Buckland Products Pty Ltd v Deputy Commissioner of Taxation; Burwood Retail Pty Ltd v Deputy Commissioner of Taxation; Scandi

5. There then arose a debate about costs. The respondent sought costs against the solicitor personally and against those who were directors of the companies, the appellants. At the request of the solicitor the matter was adjourned overnight to allow him to prepare argument on costs and we have heard argument this morning.

8. It is true, as was pointed out, that the appeals to this Court were in each case instituted before the appellant company was ordered to be wound up, but once the winding up order was made s.471A came into play, and in our opinion the solicitor ought to have been alive to the limitation imposed by that section upon his authority to act upon any instructions given by the directors.

11. It may be noted in passing that these companies appear from the names on the register to be, or to have been, in the hands of members of the Guss family. Though part of the context, that does not, of course, make the argument either way more or less compelling.

14. In the circumstances the continued prosecution of these appeals was tantamount, we think, to the solicitor acting without proper authority from the appellants. There is ample authority for an order against the solicitor to pay costs personally when he acts without authority from the client; one need instance only Myers v. Elman[1] and the several cases cited in the second edition of Halsbury's Laws of England[2], to which Viscount Maugham makes reference in Myers v. Elman[3].

17. Having considered what has been said this morning we are not dissuaded against making an order against the solicitor personally. It was the solicitor who should have been aware of s.471A and, in the absence of any evidence that he advised those instructing him about the section and its effect, we think the only order that ought to be made is against the solicitor himself. Indeed, that can be the only conclusion we think, given that Mr Guss, despite the adjournment, made no attempt to put before the Court today any evidence that those who were directors when the companies were wound up instructed him to continue to prosecute these appeals in the name of the company despite their winding up.

20. In the course of his spirited resistance to the application this morning, Mr Guss asserted that he had been taken by surprise by the respondent's objection based on s.471A, that objection having been taken very late in the day. It appeared for the first time, he said, in the outline of submissions which had been provided by respondent's counsel last Thursday.

23. In response, respondent's counsel took us through some of the history of these matters. It turned out that in winding up proceedings involving two of the appellants before the Senior Master, although s.471A was not taken by way of objection by the respondent, the Senior Master made express reference to the section under "other matters" when explaining that that section provided the only reason for his not then and there making winding up orders. Not surprisingly, then, s.471A figured again in the reasons given by Hansen, J. on 13 September 2002, the day on which his Honour ordered the winding up of those two appellants and refused an application for a stay.

26. It must be acknowledged that in the course of his reasons for judgment on 13 September last his Honour contemplated that application for approval under s.471A might be made in timely fashion by interlocutory process or, the appeal having been instituted, on the hearing of the appeal, such approval then being given nunc pro tunc; but the fact remains that, in choosing the second over the first, Mr Guss made a choice which left him at risk as to costs should leave be refused. Were we to consider whether approval was to be given under s.471A(2) altogether independently of the merits, as Mr Guss urged us to consider this morning, it would be material that there was nothing before us indicating that those who were, until winding up, in charge of the companies wished the appeals to be prosecuted or why.

29. Whatever else can be said, the fact remains that Mr Guss cannot really have been taken by surprise by the emergence of s.471A as a ground of objection in the outline of argument served last Thursday by the respondent. Still, it is true that s.471A does not appear to have been raised before this Court when a stay was sought on 30 September 2002 and so there is some force in the submission that, although s.471A has been mentioned from time to time and indeed has figured in the reasons given by those disposing of applications hitherto, it was not formally relied upon by the respondent by way of objection until last Thursday.

32. For that reason it seems to us that it is appropriate in all of the circumstances to limit any order for costs against the solicitor to the costs of the hearing of the appeal. On taking instructions, Ms Mavroudis told us that the costs of the attendance of her and her instructing solicitor today and yesterday would be in the order of $4,500. That sum is modest and we think it appropriate to order those costs against Mr Guss personally.

35. For those reasons the Court makes these orders in each of the three appeals now before us:

2. The respondent's costs of the hearing yesterday and this day are to be paid by the solicitor on the record for the appellant, Joseph Guss, personally, and those costs are fixed in each case at $1,500 (being thus $4,500 for all three appeals).

3. In case it be necessary, it is further ordered that the costs ordered to be paid are disallowed as between solicitor and client.

42. Mr Guss has now applied for a stay in order that he might "consider the effect" of the decision just made. We do not quite understand why a stay should be granted, but as counsel for the Deputy Commissioner has consented to a stay of 28 days, the Court makes the following further order in each appeal:

4. By consent the order for payment of costs is stayed for 28 days from this day.

[1] [1940] A.C. 282 at 288 and following.