Macteldir Pty Ltd v Dimoski [2006] FCA 489 | Case summary

introduction 1 On 2 November 2005, in proceeding NSD 207 of 2001 ('the primary proceeding'), Allsop J dismissed a motion brought by the present applicant, which was also the applicant in that proceeding ('Macteldir'). By the motion Macteldir had sought orders under s 43 of the Federal Court of Australia Act 1976 ('the FCA Act') and O 62 r 9 of the Federal Court Rules ('the FC Rules'), that the solicitor and the barrister who had represented Macteldir in the primary proceeding pay the costs that Macteldir had been ordered to pay to the respondents in that proceeding, and an order disallowing their own fees charged to Macteldir. The solicitor in the primary proceeding was James Roskov, whom, like Allsop J, I will call the 'Solicitor'. The barrister in that proceeding was John De Meyrick, whom, like Allsop J, I will call the 'Barrister'. 2 The primary proceeding was beset with procedural difficulties. Macteldir says that these were attributable to the fault of the Solicitor and the Barrister. Unfortunately, this present proceeding also suffered from procedural difficulties. Macteldir commenced proceeding NSD 2281 of 2005 by filing a notice of appeal on 23 November 2005. The Barrister filed a notice of motion in that proceeding seeking dismissal of the appeal as incompetent on the basis that Allsop J's decision was interlocutory and leave to appeal was required. The Registry wrote to Macteldir's solicitors, Petrovski Lawyers, the solicitors for Macteldir (providing copies of the letter to the solicitors for the Barrister and the Solicitor) advising that the notice of appeal had been wrongly accepted for filing by the Registry and had been 'voided', apparently on the view that Allsop J's decision was interlocutory. The letter also stated that the notice of motion filed on behalf of the Barrister was 'redundant' and that no affidavit in support of it need be filed. 3 On 23 November 2005, apparently against the possibility that Allsop J's order was interlocutory, Macteldir also commenced this present proceeding (NSD 2280 of 2005) seeking an order that the time be extended for applying for leave to appeal and the grant of leave to appeal. The application for leave to appeal was supported by an affidavit of Macteldir's present solicitor, Sasho Petrovski ('Mr Petrovski'), made on 23 November 2005, to which was annexed a draft notice of appeal (being a copy of the notice of appeal, the filing of which commenced proceeding NSD2281 of 2005). 4 There was correspondence between Mr Petrovski and McCabe Terrill Lawyers, who represented the Barrister, in which Mr Petrovski asserted that leave to appeal was not required, and McCabe Terrill asserted that it was, and that as a first step, an extension of time to seek to appeal would be required. McCabe Terrill referred to s 24(1A) of the FCA Act and O 52 r 10(2A) of the FC Rules. The latter fixes a seven day time limit for the seeking of leave to appeal, but provides for the extending of that period by the Court. It will be noted that the commencement of both proceedings NSD 2280 and 2281 of 2005 was on the last day of the 21-day time limit for appealing as of right if Allsop J's orders of 2 November 2005 were final: see O 52 r 15(1)(a) of the FC Rules. 5 In his written submissions filed on 22 March 2006, the Barrister stated that all that was before the Court for hearing was the motion seeking leave to appeal and that there had been no challenge to the Registry's statement that the notice of appeal should not have been accepted for filing and would be avoided. In response, Macteldir filed on the hearing an amended notice of motion by which it sought, first, a declaration that leave to appeal was not required; and, secondly, an order that if leave to appeal is required, the time for applying for leave to appeal be extended, and that leave to appeal be granted. It was not appropriate to seek a declaration that leave to appeal is not required, but the seeking of that declaration did have the salutary effect of making it clear that Macteldir's primary position is that it was entitled to appeal as of right. If it succeeds in that contention, its filing of the notice of appeal on 23 November 2005 was within time.

WAS THE ORDER OF DISMISSAL FINAL OR INTERLOCUTORY? 6 Whether a judgment if final, rather than interlocutory, usually depends on whether it finally determines the rights of the parties in respect of the matter of dispute between them: Hall v Nominal Defendant (1966) 117 CLR 423 at 443 per Windeyer J; Licul v Corney (1976) 180 CLR 213 at 225; Carr v Finance Corporation of Australia Ltd (No 1) (1981) 147 CLR 246 ('Carr') at 248; Re Luck (2003) 203 ALR 1 ('Luck') at [4]. In Carr at 248 and in Luck at [4], it was observed that in applying this test, the Court must have regard to the legal effect, as distinct from the practical effect, of the judgment. In those cases, the full expression used was 'finally determine[s] the rights of the parties in a principal cause pending between them'. 7 Macteldir sought to invoke on its motion before Allsop J the following provisions of s 43 of the FCA Act and O 62 r 9(1) of the FC Rules: Section 43 '(1) … the Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs shall not be awarded. … (2) Except as provided by any other Act, the award of costs is in the discretion of the Court or Judge.' Order 62 rule 9 '(1) Without limiting the Court's discretion to award costs in a proceeding, if costs are incurred improperly or without reasonable cause, or are wasted by undue delay orby any other misconduct or default, and it appears to the Court that a legal practitioner is responsible (whether personally or through a servant or agent), the Court may, after giving the legal practitioner a reasonable opportunity to be heard, do any of the following: (a) disallow the costs as between the legal practitioner and the legal practitioner's client; (b) if the legal practitioner is a barrister - disallow the costs as between the barrister and the barrister's instructing solicitor; (c) direct the legal practitioner to repay to the client, costs which the client has been ordered to pay to another party; (d) direct the legal practitioner to indemnify any party other than the client against costs payable by the party indemnified.' 8 Three matters should be noted at the outset. First, it was not suggested that either provision was invalid. Secondly, it is not determinative of the status (final or interlocutory) of the order of dismissal that Macteldir sought the order against the legal practitioners by motion in the primary proceeding. The question is one of substance, not of form. 9 Thirdly, the answer must be the same whether Macteldir's motion succeeded or failed. If an order in favour of Macteldir against the legal practitioners would have been final (or interlocutory), a dismissal of Macteldir's motion must be correspondingly final (or interlocutory). Accordingly, those cases to which I refer below in which a costs order was made against a legal practitioner are just as persuasive on the present question of those in which one was refused. 10 Several cases to which I was referred turned on the construction of a 'costs only' rule that has no counterpart in the FCA Act or the FC Rules. This provision is one to the effect that an appeal does not lie without leave from an order as to 'costs only'. The policy underlying such a provision is obvious enough: it should not be open to a party to appeal as of right from an order as to costs, unless the costs aspect was part of an appeal from a substantive order. 11 Since Re Bradford, Thursby and Farish (1883) 15 QBD 635 ('Bradford'), it has been consistently held that the 'costs only' rule did not catch an order that a party's legal practitioner pay costs. In that case, the rule was found in s 49 of the Judicature Act 1873 (UK) ('Judicature Act'). The order was made against a solicitor on the basis that he had made an application to the Court without his client's authority. The larger expression in s 49 was actually 'as to costs only, which by law are left to the discretion of the Court'. There was no provision comparable to O 62 r 9(1) of the FC Rules. The Court of Appeal held that it was not within the discretion of the primary Judge to 'punish' the solicitor unless he had been guilty of 'some misconduct or negligence', and that an appeal should lie as of right against such a finding. 12 The 'final or interlocutory' issue did not arise. In fact there was no requirement for the obtaining of leave to appeal from an interlocutory order (r 57 in a Schedule to the Judicature Act provided that no appeal from an interlocutory order should be brought after the expiration of 21 days except by special leave of the Court of Appeal, and that no other appeal should be brought after the expiration of one year). 13 By the time of Thompson v Fraser [1986] 1 WLR 17, there was a 'costs only' rule in s 18(1)(f) of the Supreme Court Act 1981 (UK) (the larger expression was 'relating only to costs which are by law left to the court or tribunal'). The Court of Appeal held, without referring to Bradford, that an order that a solicitor pay costs lay outside the 'costs only' rule, and that the solicitor had a right of appeal. 14 There are two interesting aspects of the case. The first is that, by now, there was a rule providing expressly for the making of an order for costs against solicitors, and the order had been made against the solicitor under that rule. The rule was RSC Ord 62 r 8(1) which was very similar to that found in O 62 r 9(1) of the FC Rules set out earlier. For example, like the Australian provision, it referred to costs having being 'incurred improperly or without reasonable cause' or having been 'wasted by undue delay or by any other misconduct or default'. 15 The second aspect is that, at that time, s 18(1)(h) of the Supreme Court Act 1981 (UK) provided that without leave, an appeal did not lie to the Court of Appeal from an interlocutory order. Despite the existence of this provision, apparently it did not occur to anyone that leave might be required because the order that the solicitor pay costs was an interlocutory order. 16 In concluding that the costs order against the solicitor was not an order 'relating only to costs', the Court of Appeal described it as an order relating to the conduct of the solicitor. 17 The Barrister and the Solicitor submit that such cases are to be explained as turning upon the inherent disciplinary jurisdiction exercised by courts or general jurisdiction over their officers. I do not agree. It is true that in Bradford, the Court of Appeal cited In Re Hardwick (1883) 12 QBD 148, a disciplinary case, but nothing was made of the point in Thompson v Fraser, in which the application was treated simply as one under RSC Ord 62 r 8(1). 18 It is unnecessary and irrelevant to distinguish, in the present context, between a court that admits persons to practise as solicitors or barristers or both, and has an inherent disciplinary jurisdiction over persons so admitted as its officers, on the one hand, and a statutory court such as this Court on the other hand. In De Sousa v Minister for Immigration, Local Government and Ethnic Affairs (1993) 41 FCR 544, a case that pre-dated O 62 r 9(1) of the FC Rules in its present form, French J held that s 43 alone empowered the court to make a costs order against a solicitor. His Honour said that the Court's power to do so was to be seen as part of a wider power under the section to make a costs order against non-parties generally, and referred to Aiden Shipping Co Ltd v Interbulk Ltd [1986] 1 AC 965 ('Aiden') and Knight v FP Special Assets Ltd (1992) 174 CLR 178 ('Knight'). In those cases, orders were made against non-parties other than legal practitioners under the general provisions conferring power to order costs (in Aiden, s 51(1) of the Supreme Court Act 1981 (UK); and in Knight, s 58 of the Supreme Court Act 1867 (Qld) and O 91 r 1 of the Rules of the Supreme Court of Queensland). A rule such as O 62 r 9(1) does not reduce the power to order costs conferred otherwise. 19 In In Re Land and Property Trust Co Plc [1991] 1 WLR 601, a costs order was made, not against legal practitioners, but against a company's directors. The Court's power to make the order was said to reside in the general statutory provision placing costs within the discretion of the court. The provision was s 51(1) of the Supreme Court Act 1981 (UK). That provision contained additional words which are not in s 43 of the FCA Act, namely, 'and the court shall have full power to determine by whom and to what extent the costs are to be paid'. However, nothing turns on this. The additional words were not present in the Queensland provisions that were considered by the High Court in Knight v FP Special Assets Ltd, above. 20 The Court of Appeal, in In Re Land and Property Trust Co Plc, held that s 18(1)(f) of the Supreme Court Act 1981 (UK) did not stand in the way of the directors exercising a right of appeal. Nicholls LJ observed (at 604-5): 'It would indeed be remarkable if a "stranger" to proceedings could be ordered to pay the costs of a party to those proceedings and have no right of appeal against that order in any circumstances unless the judge who made the order saw fit to give leave to appeal.' 21 Similarly, it is difficult to accept that if Macteldir had obtained an order for costs against the Solicitor and the Barrister upon a finding against them of misconduct or default under O 62 r 9(1) of FC Rules, they would not have a right of appeal without leave. 22 The last English case to which I was referred, Wilkinson v Kenny [1993] 1 WLR 963, is distinguishable. It concerned, not the order that the defendant's solicitors pay certain costs to the plaintiffs, but that they pay four-fifths of the plaintiffs' costs of the application for that order. The Court of Appeal held that the latter order fell within the 'costs only' rule. 23 I turn now to the three Australian cases to which I was referred. The first in time is Michael v Freehill Hollingdale & Page (1990) 3 WAR 223. Dr Michael was ordered to pay the costs of Monitronix Ltd ('Monitronix') which had been represented by solicitors ('Freehills'). He applied unsuccessfully for an order that Freehills indemnify him. His application for the order against Freehills was made under O 66 r 5(1) of the Rules of the Supreme Court 1971 (WA) which was comparable to the English Ord 62 r 8(1), and therefore to O 66 r 9(1) of the FC Rules. Section 60(1)(e) of the Supreme Court Act 1935 (WA) was a 'costs only' rule similar to s 18(1)(f) of the Supreme Court Act 1981 (UK) discussed above, while s 60(1)(f) of the Western Australian Act was a 'no appeal from interlocutory orders without leave' provision, similar to s 18(1)(h) of the English Act (and to s 24(1A) of the FCA Act). 24 The statutory setting was therefore similar to that in the present case except for the absence of a 'costs only' rule in the FCA Act. 25 On the appeal, Malcolm CJ and Seaman J delivered independent judgments. Franklyn J agreed with both of them. 26 Malcolm CJ likened Dr Michael's claim against Freehills to a third party proceeding in which an unsuccessful party in the principal proceeding seeks contribution or indemnity from a third party in respect of his liability. The Chief Justice said (at 228): 'As between Dr Michael and Freehills the former's aim for an indemnity was a principal cause and the order of Master Ng finally disposed of the matter between them subject to an appeal.' 27 In relation to the 'costs only' rule found in s 60(1)(e), the Chief Justice cited Re Bradford and Re Hardwick, and said that a claim under O 66 r 5(1) was founded on 'the misconduct of the solicitor'. In this way, he said, Re Hardwick was applicable. Macteldir's claim against the Solicitor and the Barrister, was based on O 62 r 9(1) of the FC Rules which also refers to 'misconduct'. 28 In relation to s 60(1)(f), his Honour referred to the test for distinguishing between final and interlocutory judgments described by Windeyer J in Hall v Nominal Defendant, above,at 443, and held that Master Ng's order of dismissal finally disposed of the matter between Dr Michael and Freehills, subject only to any appeal. 29 Seaman J also saw no obstacle in the 'costs only' rule. In dealing with the point, however, his Honour referred to Dr Michael's application as having been made to the Court 'in its inherent disciplinary jurisdiction over practitioners' (at 233). His Honour then said that Dr Michael's claim against Freehills had 'concerned indemnity' and was not an order 'as to costs only'. 30 When his Honour then turned to the 'final/interlocutory' issue arising under s 60(1)(f), he again referred to the inherent jurisdiction of the Supreme Court of Western Australia over its officers, stating (at 233): 'In my opinion O 66, r 5 sets out one set of circumstances in which the inherent power of the court invested in it by s 16(1)(a) of the Supreme Court Act is to be exercised.' 31 With respect, I do not think it was necessary, as Malcolm CJ apparently did not think it was, to refer to the 'inherent' jurisdiction over practitioners. A rule of the kind found in the English Ord 62 r 8(1), the Western Australian O 66 r 5(1), and the Federal Court O 62 r 9(1) itself refers to 'misconduct'. The fact that O 62 r 9(1) of the FC Rules singles out legal practitioners and refers to their 'misconduct or default' suggests a disciplinary purpose, but it suffices for present purposes simply to see it as setting out particular circumstances in which the power invested in the court by s 43 of the FCA Act may be exercised. 32 Macteldir relies on Etna v Arif [1999] 2 VR 353. In the Victorian Court of Appeal in that case, Charles and Callaway JJA agreed with Batt JA, who held that the Victorian 'costs only' rule did not apply to an appeal from an order for costs that had been made against a party's solicitors. The word 'only' did not appear in the Victorian provision, which was s 17A(1)(b) of the Supreme Court Act 1986 (Vic), but Batt JA said (at 379) that this did not render the course of authority to which I have referred inapplicable. Accordingly, the solicitors were entitled to appeal without leave. 33 His Honour also referred to the 'disciplinary jurisdiction of the court', but it is plain that he was referring to para (1) of r 63.23 of the Supreme Court Rules (Vic) Ch I, which was generally similar to O 62 r 9 of the FC Rules. His Honour did not use the word 'inherent'. 34 Again, apparently it did not occur to anyone to suggest that the solicitors needed leave to appeal by reason of s 17A(4)(b) and the costs order's being interlocutory. 35 The Solicitor and the Barrister relied on Wentworth v Rogers [1999] NSWCA 403. The New South Wales Court of Appeal had before it a summons seeking orders setting aside, relevantly, an order made by Sperling J. The relevant order was one dismissing Ms Wentworth's application for an order that Dr Rogers's counsel and solicitors personally pay, on an indemnity basis, certain costs incurred by Ms Wentworth. The Court stated (at [2]): 'The matters in question in this application, dealing as they do with the costs of the interlocutory proceedings before Sperling J, are accordingly also interlocutory. Leave to appeal is thus required. The summons of 11 September 1997 should therefore be treated as an application for leave to appeal. That matter was discussed during the argument and, subject to one qualification, that is the way the Court said that it would approach it.' So far as the judgment reveals, the present issue was not debated and none of the cases mentioned above are referred to in the judgment. 36 I do not regard Wentworth v Rogers as deciding the present question. 37 The Solicitor and the Barrister rely on authorities to the effect that an order made resolving a dispute between the issuer of a subpoena and a stranger to the proceeding to whom the subpoena is issued is classified as interlocutory; see, for example, Brouwer v Titan Corporation Ltd (1997) 73 FCR 241; Hudson v Branir Pty Ltd (2005) 15 NTLR 35. 38 In my view, those cases are distinguishable, on the basis that the application by a party for a costs order against a legal practitioner is 'in the nature of a principal cause of action pending between them': Hall v Nominal Defendant above, at 443 per Windeyer J; Luck, above, at [4]. This is not so in the case of a subpoena dispute. 39 The party seeking a costs order against a non-party legal practitioner has a grievance against the legal practitioner. The allegation is that the legal practitioner is guilty of misconduct or default, which has caused loss or damage to the party or is about to do so, for which the party seeks a remedy that the law provides. These considerations seem to me to attract the description 'principal cause of action', in the sense used in Hall v Nominal Defendant and Luck (see [6] above). A subpoena dispute is different. There is no antecedent and underlying wrongdoing, or loss or damage, and no consequential seeking of a remedy that the law provides. Rather, the dispute is entirely procedural, concerning, as it does, the invoking of the subpoena procedure by a party against a stranger. 40 In substance, Macteldir's application for an order under O 62 r 9(1) against the Solicitor and the Barrister was in the nature of a third party claim against legal practitioners for their alleged 'misconduct or default'. That application raised the only matter in dispute between Macteldir and them. Allsop J's order dismissing Macteldir's motion determined finally the rights of the parties (Macteldir and the legal practitioners) in respect of that matter. Macteldir had a right of appeal against the dismissal under s 24(1)(a) of the FCA Act. Macteldir exercised that right of appeal by filing its notice of appeal on 23 November 2005. The notice of appeal then filed should stand. Leave to appeal was not required.

Macteldir Pty Ltd v Dimoski

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