Frigger v Banning

The authorities referred to by the registrar 8 In Abbott, one of the respondents to the proceedings had sought the taxation of a bill of costs. The applicant (being the party liable under the costs order) contended that the respondent who claimed the costs had no liability to meet the claimed costs. The applicant sought information from the respondent concerning its liability to pay the costs claimed. The respondent maintained that it was not obliged to provide the information: at [7]. The applicant then brought an application seeking orders compelling the respondent to provide information relevant to the respondent's entitlement to claim the costs: at [1]. 9 When the applicant raised its concerns about the refusal by the respondent to provide the information that had been requested, the registrar ('quite properly' in the view of Gilmour J) advised the applicant that it should raise these matters with the Court by way of interlocutory application: at [14]. 10 Amongst other things, the respondent submitted that the Court was functus officio and it was a matter for the registrar to exercise the power conferred by r 40.28 of the Federal Court Rules 2011 (Cth). That rule provides that a taxing officer may summons and examine witnesses and require production of books, papers and documents as well as authorise the issue of subpoenas for the purposes of the taxation. 11 Gilmour J concluded that the Court retained jurisdiction to make a supplemental order to its order for costs: at [23]. In circumstances where, despite numerous requests, the requested information had not been provided, his Honour made orders requiring that information to be provided and stayed the taxation until further order. His Honour deferred consideration of the question whether there would be leave to cross-examine the lawyer for the respondent. 12 Therefore, it is not entirely clear whether his Honour proposed a course by which the Court would determine the issue whether there was any liability on the part of the respondent for the costs claimed or whether his Honour was simply dealing with the issue whether the information sought should be provided. 13 Gilmour J placed reliance upon the decision of Drummond J in Coogi Australia Pty Ltd v Hysport International Pty Ltd [1998] FCA 1270 for the making of such orders. In that case, after a trial, a party sought to raise issues as to whether a party who sought costs had any liability to pay them. That is, the issue was raised at the point where the Court was considering the orders to be made as to costs. The proposition was advanced that orders compelling the provision of information relevant to whether a party had a liability to meet the costs in respect of which it sought an order could not be made after the trial had concluded. Unremarkably, Drummond J found that the Court could make such orders at that stage of the proceeding. 14 An application for leave to appeal the decision of Gilmour J in Abbott came before Barker J. It was the occasion for the decision in Windus. There appear to have been many points raised in support of the application for leave. However, Barker J exposed the real issue in the following way (at [17]-[20]): Thus, this case raises a very practical issue in relation to how the Court or a taxing officer should deal with the question, where it is raised, of the terms of a retainer. One can immediately see that ordinarily, where a party has acted by its solicitor on the record, it will be assumed by all concerned that the solicitor was properly retained and that there was some liability on the part of the client to pay the reasonable costs of the solicitor for so acting. … Where, however, some reasonable grounds are put forward to raise the question whether the party entitled to the benefit of the costs order has any liability for costs to the solicitor whose costs are the subject of recovery, obviously the position is different. 15 His Honour then noted that Coogi concerned a different point: at [24]-[27]. 16 Then at [31], Barker J reasoned as follows in refusing leave to appeal (noting that the references to the Director are to the party against whom the costs order had been made): As noted above, the primary judge here proceeded to entertain the interlocutory application of the Director on the basis that he had the power to make a supplemental order. In my view, having regard to the authorities just cited, it is most probable, with respect, that that is so. In this case, by bringing the interlocutory application, the Director did not seek to question the correctness of the costs order. Rather, a supplemental order was sought that was relevant to the taxation of costs that would ensue from the making of the order. Given that it is well understood that a party who has the benefit of a costs order can only recover legal costs for which the party has some liability to meet, and in circumstances where the Director had raised questions as to the existence of any such relevant retainer, it was in my view open to the Court to assume the jurisdiction to make a supplemental order and, on the facts before it, to do so. In any event, in my view, the decision of the primary judge is not attended with sufficient doubt to warrant it being reconsidered and therefore that the order his Honour made should be the subject of appeal. 17 It can be seen that Barker J dealt with the issue on the basis that it concerned whether a judge of the Court had jurisdiction to make a supplemental order requiring the information to be provided. His Honour did not address directly whether the issue as to whether the indemnity principle was met could be determined by a registrar in the course of a taxation. As to that aspect, one contention advanced in support of the application for leave to appeal was to the effect that such an issue could not be raised in the course of the taxation because, to do so (so it was put) was to challenge the foundation for the costs order. As to that aspect, it can be seen that the reasoning of Barker J was to the effect that such an issue could be raised in the course of the taxation after the order had been made because it did not challenge the correctness of the costs order. 18 In Mango Boulevard, the party who had been ordered to pay costs brought an interlocutory application for orders declaring that no sum could be allowed for solicitors and counsel as there was no liability to pay them. The position of the party seeking costs was that the taxation of costs should be allowed to take its course: at [11]. As to that submission, Rangiah J reasoned as follows (at [12]-[14]): Part 40 of the Rules sets out a comprehensive procedural scheme for taxation of costs and review of a taxation. Under that scheme, r 40.28 gives a taxing officer (a registrar) the power to direct or require the production of books, papers and documents. The respondents submit that the application for the production of documents should have been made to a registrar. They accept that rr 1.32 - 1.35 of the Rules allow the Court to depart from the Rules, but submit that the Court ought not do so except in the interests of justice. They submit that the taxation should proceed accordance with the Rules and that the Court should decline to deal with the application. There is some attraction in the respondents' submission. However, in Director of the Fair Work Building Industry Inspectorate v Abbott (No 5) [2013] FCA 522, where a registrar declined to deal with a similar dispute about disclosure of costs agreements and instead referred the dispute to the Court, Gilmour J said at [14] that the registrar had acted 'quite properly'. It may also be noted that Gilmour J held at [21] that although final costs orders had been made in the principal proceeding, he retained the power to make supplemental orders and was not functus officio in respect of the application for disclosure of material in the costs dispute. An application for leave to appeal against that judgment was dismissed: Windus v Director, Fair Work Building Industry Inspectorate [2013] FCA 1053; (2013) 216 FCR 207 at [31]. In this case, the applicants seek declaratory orders which will ultimately have to be determined by a judge, not a registrar. The interlocutory relief the applicants seek is in aid of their claim for final relief. If the applicants are ultimately wholly successful, that will effectively determine the outcome of the taxation, and if partially successful, may significantly affect the taxation. In these circumstances, I consider that it is appropriate for the application for interlocutory relief to be determined by a judge. 19 It can be seen that the basis upon which Rangiah J dealt with the matter (rather than allowing the taxation to take its course) was the formulation of the application as one for declaratory relief. Further, his Honour was of the view that there was some attraction in the submission that the matter should be dealt with by the registrar on the taxation.

Registrar has authority to determine whether indemnity principle is satisfied 20 For the following reasons, it is not the case that a registrar conducting a taxation under the Federal Court Rules lacks the authority to determine whether the indemnity principle has been met. For reasons I have given, the decisions to which the registrar referred in declining to deal with that issue were not to the effect that a registrar lacked authority. If I am wrong in that view and Abbott determined that an issue as to whether the indemnity principle was met as to some or all of the costs claimed at taxation had to be referred to a judge of the Court then, respectfully and recognising the importance of judicial comity, for the reasons that follow I would conclude that such an approach is plainly wrong. I do so on the basis of a strong conviction that the taxation process encompasses a consideration of any claim of substance that the indemnity principle has not been met. In doing so I have regard to the principles to be applied by one judge when considering whether to follow the considered decision of another judge as explained by French J in Hicks v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 757 at [75]-[76] and the need for a strong conviction of error that can be demonstrated by reasoning and a persuasion that notwithstanding the importance of the underlying principles of certainty, stability and predictability it is proper for one judge to depart from an earlier decision: Gett v Tabet [2009] NSWCA 76; (2009) 109 NSWLR 1 at [283]-[301].

The distinction between the making of an order for costs and taxation of costs 21 It is important to begin by distinguishing between the question whether an order for costs should be made and the subsequent task of assessing the quantum of those costs. Further, issues may arise as to whether, having regard to the taxation or assessment procedure that applies in a particular jurisdiction (noting that the procedures can be quite different in different courts) whether the person entrusted with the assessment task may or should refer to a judge any question as to whether the indemnity principle was satisfied. In particular, the officer entrusted with the assessment task may lack any authority to require the production of documents or other evidence upon which to reach a fair conclusion as to whether the indemnity principle had been met. The cases must be approached with these two matters in mind.

The relevant authorities 22 The first point to be made is that in making a costs order consequent upon the dismissal of proceedings it would not be usual for the Court to make inquiry as to whether the party in whose favour the order was made had a liability to pay costs: Lowbeer v De Varda [2018] FCAFC 115; (2018) 264 FCR 228 at [13]. The reason for that position was there explained as follows: That is because, in the absence of proof of an agreement to the contrary, a solicitor who acts on instructions for a party on the record is taken to be entitled to look to that party for costs, even if the instructions have come to the solicitor from another party or from some non-party interested in the litigation: Marsh v Baxter [No 2] [2016] WASCA 51 at [37]. On that basis, the requirements of the indemnity principle whereby a party who does not have a liability to the solicitor on the record for costs cannot recover costs against the unsuccessful party (Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495) may be presumed to have been met. See also, at [86]. 23 In Marsh v Baxter [No 2] [2016] WASCA 51 at [37] the following view was expressed (citing authority including the High Court decision in Halliday v High Performance Personnel Pty Ltd (in liq) (1993) 113 ALR 637 at 639): The onus of establishing that the respondent had no liability to [his lawyers] for their costs lies on the appellants. In the absence of proof of an agreement to the contrary, a solicitor who acts on instructions for a party on the record is taken to be entitled to look to that party for costs, even if the instructions have come to the solicitor from another party or from some non-party interested in the litigation … 24 However, even if an order for costs is made without inquiry as to whether the indemnity principle is met, it is open to a party to contend at the time of assessment of the quantum of costs to be paid pursuant to the order that all or part of the amount claimed should not be allowed on the basis that the party claiming the costs has not demonstrated that a liability to pay the costs was incurred by that party. If that were not so, then a party could rely upon the costs order as an adjudication that there was a liability (being an adjudication that is likely to have been made on the basis of the presumption just explained) and seek an assessment pursuant to that order even if there was no liability to meet the costs claimed. 25 Of course, as Barker J recognised in Windus at [18], ordinarily the officer undertaking the assessment pursuant to the order will be able to rely upon 'the professional, ethical obligations of a solicitor not to advance a bill of costs in circumstances where the client/party did not incur costs and had no obligation to pay legal costs to that solicitor' and the fact that the 'failure of the solicitor to recognise and act upon such a professional or ethical obligation plainly would have professional consequences were it to be ignored and later come to light'. However, putting to one side instances like Abbott where the position of the party is that any request for information will be refused, there may be room for differences of opinion as to whether facts that are not in dispute give rise to a circumstance where the indemnity principle is met in respect of some or all of the costs. 26 The next point to note is that all cost orders are made on the basis that they are awarded by way of indemnity (see Cachia v Hanes (1994) 179 CLR 403 at 410). That is, there must be a legal liability to pay costs that falls on the party seeking to recover costs pursuant to a costs order. Costs which do not satisfy the principle are not covered by the order. If that were not so then the appropriateness of the approach whereby the Court presumes, in the absence of proof to the contrary, that there are costs which satisfy the indemnity principle might be questioned. In consequence, when the costs come to be assessed, one of the issues that arises is whether the indemnity principle has been met. 27 Of course, it is possible for a party to oppose the making of a cost order on the basis that the indemnity principle is not met. There are many instances where that has occurred. However, the fact that a costs order has been made does not mean that there is no scrutiny at the point of assessment as to whether there is a liability to meet the costs claimed that falls upon the party seeking assessment of the quantum of costs to be paid pursuant to the costs order. 28 In Wentworth v Rogers [1999] NSWCA 403, strenuous objection was taken to the proposition that the terms of retainer of counsel and solicitor for the party claiming costs should be determined by a costs assessor. However, the Court of Appeal (Handley JA, Sheppard AJA and Stein JA), concluded at [56] that reasoning by Priestly JA in an earlier decision to the effect that such matters could be determined by a cost assessor was correct. Relevantly for present purposes, that reasoning (as quoted by the Court of Appeal in Wentworth v Rogers at [55]) was as follows: … the matter raised in [the] point was something for the Costs Assessor to consider. It appears from the materials before us in this application that submissions were put to him on the point. Presumably, the proper way of pursuing that point would be to pursue whatever avenues of review or appeal may be available against the Costs Assessor. I do not wish to encourage Aluma-Lite to think that if such avenues are available success will lie at the end of the road. Without having heard argument on the matter, it nevertheless seems to me a doubtful proposition. The answer to the question would depend upon an examination of a number of considerations, including the actual terms upon which counsel agreed to do the work he was asked to do on behalf of Mrs Graham by the Manager of the New South Wales Bar Association's Legal Assistance Scheme. The court does not know what the terms of counsel's engagement were. But, in any event, as I have indicated the question, in my opinion, is not one for this court. It is for the Costs Assessor in the first instance and thereafter whatever the Supreme Court Act and Rules provide for review or appeal. 29 The Court of Appeal concluded that the Court was not the appropriate forum to deal with a claim that there was no entitlement to recover any costs pursuant to an order: at [57]. 30 The litigation between Ms Wentworth and her former husband Mr Rogers concerning liability for costs persisted. The history was recounted by Santow JA in the later decision of Wentworth v Rogers [2006] NSWCA 145; (2006) 66 NSWLR 474 at [5]. By that time, there had been assessments undertaken by a cost assessor of the costs payable under two costs orders. Review was sought before a judge in which it was claimed that the assessor had no jurisdiction to determine (as the assessor had indeed determined) that the legal representatives for Mr Rogers had been acting on a 'no win no fee' basis such that there was a liability to pay legal costs. The same point was amongst the matters agitated on appeal. 31 Santow JA concluded that the 1999 decision of the Court of Appeal in Wentworth v Rogers must be followed: at [42]. 32 Basten JA approached the matter on the basis that the 1999 decision in Wentworth v Rogers did not conclude that a trial judge did not have power to consider, on review of the decision by the assessor, whether the indemnity principle had been met. In part the issue was posed in that way because the case was concerned with the nature and extent of the power of a judge when there was a challenge to the decision of an assessor: at [169]-[178]. It was also influenced by the nature of the procedure undertaken by the assessor who did not act as an officer of the Court: at [179]-[185]. 33 The other member of the Court, Hislop J, expressed no concluded opinion as to the divergence in views: at [216]. 34 In Doyle v Hall Chadwick [2007] NSWCA 159 at [61]-[62] Hodgson JA (Mason P and Campbell JA agreeing) held that it was correct to say that an assessor can determine disputes between a lawyer and client as to the terms of a costs agreement, but declined to address the divergence of opinion in the 2006 decision in Wentworth v Rogers as to the power of a costs assessor in assessing party and party costs. It appears that the distinction between the two cases was influenced by the limited extent of the authority of the assessor to require relevant documents to be produced by a third party. 35 In eInduct Systems Pty Ltd v 3D Safety Services Pty Ltd [2015] NSWCA 284; (2015) 90 NSWLR 451 at [26] Basten JA referred to the view that he had expressed in 2006 and then said (noting that the views are obiter and concern a point not argued): Looking at the matter from a different perspective, the costs assessment involves the carrying into effect of an order of a court requiring one party to pay the costs of the other. To assert that the other party has no entitlement to receive such a payment is to contradict the effect of the court order. Although the point was not argued, it is difficult to understand any basis in the Legal Profession Acts for a costs assessor to undertake such a course. The assessor would, in effect, be redetermining the very order upon which his or her jurisdiction depends. 36 However, for reasons that have been given, respectfully, I would observe that it is not the case that an order for costs entitles a party to claim, in a subsequent assessment or taxation, costs for which the party has incurred no liability on the basis that there has been an order for costs. Every order for costs is an order for costs by way of indemnity. 37 Further, as has been explained, by long standing approach, the Court presumes that the indemnity principle has been met and therefore in most cases when making a costs order will not make any determination as to whether the indemnity principle has been met. 38 There is also the possibility that there will be a need to determine the extent to which there is a liability in respect of the costs the subject of a costs order. That is to say, the issue as to whether the indemnity principle has been met may not relate to all of the costs claimed. 39 It also appears that the cost assessor who made the decisions the subject of the 2006 decision in Wentworth v Rogers did not have powers to summons those involved and submit them to cross-examination: at [39]. This was an aspect that may have influenced the views of Basten JA. 40 For those reasons, it is not the case that the issue whether the indemnity principle had been met in respect of the costs claimed by the respondents was a matter that was required to be dealt with by a judge of the Court. In the particular circumstances of the present case, the appropriate course is for the interlocutory application to be dismissed and for the liberty reserved by the registrar to be exercised. 41 It seems to me that the following would apply to the taxation to be conducted by the registrar: (1) It is reasonable to expect that a party who seeks the exercise of the powers conferred by r 40.28 to obtain further information on the basis that it is relevant to whether the indemnity principle has been met will first make a request for that information of the relevant party and then request a conference before any scheduled date for taxation to consider whether any of those powers should be exercised. (2) It may be appropriate for a party who has not taken the steps described in (1) before the scheduled date for taxation to be refused any request for the exercise of the powers conferred by r 40.28. (3) It is also reasonable to expect that a party who claims that the indemnity principle has not been met to give notice of the claim and the basis for the claim before any scheduled date for taxation (irrespective of whether the party also seeks the exercise of the powers conferred by r 40.28). (4) It may be appropriate for a party who has not taken the steps described in (3) before the scheduled date for taxation to be refused the opportunity to raise any such claim at the taxation. (5) It is appropriate for a registrar to approach the conduct of the taxation (and the question whether any of the powers conferred by r 40.28 to provide further information should be exercised) on the basis that a lawyer has a professional obligation to confine any claim to costs pursuant to a costs order to those costs in respect of which the lawyer has a proper basis to conclude that the party claiming the costs has incurred a liability to meet those costs. (6) Therefore, a party who seeks to raise such an issue must bring forth material that is sufficient to persuade the registrar taking account of the matters in (5) that there is a proper basis, as part of the assessment, to inquire into whether there is a liability on the part of the party claiming the costs to meet some or all of the costs claimed (noting the flexibility of the indemnity principle). 42 There remains only the question of costs. Counsel for the respondents sought to adjourn the interlocutory application for the purpose of inviting the Court to consider at a later hearing the making of lump sum cost orders on the basis of a minute of proposed orders filed the day before the hearing date for the interlocutory application. I was not persuaded that the Court should entertain as part of the applicant's interlocutory application an application by the respondents for orders brought on the basis that the indemnity principle had not been met, being what was, in substance, an application by the respondents for the lump sum assessment of costs payable under various cost orders made in the proceedings a number of years ago. Any such application should be brought by the respondents in the proper form and supported by appropriate evidence. Further, as I indicated, any such application was likely to be referred to a registrar given the fact that it relates to orders made some time ago. Indeed, some of the orders relate to a period when the proceedings were being case managed by a different judge. It is not an instance where I would be able to make a rough and ready lump sum assessment informed by my recent involvement in the circumstances giving rise to the various cost orders. 43 The respondents otherwise provided no submissions of assistance in dealing with the issues raised by the interlocutory application. 44 In all the circumstances, the appropriate order is that there be no order as to costs of the interlocutory application. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Colvin.