Giannarelli v Wraith [No 2] [1991] HCA 2; (1991) 171 CLR 592

Staley v Pivot Group Pty Ltd [No 3] [2009] WASC 355

(This judgment has been delivered extemporaneously on 15 April 2010 and has been edited from the transcript.)

1 This is an application brought by the plaintiffs concerning costs. It concerns the costs award on an indemnity basis that I made on 1 December 2009 in favour of the defendant. By order 3, I ordered that the plaintiffs pay the defendant's costs thrown away by reason of the adjournment required on day two of the trial on 22 September 2009.

2 The terms of sub-orders 3.1.1, 3.1.2 and 3.1.3, essentially awarded indemnity costs to the defendant, by reference to circumstances in which the trial had been unable to proceed past its second day (as I explain in Staley v Pivot Group Pty Ltd [No 3] [2009] WASC 355).

3 I ordered by sub-order 3.1.1 that those costs be fixed without limits under any applicable cost determination, on a basis that the defendant be entitled to indemnity in respect of the costs incurred, except to the extent that such costs were not reasonably incurred. I also made orders permitting the defendant to tax its costs immediately. I granted liberty to apply.

4 The taxation regarding these costs has since been commenced by the defendant, but remains incomplete. On 6 April 2010 Registrar Powell made orders now extracted, which are appended to Ms Donald's affidavit (affirmed 14 April 2010), in these terms:

On the oral application by the plaintiff for their counsel to inspect the defendant's file for the purposes of the indemnity costs order dated 1 December 2009 ('Order') it is ordered that:

(1) The application be refused.

(2) The defendant have the costs of the application to be paid by the plaintiff in any event.

(3) The taxation of the bill filed 24 February 2010 pursuant to the Order be adjourned sine die.

5 The application by the plaintiffs' counsel to me this morning in my CMC List is in terms of a minute, said to be brought pursuant to the liberty to apply included in my orders of 1 December 2009. The plaintiffs' application is supported by an affidavit of the plaintiffs' solicitor, Mr Kevin Staffa, affirmed 13 April 2010. The plaintiffs' minute seeks orders that:

(1) upon the written undertaking of Mr Garnsworthy of counsel not to disclose information gained by him in the process of inspection, that Mr Garnsworthy be permitted to inspect the files of the defendant's solicitors relating to costs claimed by virtue of the orders made 1 December 2009;

(2) the undertaking of counsel not limit the scope of his arguments on taxation;

(3) counsel be given a copy of the relevant time sheets on which the bill is based;

(4) lawyers for the defendant identify the fee earners providing services by reference to the categories described in the costs agreement between the defendant's solicitor's practice and the defendant; and

(5) the defendant pay the plaintiffs' costs of the application on an indemnity basis.

6 The affidavit supporting the application essentially appends passing solicitors' correspondence and a memorandum of conferral document in respect of the application. One appended letter from Mr Staffa of 13 April 2010 to Lavan Legal the solicitor for the defendant, refers to proposed orders sought as set out in the minute and says:

In our view this application ought not be necessary. The unqualified undertaking by Counsel ought to deal with any concerns about disclosure. Further Mr Garnsworthy will not play any part in the trial nor has he been briefed, in any way, relating to the trial. On that basis the foundation exists for orders for the costs of this application on an indemnity basis. Further we draw to your attention that this practice has a cost agreement with the plaintiffs as does Counsel. At taxation these agreements will be relied on.

7 A preliminary objection against the plaintiffs' application is raised by counsel for the defendant, on the basis that that the proper course over what is effectively a challenge against the refusal by Registrar Powell on the oral application made to him to inspect the defendant's files on 6 April 2010, is to pursue an appeal against those orders.

8 The objection is correctly taken. An appeal is the correct course of procedure, since there is potential for an undisturbed order by a Registrar of the court that is made (and is now extracted) to be collaterally undermined by this application pursued to me, grounded, it is said, on the basis of the liberty to apply I earlier allowed. Failure to pursue an appeal presents as an insurmountable jurisdictional obstacle to this application, at the outset.

9 Nevertheless, I will briefly deal with the substantive application of the plaintiffs made, as I have said, under the liberty to apply I granted and seeking inspection orders sought for the plaintiffs in the minute.

10 The prevailing circumstances, in which a trial presently remains live, resuming on 4 May 2010 for eight further days, are wholly unique. The defendant, as is its right, declines to waive client legal privilege in respect of its solicitor's files. These two considerations both tend against the plaintiffs' application as a matter of logistics. I say that without any disrespect to independent counsel for the plaintiffs, who argued this application and submitted his undertaking. But it is an unusual situation where a trial is shortly to recommence, yet the opportunity is now sought by counsel for the opposition party to inspect the opposition solicitor's files for the purposes of a pending taxation.

11 I should say that I am also troubled by the practicalities that may arise under order 2 of the proposed minute of the plaintiffs - by reference to the qualification it puts upon the undertaking, not to disclose information gained through the inspection, albeit not limiting the scope of arguments on the taxation. On the face of it, that seems to also present to me a difficulty in concept, as between proposed orders 1 and 2.

12 Putting those practical difficulties aside, the fundamental consideration of principle which governs my negative assessment of this application, is that it is grounded in circumstances where I have, in effect, already made these indemnity costs orders and explained the reasons underlying those orders: see Staley v Pivot Group Pty Ltd [No 3]. All I can detect here sustaining the plaintiffs' application, when I assess the full content to Mr Staffa's affidavit in support, is an expressed desire to 'look' through the defendant's solicitor's files, to gather information for a purpose of marshalling arguments in resistance in the taxation.

13 The inspection orders are said to be justified on a basis that the plaintiffs, in effect, will carry an onus at the taxation, where an indemnity costs order has been made, to demonstrate that costs claimed are essentially unreasonable. Accordingly, an inspection must be permitted, so it is argued. But even if that is correct, that rationale, to my mind, is wholly inadequate to support the inspection orders sought being allowed.

14 A bare desire to 'look' through the defendant's solicitor's files, so as to gather intention for the taxation, is no sufficient basis in my assessment, to justify these inspection orders, particularly so in circumstances where the balance of a complex trial is shortly to resume for a further eight days, on 4 May 2010. Merely because indemnity costs orders have been made against the plaintiffs does not of itself support what, on the face of it, I evaluate to be a wish to go 'fishing' for a basis (unexpressed to date) to offer some resistance in the taxation, on grounds not presently articulated.

15 I take into account policy observations of McHugh J in Giannarelli v Wraith [No 2] [1991] HCA 2; (1991) 171 CLR 592, 604 - 607, as to the importance of client/legal privilege and the circumstances in which that privilege may unknowingly be lost if, for example, a waiver for one purpose carries a more general waiver repercussion. The policy rationale underlying client/legal privilege and protecting against its loss by what may come to be assessed as an act of unintentional waiver, in circumstances not yet fully explored, is a policy consideration tending in principle against this inspection application by the plaintiffs being acceded to.

16 Whilst there may arise occasions on which a party's affidavit materials do advance a sustainable evidentiary basis justifying some need to allow an inspection of an opposition solicitor's files (or components thereof), the affidavit of Mr Staffa filed in support here, really does no more than express a desire to look, so to speak. The expressed desire to look, by itself, is no sufficient basis to allow the inspection orders sought under the application.

17 I would then as a matter of merit refuse the application, in any event. But in principle it seems to me that what is, in effect, a substantive challenge against Registrar Powell's orders, must be pursued via the proper mechanism of appeal, and not collaterally attacked on the basis of a liberty to apply provision found in my orders of 1 December 2009.