 50.01, 53.02, 53.05, 54, 56.09 and 57.03 as provisions which contemplate the taxation or assessment of solicitor client costs. Those provisions are: 1. 50.01, which provides that: Subject to the provisions of any law of the Commonwealth and to these Rules, the costs of and incidental to all proceedings in the Court are in the discretion of the Court or a Justice. 2. 53.02, which provides that: Bills of costs which are to be taxed shall be taxed, allowed and certified by a Taxing Officer. 3. 53.05, which provides that: On any taxation of costs the Taxing Officer may: (a) direct which parties are to attend the taxation; (b) direct which parties are to be served with copies of bills of costs; and (c) disallow the costs of any party whose attendance at the taxation the Taxing Officer considers to have been unnecessary. 4. 54.01, which provides that: Taxation of costs shall be commenced by the party whose costs are to be taxed filing, and serving on the party liable to pay the costs, a copy of the bill of costs to be taxed not less than 7 days before the time appointed for taxation. 5. 54.02, which is concerned with the content of a bill of costs. Rule 54.02.4 requires a bill of costs to be accompanied by proof of payment of all disbursements claimed. 6. 56.09, concerning the costs of counsel. In addition to rule 56.09.03, which is set out above, Mr King referred to rule 56.09.06, which permits the Taxing Officer to allow a party a sum for unpaid counsel's fees on an undertaking to the Court from the party's solicitor to pay the fees from any costs recovered; 7. 57.03, concerning reconsideration of a taxation. 113 Again, Mr King did not identify anything particular in these rules which was said to "contemplate" the assessment of solicitor client costs, and I do not detect anything. Ultimately, the appellant's case appeared to be that the absence of any specific restriction of certain rules to taxation or assessment of party party costs supports a conclusion that the High Court has statutory jurisdiction to assess solicitor client costs. Such a contention is clearly inconsistent with Woolf. 114 The appellant has failed to establish that the Rules confer jurisdiction on the High Court to assess solicitor client costs. Put another way, the appellant has not established that Turner Freeman could have had the fees assessed under the processes of High Court pursuant to the Rules, by virtue of the Rules themselves. 115 Accordingly, the first ground of appeal fails.

Second ground of appeal 116 The second ground of appeal is that the primary judge erred in determining the jurisdiction and power of the High Court with respect to costs of a matter decided by that Court. The scope of the relevant error is not clear. The primary judge's reasons did not address whether the High Court had the relevant jurisdiction, apart from under the Rules except to observe (at [19]) that the inherent jurisdiction of courts, both in the States and in the federal system provided a reason for rejecting a submission that the provisions of the Legal Profession Act constituted a code under which the assessment of solicitor client costs is regulated. 117 The appellant's written submissions on this ground simply said: Insofar as the primary judge concluded as it appears he did that the costs assessment was reasonable he had no power to do so. Ground 2 is made out. 118 This written submission was not amplified in oral submissions. I cannot see any evidence that the primary judge reached such a conclusion in his reasons. Nor do I understand the relevance of the submission to the second ground of appeal. If this were the only basis for the second ground of appeal, then it fails. 119 As appears at paragraphs [31] and [32] above, Mr King did however make submissions concerning the jurisdiction of the High Court to deal with solicitor client costs, apart from jurisdiction derived from the Rules. These submissions arguably concern the second ground of appeal. As to these submissions: a. The primary judge acknowledged the High Court's "inherent" jurisdiction (at [19]); b. The appellant did not explain how any of ss 71, 73 and 77 of the Constitution or ss 17, 30 and 48 of the High Court of Australia Act 1979 (Cth) affected his case and, without the benefit of submissions, I am unable to see how those provisions support the appellant's case. c. Section 26 of the Judiciary Act 1903 (Cth) provides: The High Court and every Justice thereof sitting in Chambers shall have jurisdiction to award costs in all matters brought before the Court, including matters dismissed for want of jurisdiction. 2. Section 26 does not supply the necessary jurisdiction because the respondent's claim for unpaid disbursements does not form part of the matter that was brought before the High Court. d. As to the submission that the High Court's jurisdiction was engaged by a matter in the High Court, namely, QSR, the primary judge (at [19]) expressly accepted Mr King's submission that "if the proper place for adjudicating the assessment of costs as between solicitor and client in respect of matters heard in the High Court was the High Court, then that would trump the provisions of the Act in New South Wales by virtue of s 109 of the Constitution". 120 In oral submissions, Mr King seemed to say that the mere fact that an application could have been made by either the appellant or the respondents to the High Court for an order in the exercise of its general jurisdiction that the fees be assessed under the High Court Rules was sufficient to raise a question of inconsistency. That cannot be right. There was no entitlement to such an order and there is no particular reason to think that the High Court might have exercised its general jurisdiction by making such an order. 121 Accordingly, the second ground of appeal fails. 122 In the absence of a conclusion that any relevant person had an entitlement to an assessment of Mr Kenzie QC's costs under the Rules, the Legal Profession Act cannot be held to "alter, impair or detract from the operation of a law of the Commonwealth Parliament" giving rise to an inconsistency within the meaning of s 109 of the Constitution: cf Victoria v The Commonwealth (1937) 58 CLR 618.

Proper party to obtain bankruptcy notice (appeal ground 4) 123 The appellant's notice of appeal alleges that the primary judge erred in holding that the respondents were the creditors and proper parties to the proceedings.

Appellant's submissions 124 In the written submissions, the appellant submitted that: a. The true creditor was (if anyone), Mr Kenzie QC; b. At common law a barrister could not sue for his or her fee. Under Part 3.2 of the Legal Profession Act, unless the barrister enters into a costs agreement, he or she is prevented from claiming a fee. 125 In oral submissions, Mr King re-asserted that the primary judge was wrong to find that the respondents were the appellant's creditor. He referred to s 83(3) of the Legal Profession Act, by which a barrister may enter into a contract for the provision of services with a client or with another legal practitioner. The barrister may accordingly sue and be sued in relation to the contract. However, Mr King said, there had been a complete abandonment and utter disregard of the Legal Profession Act regarding costs disclosure. He contended that where the court must imply or infer a contract, it must only be an implied contract between the provider of the services and the recipient. 126 Mr King argued that the evidence revealed the respondents were only acting as agents for Mr Kenzie QC in seeking payment of his fees, and did not demand payment from the appellant. He submitted that, if Turner Freeman were creditors of Mr Kenzie QC, then they would have paid him. 127 Further, Mr King argued that the barrister was not entitled to payment by reason of negligence and that Part 3.2 of the Legal Profession Act was never engaged because the costs assessor failed to provide a copy of the costs certificate to the appellant when it was issued. 128 Mr King cited the following passage from Abigroup at 78: It was argued for the respondent that for a person to be entitled to the issue of a bankruptcy notice he must be a creditor entitled to execute the final judgment or order and obtain the fruits of the judgment for himself;… 129 He also referred to the decision in Franks v Equititrust Ltd [2012] FMCA 1180 ("Franks").

Consideration 130 Abigroup is authority for the proposition that a right to be indemnified in respect of the future liability of a guarantor is not a final order for the payment of money that supports the issue of a bankruptcy notice. Abigroup has no application in this case because the respondents have a final order for the payment of money in the form of the Local Court judgment. 131 The respondents were and are the appellant's creditor within the meaning of s 40(3) of the Bankruptcy Act, because they satisfied the requirements of s 40(3)(d), as a "person who is for the time being entitled to enforce a final judgment or final order for the payment of money". 132 None of the remaining matters put by Mr King gives any reason to doubt the respondents' entitlement to obtain the issue of the bankruptcy notice. In particular, there is no relevant concept of "true creditor". Section 83(3) is not inconsistent with that entitlement. The appellant did not identify any provision or provisions to support the contention that the respondents were not the appellant's creditor. 133 The judgment in Franks, concerning multiple parties with the benefit of a costs order, does not assist the appellant's case. 134 This ground of appeal fails.

Factual errors (appeal ground 5) 135 The notice of appeal alleges that the primary judge erred in finding: a. That at the time of the High Court hearing, Mr Kenzie QC replaced Mr Rothman SC; b. That in all the circumstances it was reasonable for senior counsel to rely on the credit of the respondent and the appellant having regard to s 345 of the Legal Profession Act; c. That in the circumstances of a failure of the "cost creditor" and the respondents to make a costs disclosure or a costs agreement under the Legal Profession Act, the alleged debt was still payable. 136 No substantive submissions were directed to this ground of appeal. 137 As to the first matter, there is no dispute that Mr Kenzie QC appeared as senior counsel for the appellant before the High Court. In the absence of submissions, to the extent that the primary judge made a finding to the effect of the alleged finding, the Court cannot be satisfied that it involved any error. 138 As to the second matter, no such finding was made by the primary judge. In particular [8] of the primary judge's reasons does not contain any such finding. 139 As to the third matter, no such finding was made by the primary judge. The primary judge's reasons were directed to the question of whether the respondents were a creditor of the appellant that was entitled to obtain a bankruptcy notice. 140 Accordingly, the fifth ground of appeal fails.

Conclusion 141 The appeal must be dismissed with costs. I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.