Joseph Anthony Marks v National and General Insurance Company Limited [1996] ACTSC 41 (13 May 1996)

SUPREME COURT OF THE ACT

JOSEPH ANTHONY MARKS v. NATIONAL AND GENERAL INSURANCE COMPANY LIMITED
No. SCA185 of 1992
Number of pages - 8
Costs

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
HIGGINS J

CATCHWORDS

Costs - taxation - application by way of order to review taxing officer's decision - whether certain items should be included in taxation - affidavits drawn up for use in proceedings outside ACT - that matter not justiciable in ACT - affidavits unnecessary and not subject to taxation - fees not vouched by counsel's signature - whether mandatory disallowance under O65 r75 - O65 r75 inapplicable in respect of 'in-house' counsel.

Supreme Court Rules, O65 r65, O65 r66, O65 r75

Small Claims Act 1974 (ACT), s40
Interpretation Act 1967 (ACT), s11A
Legal Practitioners Act 1975 (ACT)

Registrar of Titles v Watson (1954) VLR 111, (1954) 28 ALJ 19
Watkins v Alcock (1954) Tas SR 63
Commonwealth of Australia v Magriplis (1962) 3 FLR 47
Sadd v Griffin (1908) 2 KB 510
In re Taxation of Costs: in re A Solicitor (1936) 1 KB 523

HEARING

CANBERRA, 4 April 1996
13:5:1996

Counsel for the Applicant: Mr G Brady

Instructing solicitors: Pappas J - Attorney

Counsel for the Respondent: Mr A Bradbury

Instructing solicitors: Deacons Graham and James

ORDER

THE COURT ORDERS THAT:
The costs allowed by the taxing officer may stand.

DECISION

HIGGINS J. This is an application, dated 26 February 1996, seeking leave, pursuant to Order 65 Section 66 (sic) of the Supreme Court Rules to review the decision of a taxing officer disallowing certain objections to a bill of costs. The application is actually made pursuant to Order 65, rule 66. That rule allows a person 'within fourteen days from the date of the certificate or allocatur' to apply for an order to review the taxation as to the items so objected to. The Court, Judge or taxing officer may extend that further time beyond 14 days.

2. The bill of costs in question was taxed on 21 March 1995. It was drawn pursuant to an order for costs made on 20 September 1993 in favour of the respondent.

3. Certain objections were taken in the course of the taxation. They were rejected. The taxing officer was then requested, pursuant to O65 r65, to review her allowance of certain items to which objection had been taken. The bill of costs was then allowed on an interim basis at $1,081.14, being the sum of the items not in dispute. The disputed items related to the preparation of certain affidavits for use at the hearing of the substantive proceedings and to fees for in-house counsel.

4. On 23 February 1996, the taxing officer dismissed the objections, increasing the sum allowed to $2,933.64 by the addition of the sums claimed in respect of the items objected to and a further sum of $234.80 representing the costs of the review.

5. It is common ground that if the applicant is substantially successful on this application, that allowance is also now open to review.

6. The Certificate of Taxation issued after the dismissal of the objections on 23 February 1996. Thus, although leave is sought to make this application, it was made within the time limited by O65 r66 and, hence, neither leave nor any extension of time is required.

7. I will first consider the substantive objections relating to the allowance of costs for the affidavits and counsel's fees referred to and then the consequential issue of costs of the review by the taxing officer and of this application.

The Affidavits
8. The costs sought and allowed related to affidavits of Stuart John Given and Simone Melanie Nichols. The items in question were as follows,
No. Item Date Work Performed Cost
15 27 2/2 Telephone attendances on David Parker of our

principals in relation affidavit of Stuart Given 13.80

16 35 4/2 Receiving and filing letter from Lyons' solicitors

enclosing the affidavits of Simone Melanie Nichols,
Stuart John Given and a copy of the letter from S J
Given to Lyons dated 2/2/93 5.80

17 18 5/2 Perusal of letter from Lyons enclosing affidavits and

letter (1 folio) 2.20

18 18 5/2 Perusal of enclosed letter from S J Given to Lyons'

solicitors in relation to S J Given's affidavit (2
folios) 4.40

19 18 52 Perusal of affidavit of Simone Melanie Nichols in

relation to the compromise of the Magistrates Court
Brisbane action (4 folios) 8.80

20 18 5/2 Perusal of affidavit of Stuart John Given in relation

to compromise of the Magistrates Court Brisbane action
(5 folios) 11.00
$46.00

9. The affidavits in question were not adduced at the original hearing before Special Magistrate Hardiman.

10. The respondent's defence to the substantive claim brought by the applicant was successful. That defence was that the issue raised by the applicant was res judicata. A complaint raising the same cause of action had previously been dismissed, by consent, in a Magistrates Court at Brisbane. The applicant sought, before Special Magistrate Hardiman, to claim that the dismissal did not give rise to res judicata. That claim was rejected. Possible alternative defences upon which the respondent might otherwise have relied were then rendered unnecessary.

11. One of those defences was issue estoppel. The applicant had claimed that the effect of his agreement to the dismissal of his claim in Queensland had not been intended or known by him to have the effect of barring further action.

12. Leave to appeal from the decision of Special Magistrate Hardiman was granted to the applicant. The substantive appeal was dismissed by the Chief Justice in a reserved judgment handed down on 20 September 1993. His Honour's judgment reviewed the history of the matter. He concluded that there was no jurisdiction in this Court to set aside the Queensland Magistrate's order even if grounds for challenge had been made out. Unless that order was set aside, the applicant's claim was barred as res judicata. Following the dismissal of the appeal, the order for costs giving rise to the taxation, the subject of this review application, was made.

13. By virtue of s40 of the Small Claims Act 1974 (ACT), it was not open to either party to call evidence on the hearing of the appeal save by leave. Leave was not requested in relation to either of the affidavits for which costs were sought by the respondent. The affidavits bore the date 2nd February 1994. They were entituled 'In the Magistrates Court at Brisbane'.

14. The date was probably an error. It should, no doubt, have been 1993. The deponents were legal practitioners who had represented the respondent during the Brisbane proceedings. Mr Given, a barrister, denied in his affidavit that he had been told that Mr Marks intended, in effect, a non-suit rather than final judgment for the respondent. Ms Nichols, a solicitor, confirmed in her affidavit that she had the same impression.

15. For the reasons given by Miles CJ this material went, so far as it was admissible at all, to an issue only justiciable in the Magistrates Court at Brisbane or, perhaps, on an appeal therefrom. The affidavits were, in my view, unnecessary. They were also irrelevant to the alternative defence of issue estoppel. The preparation of affidavits seems to have been designed to meet an application before the Brisbane Magistrates Court to set aside its order rather than for the appeal before his Honour. There was no need to obtain those documents. They could serve no useful purpose unless or until such an application was made, or, at least, threatened.

16. In my opinion, the costs claimed in respect of the affidavits should have been disallowed.

Counsel's fees
17. This was a reference to the following items,
No. Date Work Performed Cost
61 8.4.93 Appeal on hearing of application for special leave to

appeal and an appeal (heard together) including time
spent in research and preparation prior to attending
Court (3/4 x $950) 712.50

62 20.9.93 Attending Court to take reserved decision

(3/4 x $205) 153.75
Total $866.25

18. The objection was that no receipted or 'vouched' fee note from counsel was produced on taxation. It was the applicant's evidence, and not disputed by counsel for the respondent, that a 'fee note' produced on 21 March 1995 was not vouched by counsel's signature. The counsel in question was a senior partner in the firm of solicitors representing the respondent.

19. The applicant relied on O65 r75,

No fee to counsel shall be allowed on taxation unless vouched by
his (or her) signature.

20. A rule in similar terms was considered in Registrar of Titles v Watson (1954) VLR 111. The counsel in question could not give a receipt for fees. Each such counsel was a Crown employee.

21. Gavan Duffy J for the Full Court, noted that there was no objection to such employees being allowed, on taxation, counsel's fees appropriate to their standing. However, the rule in question barred the allowance of those fees on taxation against an unsuccessful litigant in the absence of a vouched fee note which note they could neither give nor sign. How such fees or allowance of fees would otherwise be recovered was not addressed.

22. The note of the case in (1954) 28 ALJ 19 suggests that the effect of the decision was to,

... preclude the Crown from recovering anything in respect of
counsel's fees, where the Crown has appeared by the
Solicitor-General and another salaried officer of the Crown.

23. In this case, the taxing officer states, in her reasons, that a note signed by counsel was produced on taxation. This, it is conceded, was a factual error. The fee note then produced for inspection was, in fact, unsigned. There was no 'voucher' receipt of the fees from counsel. A fee note vouched by Mr Refshauge's signature was later produced and attached to the submissions on the review undertaken by the taxing officer, pursuant to O65 r65.

24. Green J in Watkins v Alcock (1954) Tas SR 63 noted that the equivalent Tasmanian rule was so expressed as not to require a voucher from an 'employee-counsel' or an 'employer-counsel', that is, any 'in-house' counsel. His Honour noted that such counsel were not only counsel for the relevant party but also solicitors for that party. They could neither personally receive nor give a personal receipt for such fees. As a result, the relevant Tasmanian rule had been expressed so as to delete the requirement for a vouched fee note in the case of 'a fee to a practitioner acting both as solicitor and counsel'.

25. It follows that, 'in-house' counsel in the private sector are, in this respect at least, in the same position as the Crown counsel were in Registrar of Titles v Watson (supra).

26. In Watson's case, the court expressly rejected the argument that the Victorian equivalent of O65 r75 was not, on its correct interpretation, applicable to 'in-house' counsel. The note in the Annual Practice (UK) stated that the equivalent English rule was interpreted so as to be inapplicable to Crown counsel. Even that qualification was expressly rejected. It was said to be an unauthorised gloss on the clear words of the rule. Thus, the rule was applied literally, whatever the inconvenience or inappropriateness that followed. The Victorian rule was revoked in 1957.

27. The fee charged in respect of 'in-house' counsel in this matter was calculated in accordance with, and certainly did not exceed, the fee recommended by Bridge J in Commonwealth of Australia v Magriplis (1962) 3 FLR 47. That case lays down a general rule on the assumption that there is some saving in the briefing of 'in-house' counsel. That may not always be the case. There is no reference in Magriplis' case to any requirement for a signed fee note in order for the fees to be recoverable on taxation. The issue was not raised.

28. It was submitted, correctly in my view, that O65 r75 was intended to enable the party to be charged on taxation with counsel's fees to be satisfied that the solicitor had indeed incurred the disbursement in question. Counsel's fees traditionally, at least in a divided profession, have been considered to be mere gratuities, see, for example, Sadd v Griffin (1908) 2 KB 510, 512. In that case, Farwell LJ noted that the requirement that disbursements actually be incurred could only be fulfilled, in relation to counsel's fees, by payment. If it was a legally enforceable debt, it might properly be included as a disbursement though not yet paid, see In re Taxation of Costs: in re A Solicitor (1936) 1 KB 523. In that case, Scott LJ contrasted counsel's fees with items in respect of which there was a legally enforceable debt although actual payment had yet to be made.

29. I refrain from expressing a view as to whether the traditional rule that counsels' fees are due only as a professional, rather than contractual, obligation on the briefing solicitor, survives in this Territory. Counsel for the respondent contended that the underlying purpose of O65 r75 was inconsistent with the proposition that it applies to 'in-house' counsel. The decision in Watson's case is contrary to that contention. If that case is taken to represent the law in this Territory, the taxing officer should not have allowed the counsel's fees in question without a vouched fee note. She should also have concluded that it was not possible for 'in-house' counsel to give a voucher for fees as 'in-house' counsel. Thus, she should not have allowed counsels' fees on review even though there was then a document purporting to be a vouched fee note.

30. Watson's case is a decision of a Full Court of the Supreme Court of Victoria. It should be given great weight.

31. Watson's case was concerned with practice and procedure rather than with substantive law. It is at variance with the interpretation accorded to a similar rule as then in force in the United Kingdom. A purposive construction was not adopted. A purposive construction is now to be preferred, see, for example, s11A Interpretation Act 1967 (ACT).

32. The decision may have reflected a policy considered appropriate in 1954 in the State of Victoria to discourage the use of 'in-house' counsel. That policy did not, however, persist beyond 1957 when the rule in Victoria was repealed and not replaced.

33. The practice in this Territory has not been to discourage the use of 'in-house' counsel. There is a public interest, recognised in this Territory at least since 1974, in supporting diversity in forms of legal practice. To adhere to Watson's case would be contrary to that public interest principle. The other difficulty is that unless such an exception is recognised, no such fee would ever be recoverable on any taxation of costs, whether party and party or solicitor/client. That would be absurd. Magriplis (supra) recognises the right of solicitors to recover a fee for 'in-house' counsel. That right would be illusory if compliance with O65 r75 was mandatory, at least in the case of 'in-house' counsel.

34. In my view, the rule has no application in the case of fees to counsel who are not dependant on a solicitor to pay their fee. It, therefore, has no application to the case of 'in-house' counsel including Crown counsel.

35. I, therefore, respectfully decline to follow Watson's case. In my view, O65 r75 should be interpreted as if it contained the express provisos which appear in the equivalent Tasmanian rule referred to in Watkins v Alcock (supra).

36. It follows that 'fees to counsel' should now be allowed.

37. I order the Certificate of Taxation to be amended accordingly.

38. That raises the question of the costs of the review.

Costs of Review
39. The applicant has succeeded only slightly. However, the taxing officer had no authority to decline to follow Watson's case. If she had considered that a question arose as to the applicability of Watson's case, she should have referred that question of law to a Judge for decision.

40. However, albeit not on a ground taken before the taxing officer, though on a point which was taken expressly before me, the respondent has substantially succeeded.

41. Strictly speaking, that should lead to disallowance of the costs of review allowed by the taxing officer and to an order for costs in favour of the respondent on this application.

42. In those circumstances, I consider I should, in the interests of certainty, permit the costs already allowed to stand but make no order as to the costs of the review before me.