FEDERAL COURT OF AUSTRALIA

Titan v Romano [2000] FCA 431

CATCHWORDS

PRACTICE AND PROCEDURE – Magistrates Court – proceedings brought by solicitor to recover costs which had not been taxed – allegations that costs not properly incurred and of misconduct on part of solicitor – reference to Registrar of Magistrates Court for assessment of costs – no reasons given by Registrar for assessment and no reasons given by magistrate for accepting the assessment when various items subject to dispute – whether reasons required to be given by magistrate where none given by Registrar.

Legal Practitioners Act 1970 (ACT), s 110

Supreme Court Rules (ACT),  O 65 r 8, O 65 r 53

Magistrates Court (Civil Jurisdiction) Act 1982 (ACT), s 47

Limitation Act 1985 (ACT)

Federal Proceedings (Costs) Act 1981 (Cth)

Titan v Babic (11 October 1995, Federal Court of Australia, Finn J, unreported)

Chloride Batteries Australia Ltd v Glendale Chemical Products Pty Ltd (1988) 17 NSWLR 60

Cape v Maidment & ors (1991) 103 FLR 259

Public Service Board (NSW) v Osmond (1986) 159 CLR 656

Doyle v Ranse (1991) 103 FLR 419

Harris v Western Australian Exim Corporation (1994) 56 FCR 1

Rodgers v Commissioner of Taxation (1998) 88 FCR 61).

ON APPEAL FROM A JUDGE OF THE SUPREME COURT OF THE

AUSTRALIAN CAPITAL TERRITORY

JUDGES:                     HILL, HIGGINS, GYLES JJ

DATE:                         10 APRIL 2000

WHERE MADE:          CANBERRA

ON APPEAL FROM A JUDGE OF THE SUPREME COURT OF THE

AUSTRALIAN CAPITAL TERRITORY

THE COURT ORDERS THAT:

1.                  The appeal be allowed.

2.                  The orders made by the learned primary judge be set aside.

3.                  The matter be remitted to the Magistrates Court for rehearing in accordance with law.

4.                  Respondents to pay appellant’s costs of this appeal and of the appeal to the Supreme Court.  The costs of the proceedings in the Magistrates Court are reserved to that Court for such order as it deems fit after the rehearing of the proceedings.

5.                  If the respondents so apply that there be granted to the respondents a costs certificate pursuant to the Federal Court Proceedings (Costs) Act 1981 (Cth).

ON APPEAL FROM A JUDGE OF THE SUPREME COURT OF THE

AUSTRALIAN CAPITAL TERRITORY

REASONS FOR JUDGMENT

HILL J

1                     I have had the advantage of reading the judgment of Higgins J and agree with his Honour and for the reasons he gives that the appeal should be allowed and the matter remitted to the Magistrates Court for rehearing.

2                     On the so-called “misconduct issue” it is clear that that matter has not been dealt with.  I think it inappropriate to comment here on how it should be dealt with, other than to say that when the matter is remitted to the Magistrates Court it will be for it to determine in the ordinary way.

3                     I agree with the orders proposed by Gyles J.

Associate:

Dated:              10 April 2000

REASONS FOR JUDGMENT

HIGGINS J:

4                     This is an appeal from a decision of Miles CJ in the Supreme Court of the Australian Capital Territory, handed down on 4 December 1998, dismissing an appeal by the appellant against the entry of judgment in the ACT Magistrates Court on 30 June 1998 in favour of the respondents in the sum of $3,203.84 (plus costs and interest).

5                     However, the matter has a much longer history as the judgment appealed from sets out in detail.

THE PREVIOUS PROCEEDINGS

6                     In essence, the matter started when the appellant, on 27 July 1982, consulted the respondents, a firm of solicitors.  The appellant claimed to have consulted them concerning both a work-related injury suffered in 1976 and a motor vehicle accident in 1980.  However, it is the respondents’ case that they were instructed to act only in respect of the motor vehicle accident.

7                     In October 1985, the appellant withdrew his instructions from the respondent.  He instructed another firm of solicitors instead.  The respondents then prepared and sent to the appellant a statement of their costs and disbursements.  They claimed $6,911.

8                     There were discussions with the appellant’s then solicitors concerning those costs.  A costs consultant assessed the sum payable, assuming the work was properly and necessarily performed as claimed, at $4,159.85.

9                     On 18 July 1986, the respondents took out a “special claim” in the ACT Magistrates Court, claiming $5,627.29.  It was initially agreed that the costs be taxed, but the appellant withdrew his consent to that course.  That action was dismissed on 4 March 1988.  The respondents had not complied with s 110 of the Legal Practitioners Act 1970 (ACT) (LP Act) (sending an itemised bill one month before action).  They were non-suited.

10                  On 4 March 1988 an itemised bill was prepared and issued to the appellant.  It claimed $4,057.95.

11                  The appellant declined to have it taxed by the Registrar of the ACT Supreme Court, as he could have requested under the LP Act.  He demanded, as a precondition to giving consent to that course:

“…documentation of the work that you did in relation to my 1976 accident.”

12                  That request was not met.  Indeed, on the respondents’ version of events, they had not received any instructions concerning that accident and, consequently, did no work and had no documents relating to it.

13                  On 19 July 1988 the present claim was instituted.  It claimed by way of special claim, the amount assessed on the intemised bill.  There was a defence filed.  It was somewhat cryptic.  It reflected the appellant’s continued insistence that the respondents had been consulted about two accidents.  It read:

“1.       I consulted you about injuries sustained in two separate accidents in 1976, the other in 1980.

2.                  No provision of documentation in relation to July 1976 accident.

3.                  You are charging me for your time spent on the 1976 claim as well as on the 1980 claim.

4.                  Misconduct medical reports not paid.

5.                  Has paid for medical reports.

6.                  Any work performed subsequent to July 1985 was without the authority of myself and against my instructions.

7.                  The amount claimed is generally excessive.

8.                  Has offered $2,000.

9.                  The special claim against me by Romano & Co. should be deleted.”

14                  On 12 July 1989 the matter first came on for hearing before Magistrate Somes.  His Worship heard evidence from the first named respondent that the work was done as claimed in the detailed bill.  A solicitor gave evidence as to the reasonableness of the charges made.  It was conceded (for some reason) that a $750 reduction should be made (perhaps, to reflect payments made on account of costs by the appellant)..

15                  His Worship obviously had difficulty understanding the appellant’s case.  That was not surprising.  The grounds of defence were somewhat cryptic and confusing, particularly insofar as the appellant was challenging the bill on the basis of “misconduct”.  His Worship took the view, it seems, that the appellant had lost the right to challenge the inclusion of items in the detailed bill by declining to request taxation of it pursuant to the LP Act.

16                  In consequence, his Worship’s reasons did not, on their face, address the issues as to “misconduct” and the effect of the factual dispute as to the nature and scope of the appellant’s instructions to the respondents.

17                  The appellant appealed to the Supreme Court of the ACT.  It was heard by the Chief Justice and dismissed on the basis that it was too late for the appellant then to raise an issue as to whether the negligence or other misconduct of the solicitors should have resulted in the disallowance of any item claimed or a reduction in the sum allowable.

18                  A further appeal followed to a Full Court of this Court (Gallop, Neaves & Foster JJ).  That appeal succeeded for reasons handed down on 2 November 1990.  The view was taken that it had, contrary to the view expressed by the learned Magistrate, been open to the appellant to have disputed the inclusion of particular items in the bill.  That entitlement continued notwithstanding that taxation had been declined.

19                  Their Honours concluded that the preferable approach would have been to have required the appellant to give particulars of the items he disputed and then to take evidence relevant to the allowance or disallowance of those items.  It was suggested that a referral to one of the Magistrates Court taxing officers for report to the Court might be undertaken.  The question of “misconduct” was not dealt with, though their Honours noted it would be necessary for the Magistrates Court to deal with that issue.

20                  Reference was made in the context of “misconduct” to the terms of O 65 r 8 of the Supreme Court Rules (ACT).

21                  That provides:

“If in any case it appears to the Court that costs have been improperly, or without any reasonable cause, incurred, or that by reason of any undue delay in proceeding under any judgment or order, or of any misconduct or default of the solicitor, any costs properly incurred have nevertheless proved fruitless to the person incurring the same, the Court may call on the solicitor of the person by whom such costs have been so incurred to show cause why such costs should not be disallowed as between the solicitor and his or her client, and also (if the circumstances of the case require) why the solicitor should not repay to his or her client any costs which the client may have been ordered to pay to any other person, and thereupon may make such order as the justice of the case requires.  The Court may, if it or he or she thinks fit, refer the matter to the taxing officer for inquiry and report, and direct the solicitor to show cause before such taxing officer.  Such notice (if any) of the proceedings or order shall be given to the client in such manner as the Court directs.”

22                  As I understand it, that rule was not referred to on the basis that it had direct application, but rather to indicate the manner in which the claim of “misconduct” was relevant to and might affect the sum, if any, to be allowed.

23                  The matter then returned to Magistrate Somes.  It came before him on 25 March 1993.  There was some uncertainty as to what should then be done.

24                  In the meantime, on 12 August 1992, the appellant had filed a document headed “Notice of Cross-Claim”.  That document was in the following terms:

“1.       The plaintiff does not accept the statement made by the defendant in Court on 12 July 1989 that there was difficulty in commencing proceedings for the Workers’ Compensation Claim for the injuries sustained by the plaintiff in 1976 while working for Meccho Constructions as Leading hand Pipe Layer, because no formal instruction was ever given to commence proceedings.

2.                  The plaintiff alleges that on 27 July 1982 he gave the defendant all the necessary details at the defendant’s request to commence action, gave the names of treating doctors and signed authorities for the release of medical records and authorities for the release of hospital records in relation to the 1976 accident.

3.                  In conference with the defendant on 7 December 1982, the defendant misled the plaintiff by stating that proceedings had commenced in Court for the Workers’ Compensation Claim in relation to the 1976 accident.  In fact, the proceedings were never commenced.

4.                  The plaintiff cross-claims the amount such as a Workers’ Compensation Claim of this nature attracts in proceedings in Court which the plaintiff instructed the defendant on 27 July 1982 on defendant’s advice to commence.

GROUNDS

(a)               The defendant was negligent in that the defendant obtained medical records selectively without informing plaintiff.  The defendant did not obtain all the relevant medical evidence in relation to the 1976 accident as common practice requires for commencement of proceedings in the Court.

(b)               The defendant failed to have the plaintiff medically examined to establish the extent of damage caused to the plaintiff in the accident in 1976 on which to base the exact nature of the claim in order to obtain proper compensation.

(c)                The defendant gave false advice to the plaintiff in stating that common practice is that both claims would be dealt with in the Supreme Court at the time of Hearing of Proceedings for the motor vehicle accident, that is, the Workers’ Compensation Claim 1976 and the Third Party Claim for the 1980 motor vehicle accident.

(d)               The defendant misled the plaintiff in obtaining certain evidence concerning the 1976 accident which the plaintiff was led to believe would be used in a Workers’ Compensation Claim.  The evidence was in fact used in the claim for the motor vehicle accident of 1980, damaging that claim.

5.                  Further, the plaintiff cross-claims the amount incurred in unnecessary delay in proceedings for the motor vehicle accident claim caused by the defendant claiming an unreasonable amount of money to be paid in cash before releasing plaintiff’s file and by taking action in Court to record the amount claimed, which action was not in accordance with the Legal Practitioners’ Ordinance 1970.

6.                  The plaintiff does not concede the fact of defendant’s statement that no great injustice was done by defendant in not commencing the action for the Workers’ Compensation Claim for the 1976 accident.  If the proceedings were to commence in Court now, legal costs would be higher than the amount recoverable in a claim of this nature.  Indeed it is impossible for the plaintiff to commence action because legal representation cannot be obtained due to defendant’s actions and the plaintiff not qualified to commence such action.

ORDERS SOUGHT

1.         That this cross-claim be allowed.

2.         That pursuant to O.65 r.8 of the SUPREME COURT RULES the Court accept the evidence of plaintiff in support of alleged negligence and misconduct by defendant and should be allowed and be dealt with and give the matter such effect and weight as seems appropriate.

3.         That if the Court finds negligence and misconduct the defendant be ordered to pay the plaintiff such amount as a Workers’ Compensation Claim of this nature attract.

4.         Alternatively amount claimed in respect of loss or earnings, damages, pain, suffering and loss of amenity be as such amount as assessed by the Court.

5.         That the defendant pay the costs improperly incurred.

6.         That the defendant pay the plaintiff costs.

7.         Such further or other orders as this honourable Court deems fit.”

25                  Mr D Romano, who then appeared for the respondents, complained that the Notice did not appear:

“…to address the issues which the Federal Court had raised in its judgment or indeed which were communicated to him by the Registrar on 15 July 1992 in the letter sent to Mr Titan in accordance with your directions.”

26                  His Worship correctly noted that the document raised a claim for damages for negligence arising out of the alleged failure of the respondents to progress the 1976 claim and to deal effectively and efficiently with the 1980 claim.  It also sought the kind of remedies referred to in O 65 r 8.

27                  The matters raised in the “Cross-Claim” were apparently relevant to the allowance or not of costs on the ground of “misconduct”.

28                  Unfortunately, it was at that point that his Worship fell into error.  The appellant asserted that the Full Court had “sent the case back for rehearing of the special claim”.

29                  His Worship disagreed.  He said:

“…all they have sent back is the question of the bill.  They have not sent back the actual action.”

30                  A perusal of the reasons of the Full Court makes it clear that the judgment entered by the learned Magistrate was set aside.  The action was remitted back “for further hearing and determination”.  Regrettably, the understanding of his Worship and Mr Romano was incorrect.  The appellant’s understanding was correct.

31                  There had been, at the time of the determination by the Full Court, no Cross-Claim filed, though the reference to O 65 r 8 probably raised the same issues, as the Cross-Claim did, albeit somewhat confusingly.

32                  The appellant had, also, in an affidavit dated 12 August 1992, identified the items detailed in the bill which he disputed as the Full Court suggested he should.

33                  His Worship decided to refer the disputed items to the Registrar of the Magistrates Court for report.  The appellant attempted to raise with his Worship the issue of his Cross-Claim.

34                  His Worship said:

“The cross-claim does not interest me, Mr Titan.  If you want to see (sic – “sue”) Mr Romano or Romano & Co then you can do that but you cannot, in this action.”

35                  The appellant, understandably, asked:

“…why not?”

36                  His Worship replied:

“Because I take the view that Gallop J’s decision, that was repealed (sic – “appealed”) against from me, relates only to the bill of costs…

…and the other question raised by you was not decided by his Honour and still may well be on foot and I do not propose to hear any more from you about that, Mr Titan.”

37                  However, whilst his Worship declined to entertain the cross-claim, he did go on to recognize that the “other question”, ie misconduct, “may well” be outstanding.

38                  It appears that, following his Worship’s referral of the disputed items to the Registrar, Mr Mark O’Neill, then Senior Deputy Registrar, undertook an enquiry.

39                  He referred the disputed items to the respondents for comment on 20 April 1993.  For some reason it does not seem to have been received by them until 10 May 1993.  However, they responded on 26 May 1993.  They took issue with the appellant’s assertion as to what their instructions had been but did not address the particular items challenged save to assert, in general terms that the total was reasonable.  They did detail, albeit inaccurately, disbursements which had been made, as Mr O’Neill had requested.

40                  Mr O’Neill responded on 15 June 1993.  He asked for details of costs incurred, payments made and file notes detailing work done.

41                  It is not clear what happened to that letter.

42                  There was also a “summary sheet” prepared by Mr O’Neill setting out calculations of allowable costs and disbursements totalling $3,129.16.  It is not clear whether that “summary sheet” was referred to the parties.

43                  It seems reasonable to infer that this summary sheet represented Mr O’Neill’s view as to the amount which ought to have been allowed had the items claimed represented work done by the respondent in reasonable execution of the appellant’s instructions.  It did not purport to address issues relevant to the consequences of any “misconduct” alleged by the appellant.

44                  For whatever reason, the matter then fell into some kind of “black hole”.

45                  The appellant, not having heard anything in the meantime wrote to the Magistrates Court Registry on 21 September 1994.  There was no reply.

46                  The appellant wrote again on 9 February 1995, seeking, within fourteen days, a “Certificate of Taxation”.

47                  Again, there was no response.  Accordingly, on 5 August 1996, the appellant inspected the file and noted thereon copies of the documents prepared in 1993 by Mr O’Neill.

48                  The appellant then, on 4 June 1997, spoke to another Deputy Registrar, Mr George Hardiman.  He was advised by Mr Hardiman that Mr O’Neill’s recommendations would soon be put before the Court.  He would be notified of further developments.

49                  Again there was a period of unexplained delay.  On 6 April 1998, the appellant received a letter from Senior Deputy Registrar Witchard.  It was dated 23 March 1998.  The appellant had gone overseas on 2 March 1998.  Ms Witchard advised that she proposed to conduct:

“…an assessment of the Plaintiff’s bill of costs at 2.30pm on Tuesday 28 April 1998 and invite you to attend that assessment so that you may identify the items in the bill of costs that you dispute and the grounds upon which you dispute those items.  After the assessment the matter will need to be relisted before Magistrate Somes for a final order.”

50                  It is apparent from the terms of this letter that, unsurprisingly, the erroneous impression that Magistrate Somes had gained, only the quantum of the bill remained to be determined, was shared by Ms Witchard.

51                  The appellant asked, by letter of 6 April 1998, for an adjournment.  On 21 April 1998 that request was acceded to.  A notice of that date adjourned the “proceedings” to 4 June 1998 at 2.30pm.  However, the appellant did not become aware of that adjournment until after he had cut short his overseas trip and returned to Canberra.

52                  It was not until that same day that the appellant filed “Notice of Objection”.  It contained five pages of objections both general and specific.  He invoked O 65 r 53 of the rules of the Supreme Court.  That provides:

“          On every taxation the taxing officer shall allow all such costs, charges, and expenses as appear to him or her to have been necessary or proper for the attainment of justice or for enforcing or defending the rights of any party, but save as against the party who incurred the same, costs shall not be allowed which appear to the taxing officer to have been incurred or increased through over caution, negligence, or mistake, or by payment of special fees to counsel or special charges or expenses to witnesses or other persons, or by other unusual expenses.”

53                  It will be observed that O 65 r 53 covers similar issues to O 65 r 8.  That is, negligence, misconduct and incompetence affecting the allowance of costs.

54                  The hearing commenced at 2.30pm.  Mr Romano appeared for the respondents.  There was some dispute as to which bill should be assessed.  As a result of that dispute, it seems, Mr Titan took umbrage and left the hearing room.  It seems that Mr Romano then decided also to leave.  Thus the hapless Senior Deputy Registrar was left to assess some version or other of the respondent’s bill without any assistance save, if, despite Mr Romano’s objection to her doing so, she had regard to the appellant’s written objections.

55                  Nevertheless, Ms Witchard proceeded to make an assessment.  She concluded, as expressed in a letter signed by her on 17 June 1998, that $3,203.84 was “fair and proper”, and said:

“I confirm that, in accordance with the order of the Federal Court, I have forwarded a report to the Magistrate for final adjudication.”

56                  10.30 am on 30 June 1998 was appointed for that purpose.

57                  The hearing commenced on that day before Magistrate Somes.  His Worship noted that Ms Witchard had reported that “the proper figure is $3,203.84”.

58                  The appellant told his Worship:

“I object on that decision, your Worship.  I don’t accept that.

HIS WORSHIP:           As I understand it that was what the Federal Court suggested ought to be done.

MR TITAN:                 Yes, your Worship.  I am entitled to receive the reasons for decision which I did not receive with the decision she made, that is, Ms Witchard.  There are claims made in the bill, of course, which are not … properly addressed by Ms Witchard.

HIS WORSHIP:           What?  Going back to the dispute as to whether Mrs Romano had instructions in the workers compensation matter[?]

MR TITAN:                 Not only that.  Items which are related to a brief to the council (sic – “counsel”).  Two quantums which I never requested that be provided to me by the solicitor.  There’s a lot more than that your Worship.”

59                  It may be observed that the appellant was raising issues other than the reasonableness of the charges made by reference to the appropriate scale for such work or even whether work was in fact performed.  He was also seeking to dispute whether he had instructed the respondents to do all they had done and whether they had failed to do what they had in fact been instructed to do.  His Worship, however, dismissed that objection.

“HIS WORSHIP:         Ms Witchard reports to me that she has inquired into the disputed amounts and has assessed the bill in that figure.  That, as I understand it, is what was required by the Federal Court.  The matter has to end at some point in time, Mr Titan.  It can’t go on forever.”

60                  His Worship then entered judgment for $3,203.84 plus costs and interest.

THE SUPREME COURT APPEAL

61                  Not surprisingly, the appellant was not content with that result.  He filed Notice of Appeal to the ACT Supreme Court on 20 July 1998.

62                  He complained, in that Notice that:

·                    The learned Magistrate had failed to inquire into and decide upon the ground of misconduct or upon the Cross-claim.

·                    Neither the learned Magistrate nor the Senior Deputy Registrar had provided any reasons for the decision.

·                    The learned Magistrate had declined to examine or interfere with the conclusion expressed by the Senior Deputy Registrar.

(There were other grounds expressed not relevant for present purposes).

63                  The grounds were further explained in an affidavit dated 20 June (sic “July”) 1998.

64                  The appeal was heard before Miles CJ on 12 November 1998.  Again, the appellant appeared in person, as he did in this Court.

65                  Even when the matter was called over, the appellant complained that his Worship had not given him the reasons for the “decision of the Deputy Registrar investigation”.

66                  He also complained in his submissions of the decision to award pre-judgment interest, pointing out that it had not been his fault that the matter had taken so long to get to a final adjudication.

67                  The appellant’s submissions, though somewhat confusing, clearly raised issues as to the failure of the respondents, as he perceived it, to act on his instructions concerning his 1976 accident and to act competently and promptly on his instructions concerning the 1980 accident.

68                  His Honour, in the course of argument, recognized the issue as to the lack of reasons for the decision appealed from and the lack of attention given to the issue of “misconduct”.

69                  Mr Romano in his submissions unfortunately confused the question of “misconduct” with a complaint of professional misconduct.  The allegation was in truth of a lack of proper performance of the contract to provide legal services, broadly falling within the same areas as covered by O 65 r 8.  The confusion seems to have arisen because the appellant had, collaterally, unsuccessfully complained to the Law Society of the respondents’ conduct.

70                  Mr Romano did, however, mention in the course of argument that Magistrate Somes had accepted evidence from Mrs Romano the first respondent, that she had never received any instructions from the appellant concerning the 1976 accident.  If that was so, there is no reference to such a finding in any of the material before this Court.  It may have been a finding which Mr Romano took to be implicit in Magistrate Somes’ general acceptance of the first respondent’s evidence.  It is not even apparent that the significance of that factual issue was appreciated by his Worship.  Given the confused manner in which both sides presented their cases this is not unlikely.

71                  Mr Romano did request of his Honour, again in argument, that, if the issue of “misconduct” or of other matters raised in the Cross-claim were to be considered, some guidelines should be propounded for the assistance of the Magistrate.

72                  However, Mr Romano’s central submission was that the issue raised might simply be resolved by taxation of the bill presented to ascertain the reasonableness of the charges made, even if the appellant’s complaint as to lack of reasons was upheld.

73                  His Honour raised with the appellant a question as to whether he could raise a cross-claim “after judgment had been given against you”.  That question appeared to overlook the effect of the order of the Federal Court which had set aside that judgment and referred the matter back for rehearing.  The appellant replied by insisting that his cross-claim was “pursuant to O 65 r 8”.  This was not directly responsive to the question his Honour had raised.

74                  His Honour reserved his decision, delivering the same on 4 December 1998.

75                  In those reasons his Honour held that the Senior Deputy Registrar had not been required to provide reasons for her allowance or not of the items specified in the bill upon which she reported.

76                  His Honour distinguished Titan v Babic (11 October 1995, Federal Court of Australia, Finn J, unreported).  In that case Finn J had ruled that on a review of taxation, the taxing officer was obliged to give reasons when considering objections to the taxation of costs at first instance following that initial taxation.  Referring to the procedure for taxation of a solicitor/client bill under the LP Act, his Honour observed:

“There is no express requirement that the Registrar give reasons, although no doubt he or she will do so as a matter of common sense and discretion in relation to matters or items which require reasons.  Any reasons do not necessarily need to be in writing.  They might be given as the taxation proceeds.”

77                  His Honour further observed that, had the appellant not absented himself, he may well have had the benefit of reasons as the procedure progressed.

“By his own actions, for which I am unable to detect any justification, Mr Titan deprived himself of that opportunity.”

78                  Noting that the Senior Deputy Registrar’s report was akin to a referee’s report, his Honour referred with approval to the statement of Cole J in Chloride Batteries Australia Ltd v Glendale Chemical Products Pty Ltd (1988) 17 NSWLR 60, 67.

“The Court will have regard to the futility of a process of re-litigating an issue determined by the referee in circumstances where parties have had an opportunity to place before the referee such matters as they desire.  It will also have regard to cost.  If the report shows a thorough, analytical, and scientific approach to the assessment of the subject matter of inquiry, the court will have a disposition towards acceptance of the report, for to do otherwise would be to negate the purpose of and the facility of referring complex, technical issues to independent experts for inquiry and report.  This disposition may be enhanced in circumstances where the parties, as a consequence of the operation of R 8, have had the opportunity to place before the referee such evidence and technical reports as they may wish.  The court may be more hesitant in its disposition if the report is provided by the expert in the absence of the parties having been given such an opportunity.  The disposition must always yield to the requirements of justice, if it becomes apparent for any reason than to adopt the report would result in an injustice or unfairness to a party.  These matters reinforce the view that each matter requires its own consideration.”

79                  His Honour considered that the appellant, notwithstanding the lack of reasons, had had a fair and complete hearing of his objections.  The appeal was dismissed.

THE FURTHER APPEAL

80                  An appeal to this Court was filed on 23 December 1998.  Six grounds of appeal were specified:

“1.       The appellant appeals from the whole of the judgement of the Supreme Court of his Honour Chief Justice Miles given on 4 December 1998 at Canberra.

GROUNDS

2.                  The learned Chief Justice was wrong in law in holding:

(a)               in reaching his decision the learned Chief Justice placed excessive reliance on the conclusions, of the Magistrate Mr Somes in stating that the matter could not go on forever in failure to give relevant reasons;

(b)               he failed to accept the evidence and argument of the appellant that the enquire conducted by the deputy magistrate Mr O’Neill was completed and report prepared in 1994 in accordance with the order made by the Magistrate Mr Somes on 25 March 1993.

(c)                he failed to enquire why the Magistrate Mr Somes proceeded to make a final judgement on the second report which was prepared by the legal officer WITCHARD on 17 June 1998 some 5 years later and not on the report completed by the Deputy Registrar Mr O’Neill in 1994 without order being made or he gave reasons for rejecting that report or releasing copy to the appellant.

(d)               he failed to take into account the fact that the Romano & Co. did not provide any relevant evidence in reply to the request made by the Deputy Registrar Mr O’Neill in letter to Romano & Co. dated 15 June 1993 in absent of that evidence the decision of the assessment of the Respondents bill of costs by the Legal Officer on 17 June 1998 is not fair, reasonable or proper.

3.                  There was no request made by the Deputy Registrar to the appellant to attend the assessment of the respondents bill of costs prior to the 28 April 1998.

4.                  He failed to take into account that on 4 June 1998 in office of the Legal Officer 50 minutes has gone past before the appellant left office.  In that time the objections were made by Mr Romano to Legal Officer to the assessment of the bill of costs on the grounds that the assessment was completed and recommendations to the Court were made by the Deputy Registrar Mr O’Neill some years ago.

5.                  In accepting the fact that the misconduct is a common ground and that the notice of cross-claim did made out grounds of misconduct by the respondents he ought to direct the appellant to file relevant documents.

6.                  Miscarriage of Justice;”

81                  Those grounds seem to raise the following issues.

·                    Whether the learned Magistrate, before acting upon the report of the Senior Deputy Registrar was obliged to ascertain the reasons for the report and to communicate those reasons to the parties for submission or further hearing.

·                    Whether the learned Magistrate, before acting upon the Senior Deputy Registrar’s report should have enquired into the “misconduct” issue to disallow or set-off any of the costs otherwise allowable.

·                    Whether the learned Magistrate should have entertained the appellant’s Cross-Claim.

·                    Whether the learned Magistrate should have acted upon the “assessment” made by then Senior Deputy Registrar O’Neill in 1993.

82                  Of course, this matter is not an appeal from the learned Magistrate.  Those issues are relevant only insofar as Miles CJ was in error in declining to correct any error made by the learned Magistrate.  The appeal before his Honour was an appeal by way of rehearing.

THE OBLIGATION TO GIVE REASONS

83                  It has already been noted that there was confusion as to the effect of the Full Court’s orders of 2 November 1990.  That was compounded by the lengthy and unexplained delay in the finalisation of the rehearing in the Magistrates Court.  There was also confusion as to the role of the Deputy Registrars.  In the Magistrates Court Deputy Registrars do tax costs awarded by the Court.  In some cases, particularly Workers Compensation cases, this is on the Supreme Court scale.  A Deputy Registrar would therefore, have been an appropriate referee to report on the bill submitted by the respondents, including, if necessary, reporting on the application, by analogy, of O 65 r 8 (and similar rules in O 65) of the Supreme Court Rules (ACT).

84                  The reference as made, initially to Mr O’Neill and then to Ms Witchard, was not specific as to the task to be performed.  Each seems to have approached it on the basis that it would simply be an assessment of the reasonableness of the bill and whether the work was performed as claimed in it.  That may well have sufficed had the court itself undertaken an enquiry as to the issues raised by the appellant under the perhaps inaccurate title of “misconduct”.

85                  The process undertaken by Mr O’Neill, though not completed, was to seek details and corroboration of attendances etc. from the respondents.  The process Ms Witchard undertook is quite unexplained.  She made, it would seem, simply an assessment of the reasonableness of the charges made by the respondent.  The amount she recommended, $3,307.95, is different from the figure arrived at by Mr O’Neill in his draft assessment.  That was $3,129.16.  How that difference is explained does not emerge.

86                  Nor, it follows, does it appear why the sum recommended by Ms Witchard differs from the sum claimed ($4,057.95), though the difference, $750, is the same figure as Mr Romano had previously conceded should be disallowed during the hearing before Magistrate Somes on 12 July 1989.

87                  These differences are relevant only to a conclusion that, even without regard to the misconduct issue or any set-off otherwise allowable, the consideration of the allowance or not of items claimed, even absent the appellant’s written objections, was not a straight forward or automatic process.

88                  Given the objections of 4 June 1998, it is not clear whether the Senior Deputy Registrar considered and dismissed them, or, as some would have required the resolution of plainly contested questions of fact, regarded them as questions to be resolved by Magistrate Somes.

89                  It was, of course, not necessary for his Worship to have given reasons for accepting the Senior Deputy Registrar’s report, if the report itself had explained her reasons for allowing or not the items challenged by the appellant.

90                  However, in the absence of such reasons, it was not possible for his Worship to have determined:

“If the report shows a thorough, analytical, and scientific approach to the assessment of the subject matter of inquiry…”

(see Chloride Batteries Australia Ltd v Glendale Chemical Products Pty Ltd (1988) 17 NSWLR 60, 67 per Cole J).

91                  That is the difference in this case from the process of approval of the referee’s report in Cape v Maidment & ors (1991) 103 FLR 259.  In that case the report was fully supported by detailed reasons.

92                  Further, this matter does not merely involve performance of an administrative process.  It requires adjudication according to law and the determination of disputed questions of fact (cf. Public Service Board (NSW) v Osmond (1986) 159 CLR 656).

93                  The duty to give reasons or, at least, cause them to be given, is one which certainly applies to the ACT Magistrates Court - see Doyle v Ranse (1991) 103 FLR 419.

94                  Whilst it is correct to observe, as his Honour did, that the appellant had deprived himself of the opportunity to hear reasons from the Senior Deputy Registrar herself, that does, with respect, overlook the primary purpose in that context of those reasons.  The process adopted needed not only to inform the parties of the reasons for and the scope of the report made to the Magistrate but also to inform the Magistrate of those reasons so as to enable him to determine to adopt or not the report in whole or part.

95                  Further, whilst the process was analogous to that adopted in the taxation of a bill of costs, it was not analogous to the original taxation.  It was more analogous to a review of a taxation.  The appellant had been invited to specify his objections.  He had done so in writing, albeit at the last moment.  Presumably, some kind of ruling was made thereon.  If O 65 r 54 had been applied, reasons would have been expressly required to support rulings on such objections.

96                  Indeed, the appellant himself had been involved in such a process in a related matter – Titan v Babic (11 October 1995; Federal Court of Australia; Finn J; unreported).  Finn J in that case, said:

“(p 17) The obligation to give adequate reasons is an important one to uphold if public confidence – but more importantly the confidence of litigants – is to be maintained in our courts and their processes.”

97                  Those remarks are equally applicable to the officers of a Court undertaking an exercise such as a review of a taxation.

98                  That obligation is an express one in the case of a review process where a party has specified objections to the allowance of items in a bill and asked for those objections to be determined.  Whilst no such express obligation was placed upon the Senior Deputy Registrar in this case, the appellant was entitled to assume both from the general obligation on the Magistrates Court to give reasons and, by analogy, from O 65 r 54, that reasons would be given by the Senior Deputy Registrar in support of her recommendation.

99                  I would, therefore, respectfully differ from the conclusion expressed by Miles CJ that reasons were not required to be given for the dismissal in whole or part of the appellant’s objections.  Nor was it a sufficient answer that the appellant might have stayed and heard reasons given by the Senior Deputy Registrar as she proceeded.  It would still have been incumbent on the learned Magistrate to evaluate those reasons for himself.  He could not form any view about them unless he knew what they had been.

THE MISCONDUCT ISSUE

100               It seems reasonably clear that neither the Senior Deputy Registrar nor the learned Magistrate regarded this as a live issue.  They took the view that the issue was foreclosed by the Full Court decision of 2 November 1990.  That was an error.  It followed that the appellant was denied the opportunity to call or challenge evidence relevant to that issue.

101               Although the appellant expressly raised his dissatisfaction with the fact that his claims as regards “misconduct” were not dealt with, they are not adverted to in the reasons given by Miles CJ.  Given the confused manner in which both sides made their submissions, it seems that the issues raised in the “Cross-Claim” was simply equated with a cross-claim for damages for negligence and regarded as irrelevant.

102               The appellant should have had the opportunity to call such evidence as he may have considered relevant to the “misconduct” issue.  He should, of course, be obliged first to particularise that claim, though in large measure he has done so.

103               The issue of the “Cross-Claim” is more problematic insofar as it goes beyond a mere set-off (if that is what it is intended to do).

THE CROSS-CLAIM

104               It was assumed that it was not appropriate for the learned Magistrate to have entertained the appellant’s Cross-Claim.  Two reasons emerged supporting that view.  The first was that it was “after judgment”.  That objection was based on the misconception that the Full Court orders of 2 November 1990 precluded the appellant raising a cross-claim or set-off.  Of itself, as has already been noted, it did not.

105               The second was that to allow the Cross-Claim to be litigated would have been to permit a statute-barred cause of action now to proceed.

106               Section 47 of the Magistrates Court (Civil Jurisdiction) Act 1982 permits a defendant “in his or her notice of grounds of defence” to claim a set-off.  Section 48 similarly permits a “cross-claim” to be pleaded in the notice of grounds of defence.  A cross-claim cannot exceed the amount the Court can award but, under s 49, the surplus over that limit ($50,000) can be abandoned.

107               Section 37 permits a defendant to, “at any time before final judgment is entered in the proceedings, file a notice of grounds of defence”.

108               Thus, there was no discretion to reject the appellant’s “Notice of Cross-Claim” if it was intended as part of his notice of grounds of defence.  If it was considered inadequate or otherwise defective, it could be struck out in whole or part under s 113.  However, unless it was plainly unarguable, leave to amend the notice of grounds of defence could be granted pursuant to s 126 of the Act.

109               So far as the Limitation Act 1985 is concerned s 51 provides:

“Where in an action (in this section called the “principal action”), a claim is made by way of set off, counterclaim or cross action, the claim, for the purposes of this Act-

(a)               is a separate action; and

(b)               is, as against a person against whom the claim is made, brought on the only or earlier of such of the following dates as are applicable-

(i)                  the date on which he or she becomes a party to the principal action; and

(ii)        the date on which he or she becomes a party to the claim.”

110               The respondents commenced this action on 19 July 1988.  At that date, whilst the appellant was out of time to sue his employer in relation to the 1976 accident, he was not out of time to complain of negligence predating his termination of the respondents’ instructions if, for example, he had instructed them to sue on the 1976 accident as he claims.  It follows that, insofar as the appellant’s Cross-Claim was procedurally irregular, he could have been required to amend his Notice of grounds of defence to include his set-off and/or Cross-Claim.  However, insofar as the Notice of Cross-Claim raised a new cause of action it was not then, or now, necessarily statute-barred.

111               The Notice of grounds of grounds of defence (and set-off or cross-claim) should be put into proper form and particularised.  The action must then be heard and determined after the respondents have replied to it so as to define the issues to be heard and determined.

112               This appeal must be upheld.  That is done with some reluctance.  The appellant has been both obstructive and unreasonable in his approach to this litigation.  However, the errors identified are such as to require that the judgment appealed from be set aside.  In lieu thereof the judgment entered in the Magistrates Court must also be set aside.

113               The matter must be remitted to the Magistrates Court to be heard according to law.

114               Whilst the majority do not agree that specific directions ought to be given.  I would respectfully suggest that whilst leaving the Magistrates Court to exercise appropriate discretions, the following matters deserve consideration.

·                    The notice of grounds of defence should be re-pleaded to include the objections to the specific items in the bill of costs which are challenged and the grounds for those objections (that is, to include the substance of the “Notice of Objection to a Bill” of 4 June 1998).

·                    The defence should include any set-off or cross-claim relied upon (the two are not mutually exclusive) (that is, to include the substance of the “Notice of Cross-claim” of 12 August 1992).

·                    If it is decided to make a reference to the Registrar or a Deputy Registrar the terms of that reference should be specified precisely.

·                    The report (if any) of any referee, including reasons for any conclusion, should be considered by the presiding Magistrate, in the light of any objections by the parties, and the report then adopted or otherwise as the Magistrate considers appropriate.

·                    Insofar as issues relating to the set-off or cross-claim are not considered by the referee, the Magistrate presiding should hear evidence on and determine those issues.

115               The appeal must be upheld.  The judgment and orders appealed from should be set aside and the matter remitted back to the Magistrates Court for rehearing.  The respondents should pay the appellant’s costs of this and the preceding appeal to the Supreme Court.  The costs of the proceedings in the Magistrates Court should be reserved to that Court to make such order as it considers appropriate after the rehearing.

116               In the circumstances I would, should the respondents so apply, support the grant of a costs certificate to them pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth).  That certificate should, in accordance with s 11 thereof include costs incurred in the appeal to the Supreme Court.

Associate:

Dated:              10 April 2000

ON APPEAL FROM A JUDGE OF THE SUPREME COURT OF

THE AUSTRALIAN CAPITAL TERRITORY

REASONS FOR JUDGMENT

GYLES J:

117               I have had the advantage of reading the reasons of Higgins J in draft.  I gratefully adopt his recounting of the sorry tale of this litigation.  It is with considerable regret that I am compelled to agree with the conclusion of Higgins J that the appeal must be allowed because of the failure to give reasons, and the matter remitted to the Magistrates Court for rehearing.  I am not persuaded, however, that this Court should give any directions about the conduct of that rehearing. 

118               In the first place, I am anxious to avoid any suggestion that this case should be treated in any special or unusual way so as to distinguish it from any ordinary claim for remuneration for work done, notwithstanding its bizarre procedural history.  In particular, I would do nothing to encourage the referral out of any of the questions at issue.  In my opinion, that apparently reasonable suggestion, in the event, contributed to the unfortunate history of this matter since 1990.  The fact that the claim for work done happens to be by a solicitor rather than an architect or a plumber is of no consequence.  Indeed, in my opinion, the evidence given in the original hearing by Mrs Romano and Mr Clapham constituted a perfectly good case subject to it being tested in cross-examination and answered by countervailing evidence.  Often what appears to be the longest road is the shortest way home.

119               In the second place, I am troubled by what has become known as the misconduct issue.  The ground of appeal to this Court which went to that point was in the following terms:

“5.       In accepting the fact that the misconduct is a common ground and that the notice of cross-claim did made out grounds of misconduct by the respondents he ought to direct the appellant to file the relevant documents.”

120               The notice of appeal to the Supreme Court included the following:

2.                  The learned Magistrate Mr Somes was wrong in law in holding:

(a)               That in further hearing and determination of the Special Claim for legal costs of the respondents herein on 25 March 1993 pursuant to the Order and directions made by the Full Court of the Federal Court of Australia in Australian Capital Territory on 2 November 1990 his Worship refused to hear the alleged “MISCONDUCT” in grounds of appeal No. 2(b) to that Court and the grounds to the Court below and therefore refused the application of CROSS-CLAIM pursuant to the O.65 r 8, 43, 44, 52 of the Supreme Court Rules ACT.

(b)               …”

121               This ground encompasses two issues – what was said to be misconduct, which was referred to in the decision of the Full Court as arising on the grounds of defence which had been filed; and the question of a cross-claim said to be pursuant to O 65 of the Supreme Court Rules (ACT).

122               Whilst it is not completely clear on the material before us, on the initial appeal to the Supreme Court apparently one ground of appeal could shortly be described as “misconduct”.  In that extract of the judgment of the Supreme Court which is set out in the Full Court reasons, it appears that, in relation to that ground, the appellant relied on O 65 of the Supreme Court Rules (ACT), and it appears that the appellant was seeking to bring forward fresh evidence on that point.  This was rejected by the Supreme Court.  Reference to O 65 was and continues to be inappropriate as it had and has no application to the Magistrates Court. 

123               What the Full Court said was as follows:

 “We have not dealt with the appellant’s ground of appeal No. 2(b) relating to alleged misconduct by the respondent.  The ground of appeal was not fully argued before this Court and it is unnecessary for the purpose of disposing of the appeal to deal with the substance of the claim of misconduct.  In our view, however, the Magistrates Court should have regard to any evidence on the subject as it is relevant under O.65 r.8 of the Supreme Court Rules and give the matter such effect and weight as seems appropriate.”

124               At that stage, particulars 1, 2 and 3 of the defence which had been filed, and which are set out in the reasons of Higgins J, referred somewhat obliquely to an issue of fact between the parties as to whether the respondents were instructed by the appellant at all in relation to the 1976 accident and the consequences which flowed from that.

125               Those issues were certainly not dealt with in the Magistrates Court on the remitted hearing, and there is no doubt that this was because, as Higgins J has pointed out, there was a misunderstanding about the effect of the Full Court order by the Magistrate.  This failure was complained about in the ground of appeal to the Supreme Court to which I have referred, but was not expressly dealt with in the judgment of that Court.  This, in turn, is now complained of in this appeal.  Having read the transcript of the proceedings before the Magistrate and before the Supreme Court, there is no doubt that the appellant maintained his right to have those issues determined at all times.

126               The question has become confused because of the informal filing of a document headed “Notice of Cross-Claim”.  The manner in which this document was dealt with in discussion between the Magistrate and the parties was certainly affected by the mistaken view the Magistrate took as to the scope of the proceedings which had been returned to the Magistrates Court pursuant to the order of the Full Court.  However, as the examination of the Magistrates Court (Civil Jurisdiction) Act 1982 (ACT) by Higgins J shows, the document was truly informal as the Act made no provision for it.

127               It is true that s 37 provides that a defendant may file a notice of grounds of defence at any time before final judgment is entered.  However, once filed, the defence can only be amended pursuant to s 126.  That power of amendment is affected by s 135, which provides:

“135.   Statutes of limitation

            Subject to this Part, where any relevant period of limitation has expired after proceedings were instituted and, after that expiration, the plaintiff applies for leave to amend his or her claim by making an amendment referred to in any of the succeeding subsections, the court may, in accordance with the relevant subsection, make an order giving leave accordingly notwithstanding that the period has expired.”

I cannot see that any of the remaining subsections apply.  Whilst s 135 does not limit the power of the Court to grant an amendment under s 126 it remains relevant to the exercise of that power.  Without fully exploring the law on that topic, the prejudice to the respondents in permitting what amounts to a new cause of action which is statute-barred in circumstances not authorised by s 135 would be either decisive against exercising the power to permit the amendment, or at least a powerful consideration against it (Harris v Western Australian Exim Corporation (1994) 56 FCR 1; Rodgers v Commissioner of Taxation (1998) 88 FCR 61).

128               To raise a cause of action for damages for professional negligence is a very different thing from raising issues as to the recoverability of parts of a bill of costs pursuant to a defence, although there might be some overlap on the facts.  In the present case, if, when the matter is returned to the Magistrates Court, an application were made to amend the defence to include a cross-claim along the lines foreshadowed, then there would be serious questions to consider.  At that stage, the alleged negligence would have been committed more than 17 years before, the issue having been first raised about ten years after the alleged negligence - in each case well after the expiration of the relevant limitation period.  The circumstance that s 51 of the Limitation Act 1985 (ACT) provides as it does is a reason for refusing such an amendment rather than the contrary.

129               In my opinion, this Court should not make a ruling in advance as to an application not yet made which it is the province of the Magistrates Court to decide.  So far as I am concerned, the Magistrates Court, when the matter is remitted, should proceed to hear and determine it on the pleadings as they stand.  Any application for amendment which is made should be considered upon its merits, in accordance with normal principles, by that Court.

130               I would propose the following orders:

1.                  Appeal allowed.

2.                  In lieu of the order of the Supreme Court, order that the decision of the Magistrates Court given 30 June 1998 ordering judgment in favour of the respondents should be set aside and the matter remitted to the Magistrates Court for rehearing.

3.                  That the respondents pay the costs of the appellant of this appeal and of the appeal to the Supreme Court.  The costs of the first hearing should be reserved for order by the Magistrates Court after the rehearing.

Associate:

Dated:              10 April 2000