JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA

CITATION : FEATHERSTONE (by his next friend ANGELA FEATHERSTONE) -v- WESTAR ENGINEERING PTY LTD & ORS [1999] WADC 139

BETWEEN : JOHN FEATHERSTONE (by his next friend ANGELA FEATHERSTONE)

(1) Costs - Taxation of costs payable by person under disability - Appeal from decisions of Taxing Officer - Bill of costs pursuant to costs agreement - Turns on own facts

(2) Practice and procedure - Compromise by person under disability - Need to inform Judge approving compromise of costs agreement with next friend

Orders approving compromise varied to ensure costs taxed on basis of costs agreement

D'Alessandro and D'Angelo v Wood, unreported; DCt of WA; Library No 4931; 29 May 1996

Halligan v Lawson (1993) 9 SR (WA) 166

Steeden v Walden (1910) 2 Ch 393

1 BLAXELL DCJ: In this matter the solicitors for the plaintiff's next friend appeal from certain decisions made by a Deputy Registrar of the Court when taxing solicitor-client costs pursuant to O66, r23(4) of the Rules of the Supreme Court. As the solicitors are "a person affected" by those decisions they are entitled to bring the appeal pursuant to O6, r11 of the District Court Rules.

2 On the hearing of the appeal I have dealt contemporaneously with an application on behalf of the plaintiff to vary the orders made on 28 February 1996 when I approved the terms of compromise of the action. In essence a variation is sought so as to ensure that solicitor-client costs are taxed on the basis of a costs agreement entered into by the plaintiff's next friend on 19 January 1996. It is open for me to vary the orders pursuant to a general liberty to apply which was granted at the time of approving the compromise.

3 The plaintiff commenced action against the first and second defendants in November 1990 claiming damages for personal injuries suffered in an accident in the course of his employment on 22 August 1989. The statement of claim alleged that on the date of the accident the plaintiff was employed by the first defendant in erecting roller doors in a prefabricated building at the Telfer minesite. While adjusting the height of a roller door the spring-loaded axle suddenly released itself causing a chainwheel to spin rapidly and to shatter. This caused fragments of the plastic chainwheel to travel at high velocity and to strike the plaintiff in the skull causing significant brain and eye injuries. The resultant cognitive disability has required that the plaintiff's daughter act in the proceedings as his next friend.

4 The original claim was against the first defendant as the plaintiff's employer, and against the second defendant as the supplier of the parts of the prefabricated building including the defective roller door. However, after these parties had filed their defences it became necessary for other parties to be joined. In this regard, the third and fourth defendants had been respectively the manufacturer and designer of the roller door. The fifth, sixth and eight defendants had in various ways been involved in the design and/or manufacture of the chainwheel parts in the roller door. The seventh defendant had been the original supplier of the plastic material from which the defective chainwheel was made.

5 During the course of proceedings, most of the defendants filed notices of contribution and/or third party notices against one or more of the others. It is evident from the pleadings that the factual issues were very complex and turned upon the evidence of experts. There were also difficulties in identifying the precise cause or causes of the accident.

6 The action was eventually set down for a trial of not less than five weeks duration commencing on 1 April 1996. However, following a late pre-trial conference and a conference of experts the parties were able to negotiate a settlement of the plaintiff's claim. On 26 February 1996 I approved the compromise whereby there was judgment for the plaintiff against all defendants other than the fifth defendant for $728,000 together with costs of $80,000 and non-counsel disbursements in the sum of $14,687.37. The usual order was made for investment of settlement moneys with the Public Trustee.

7 The party and party costs recovered from the defendants pursuant to this compromise did not cover the whole of the plaintiff's solicitors' costs. Consequently, the additional solicitor-client costs were required to be taxed pursuant to O66, r24(3).

8 On 30 July 1996 a bill of costs was filed in this Court itemising fees and disbursements totalling $172,572.85, which after deduction of the $94,687.37 recovered from the defendants left a net claim of $77,885.48. The taxation of this bill was listed for 10 September 1996, but the learned Deputy Registrar declined to proceed on that day on the ground that the next friend needed to be represented by a separate solicitor. Accordingly a direction was made pursuant to O66, r44 that the next friend be separately represented.

9 The next friend had difficulty in complying with this order given that neither she nor the plaintiff had the means to pay for such separate representation. Furthermore, the Public Trustee, as a matter of policy was not prepared to arrange such representation for the purposes of taxing costs. Fortunately, this problem was resolved when Mr E C De Vries (acting in accordance with the best traditions of the legal profession) agreed to represent the next friend on the taxation without fee. Mr De Vries subsequently conferred with the next friend for the purposes of advising on and taking instructions in respect of the costs claimed.

10 The taxation of the bill of costs was relisted for 6 December 1996 and on that date the learned Deputy Registrar was advised by Mr De Vries that the next friend did not make any objection to the fee agreement or to the bill of costs. However, the taxation did not proceed on that date because the learned Deputy Registrar directed that a three day hearing would be necessary to enable a consideration of the bill item by item.

11 Thereafter the taxation of the bill of costs proceeded intermittently on 12, 13 and 14 March; 13 and 15 May; and on 7 and 8 August 1997. By the latter date the learned Deputy Registrar had completed his consideration of the professional fees portion of the bill, as well as the disbursements (including counsel fees) other than for photocopying and facsimiles.

12 From that point on it is fair to describe the process of taxation as having stalled, and the learned Deputy Registrar also declined to sign a partial allocatur in respect of the determinations he had already made. The reasons given by the learned Deputy Registrar for this unusual state of affairs appear from his letters dated 19 August 1997 and 11 and 28 May 1998 sent to the plaintiff's solicitors, namely:

- "As to the reasonableness of the claims generally" (letter 19 August 1997) ... "the process of taxation of a solicitor/client bill involves a consideration of quantum of agreed party/party costs" (letter 11 May 1998).

- "A further or perhaps a more fundamental issue is that although the agreement upon which you rely would found taxation under the Legal Practitioners Act as against the client, there is no agreement which has the effect of binding the incapable person such that it would be appropriate to execute an allocatur along the lines countenanced by O66, r24(3). The recognition of that fact raises the issue of the jurisdiction of this Court to determine costs under the Act" (letter 11 May 1998).

- "Despite the fact that I have engaged in the process of taxing the bill it is now clear to me that the costs as determined under the agreement would not qualify as a determination under r24 as it does not bind the incapable person. It follows that the bill is properly taxed under the provisions of the Legal Practitioners Act and this Court has no jurisdiction" (letter 28 May 1998).

13 On 18 May 1998 the plaintiff's solicitors lodged a notice of appeal in respect of the learned Deputy Registrar's decision that the consideration of the solicitor/client bill of costs involved a need to consider the agreed party/party costs. This notice was later amended to include an appeal from the decision that the District Court lacked jurisdiction to tax the costs.

14 The appeal came on for mention on 15 June 1998 and was adjourned sine die. The plaintiff's solicitors did not seek to relist the appeal until July 1999, and it was ultimately heard by me on 31 August 1999. At the same time the plaintiff applied to vary the orders made upon the compromise of the action in the manner I have indicated above.

15 I have before me affidavits sworn by Paul Gerard Donovan (on 28 July and 27 August 1999) which deal extensively and in great detail with the background to the costs agreement with the plaintiff's next friend, the circumstances surrounding the compromise of the plaintiff's claim, and the history of the taxation of costs. Having perused these affidavits I am satisfied as to the following:

- At all material times up until the compromise of his action, the plaintiff lacked the means to meet the reasonable costs of conducting the proceedings. It is a notorious fact that Legal Aid is generally unavailable in civil matters, and the plaintiff's solicitors accepted his instructions in the knowledge that their costs were unlikely to be met if the action should fail.

- There were exceptional difficulties in conducting the plaintiff's claim by reason of his incapacity, the large number of defendants, and the complicated nature of the initiating and contributing causes of the accident. An immense amount of work had to be undertaken to gather the necessary expert evidence and to prepare the case for trial. Prior to the action being settled, the plaintiff's solicitors had also been obliged to incur disbursements (not including counsel fees) totalling $22,251.36. Most of these disbursements were out of pocket expenses.

- The plaintiff's solicitors sought and obtained advice from an officer of the Law Society in respect of the form of the costs agreement. Prior to seeking its execution extensive correspondence was sent to the plaintiff's next friend thoroughly explaining his rights with respect to costs. The next friend was also urged to obtain independent legal advice in respect of the costs agreement (and she did in fact obtain independent advice from a non-lawyer).

- Prior to the compromise of the action the plaintiff's next friend and family were thoroughly advised as to the legal costs that would be claimed and the other moneys that would need to be paid out of the settlement sum.

- The plaintiff's next friend has at all material times accepted that a proper quantum of costs is being claimed, and has not taken issue with any particular item or amount. The only fair inference from the material before me is that the next friend has come to this view with the best interests of the plaintiff in mind.

16 Before dealing with the specific grounds of appeal, it is appropriate to make some observations as to the general conduct of the taxation. The process of taxation in this case has taken an extraordinary and unacceptably long time, and it seems to me that this has stemmed from the learned Deputy Registrar's concern that a relatively large quantum of costs is being claimed pursuant to a costs agreement.

17 It may well have been for this reason that the learned Deputy Registrar directed at an early stage that the next friend be separately represented. While O66, r44 does allow a Taxing Officer to require that a party be represented by a separate solicitor, it is a power that should be exercised only sparingly and in exceptional circumstances. It must always be remembered that a party subjected to this requirement will incur additional costs, and the mere fact that a bill of costs is for an unusually large amount or is claimed pursuant to a costs agreement, should not of itself necessitate separate representation.

18 Furthermore, the fact that the client is a person under a disability will not ordinarily require that he or she (or the next friend) be separately represented. This is so notwithstanding the potential conflict of interest between the solicitor and the client as to the quantum of the bill. It is undoubtedly for this very reason that O66, r24 requires that in such circumstances the bill of costs must be taxed, and it is by this means that the interests of the party under a disability will usually be protected. As is stated in the 1999 Supreme Court Practice ("the White Book") at 80/11/2, it is the role of the Court:

"To ensure that solicitors acting for a minor or patient are paid their proper costs and no more. It was found that there were two dangers: first that the plaintiff might be overcharged and, second (and, perhaps worse) that a solicitor might be influenced to recommend an unfavourable settlement by a tempting offer to agree his costs. Accordingly (O66, r24) provides that, unless the Court otherwise orders, the costs payable to a solicitor acting for a plaintiff under a disability, who has claimed or recovered money (eg damages), must be taxed and that only those costs allowed on taxation should be paid."

19 I turn now to the first substantial ground of appeal concerning the decision that the taxation of solicitor/client costs involved a consideration of the quantum of agreed party/party costs in the action. In coming to this conclusion, the learned Deputy Registrar purportedly followed the decision of Acting Deputy Registrar Christo in D'Alessandro and D'Angelo v Wood, unreported; DCt of WA; Library No 4931; 29 May 1996. However, that was a case where both party/party and solicitor/client costs were required to be taxed, and the party/party costs had necessarily to be ascertained prior to determining the reasonableness of the quantum of the solicitor/client bill.

20 In the circumstances of the present case there is simply no basis for the contention that the taxation of the solicitor/client bill is in some way dependent upon the reasonableness of the agreed party/party costs. In any event the quantum of the party/party costs was approved by the Court at the time of compromise of the action, and the learned Deputy Registrar is not in a position to look behind that order. Accordingly, the first ground of appeal must be upheld.

21 The second substantial ground of appeal concerns the learned Deputy Registrar's decision that the District Court has no jurisdiction to tax the costs, because the costs agreement is not binding on the plaintiff. It is of course well established law that a plaintiff under a disability:

"... is prima facie liable to indemnify the next friend against costs properly incurred on his behalf, and ... that such liability ought to, and will, be enforced in all cases where the Court is satisfied that the litigation has been prompted by motives of benevolence towards (the plaintiff), and has been conducted in his interest and with diligence and propriety." (Eve J in Steeden v Walden (1910) 2 Ch 393, 399)

22 The fact that a next friend enters into a costs agreement does not of itself mean that this right to indemnity is lost. The right to indemnity will only be affected if by doing so the next friend has failed to comply with the test in Steeden as set out above. In this regard the decision of Judge Kennedy of this Court in Halligan v Lawson (1993) 9 SR (WA) 166 provides an example where a next friend had properly incurred costs on behalf of a plaintiff pursuant to a costs agreement.

23 In the present instance it was clearly in the plaintiff's best interests for the next friend to enter into the relevant costs agreement. There would have been insuperable difficulties in pursuing the action on his own, and given his lack of means and the disbursements that were being incurred, the costs agreement offered the only reasonable means of securing legal representation. Furthermore, his solicitors went to considerable lengths to ensure that his next friend fully understood and appreciated the consequences of the costs agreement prior to asking her to sign it. It follows that the plaintiff is liable to indemnify the next friend for the costs incurred under the agreement.

24 In respect of actions that have proceeded through the District Court, a Registrar of the Court has jurisdiction pursuant to O66, r24(3) to tax:

"... the costs payable to his solicitor by or on behalf of a plaintiff who is a person under disability or from any money recovered by or on behalf of a person under disability in any proceedings to which this rule applies being the costs of or incidental to those proceedings or consequent thereon ... ".

25 In those instances where there has been a costs agreement between the next friend and the plaintiff's solicitor ss58ZB and 59 of the Legal Practitioners Act have the combined effect of requiring that the relevant solicitor/client costs be taxed in accordance with that agreement. The right of the person charged (under s66 of the Legal Practitioners Act) to have solicitor/client costs taxed by a Taxing Officer of the Supreme Court does not in any way impinge upon the jurisdiction of the District Court under O66, r24(3). Accordingly, in the present case, the learned Deputy Registrar is obliged to give effect to the costs agreement, and the second ground of appeal should be upheld.

The application to vary the orders approving the compromise

26 At the time of approving the compromise on 28 February 1996 I granted the parties liberty to apply. Notwithstanding the lapse of time since then it is still open to me to vary the orders to meet the particular exigencies that have occurred upon taxation.

27 Obviously, I should have been informed of the costs agreement prior to approving the compromise so that I could take account of the full impact of costs when determining whether or not it was in the best interests of the plaintiff for the settlement to proceed. This issue is addressed in the affidavits sworn by Mr Donovan, and I accept that the failure to inform me of the costs agreement was an oversight.

28 In light of the full facts now known to me, I have reconsidered the question of whether the compromise was in the best interests of the plaintiff. Having regard to the matters set out in the affidavits including the opinion from senior counsel, and after allowing for the full costs claimed, it is clear to me that the compromise was indeed very beneficial to the plaintiff. Accordingly I consider it appropriate to vary the orders made on 28 February 1996 so as to add the following:

"1. The solicitor and client bill of costs of the next friend Angela Featherstone of and incidental to the institution and conduct of this action be taxed under the Rules of the Supreme Court Order 66 Rule 24 on the basis of the terms of the costs agreement between the next friend and her solicitors dated 19 January 1996, subject to the taxing officer's discretion as to the reasonable rates and items allowable.

2. The next friend Angela Featherstone be indemnified out of the funds from the judgment sum held by the Public Trustee on behalf of the plaintiff for costs reasonably and properly incurred by her of and incidental to the institution and conduct of this action and the Public Trustee do pay the solicitor and client costs as taxed from the moneys held on behalf of the plaintiff."

As these orders have the retrospective effect of negating the need for the appeal it is convenient that I order that the appeal be dismissed.

29 I have already observed that there has been unacceptable delay in the taxation of costs in this matter, and to the extent that there has been delay in delivering this decision on appeal I must share some responsibility in that regard.

30 In all of the circumstances it is obviously in the best interests of all concerned that the taxation of costs should be completed as swiftly as possible. Accordingly, pursuant to O29, r2 of the Rules of the Supreme Court I make the following directions:

1. That the taxation of solicitor/client costs in the present matter be expedited and disposed of as a matter of priority.

2. That there be liberty to the plaintiff's solicitors to apply to me on 24 hours notice for any further directions that may be necessary.