Grundmann v Georgeson [2000] QCA 394

[1] THE COURT: This is an appeal from Muir J, who dismissed an application to review an assessment of costs. The only question raised by the appeal is whether the respondent had any liability for costs; if he did not, then, it is said, there was no right to receive any costs from the appellant. The costs in question were asserted to have been incurred by the respondent in relation to an appeal against judgment in an action brought against him by the appellant. In February or March 1993, Mr D Kerr, a solicitor and an officer of the Queensland Right to Life Association, gave instructions to Boulton Cleary and Kern, solicitors, of Townsville to act as solicitors on the record for the respondent in that action. On 18 March 1993, Boulton Cleary and Kern wrote to Mr Kerr saying that, with a certain reservation, the instructions would be accepted, on the basis that they would not make any professional charges to the Association "but that in the event that an Order for costs was obtained against [the appellant] we would render costs for the work done by us and accept whatever amount in respect of those costs was recovered from him". There was a reply from the president of the Association accepting Boulton Cleary and Kern's proposal.

[2] On 7 December 1993 the respondent wrote to Boulton Cleary and Kern about the action, saying "that I wish you to take your instructions for the conduct of this litigation on my behalf from Mr Doug Kerr of the Queensland Right to Life Association". A few months later, in April 1994, the respondent paid $7,000 into the trust account of Boulton Cleary and Kern, in relation to the litigation we have mentioned; but the remainder of the firm's costs was paid by the Association.

[3] The appellant's action failed, after a trial, and so did an appeal against the judgment in that action, which was dismissed with costs. There followed a dispute as to the liability of the appellant to pay to the respondent any costs of the appeal, the basis of the appellant's contention being that the respondent had no obligation to pay the solicitors on the record, Boulton Cleary and Kern, those costs. That question was resolved by the taxing officer in favour of the respondent and an application to review the taxing officer's decision was dismissed by Muir J.

[4] The argument advanced before Muir J was that the respondent had no liability to the solicitors as they had been paid by the Association before the costs were taxed; that was, rightly, rejected. The only question is whether the evidence sufficiently established that, whether or not the Association was liable to pay any costs, the respondent himself had such a liability.

[5] The evidence as to the arrangement under which Boulton Cleary and Kern acted is less than complete. There is sufficient to show that the solicitors did not agree expressly with the respondent that he would not have to pay costs, nor tell him that he would not have to pay costs. But without a more detailed knowledge of the circumstances, one cannot make a confident finding, as to precisely what the arrangement was between the solicitors and the respondent. In particular, there is no evidence explaining the fact that, although the letter of 18 March 1993 contemplated that Boulton Cleary and Kern would look to the Association for payment of their costs, in April 1994 the respondent paid $7,000 on account of costs.

[6] It is argued for the appellant that the respondent, being the only person in a position to do so, had to supply the Court with the necessary evidence to enable it fully to understand what the respective parties' obligations were. The respondent's answer is that he produced enough evidence to make it reasonable to infer that he was obliged to pay the solicitors' costs.

[7] The cases show that the rule that costs cannot be recovered by a party not liable to the solicitors on the record is not applied with excessive rigour. In Backhouse v Judd [1925] SAStRp 49; [1925] SASR 395, as here, a society engaged a solicitor to act for a party to a proceeding and undertook to pay the solicitor's costs. It was held that although the party would not have been expected to pay the solicitor's costs the party's liability for the costs "in the absence of a bargain to the contrary, is not to be taken to be negatived" (at 403). Then in Blackall v Trotter (No 1) [1969] VicRp 114; [1969] VR 939, the solicitor whose costs were in issue was a Crown employee, paid by salary, but it was nevertheless held that the party represented by that solicitor could recover under a costs order. The Victorian Full Court said:

"The present is a case involving a Crown-employed solicitor, but we are not to be taken as deciding that the principle is limited to such a case". (942)

Some of the authorities are discussed in Angor Pty Ltd v Ilich Motor Company Pty Ltd [1992] FCA 348; (1992) 37 FCR 65. There one of the parties to an action, a company, had been wound up and did not pay its solicitor's costs. It was held that a party which had been ordered to pay the company's costs was still liable. French J remarked:

"It is clear however, from [certain] authorities that the indemnity principle is satisfied where there is shown to be a liability in existence as between solicitor and client though the prospect of payment be remote". (71)

[8] Lastly, the following statement of Dawson J was agreed in by Mason CJ in Halliday v High Performance Personnel Pty Ltd (in liq) (1993) 113 ALR 637 at 639:

"The mere fact that a person appears on the record as the solicitor for a party does not necessarily justify the conclusion that there is a contract of retainer between the solicitor and that party. But, at least where the party is aware of this and takes no steps to rectify it, then a presumption must arise that there is a contract of retainer between them. And, both in so far as the Court is concerned and as between the parties to an action, the presumption that the solicitor on the record represents the party for whom he is recorded as being solicitor must surely be a strong one".

Here the evidence is that it was the Association which engaged the solicitors on the record, purporting to do so on behalf of the respondent; the presumption that the solicitors were retained under a contract with the respondent is not rebutted by the evidence that the instructions came from the Association; and it is strengthened by the fact that the respondent himself paid part of the costs.

[9] In our opinion both the taxing officer and Muir J were, with respect, correct in deciding the case on the basis that there was sufficient evidence to establish liability in the respondent to pay the costs of Boulton Cleary and Kern, and the appeal should be dismissed with costs.