STRACHAN THOMAS v CLOUGH No. SCGRG-96-2239 Judgment No. S298 [1999] SASC 298

2 Consequential upon the order of 14 July 1998 the plaintiff took separate proceedings in the Magistrates Court and a consent order was made on 24 February 1999 in the Magistrates Court.

"1. That the plaintiffs recover against the defendant the sum of $6,554.34.

2. That the defendant pay interest on the said sum, such interest to be calculated from the dates of the respective invoices comprised in the plaintiffs' Claim.

3. That the defendant pay the plaintiffs' costs of action to be agreed, or, in default of agreement, to be taxed.

4. That this judgment and order are not to create any issue estoppel(sic) in respect of any action now pending between the parties in the Supreme Court of South Australia."

4 The particulars of claim filed in the Magistrates Court action fairly disclose the issue which had arisen before the Master upon taxation. An extract from the particulars of claim in the Magistrates Court action reads as follows:

"1. The plaintiffs are legal practitioners duly admitted to practise in the State of South Australia and at all material times carried on business as legal practitioners under the registered business name "Strachan Thomas".

2. The defendant is a legal practitioner duly admitted to practise in the State of Queensland and at all material times carried on business as a legal practitioner in that State.

3. On 24 January 1996 the defendant gave instructions to the plaintiffs to act as his agents in an action in the District Court of South Australia No 1466 of 1994 ("the action") in which his clients William Alex Wilson, Lorna Durrant Wilson and Alec Theodore Wilson ("Wilsons") were parties.

7. The plaintiffs proceeded to act in the action in accordance with the defendant's instructions and continued so to act until 1 October 1996.

8. The plaintiffs rendered four invoices to the defendant for their professional fees and disbursements.

9. The plaintiffs have made demands for payment of the said sum but the defendant has made no payment whatsoever.

10. The plaintiffs have lodged a Bill of Costs for taxation in the Supreme Court of South Australia in action No 2239 of 1996. The taxation has been adjourned pending determination by this Court of the issues between the parties concerning the existence and scope of the plaintiffs' retainer.

C. Costs of action as a Complex Action pursuant to Rule 106."

5 The issue as to the extent of the retainer of Strachan Thomas by Mr Clough was resolved, together with an agreement as to the amount properly payable thereunder. The need for continuance of the taxation before the Master had been overtaken by the agreement between the parties and the entry of consent judgment in the Magistrates Court.

6 The Supreme Court proceedings commenced on 26 November 1996 when Strachan Thomas, as legal practitioners acting under s42(1)(a) of the Legal Practitioners Act, 1981 submitted for taxation their bill of costs against their former client, Mr Clough, a Queensland legal practitioner. The taxation arose out of the retention of Strachan Thomas as the Adelaide agents for Mr Clough in the conduct of court proceedings.

7 A dispute eventually developed as to the extent to which Strachan Thomas, in terms of its instructions, should have undertaken the performance of legal work as opposed to a more limited role which would have required greater participation by Mr Clough as principal. The costs which are the subject of the present appeal are not the costs which were the subject of the taxation. I am now concerned with the costs which were occasioned by the taxation up to 14 July 1998.

8 In accordance with Supreme Court Rules r106.05(2)(c) the parties have agreed that the present appeal from a Master's decision should be heard by a single judge. Accordingly, the appeal will be dealt with in accordance with Supreme Court Rules r97.

2. A solicitor's right to costs when acting on own behalf

9 Although there is only a small amount in dispute the appeal does raise one point where there is room for a difference of opinion in terms of legal principle.

10 The costs now in question are those claimed by Mr Thomas, who as a legal practitioner, acted in the taxation on behalf of himself and his former partner Mr Strachan. The partnership of Strachan Thomas has now been dissolved.

11 The appellant's contention is in the following terms:

"At all material times, the respondent was acting for himself and a former partner. He has incurred no liability to pay costs to any person. Costs are an indemnity only, that is to say, an indemnity against liabilities incurred. A self-represented practitioner has no right to profit costs. That is because he or she has incurred no liability to a third party and needs no "indemnification". The order under appeal was thus unauthorised. See R 101.07(6)(a):

Kelly v Noumenon Pty Ltd (1988) 47 SASR 182, 184-5, 196

Elders Trustee & Executor Co v Estate of Herbert (1996) 111 NTR 25, 29

The older authorities to the contrary, that is to say, the older authorities to the effect that a solicitor who acts for himself should be permitted to recover certain profit costs, should not be followed:

Cacchia(sic) v Hanes [1994] HCA 14; (1993-4) 179 CLR 403, 410-413

Burford v Allan (1998) (South Australia, Supreme Court, Full Court, not reported, 26.5.98, Judgment S6693)."

12 This point of law was not argued before the Master but nevertheless is available.

13 The right to costs, in the exercise of a judicial discretion, is provided by s40(1) of the Supreme Court Act. "Costs", as now relevant, generally refer to money paid or liability incurred for professional legal services (see Supreme Court Rules r101.07(6)(a). However, it is well established as an exception to the general rule that when a solicitor, as litigant, has acted in his or her own behalf in undertaking the work for which another solicitor might be employed, the solicitor, with some limitations, will be entitled to the same costs as if another solicitor had done the work. Nevertheless there will be some circumstances in which costs will not be recoverable, for example, for conferring with himself. The justification for this general rule is explained in London Scottish Benefit Society v Chorley & Ors (1883) 13 QBD 872 at 875 per Brett MR and at 877 per Bowen LJ. The rule itself as stated by Brett MR at 876 is that:

"The true rule seems to be that when a solicitor brings or defends an action in person, he is entitled to the same costs as an ordinary litigant appearing by a solicitor subject to this restriction, that no costs which are really unnecessary can be recovered. Of this kind are the costs of instructions and attendances."

14 The principle was recognised by the High Court of Australia in Guss v Veenhuizen [No.2] [1976] HCA 57; (1976) 136 CLR 47 at 51 per Gibbs ACJ, Jacobs and Aickin JJ. However, more recently in Cachia v Hanes & Anor [1994] HCA 14; (1993) 179 CLR 403 at 411 five members of the High Court in a joint judgment have described the justification for the rule as stated in Chorley's case (supra) as being "somewhat dubious". At 412-413 the High Court majority in Cachia (supra) said:

"If the explanations for allowing the costs of a solicitor acting for himself are unconvincing, the logical answer may be to abandon the exception in favour of the general principle rather than the other way round. However, it is not necessary to go so far for the purposes of the present case. It suffices to say that the existence of a limited and questionable exception provides no proper basis for overturning a general principle which has, as we have said, never been doubted and which has been affirmed in recent times."

15 In Dobree & Ors v Hoffman (1994) 14 WAR 408 at 414 Ipp J has taken the step of treating Chorley's case (supra) and Guss v Veenhuizen [No.2] (supra) as not now reflecting Australian law.

16 In my view the principle of Chorley's case (supra) should still be applied in South Australia until the High Court otherwise declares. I adopt the views expressed by Batt J in Brott v Almatrah (1998) 2 VR 83 at 86-87. His Honour noted recent cases in which the principle discussed in Guss v Veenhuizen [No.2] (supra) has continued to be applied. Batt J then said at 87:

"Thus, in my view, it is not for me at first instance to choose between the two High Court decisions. I must treat the statement of the law in Guss as still left standing, and it is squarely in point. Therefore in this difficult state of the law I should follow it, even though I recognise that the High Court of Australia, if it has occasion to consider the matter again, may well overrule it. I should not, however, as a judge at first instance seek to anticipate that. I merely note that the composition of the High Court has already changed since Cachia."

17 I therefore reject the appellant's contention that Mr Thomas was not entitled to his professional costs for solicitor's work undertaken in the taxation.

18 The appellant's argument placed emphasis upon the bases of assessment of costs provided in Supreme Court Rules r101.07(6)(a). The argument is that it is only where costs have been "incurred" that costs orders should be made. In my view, the proper approach to this question requires that the rules be applied in the light of the statement of Brett MR in Chorley's case (supra) which I have quoted.

19 It was argued by the appellants that the plaintiff's right to recover costs of the taxation merged in the consent judgment obtained in the Magistrates Court on 24 February 1999. Therefore, any contingent obligation which may have attached to the appellant for such costs was discharged by the consent judgment.

20 The appellant relied upon the statement of principle in Chamberlain v Deputy Commissioner of Taxation [1988] HCA 21; (1987) 164 CLR 502 especially at 504-5 upon the basis that "...the doctrine of res judicata does not admit of any exception so long as the first judgment stands....". As was pointed out in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1980) 147 CLR 589 at 597,"the rule as to res judicata comes into operation whenever a party attempts in a second proceeding to litigate a cause of action which has merged into judgment in a prior proceeding."

21 It seems to me that the appellant's point depends upon the proper construction of the terms of the consent judgment of 24 February 1999 when considered in the light of par8 of the particulars of claim in that action. The plaintiffs in that action (the respondent) contended that in terms of four invoices they were entitled to professional fees totalling $6554.34. It appears that judgment by consent was entered for this amount together with the costs of proceeding in the Magistrates Court. The question of the plaintiffs' right, if any, to costs in the Supreme Court taxation was beyond the ambit of the Magistrates Court action and could not have been determined therein. Despite par4 of the order, the question as to the plaintiffs' right to $6554.34 was finally determined in the Magistrates Court and that question could not itself thereafter be determined in the Supreme Court proceedings. However, the question of the plaintiffs' right to costs upon the taxation remained.

22 Counsel for the appellant submitted before me that "all the steps taken [in the taxation] by the applicant [Strachan Thomas] prior to the initiation of the Magistrates Court action were part and parcel of the cause of action which was the subject of the Magistrates Court action."

23 In my opinion this is not correct. The question of costs associated with the adjourned proceedings before the Supreme Court was a matter which lay within "...the discretion of the court or a judge" by virtue of s40(1) of the Supreme Court Act.

24 The appellant contends that if Strachan Thomas had only sought and obtained a declaration of right in the Magistrates Court the plaintiff could have preserved the right to proceed further in the Supreme Court taxation. The appellant submits that by choosing to take the further step of seeking the actual recovery of the amount on the invoices then the position, as now relevant, is different. I disagree. In my opinion the Master retained power to deal with the question of costs at his discretion.

25 It is argued by the appellant that the plaintiff failed to put all relevant material before the Master. However, the appellant was represented at the hearings and had the opportunity to put forward material which seemed to him to be relevant. There is nothing in this point.

26 The appellant argues that upon various discretionary grounds the Master should have refused to make an order for costs. Counsel for the appellant asserts that some steps taken by Strachan Thomas were unnecessary. The appellant points to the terms of an offer to resolve the matter. He also contends that the terms of the consent judgment should not have operated to his detriment. In my view the order made by the Master was a proper exercise of the discretion. Insofar as I may be required to reconsider the matter afresh I would reach the same conclusion as did the Master.

27 There were seven grounds of appeal, some of which overlap in their ambit. I consider that for discussion purposes my remarks pick up the essentials. Indeed the appellant's counsel organised his argument by arranging the grounds of appeal into groups for the purposes of argument.

28 The appeal will be dismissed. I note that counsel have asked for the opportunity to be heard upon consequential orders.