FEDERAL COURT OF AUSTRALIA

Director of the Fair Work Building Industry Inspectorate v Abbott (No 5)

[2013] FCA 522

THE COURT ORDERS THAT:

1.    Within 14 days, the 221st respondent file and serve an affidavit addressing the following questions:

(a)    All communications, both oral and written, between Gibson & Gibson and the 221st respondent, evidencing any retainer between Gibson & Gibson and the 221st respondent, including an explanation as to who provided instructions to Gibson & Gibson.

(b)    All communications, both oral and written, between Corser & Corser Pty Ltd (Corsers) and the 221st respondent, evidencing any retainer between Corser’s and the 221st respondent, including an explanation as to who provided instructions to Corsers.

(c)    All communications, both oral and written, between Gibson & Gibson and the 221st respondent, evidencing the liability for payment of any fees in relation to fees rendered by Gibson & Gibson in relation to their representation of the 221st respondent, including an explanation as to the addressee of the invoices.

(d)    All communications, both oral and written, between Corsers and the 221st respondent, evidencing the liability for payment of any fees in relation to fees rendered by Corsers in relation to their representation of the 221st respondent, including an explanation as to the addressee of the invoices.

(e)    Proof of payment by the 221st respondent of the costs claimed in the Bill, or alternatively, if there are any litigation funders that have provided assistance to the 221st respondent in the funding of the proceedings which are the subject of the Bill of Costs, details of the litigation funders or interested non-parties, and copies of any third party undertaking or indemnity for costs.

2.    The assessment of the Bill of Costs filed by the 221st respondent, dated 6 February 2013 be stayed until further order.

3.    The application dated 20 February 2013 be further adjourned to a date to be fixed.

4.    Costs be reserved for further submissions.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The applicant seeks orders compelling the 221st respondent to provide information relevant to that respondent’s entitlement to claim costs in the action contained in a Bill of Costs dated 6 February 2013.

Background

2    The Court made orders dated 7 October 2011 in which, by order 4, the applicant was ordered to pay the costs of the 221st respondent to be taxed if not agreed.

3    Although not noted in the extracted orders of that date they were in fact made by the consent of the parties.

4    In June 2012, the present solicitors for the 221st respondent, Corser & Corser Pty Ltd (Corsers), delivered a draft Bill of Costs to the solicitors for the applicant. It was for an amount totalling $174,858.12 comprising professional costs of $72,061.30 and disbursements, including counsel’s fees, of $102,796.82. Part of these costs relate to legal services said to have been rendered to the 221st respondent by his former solicitors Gibson & Gibson who, it seems, also jointly represented the Australian Manufacturing Workers’ Union and a Mr Andrew Holdsworth.

5    The solicitors for the applicant, in a letter dated 30 August 2012, sent to Mr Ronald Bower of Corsers, raised various queries concerning the draft Bill of Costs. In particular, they asked for certain information, including proof that payment of these claimed costs had been made by the 221st respondent. This was stated to be in order to ensure that there had been no breach of the principle that such costs are payable by way of an indemnity for legal fees paid or incurred. The applicant was concerned that the 221st respondent had no actual liability to pay costs to his solicitors. If that were the case then it is contended that there would be no costs recoverable by the 221st respondent.

6    The general written response from the solicitors for the 221st respondent was to engage in debate about the legal authorities, which govern the circumstances in which the indemnity principle will be displaced, such as Adams v London Improved Motor Coach Builders Limited [1921] 1 KB 495 amongst others. Adams appears to be authority for the proposition that the indemnity principle will be displaced only if it is established that under no circumstances does the successful party have any liability to pay costs to their solicitors. The existence of a contract of retainer and the liability of the client for the solicitor’s costs is presumed, and the party who challenges the existence of the retainer in such circumstances bears the onus of establishing the absence of it: Inglis v Moore (No 2) (1979) 25 ALR 453 at 464.

7    The 221st respondent, through his solicitors, also asserted a proposition that in light of these authorities they did not believe that the applicant was entitled to the information which it sought.

8    The applicant’s solicitors disputed the application in Australia of those cases as authority for such a proposition and point, for example, to the approach taken in Noye v Robbins [No 6] [2008] WASC 266. There, EM Heenan J ordered, in circumstances similar, with one exception, to those arising in this case, that the party claiming costs should put affidavit material before the court disclosing all documents comprising the agreement or agreements relating to funding assistance provided to the party who was claiming costs. Leave to issue subpoenas relating to these issues was also given. The exception to which I referred was that in Noye the disclosure orders were made before actual costs orders were pronounced by the court. I do not consider that to be of significance in the present case.

9    Corsers have repeatedly asserted that there was no agreement with their client that under no circumstances would he be liable for costs. For example, Mr Ronald Bower, a lawyer and a director of Corsers, said as much in a letter to the applicant’s solicitors dated 15 October 2012. He also stated that their client was fully liable for Corser’s costs had they not been paid by a third party, as well as for any potential costs orders against him.

10    This last statement served only to increase the applicant’s concern as to the actual contractual relationship between the 221st respondent, each of his two firms of solicitors and the entity, a Union, which I was informed by counsel for the 221st respondent, has actually paid his costs. The applicant pressed its claims to have that information provided in a letter to Corsers dated 17 October 2012.

11    The response dated 31 October 2012 from those solicitors was to repeat that there was no agreement between them and their client to the effect that in no circumstances would he be liable for costs and that he was fully liable for the costs of the proceedings.

12    Next, in a letter dated 28 November 2012, the applicant’s solicitors wrote to Corsers in terms which included:

Evidence of Retainer and Liability

1.    Whilst we acknowledge that the Letter [from Corsers dated 31 October 2012] informs us that Mr Windus [the 221st respondent] was “fully liable for [the] costs of the proceedings”, you have:

1.1    Not established that Mr Windus in fact retained Gibson & Gibson and Corser & Corser (collectively, “the Law Practices”) to undertake the work claimed in the Bill; and

1.2    Failed to provide us with any evidence of Mr Windus’ liability for the Costs.

2.    As an agency of the Commonwealth, our client is unable to authorise the payment of costs until it is able to demonstrate a legal liability to pay those costs.

3.    Accordingly, please provide us with the following information:

    3.1    Evidence of Mr Windus’ retainer with each of the Law Practices; and

    3.2    Evidence supporting Mr Windus’ liability to each of the Law Practices.

4.    Further, we reiterate our request for the details and documents requested at points 9.1 and 9.2 of our letter to you dated 30 August 2012.

5.    Unless and until the evidence and information requested above is provided, we are instructed to deny any liability for the costs sought in the Bill, on the grounds that there is no retainer.

(Original emphasis.)

13    Corsers refused to provide the information requested.

14    The applicant’s solicitors then took their concerns up with a Deputy Registrar of this Court who was siezed with the task of assessing the Bill of Costs filed on behalf of the 221st respondent. The Deputy Registrar quite properly declined to deal with those concerns in correspondence and advised the applicant that it should raise these matters with the Court by way of an interlocutory application.

15    The application, now before the Court, was instituted on 21 February 2013.

16    The matter first came on for hearing on 12 April 2013. The following exchange took place with counsel then appearing for Corsers.

MR SHEAVYN: Yes, I assume so. I don’t know what Gibson & Gibson did, though, you know, but I’m assuming that. I think Gibson & Gibson were being paid by the union as well.

HIS HONOUR: So Gibson & Gibson were paid by the union?

MR SHEAVYN: As far as I know, yes.

HIS HONOUR: And Corser & Corser were paid by the union?

MR SHEAVYN: Yes.

HIS HONOUR: Well, how did that liability arise?

MR SHEAVYN: When Corser & Corser took over conduct of this action on behalf of the 221st respondent, they were advised by Gibson & Gibson that the costs would be paid by the union, but if there was costs ordered against Windus, they wouldn’t pay them. So they limited their liabilities, you could say, to pay Windus’ costs, and they would cover them.

HIS HONOUR: Why is that – is that in correspondence, that communication?

MR SHEAVYN: I believe some of it is, yes, yes.

17    I raised with counsel that, where the retainer arrangement was as he put it then, arguably, upon its proper construction, the 221st respondent would be liable for Corser’s costs only in the event that there was an adverse costs order against him but not otherwise.

18    In any event the application was then adjourned to enable the 221st respondent to either produce correspondence disclosing the arrangement with Corsers as to costs concerning the 221st respondent or an affidavit setting out what the arrangement was or both.

19    The 221st respondent then filed an affidavit by his solicitor, Mr Ronald Bower, sworn on 9 May 2013. No correspondence was exhibited. He did not depose to the terms of the arrangement which had been described to the Court in the passage from the transcript set out above. What he did was to depose to the correctness of the statements made by him in earlier correspondence to the applicant’s solicitors, and to which I have referred to the effect that there was no agreement between his firm and the 221st respondent that under no circumstances would he be liable for payment of the costs of his representation by Corsers. He also deposed that the 221st respondent was fully liable for payment of Corser’s costs (had those costs not been paid by a third party) and any potential costs orders made against him.

20    Apart from the ambiguity raised by this last matter to which Mr Bower deposes the difficulty is that his statements, whether in correspondence or in his affidavit, are mere assertion and conclusionary as to the effect of the retainer agreement(s) between his firm and the 221st respondent. Moreover, his affidavit is silent as to the position concerning his client’s retainer with his former solicitors, Gibson & Gibson. Mr Bower may be right in the construction placed by him upon his firm’s retainer by the 221st respondent but that is not to the point.

21    When the application came on for further hearing on 20 May 2013, the 221st respondent submitted that, because I am functus officio, I cannot make the orders sought by the applicant but that the Deputy Registrar exercising power under r 40.28 of the Federal Court Rules 2011 (Cth) could do so.

22    I do not accept this submission. This Court may properly make orders, in the exercise of its powers to make supplemental orders, as Drummond J observed in a case involving similar issues: Coogi Australia Pty Ltd v Hysport International Pty Ltd [1998] FCA 1270 at 2.

23    Contrary to the submission made by the 221st respondent, the present application is not aimed at either varying or setting aside the costs order dated 7 October 2011 made in his favour. Rather, it goes to the efficacy of the order made. It is a supplemental order. As was pointed out in Caboolture Park Shopping Centre Pty Ltd (in liq) v White Industry (Qld) Pty Ltd (1993) 117 ALR 253 at 264 by the Full Court, it is critical to the jurisdiction of the Court that an application is not one, in any way, to vary or alter the initial order. It was Caboolture upon which Drummond J relied in Coogi in the similar circumstances which existed there.

24    The applicant, in establishing as it has, that a Union has paid the legal costs of the 221st respondent, has done enough to shift an evidentiary onus to the 221st respondent, to demonstrate what were the actual terms of his retainer(s) with his solicitors: Hawksford v Hawksford (2005) 191 FLR 173 at [54].

25    Knowledge of those matters is self-evidently held by the 221st respondent and is not available to the applicant. So much was, quite correctly, conceded by counsel for the 221st respondent. Nonetheless, the ultimate burden on the question of negativing liability of the 221st respondent to pay costs to his solicitors rests with the applicant.

26    Despite numerous attempts the applicant’s requests for such information have been rejected by Corsers.

27    The issue for present determination is not whether the retainer agreement(s) between the 221st respondent and his solicitors are such as to render him liable to them for costs. Rather, the issue is to discern what are the terms, express and implied, of any such agreements with Gibson & Gibson and Corsers respectively. That cannot be done by reliance upon statements by Corsers, whether in correspondence or by affidavit as to the effect of such agreement(s).

28    I propose to make most of the orders presently sought, including the provision of information concerning the retainer, if any, between Gibson & Gibson and the 221st respondent. Gibson & Gibson were not represented before me but I expect that their files concerning the 221st respondent will have been passed by them to Corsers. To the extent that this has not occurred, I would entertain an application for further orders in relation to that firm.

Orders

29    There will be orders in terms of paras 2 and 3 of the applicant’s minute of proposed orders. There should also be an order that the assessment of the Bill of Costs filed by the 221st respondent dated 6 February 2013 be stayed until further order. I will defer consideration of whether the applicant have leave to cross-examine Mr Bower until there has been compliance with the instant orders. The interlocutory application will be adjourned to a date to be fixed. The question of costs will be reserved.

Associate:

Dated:    29 May 2013