High Court of Australia|1993-06-17|Before: Mason CJ, Dawson J

The applicant contends that the judgments in Adams v. London Motor Builders ((6) (1921) 1 KB 495) do not support the approach taken by his Honour. In my view, what his Honour said plainly accords with the judgments of Bankes LJ and Atkin LJ in that case. Further support for his Honour's conclusion is provided by Hudgson v. Endrust (Aust.) Pty. Ltd. ((7) (1986) 11 FCR 152) and Davies v. Taylor (No.2) ((8) (1974) AC 225).

8. His Honour then dealt with the applicant's contention that the presumption favouring retainer was displaced by certain evidence. That evidence, in my view, confirmed the presumption and did not displace it. The evidence included a letter from the liquidator confirming the instructions given on behalf of the respondent that Minter Ellison should act for it on the special leave application. There was also evidence that, in the proceedings to have Spectra Systems Pty. Limited ("Spectra") wound up, counsel instructed by Minter Ellison to appear for the respondent received instructions from FAI Insurance ("FAI"). There was a letter dated 16 March 1990 from FAI to Minter Ellison in which FAI instructed that firm of solicitors in relation to proceedings instituted by Spectra against the respondent in the event of indemnity being confirmed to "assume conduct of the (respondent's) defence in the interests of (the insurer)". There is also an affidavit of M.M. Dalton, a solicitor with Minter Ellison, filed in the proceedings before this Court, deposing to the fact that Minter Ellison has acted as the respondent's solicitor in the High Court proceedings and that Ms Dalton had authority from the liquidator to make the affidavit on his behalf. His Honour considered that the materials before the taxing officer suggest that FAI was pursuing its right to subrogation as the respondent's insurer either at common law or, more likely, under the insurance contract between them. It seems to me that the likelihood was that FAI was acting pursuant to the clause in FAI's standard contract of insurance giving it authority to conduct litigation falling within the risk insured against in the name of the insured.

9. The applicant claims that Dawson J was in error in invoking the doctrine of subrogation. Although at common law no right of subrogation arises until the insured has incurred a loss and the insurer has in fact indemnified the insured for the loss, the position is different where the insurer is exercising its rights under a contractual right of subrogation. In that case, there is no need for the insurer to have indemnified the insured before taking over the conduct of the litigation ((9) See Sutton, Insurance Law in Australia, 2nd ed (1991), p 888.). In such circumstances costs incurred by the solicitors retained are costs incurred on behalf of the insured ((10) See R. v. Archibishop of Canterbury (1903) 1 KB 289, at p 295.). In Davies v. Taylor (No.2), Viscount Dilhorne stated ((11) (1974) AC, at p 230):

"In this case the solicitors, no doubt first instructed

by the insurance company, were the solicitors on the record

as solicitors for the respondent. They acted for him and,

in the absence of proof of an agreement between him and them

or between them and the insurance company that he would not

pay their costs, they could look to him for payment for the

work done and his liability would not be excluded by the

fact that the insurance company had itself agreed to pay

their costs."

10. In my view, Dawson J's decision does not depend upon the application of the common law doctrine of subrogation but on the fact that FAI was entitled pursuant to the insurance contract to take over the conduct of the proceedings in the name of the respondent. Accordingly, the argument that the costs incurred by Minter Ellison were not incurred on behalf of the respondent is without any substance.

11. The applicant's affidavit suggests that, in some undefined way, questions of champerty and maintenance arise. I am unable to discover any basis at all for this suggestion. Putting to one side the status of the torts of maintenance and champerty in Australian law, it is well established that the funding of litigation by the insurer of a party does not amount to maintenance or champerty ((12) Martell v. Consett Iron Co. Ltd. (1955) 1 Ch 363, at p 416; Oram v. Hutt (1914) 1 Ch 98, at p 106; Schultz v. The Ocean Accident and Guarantee Corporation Ltd. (1923) 23 SR(NSW) 153. See also Bodkin, The Law of Maintenance and Champerty, (1935), pp 25, 30-31; Fleming, The Law of Torts, 8th ed (1992), pp 626-627.).

12. The applicant also suggests that he has been denied natural justice by the refusal of Dawson J to order the issue of a subpoena to the liquidator of the respondent and another subpoena requiring the production of certain documents. The evidence of the liquidator and the documents are said to be relevant to the question of the retainer. His Honour's reasons for judgment do not deal with this aspect of the case. In any event, in the light of the material that was before his Honour, particularly the letter from the liquidator confirming that Minter Ellison were to act for the respondent in the High Court proceedings, I can see no basis at all for the suggestion that there was no retainer of Minter Ellison on behalf of the respondent or that legal costs incurred were not incurred on account of the respondent. The suggestion proceeds from a misapprehension of the basis on which insurers give instructions for the conduct of proceedings to which insured persons are parties. Nor was the applicant able to point to any material which might tend to suggest that oral evidence from the liquidator or documentary evidence would support the applicant's case that the respondent did not retain Minter Ellison to act for it. The applicant sought to rely on the insolvency of the respondent as demonstrating that the liquidator would not have instructed Minter Ellison to act because such instruction would be contrary to law. I am unable to agree. Had the applicant ultimately been successful in his appeal, the fund available for payment of the respondent's creditors would have been further depleted, therefore defence of the applicant's special leave application was an appropriate course for the liquidator to take, particularly as the litigation was covered by an insurance policy.

13. The power of the taxing officer under O.71 r.70 to issue a subpoena is a discretionary power, to be reversed only where its exercise was unreasonable or capricious ((13) Giannarelli v. Wraith [1991] HCA 2; (1991) 98 ALR 1, at p 6.) and, in these circumstances, I can see no basis for interfering with the taxing officer's exercise of her discretion. I note that Minter Ellison did, at the direction of the taxing officer, bring in certain documents but that privilege was claimed for most of those documents. A claim of privilege would be of equal force in relation to documents produced pursuant to a subpoena.

14. Finally, the applicant argued that, if Minter Ellison were engaged to act for the respondent, then it must have been a term of that engagement that the respondent would not be liable to pay Minter Ellison's fees. There is, however, no evidence for this assertion and such an agreement is not only unlikely, but there is a presumption that no such agreement exists ((14) ibid, at p 5. See also Hudgson v. Endrust (1986) 11 FCR, at pp 154-155). There was nothing before the taxing officer to rebut this presumption.

15. Accordingly, I am satisfied that the taxation proceeded properly on the basis that a contract existed between the respondent and Minter Ellison and that Dawson J quite properly rejected the applicant's challenge to the taxation on this ground.

16. The applicant presented a number of other submissions in relation to the conduct of the taxation. First, the applicant challenged Dawson J's interpretation of O.71 r.86. This challenge is based on the applicant's misunderstanding of the nature of a taxation of costs and, in my view, Dawson J's approach was clearly correct. As a result of the order of this Court when it dismissed the special leave application, the applicant was required to pay the costs in question here. The costs are therefore not payable "out of a fund or estate or out of the assets of a company in liquidation"; therefore, O.71 r.86 has no application in this case.

17. Secondly, the applicant submits that the evidence produced to the taxing officer in respect of counsel's fees was insufficient to satisfy the taxing officer within the terms of O.71 r.103. The respondent produced counsel's backsheet with the fee marked and a letter from counsel's clerk certifying that all fees due to counsel in this matter had been paid. This is the standard practice in a taxation to satisfy the taxing officer in respect of counsel's fees and I consider it to be sufficient. The applicant asserts that further documents are required but I am unable to see any merit in the applicant's argument.

18. Finally, the applicant alleges bias on the part of this Court (and all Australian courts) and requests a stay pending the determination of a United Nation's body. I unequivocally reject the assertion of bias, for which there is no evidence, and reject also the claim for a stay.

19. I am satisfied that the applicant's grounds of appeal are without merit. I can discern no error in Dawson J's judgment and the applicant's prospects of success in obtaining leave to appeal from Dawson J's decision are negligible. Accordingly, I refuse to grant the applicant's request for an extension of time. The application is dismissed with costs.

Halliday v Sacs Group Pty Ltd [1993] HCA 13; (1993) 113 ALR 637; (1993) 67 ALJR 678 (17 June 1993)

4. The purpose of the Court's power to grant an extension of time is to enable the Court to "do justice between the parties" ((1) See Gallo v. Dawson [1990] HCA 30; (1990) 64 ALJR. 458, at p 459; [1990] HCA 30; 93 ALR 479, at p 480). However, there are a number of factors which must be considered in the exercise of the discretion to grant an extension of time, one of which is the prospect of success of the proposed appeal ((2) ibid). If the prospects of success are so slight that the appeal would be futile, it would be wrong to extend the time and subject the respondent to further pointless litigation, delay, inconvenience and expense.

Halliday v Sacs Group Pty Ltd [1993] HCA 13;

At a glance

Court

Decision date

Before

Source

Judgment (14 paragraphs)

Parties

Cases Cited (6)

Halliday v Sacs Group Pty Ltd [1993] HCA 13; (1993) 113 ALR 637; (1993) 67 ALJR 678 (17 June 1993)