Schokker v Commissioner of Taxation of the Commonwealth of Australia

Introduction 1 A Senior Counsel at the Western Australian Bar agreed, on a pro bono basis, to represent a taxpayer in an appeal to the Full Court. He would only recover fees if the appeal were successful and a costs order made against the Commissioner of Taxation who was the respondent. The appeal was successful and a costs order was made in favour of the taxpayer. But the Commissioner says his liability is to the taxpayer, not counsel and that the costs recoverable by the taxpayer are subject to a set-off of costs awarded against the taxpayer before the primary judge. That award was left partly undisturbed by the Full Court. Senior Counsel representing the taxpayer has now asked this Court for a referral under O 80 to provide legal assistance, albeit after the assistance has been provided. This, he contends, would enable him, under O 80 r 9, to recover his costs directly from the Commissioner. The Commissioner says O 80 has no retrospective operation. Further, and surprisingly, the Commissioner argues that counsel's agreement with the taxpayer was contrary to public policy.

Factual Background 2 On 12 May 1999 a Full Court of this Court allowed an appeal by Hank Schokker against a judge's decision, given on 23 January 1998, which had dismissed an appeal by him against a decision of the Administrative Appeals Tribunal, given on 24 July 1997. The factual background and circumstances of the appeals are set out in the judgment of the Full Court and it is not necessary to repeat them here. On 17 September 1999 the Court ordered that the Commissioner pay Mr Schokker's costs of and incidental to the appeal. It also ordered that he pay Mr Schokker's taxed costs of the hearing at first instance on the issue on which Mr Schokker was successful on the appeal. However the order of the Judge at first instance that Mr Schokker pay the whole of the Commissioner's costs stood save for that variation. 3 Mr Schokker represented himself before the primary judge. Early in February 1998 he telephoned Mr R O'Connor QC at his chambers and asked Mr O'Connor to represent him in the appeal to the Full Court. He told Mr O'Connor of his financial difficulties. Mr O'Connor agreed to represent him: "…on the basis that [Mr Schokker] would pay any disbursements to be incurred, and if he failed in his Appeal to the Full Court I would not charge any professional fees, but if he succeeded and the Full Court awarded costs in his favour I would then be entitled to payment of my professional fees, to the extent of the costs awarded in my favour, in acting for [Mr Schokker] in the Appeal." Mr O'Connor was not aware at this time of O 80 of the Federal Court Rules, providing for referral of indigent litigants to a panel of pro bono practitioners. It had commenced operation on 7 December 1997. He believed that previously existing informal arrangements for representation through Law Access were still in place. He was not aware therefore of the possibility of a Referral Certificate from the Court under O 80 and, indeed, did not become aware of the provisions of O 80 until earlier this year. 4 Mr GP Mohen of Law Access went on the record as instructing solicitor for the purposes of the appeal but on the basis that Mr O'Connor would do whatever was necessary in the preparation of the appeal whether it be normally the work of a solicitor or of a barrister. Following the costs order made on 17 September 1999, Mr O'Connor forwarded a claim for his costs to Law Access having regard to the order that the Commissioner pay Mr Schokker's costs of and incidental to the appeal. Approaches were made on behalf of Mr O'Connor to the Australian Government Solicitor for the payment of his fees on the appeal. These approaches did not yield any result as the Commissioner maintained that the costs order in favour of Mr Schokker was not enforceable against the Commissioner by Mr O'Connor. There was, in any event, a concern about the amount of the fees. The Commissioner argued that the costs payable to Mr Schokker, notwithstanding that they would include a component for Mr O'Connor's fees, would be subject to a set-off to the extent of the costs payable to the Commissioner in respect of the proceedings before the Judge at first instance. Had the legal assistance provided by Mr O'Connor been provided pursuant to a Court appointed referral under O 80 then he would have been entitled to recover his fees and disbursements from the Commissioner direct under O 80 r 9(2). 5 In an endeavour to remedy the situation, Mr Schokker filed a motion seeking orders that: "A Judge of the Court determine, pursuant to Order 80, subrule 4(1), that it is in the interests of the administration of justice that the abovenamed Applicant be referred under Order 80 for the legal assistance provided to him in 1998 and 1999, the particulars being as follows - Nature of Legal Assistance for which Referral made: . to settle the Notice of Appeal to the Full Court . to carry out the duties of a solicitor and a barrister in getting up the case for the hearing of the Appeal and attending to all necessary requirements in relation thereto . to appear as Senior Counsel at the hearing of the Appeal . to prepare the "Appellant's Further Amendments to the Amended Notice of Appeal and to Tender Further Evidence, and the Appellant's Further Written Submissions" . to prepare the "Appellant's Reply to Respondent's Submissions on Appellant's Application for Leave to Amend Notice of Appeal" . to prepare the Appellant's written submissions on costs . to prepare the Appellant's Reply to the Respondent's Submission on Costs"