FEDERAL COURT OF AUSTRALIA

Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus (No 5) [2009] FCA 1221

PRACTICE AND PROCEDURE — review of Registrar’s decision — de novo review — potential to fragment the taxation process — referral of outstanding issues to mediation

Held:  Mediation ordered    

Federal Court of Australia Act 1976 (Cth) s 53A

Federal Court Rules O 62 r 11

Legal Practitioners Act 1981 (SA) s 42(6)

Boys v Australian Securities Commission [2001] FCA 1440, cited

Cachia v Westpac Financial Services Ltd [2003] FCA 817, cited

Catto v Hampton Australia Ltd (In Liq) [2008] SASC 231, referred to

Miller v Wertheim [2004] FCA 988, referred to

Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus [2007] FCA 1878, referred to

Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus [2007] FCA 2117, referred to

Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus (No 3) [2008] FCA 1986, 69 ACSR 264, referred to

Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus (No 4) [2009] FCA 1085, referred to

Pacific Dunlop Ltd v Australian Rubber Gloves (unreported, FCA, Olney J, 17 August 1993), cited

Twigg v McIlwraith (1988) 89 FLR 473, cited

MOTOR TRADES ASSOCIATION OF AUSTRALIA SUPERANNUATION FUND PTY LIMITED (aCn 008 650 628) AND ANOR v JOHN RICKUS

ACD 36 of 2007

FLICK J

28 OCTOBER 2009

SYDNEY

THE COURT ORDERS THAT:

1.                  The parties are to bring in short minutes of proposed orders within 14 days to give effect to these reasons.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT
(Revised from Transcript)

1                     The litigation between the present parties has been ongoing for a considerable period of time. A number of judgments have already been given: Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus [2007] FCA 1878; Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus [2007] FCA 2117; Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus (No 3) [2008] FCA 1986, 69 ACSR 264; Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus (No 4) [2009] FCA 1085. The facts giving rise to the litigation need not be now repeated.

2                     At the comparative outset of the litigation, on 26 November 2007, orders were made that the Motor Trades Association of Australia Superannuation Fund Pty Ltd (“the Trustee”) was to pay the costs of Mr Rickus “forthwith” and that such costs were to be paid on an indemnity basis: Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus [2007] FCA 1878.

3                     It gives rise to a considerable degree of disquiet to learn that the making of those orders is still occasioning dispute between the parties.

4                     That part of the dispute which presently manifests itself is an application by the Trustee to review a decision of a Deputy District Registrar of this Court. On 18 June 2009 Deputy District Registrar Cujes made orders that:

1. The full taxation proceed on the basis there exists a valid retainer agreement between the First Respondent (Mr Rickus) and his legal representatives for the purposes of the proceedings.

2. The First Respondent is granted leave, pursuant to Order 13 sub-rule 2(1) of the Federal Court Rules, to file and serve an amended bill of costs.

Those orders were accompanied by a letter from the Deputy District Registrar also dated 18 June 2009 to the solicitors for both the Trustee and Mr Rickus. The letter recorded (in part) what the Deputy District Registrar referred to as her “preliminary oral decision … in respect of … the validity of” a written retainer as between Mr Rickus and his legal advisers. The letter helpfully recorded a finding that “the retainer between Mr Rickus and his lawyers was partly oral, partly written and/or partly to be implied by conduct”. Reference was made by the Deputy District Registrar to s 42 of the Legal Practitioners Act 1981 (SA) and to a decision of the Full Court of the Supreme Court of South Australia in Catto v Hampton Australia Ltd (In Liq) [2008] SASC 231. That decision was relied upon as authority for the proposition that “a successful litigant is entitled to recover from the other party amounts paid by the former in connection with the litigation, notwithstanding the unenforceability of any agreement between the litigant and solicitor…”. The letter concluded:

I would continue to strongly urge the parties to attend a confidential conference or mediation with a view to, at the very least, narrowing and refining the issues in dispute, but hopefully reaching settlement on a commercial basis.

5                     The Trustee’s application for review invokes O 62 r 11 of the Federal Court Rules which provides as follows:

Every taxation of costs and every decision of a taxing officer shall be subject to review by a Judge.

6                     In summary form, the Trustee seeks to contend that:

·                    the Deputy District Registrar’s decision is beyond power; and is, in any event

·                    wrong as a matter of law.

Counsel for Mr Rickus contends that:

·                    a letter dated 16 November 2006 from Mr Rickus’s legal advisers extends beyond an agreement as to the provision of legal advice and extends to an agreement including the litigation the subject of resolution by this Court;

·                    in the alternative, Mr Rickus and his legal advisers agreed to conduct their dealings on the basis of the terms of retainer attached to the letter;

·                    s 42(6) of the Legal Practitioners Act 1981 (SA) is permissive and not mandatory in nature and that s 42(6) does not require a client’s acceptance of a costs agreement to be in written form; and

·                    there is an entitlement to recover such costs as have been paid by Mr Rickus to his legal advisers. It matters not, according to this contention, that moneys were paid after the date of the November 2007 orders.

7                     The Outlines of Written Submissions filed on behalf of Mr Rickus and the Trustee in support of these competing contentions make reference to a myriad of Affidavits. A folder of Affidavits to be relied upon by the parties as filed contained some 13 Affidavits. Three more were later filed. When addressing the question as to whether there was a valid retainer between Mr Rickus and his legal advisers, the written submissions went well beyond a reference to the terms of the 16 November 2006 letter. Reference was made to the area of practice of the solicitor named in the letter, the Minutes of meetings at which the Trustee was advised as to the intent of Mr Rickus to obtain legal advice and discussions which apparently took place at the time when Mr Rickus was initially seeking advice. It may be doubted that such evidence would have assumed any relevance had it ultimately been relied upon.

8                     At the outset of the hearing this morning, however, the ambit of the evidence was considerably reduced.

9                     It may presently be assumed that O 62 r 11 has been properly invoked. Left to one side is a question as to whether the “preliminary decision” of the Deputy District Registrar, albeit a decision given effect by an order, is a “decision” within the meaning of r 11. Also left to one side is the question as to whether or not the Deputy District Registrar had power to make the decision that she did or to make the consequential order. Left unresolved is whether or not the Deputy District Registrar should have referred any question as to the validity of a retainer agreement to a Judge of this Court for resolution. That was the course which was said to be appropriate by the Family Court in Twigg v McIlwraith (1988) 89 FLR 473. As recognised by that Court, it was expected “[a]s a matter of commonsense as well as convenience to the litigants” that the question referred “be one of substance”. And it may further be assumed for present purposes that the “review” to be undertaken is a hearing de novo: Pacific Dunlop Ltd v Australian Rubber Gloves (unreported, FCA, Olney J, 17 August 1993); Boys v Australian Securities Commission [2001] FCA 1440 per Carr J. Whether such an assumption is correct, given the reservation expressed by Hely J in Cachia v Westpac Financial Services Ltd [2003] FCA 817, need not be now resolved. See also: Miller v Wertheim [2004] FCA 988.

10                  The amount of money dividing the parties is comparatively small. There was broad agreement for the purposes of this morning’s hearing that:

·                    as at the date of the November 2007 orders, no moneys had been paid by Mr Rickus to his legal advisers;

·                    since the date of those orders, he has paid a sum of approximately $85,000;

·                    if the fees are to be calculated by reference to the Federal Court scale of fees, the amount of fees payable would be approximately $55,000 to $60,000; and

·                    if the fees are to be calculated by reference to the terms of the November 2006 letter, those fees would be approximately $114,000.

The fees incurred this morning, with the Trustee and Mr Rickus both being represented by Senior and Junior Counsel, would have gone a long way to bridging the difference in the amount that will ultimately be paid in accordance with the November 2007 orders.

The principal matter dividing the parties is whether the November 2006 letter extended beyond an agreement confined to the provision of advice and extended to an agreement in respect to the litigation which ultimately followed.

11                  Notwithstanding the care with which the written submissions have been prepared and the other issues there canvassed, it is nevertheless considered that the question as to the construction and application of the November 2006 letter should be now resolved and the matter thereafter referred to mediation. Such an order may be made pursuant to s 53A of the Federal Court of Australia Act 1976 (Cth). The Deputy District Registrar, who has an intimate knowledge of the factual issues by reason of her consideration of the matters to date, urged recourse to mediation. The dispute is eminently suitable for mediation.

12                  The dispute, it is considered, can be more expeditiously resolved by mediation than by a decision of this Court on the limited matters now before it and thereafter further deliberation by the Deputy District Registrar. Further delay will inevitably be occasioned by the taxation process resuming.

13                  Although there was a measure of agreement that mediation may serve a useful purpose if the ambit of the November 2006 letter is to be resolved, an order for mediation may be made irrespective of the wishes of the parties. Section 53A thus provides as follows:

Mediation and arbitration

(1) Subject to the Rules of Court, the Court may by order refer the proceedings in the Court, or any part of them or any matter arising out of them, to a mediator or an arbitrator for mediation or arbitration, as the case may be, in accordance with the Rules of Court.

(1A) Referrals under subsection (1) to a mediator may be made with or without the consent of the parties to the proceedings. However, referrals to an arbitrator may be made only with the consent of the parties.

(2) The Rules of Court may make provision for the registration of awards made in an arbitration carried out under an order made under subsection (1).

In making an order for mediation it is presently envisaged that there should be embraced within that mediation all aspects of any outstanding dispute arising from Orders 1 and/or 2 as made on 26 November 2007.

14                  A further reason in support of an order for mediation, rather than resolving the application for review as now made pursuant to O 62 r 11 on all of the issues canvassed by the Outlines of Written Submissions, is the fact that the taxation exercise presently being undertaken by the Deputy District Registrar has not as yet concluded. Although the discrete nature of the questions sought to be now reviewed may be appreciated, it is considered generally undesirable to undertake a review of an incomplete taxation process. To do so has the potential to fragment that process and potentially encourage a series of like applications to the present — each being (arguably) addressed to an equally discrete “decision”. Such a process, if pursued, would have the potential to unjustifiably deny a party the benefit of an order obtained long ago and expose such a party to a forensic course of attrition pursued by an opponent more committed to securing a settlement than to compliance with the terms of an order. There has been no suggestion, it should be noted, that that is the course now being pursued by the Trustee. Mediation at this stage has the potential to resolve all outstanding matters that divide the parties.

15                  With respect to the November 2006 letter, it is considered that that letter is nothing other than a letter of engagement with respect to the giving of advice. It is not possible to construe that letter as also being a letter of engagement with respect to the subsequent litigation that engulfed the parties. That conclusion is reached by reason of:

·                    the subject-matter summarised at the outset of the letter, namely “Terms of Engagement — MTAA Super, Directorship Advice”;

·                    the terms of the letter expressing the “scope of the engagement” as being “to advise … in connection with your removal from the office of chairman of directors as well as your removal from office as an independent director which the board of directors of the trustee of MTAA Super resolved to give effect to at its meeting held on 10 October 2006”;

·                    the cost estimate quantified at “approximately $5,000.00”; and

·                    the absence of any reference to such matters as would normally be included in a retainer embracing potential litigation, including such matters as anticipated Counsel fees; the expected duration of any litigation; the risks inherent in any litigation; and disbursements associated with litigation.

This conclusion has been reached notwithstanding the fact that the 16 November 2006 letter also refers to:

·                    the costs estimate being “your costs” and the fact that the letter continues on to state in cl 3.4: “Additionally, if your matter is a litigation matter, the Court (in circumstances we can explain to you if you wish) may order you to pay other moneys including the costs of other parties”. There is a further reference to litigation in cl 3.5.

Passing references to “litigation” cannot transform this letter into an agreement as to the terms upon which the solicitors would conduct litigation on Mr Rickus’s behalf.

16                  Even if it were permissible to depart from the terms of the letter itself, it is not considered that such further materials as were referred to by Senior Counsel on behalf of Mr Rickus take the matter any further. In contrast to the Affidavit material filed, that additional material was within a limited compass.

17                  Reference was thus made to instructions given by Mr Rickus on 14 November 2006, two days before the 16 November 2006 letter was forwarded to him. The prospect of litigation had apparently been raised with Mr Rickus prior to 16 November 2006. But the instructions given on 14 November 2006 were confined to instructions “to confer with Mr Moshinsky of counsel as to his availability to accept a brief to represent my interests”. No agreement to retain Counsel in accordance with the terms of the November 2006 letter — or any other terms — can be discerned from the giving of those instructions. Nor is the identification of any agreement as between Mr Rickus and his solicitors to be found in an email forwarded the same day by the solicitors to Mr Moshinsky inquiring in part: “If we need counsel support in this process — would you be prepared to act?”

18                  Nor can any agreement as at November 2007 be discerned from an Affidavit of Mr Rickus sworn on 19 November 2008. The paragraphs of that Affidavit now relied upon merely set forth the reasons why he chose the solicitors he did and the fact that he has continued to retain those solicitors. The final matter relied upon by Senior Counsel on behalf of Mr Rickus to found an agreement is the fact that Mr Rickus is said to be a man experienced in commerce and with a degree of knowledge as to the manner in which solicitors conduct their affairs, that knowledge “including litigious matters”. Knowledge is not agreement.

19                  The November 2006 letter is thus an agreement confined to the terms upon which advice was to be provided. Neither that letter taken on its own — nor in conjunction with the other matters relied upon by Senior Counsel for Mr Rickus — changes the confined nature of the agreement reached as at November 2006.

20                  Although it is with diffidence that consideration is even given to making a further order that anything be done “forthwith” in this litigation, it is envisaged that the mediation that is to take place should occur within the immediate future. Inquiries should be made as to the availability of a mediator suitable to both parties. If agreement is not forthcoming, a list of mediators who are available to conduct the mediation in the immediate future should be provided and one will be selected by the Court.

ORDERS

21                  The Court orders that:

1.         The parties are to bring in short minutes of proposed orders within 14 days to give         effect to these reasons.

Associate:

Dated:         29 October 2009