Windus v Director of the Fair Work Building Industry Inspectorate

REASONS FOR JUDGMENT 1 The applicant (Mr Windus) seeks leave to appeal from the orders and judgment of Gilmour J given on 29 May 2013. 2 By the orders then made Mr Windus as the 221st respondent in WAD230/2008 was required to provide information relevant to his entitlement to claim costs in that proceeding contained in a draft bill of costs dated 6 February 2013. 3 The reasons for the making of the order are to be found in the reasons for judgment of Gilmour J dated 29 May 2013: Director of the Fair Work Building Industry Inspectorate v Abbott (No 5) [2013] FCA 522. 4 The background to the matter is set out in those reasons for judgment and may be summarised as follows: In WAD230/2008, the Court made orders dated 7 October 2011 requiring the applicant in that proceeding (the current respondent to this leave application (referred to hereafter as the Director)) to pay the costs of Mr Windus to be taxed, if not agreed. That order was made by consent of the parties. The solicitors for Mr Windus delivered a draft bill of costs for an amount totalling $174,858.12 including the costs of legal services said to have been rendered to Mr Windus by his former solicitors who apparently jointly represented the Australian Manufacturing Workers' Union and a Mr Andrew Holdsworth. The solicitors for the Director raised queries concerning the draft bill of costs and asked for information including proof that payment of claimed costs had been made by Mr Windus. This was stated to be to ensure that there would be no breach of the principle that costs are payable by way of an indemnity for fees paid or incurred. The Director was concerned that Mr Windus had no actual liability to pay costs to his solicitors. The solicitors for Mr Windus responded to that request by referring to Adams v London Improved Motor Coach Builders Limited [1920] All ER Rep 340, which was said to be authority for the proposition that the indemnity principle will be displaced only if it is established that under no circumstances does the successful party have any liability to pay costs to their solicitors. The existence of a contract of retainer and the liability of the client for the solicitors' costs was said to be presumed, and the party who challenges the existence of the retainer was said to bear the onus of establishing the absence of it: see Inglis v Moore (No 2) (1979) 25 ALR 453 at 464-465. Thus, Mr Windus said that the Director was not entitled to the information sought. The Director's solicitors disputed the application in Australia of those cases as authority for that proposition and referred to Noye v Robbins [No 6] [2008] WASC 266 where EM Heenan J ordered in similar circumstances, with one exception, that the party claiming costs should put affidavit material before the Court disclosing all documents comprising the agreement or agreements relating to funding assistance provided to the party that was claiming costs. The draft bill of costs of Mr Windus eventually came before a Deputy Registrar before whom the solicitors for the Director took up their concerns. The Deputy Registrar declined to deal with those concerns and advised the Director that they should be raised with the Court by way of interlocutory application, which was then made. 5 As noted above, Gilmour J considered that the material requested should be provided. 6 In the course of so doing, his Honour: Considered that the affidavit of the solicitor for Mr Windus was silent as to the position concerning his client's retainer with his former solicitors. Rejected a submission that he, the judge, was functus officio and could not make the orders sought by the Director, but that the Deputy Registrar exercising power under R 40.28 of the Federal Court Rules 2011 (Cth) could do so. Considered that contrary to the submission made by Mr Windus, the present application was not aimed at either varying or setting aside the costs order dated 7 October 2011 made in his favour, but rather went to the efficacy of the orders made - it was a "supplemental order". Considered that the Director had established that a union had paid the legal costs of Mr Windus and so had done enough to shift an evidentiary onus to Mr Windus to demonstrate what the actual terms of his retainer with his former solicitors were. Knowledge of those matters was said to be self-evidently held by Mr Windus and is not available to the Director. Considered that the issue for present determination was not whether the retainer agreement with the former solicitors was such as to render Mr Windus liable to them for costs. Rather, the issue was to discern what are the terms, express or implied, of any such agreement with the former solicitors and the current solicitors respectively. That cannot be done by reliance on statements by the current solicitors as to the effect of any such agreement. 7 Mr Windus accepts that the factors to be considered in connection with the application for leave to appeal under s 24(1A) of the Federal Court of Australia Act 1976 (Cth) include: whether the decision of Gilmour J is attended with sufficient doubt to warrant its being reconsidered; whether substantial injustice would result if leave were refused, supposing the decision to be wrong; the effective finality of the order challenged; whether the decision is a common interlocutory order on a point of practice and procedure or involves a matter of substantive rights; and the consequences and issues arising from the decision. 8 The primary argument made on behalf of Mr Windus is, as put to the primary judge, that he is entitled to costs unless the Director can prove an express agreement existed between him and his former solicitors that under no circumstances would he be liable to pay legal fees to his solicitors. 9 Thus, it is put that the Director's assertion that no valid retainer exists or that Mr Windus had no liability for costs "challenges matters which go to the foundation for the making of the cost[s] order itself". 10 It is further put that the second basis upon which the indemnity principle of costs has application to a matter is that the quantum of party and party costs recoverable cannot exceed the amount agreed to be paid to the solicitor by way of solicitor and client costs and this only arises in the taxation after the quantum of the bill of costs has been assessed or taxed. It does not arise in the present case as there has been no assessment or taxation of the bill of costs. 11 Thus, it is put that the circumstances of the present case do not give rise to a right to require production of documents on the basis of a "speculative possibility that any such agreement exists". In this regard, Mr Windus relies on Annfrank Nominees Pty Ltd v Connell (1991) 6 WAR 271. 12 Mr Windus submits that in substance the Director is on a fishing expedition, which is impermissible. 13 Accordingly, Mr Windus seeks to agitate the following proposed grounds of appeal: 1. The learned judge erred in law in failing to find that the Court was functus officio, and that the final orders of the Court for costs made on 7 October 2011 gave rise to an issue estoppel or res judicata. 2. The learned judge erred in law in failing to determine, or alternatively in failing to give adequate reasons as to resolving, the difference in the positions of the appellant and the respondent on the issues and application of legal principles identified in the reasons at [5] to [8]. 3. The learned judge erred in law in finding that: (a) there exists a genuine issue as to the existence of a retainer between the appellant and his solicitors; (b) the appellant bears an evidentiary burden to satisfy the Court as to the existence of a retainer between the appellant and his solicitor (whether prior to the taxation of costs or at all); (c) the appellant has an obligation to, or can be compelled to, produce evidence as to the terms of the retainer between the appellant and his solicitors. 4. The learned judge erred in law in finding that: (a) there exists a genuine issue as to the terms of the retainer between the appellant and his solicitors; (b) the appellant bears an evidentiary burden to satisfy the Court as to the terms of the retainer between the appellant and his solicitors (whether prior to the taxation of costs or at all); (c) the appellant has an obligation to, or can be compelled to, produce evidence as to the terms of the retainer between the appellant and his solicitors. 5. The learned judge erred in law and in fact in that there was no legal or factual basis, or any proper factual basis, to grant a stay of the assessment of the appellant's bill of costs. 14 The broad principles about the entitlement of a party to receive its costs on an indemnity basis are not in doubt. They do not need to be repeated here. 15 The simple fact is that the primary judge ordered that Mr Windus should be entitled to his costs and made that order. 16 Then, when the matter came before the taxing officer, the Deputy Registrar, the question about the production of materials concerning the retainer with the former solicitors, and the present solicitors, was raised. 17 Thus, this case raises a very practical issue in relation to how the Court or a taxing officer should deal with the question, where it is raised, of the terms of a retainer. One can immediately see that ordinarily, where a party has acted by its solicitor on the record, it will be assumed by all concerned that the solicitor was properly retained and that there was some liability on the part of the client to pay the reasonable costs of the solicitor for so acting. 18 No doubt, a court can also rely on the professional, ethical obligations of a solicitor not to advance a bill of costs in circumstances where the client/party did not incur costs and had no obligation to pay legal costs to that solicitor. The failure of the solicitor to recognise and act upon such a professional or ethical obligation plainly would have professional consequences were it to be ignored and later come to light. 19 There is no suggestion made on behalf of the Director that a party obliged to meet a costs order, as the Director is here, is ordinarily entitled to demand the production of documents and in that sense go on a fishing expedition to find out precisely what the terms of the retainer were. 20 Where, however, some reasonable grounds are put forward to raise the question whether the party entitled to the benefit of the costs order has any liability for costs to the solicitor whose costs are the subject of recovery, obviously the position is different. 21 The primary position, in substance, as I understand it, of Mr Windus here is not that an order may not be made requiring the provision of information about a relevant retainer, but as to whether the matter of the retainer properly arises before the taxing officer or the Court. The first and primary argument is that as the Court was functus officio, it could no longer consider the costs position, after it made the costs order in favour of Mr Windus. 22 The primary judge, as noted above, considered it was entirely appropriate, when the question of material relating to the retainer was raised before the Deputy Registrar, that the Deputy Registrar should have ruled that it was a matter to be raised with the Court by way of an interlocutory application. 23 The primary judge had little doubt that that was an appropriate course of action and in that regard referred to Coogi Australia Ltd v Hysport International Pty Ltd (unreported Drummond J, 25 September 1998) (Coogi). In Coogi, the applicant applied by motion for orders that certain respondents produce for inspection copies of documents evidencing the relevant retainer with the solicitor on the record. The question of the power or efficacy of the Court in making any orders about the retainer was raised. 24 Unlike the present case, however, the trial judge had not made any final orders in the primary proceeding or about costs. At p 2 of the reasons of Drummond J, his Honour noted that he had first published reasons for concluding that the applicant's copyright infringement action should be dismissed but did not go on to make any orders reflecting his conclusions. Instead, he directed the respondents to bring into Court minutes of the orders to which they were entitled once the question of costs had been dealt with. He indicated he would receive written submissions on costs. His Honour therefore noted that he retained "full power to entertain any application that might be made in the action, including that [now] made by the applicant". 25 His Honour added that in any event, even if judgment had been given and perfected, the orders sought by the applicant for materials concerning the retainer would be orders which the Court could, in his opinion, properly make in the exercise of its power to make "supplemental orders". In this his Honour relied on Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industries (Qld) Pty Ltd (1993) 45 FCR 224 (White Industries). 26 His Honour in this regard noted that the question whether the respondents were under any liability to pay their solicitors' fees was not one that the applicant was bound to litigate at trial. It only became an issue when the outcome was known and only then if the applicant was exposed to a costs order. His Honour observed that it was an issue entirely appropriate to be left to be determined by the Court in the exercise of the special jurisdiction to make supplemental orders after judgment on the issues raised by the pleadings. 27 It will be appreciated in this regard that the circumstances in Coogi were therefore different from those which currently present themselves. The primary judge in fact made a final order concerning the costs and the question of dealing with the "supplemental" issue as to the terms of the retainer was not raised at any relevant time before that order was made. Plainly if it had been then the circumstances in Coogi would have been replicated and the power of the primary judge to make orders about production of materials concerning the retainer would not have been in any doubt at all. 28 This then raises the question whether the decision in White Industries is applicable. In White Industries Caboolture sued White Industries and White Industries cross-claimed. Caboolture lost both actions and was ordered to pay a substantial sum and costs. After judgment had been entered it came to the attention of White Industries that there was reason to believe that Flower & Hart, the solicitors acting for Caboolture, had commenced the proceeding against it in such a manner as to amount to an abuse of process. White Industries both appealed and commenced a notice of motion in the original proceeding seeking an order that its costs be paid by Flower & Hart on an indemnity basis. Flower & Hart filed a notice of motion disputing the jurisdiction of the Court to make such an order, claiming that the judgment having been entered and an order of costs having been made, there was no jurisdiction in the Court to reopen the case and that none of the exceptions to the general principle prohibiting a court from varying orders once entered had any application to the case. 29 At 234-235, the Full Court (Lee, Hill and Cooper JJ) referred to O 35 r 7 of the Federal Court Rules 1979 (Cth) then applicable, which set out exceptions to the general rule that the Court will not vary or set aside judgments. None was considered relevant in that case. The Court noted, however, that White Industries relied upon what was said to be the power of courts to make supplemental orders where circumstances make it necessary to do so. Their Honours considered that in an appropriate case a supplemental order may be made after judgment is entered and in that regard referred to what was said by Lord Lindley in Preston Banking Co v William Allsup & Sons [1895] 1 Ch 141 (Preston Banking Co) at 143-144. Their Honours made the point that critical to the jurisdiction of the Court is first that the application not be one in any way to vary or alter the initial order. They observed that the application before the Court in White Industries did not seek to do that and was, in the sense used in the cases, a "supplemental order". 30 In Preston Banking Co, Lord Lindley, at 143-144, had observed that the application before the Court in that case was not an application to alter an order on the ground of some slip or oversight. Nor was it a case in which the order had not been drawn up. It had been drawn up and it expressed the real decision of the Court. That being so, the Court had no jurisdiction to alter it. His Lordship observed that if the application had proceeded on the theory that the order made was "right, and that circumstances had since occurred which had rendered a supplemental order necessary, the Court might have entertained the application". His Lordship then observed, however, that the application proceeded on the theory that the earlier order made was wrong. 31 As noted above, the primary judge here proceeded to entertain the interlocutory application of the Director on the basis that he had the power to make a supplemental order. In my view, having regard to the authorities just cited, it is most probable, with respect, that that is so. In this case, by bringing the interlocutory application, the Director did not seek to question the correctness of the costs order. Rather, a supplemental order was sought that was relevant to the taxation of costs that would ensue from the making of the order. Given that it is well understood that a party who has the benefit of a costs order can only recover legal costs for which the party has some liability to meet, and in circumstances where the Director had raised questions as to the existence of any such relevant retainer, it was in my view open to the Court to assume the jurisdiction to make a supplemental order and, on the facts before it, to do so. In any event, in my view, the decision of the primary judge is not attended with sufficient doubt to warrant it being reconsidered and therefore that the order his Honour made should be the subject of appeal. 32 On that basis, the first proposed ground of appeal should not be the subject of leave. 33 Nor do I consider that there is any sufficient basis to suggest that his Honour failed to give adequate reasons, as proposed ground of appeal 2 suggests. Mr Windus in essence is simply wishing to put contentions to the contrary of the findings actually made by his Honour. 34 As to proposed grounds 3, 4 and 5, in my view it was plainly open to his Honour, being possessed of jurisdiction, to have formed a view that there was a genuine issue as to the existence of a retainer and therefore to have made the orders he did. 35 No question of injustice can arise from the refusal of leave as the entire costs entitlement will be considered at taxation in due course. 36 In these circumstances I would refuse to grant leave to appeal.