FEDERAL COURT OF AUSTRALIA

Mango Boulevard Pty Ltd v Whitton [2018] FCA 399

ORDERS

THE COURT DECLARES THAT:

1.    The applicants’ disclosure in this proceeding of the documents obtained in the course of an arbitration annexed to the affidavit of Andrew James Shute sworn on 24 January 2018 was necessary for the protection of their legal rights and was no more than was reasonable for that purpose and was accordingly permitted under s 27F(5) of the Commercial Arbitration Act 2013 (Qld).

THE COURT ORDERS THAT:

2.    The second and third respondents file and serve:

(a)    an affidavit of the second respondent identifying the documents in his control that provide or may provide evidence of the terms of their senior counsel’s cost agreement in relation to proceeding VID 1183/10, and annexing a copy of each of those documents;

(b)    an affidavit of the third respondent identifying the documents in her control that provide or may provide evidence of the terms of their senior counsel’s cost agreement in relation to proceeding VID 1183/10;

within 14 days of today’s date.

3.    The parties have liberty to apply.

4.    Costs are reserved.

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

REASONS FOR JUDGMENT

RANGIAH J:

1    The application before the Court was commenced by a document headed “Interlocutory Application”. Despite that heading, the application seeks both final and interlocutory relief.

2    As the second and third respondents are the only parties named as respondents to the “Interlocutory Application”, it is convenient to refer to them simply as “the respondents”.

3    The application arises from orders made by the Court on 2 December 2015 requiring the applicants to pay a substantial part of the respondents’ costs of proceeding VID 1183/2010. The application seeks final orders declaring that no fees are payable by the respondents to their solicitors and counsel and that no sum is to be allowed for such fees in the taxation of costs.

4    At the heart of the applicants’ application is the indemnity principle. In broad terms, the indemnity principle is that a party ordered to pay any other party’s costs is obliged to pay only those costs which the other party is legally obliged to pay to his or her lawyers: Mainieri v Cirillo (2014) 47 VR 127 at [43]. The applicants allege that, for various reasons, the respondents have no legal obligation pay fees to their solicitor and counsel and that, therefore, the applicants are not required to pay any amount under the costs order of 2 December 2015.

5    The applicants also apply for interlocutory orders in aid of their application for final relief, requiring the respondents to file affidavits deposing as to the terms of costs agreements with their solicitors, their counsel and any third party litigation funder, and requiring them to produce costs agreements and other documents. That is the application presently before the Court.

Procedural history

6    The present application has come about in the following way. The respondents were bankrupts. The applicants brought proceeding VID 1183/2010 seeking review of decisions of the respondents’ trustee in bankruptcy to object to the discharge of the bankrupts from their bankruptcies and resolutions of their creditors to replace the former trustees. That proceeding arose in the context of a broader dispute which has been the subject of extensive and protracted litigation in the Supreme Court of Queensland.

7    On 2 November 2015, I dismissed the originating application in proceeding VID 1183/2010: Mango Boulevard Pty Ltd v Whitton [2015] FCA 1169. On 2 December 2015, I ordered that the applicants pay the respondents’ costs of the proceeding, with some exceptions: Mango Boulevard Pty Ltd v Whitton [2015] FCA 1352.

8    Rule 40.17 of the Federal Court Rules 2011 (Cth) (the Rules) provides that a party who wants to have costs taxed must file a bill of costs. On 18 November 2017, the respondents filed and served a bill of costs. In response, the applicants filed their “Interlocutory Application” on 1 December 2017.

9    The matter subsequently came before a registrar. On 15 January 2018, the registrar made procedural orders providing for a hearing by the Court to decide upon the interlocutory relief sought by the applicants.

Preliminary matters

10    There are two preliminary matters to deal with.

11    Firstly, the respondents submit that the taxation of costs should be allowed to take its course in accordance with the Rules and that Court should decline to deal with the application.

12    Part 40 of the Rules sets out a comprehensive procedural scheme for taxation of costs and review of a taxation. Under that scheme, r 40.28 gives a taxing officer (a registrar) the power to direct or require the production of books, papers and documents. The respondents submit that the application for the production of documents should have been made to a registrar. They accept that rr 1.32 – 1.35 of the Rules allow the Court to depart from the Rules, but submit that the Court ought not do so except in the interests of justice. They submit that the taxation should proceed accordance with the Rules and that the Court should decline to deal with the application.

13    There is some attraction in the respondents’ submission. However, in Director of the Fair Work Building Industry Inspectorate v Abbott (No 5) [2013] FCA 522, where a registrar declined to deal with a similar dispute about disclosure of costs agreements and instead referred the dispute to the Court, Gilmour J said at [14] that the registrar had acted “quite properly”. It may also be noted that Gilmour J held at [21] that although final costs orders had been made in the principal proceeding, he retained the power to make supplemental orders and was not functus officio in respect of the application for disclosure of material in the costs dispute. An application for leave to appeal against that judgment was dismissed: Windus v Director, Fair Work Building Industry Inspectorate (2013) 216 FCR 207 at [31].

14    In this case, the applicants seek declaratory orders which will ultimately have to be determined by a judge, not a registrar. The interlocutory relief the applicants seek is in aid of their claim for final relief. If the applicants are ultimately wholly successful, that will effectively determine the outcome of the taxation, and if partially successful, may significantly affect the taxation. In these circumstances, I consider that it is appropriate for the application for interlocutory relief to be determined by a judge.

15    The second preliminary matter is that the applicants seek an order under s 27F(5) of the Commercial Arbitration Act 2013 (Qld) allowing them to use material obtained by them in the course of a private arbitration, and a further order releasing them from their implied undertakings as to the use of that material. The other parties to the arbitration were Mio Art Pty Ltd (Mio Art), the trustee in bankruptcy and the respondents. The respondents do not oppose the orders sought by the applicants. The trustee and Mio Art have been served with the material, but have not appeared or indicated any opposition to such orders.

16    Section 27E of the Commercial Arbitration Act provides that a party must not disclose confidential information unless, relevantly, disclosure is allowed under s 27F. Under s 2(1), the expression “confidential information” is given a wide definition that includes “information that relates to an arbitral proceeding” and “any evidence (whether documentary or otherwise) supplied to the arbitral tribunal”. Section 27F(5) provides that a party may disclose confidential information “if it is necessary for the establishment or protection of a party’s legal rights in relation to a third party and the disclosure is no more than reasonable for that purpose”. The provision sets out circumstances in which a party may disclose confidential information, but does not, in terms, provide for leave to be granted to the party to use the information. However, it is open to the Court to make an order declaring that a party is entitled to use the confidential information.

17    The confidential information that the applicants wish to make use of is an affidavit of the respondents’ solicitor sworn on 20 June 2014, their senior counsel’s costs agreement dated 3 November 2009 and a letter from their senior counsel dated 25 January 2017. These documents were supplied to the arbitrator.

18    In my opinion, the applicants are entitled, under s 27F(5) of the Commercial Arbitration Act, to use the confidential information in this application. The information is relevant to the applicants’ defence of the respondents’ claim for payment of legal costs. Disclosure of the information is necessary for the protection of the applicants’ legal rights in relation to the respondents’ claim for costs. The disclosure to the Court is no more than reasonable for that purpose. I will make the declaration sought.

19    The applicants also seek an order releasing them from their implied undertakings restricting their use of confidential information obtained in the course of the arbitration. There is no doubt that an implied undertaking exists in relation to confidential information disclosed under a compulsory process in an arbitration, but scope of the undertaking depends upon the terms of the relevant statute: see Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10 at 32-33.

20    The applicants have not addressed the relevance of s 27F of the Commercial Arbitration Act to the scope of the implied undertaking, nor, for that matter, have they addressed the Court’s jurisdiction to release the applicants from their implied undertaking in relation to a private arbitration. In the absence of submissions, I do not propose to rule upon these issues. However, it may be noted that as s 27F of the Commercial Arbitration Act allows use of confidential material in certain circumstances, it may be that any implied undertaking does not apply where the relevant circumstances exist. The declaration may be sufficient. I intend to take the confidential material into account for the purposes of the present application.

Consideration

21    In oral submissions, the applicants raised three grounds upon which they assert that the respondents may have no legal obligation to pay fees to their solicitor and senior counsel, such that interlocutory orders for affidavits and production of documents should be made. The grounds are that:

(1)    The respondents’ senior counsel’s costs agreement may be void pursuant to statute.

(2)    The respondents’ liability to pay costs may be subject to a contingency which has not been triggered.

(3)    The respondents may have received litigation funding, such that they do not have any liability to pay costs themselves.

22    While the applicants’ written submissions also disputed the fees of one of the respondents’ junior counsel, they did not pursue that issue in their oral submissions. Their oral submissions confined their case to the three grounds they raised.

23    In Shaw v Yarranova Pty Ltd [2011] VSCA 55, the Victorian Court of Appeal held:

[19]    … The existence of a contract of retainer and the liability of the client for the solicitor’s costs will be presumed, and the party who challenges the existence of the retainer in such circumstances bears the onus of establishing the absence of it.

…

[20]    Where the party against whom the costs order has been made seeks to displace the rule, it is necessary to prove that under no circumstances does the client have any liability to pay costs to his or her solicitors…

[22]     …In Victoria and elsewhere in Australia the indemnity rule has been treated as permitting recovery of costs from the party against whom the order is made, although a third party has indemnified the successful party or paid their costs.

…

[26]     …The principles governing an application for an order that documents be produced are not different from those governing applications for access to documents produced in answer to a subpoena. So where an application is made in the Costs Court that the party in whose favour a costs order has been made produce documents asserted to be relevant to the application of the indemnity principle, the applicant must identify a legitimate forensic purpose for which access is sought, and establish that it is ‘on the cards’ that the documents will materially assist his case. There will be no legitimate forensic purpose if, ‘all the party is doing is trying to get hold of the documents to see whether they may assist him in his case.’ The court must both be satisfied that the documents are relevant to an issue and that there is something in the material then before the court that makes it appear likely that the documents will materially assist the applicant.

…

[27]     ...The evidence did not raise the likelihood that the costs that had been or were to be paid were less than those that had been taxed.

[28]     By contrast, in Kuek v Devflan Pty Ltd there were circumstances placed before the Costs Judge which gave him reason to order the production of retainer letters and costs agreements. The material was there sufficient to raise the likelihood that the party/party costs may have exceeded the successful party’s actual liability to its lawyers. But there must be evidence before the Costs Court that renders it likely that the indemnity principle has either in whole or part been displaced.

(Footnotes omitted, emphasis added.)

24    The applicants submit that the passage in paragraph [28] of Shaw v Yarranova that “the material was there sufficient to raise the likelihood that the party/party costs may have exceeded the successful party’s actual liability to its lawyers” represents the test that should be applied to their interlocutory application for production of affidavits and documents. As that passage reads, it is sufficient if the applicant demonstrates the mere likelihood of a possibility. I do not think that is precisely what was meant by the Court of Appeal, as it would be inconsistent with paragraphs [26], [27] and the last sentence of [28]. If production of costs agreements and other documents is to be ordered, there must be evidence that renders it likely that the indemnity principle has either in whole or part been displaced. The word “likely” in this context does not mean more probable than not, but instead means “on the cards”: see [26]. To similar effect, in Windus, Barker J at [20] framed the issue as requiring “reasonable grounds” to be raised.

Whether senior counsel’s costs agreement may be void

25    The applicants allege that the respondents’ senior counsel’s costs agreement may contravene s 324(4) of the now repealed Legal Profession Act 2004 (NSW) (the LPA (NSW)) and be unenforceable pursuant to s 327(4) of that Act. The respondents’ senior counsel is a New South Wales based practitioner.

26    Section 324(1) of the LPA (NSW) provided that:

(1)    A law practice must not enter into a conditional costs agreement in relation to a claim for damages that provides for the payment of an uplift fee on the successful outcome of the claim to which the fee relates.

27    Section 327 of the LPA (NSW) provided, relevantly:

(1)    A costs agreement that contravenes, or is entered into in contravention of, any provision of this Division is void.

...

(4)    A law practice that has entered into a costs agreement in contravention of section 324(1)...is not entitled to recover any amount in respect of the provision of legal services in the matter to which the costs agreement related and must repay any amount received in respect of those services to the person from whom it was received.

28    In Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd (No 4) [2011] NSWSC 720 at [23]-[30], Slattery J held that s 327(4) of the LPA (NSW) operated to disallow counsel’s fees in their entirety where a conditional costs agreement was entered into that contravened s 324(1).

29    The respondents argue that the Legal Profession Act 2007 (Qld) (the LPA (Qld)) applies to their senior counsel’s retainer. Uplift fees based on the successful outcome of a claim for damages are not prohibited under that Act and, if a cost agreement is void, counsel is not prevented from recovering a part of his or her fee. The respondents also argue that the LPA (NSW) was replaced by the Legal Profession Uniform Law (NSW), which changed the position as to uplift fees in New South Wales so that it is consistent with the Queensland position. They argue that it is an open question as to which legislation applies to the costs agreement in question.

30    There is in evidence is a costs agreement provided by the respondents’ senior counsel to the respondents’ solicitors dated 3 November 2009. It is headed “RE: MANGO BOULEVARD ATS SPENCER ETC”. The costs agreement is said to be made “pursuant to s 322(1)(c) of the Legal Profession Act 2004 (NSW) and its Queensland equivalent”. The fee agreement states that senior counsel acted on a contingency basis and exercised the right to charge an uplift of 25% “in the event that the defendant parties are successful”. It is not clear which proceeding the costs agreement related to when it was sent, but the proceeding seems to have been one brought against the present respondents.

31    On 25 January 2017, senior counsel wrote to the respondents’ solicitors referring to the costs agreement dated 3 November 2009 and providing a “further explanatory agreement with retrospective effect”. Senior counsel said he confirmed that the LPA (Qld) was to apply to the costs agreement of 3 November 2009. He said that he had been content to treat that costs agreement as being applicable to all legal proceedings between the parties. This seems to confirm that the costs agreement of 3 November 2009 applies, or at least the terms set out in that costs agreement apply, to VID 1183/10. It is likely that senior counsel entered into a conditional costs agreement in relation to VID 1183/10 that provided for the payment of an uplift fee on the successful outcome of that proceeding.

32    The costs order that the respondents seek to enforce was made in proceeding VID 1183/2010. The issue is whether the evidence demonstrates that it is likely that senior counsel’s costs agreement in relation to that proceeding contravened s 324(1) of the LPA (NSW). That proceeding was for review of decisions of the trustee in bankruptcy and the respondents’ creditors. It was not a claim for damages.

33    The applicants submit that the fact that VID 1183/2010 was not a claim for damages does not end the inquiry. They submit that the costs agreement of 3 November 2009 is “in relation to a claim for damages”. That costs agreement was acknowledged by senior counsel to “be applicable to all legal proceedings between the parties”. Those proceedings appear to include Supreme Court proceeding BS1714/11, which was a claim for damages. The applicants submit that as the costs agreement of 3 November 2009 is “in relation to” that claim for damages, it contravenes s 324(1) of the LPA (NSW) and, pursuant to s 327(4), senior counsel is not entitled to recover any amount in any matter to which that cost agreement related, including VID 1183/2010.

34    In response, the respondents argue, amongst other things, that the expression “in relation to” does not have the width contended for by the applicants having regard to the mischief to which the provision is addressed.

35    There will be issues of statutory construction and fact involved in the determination of whether s 324(1) and 327(4) of the LPA (NSW) apply to senior counsel’s costs agreement. It is unclear from the evidence whether senior counsel had a single costs agreement (viz, the agreement of 3 November 2009) that applied to each of the related proceedings; or whether there was a series of separate costs agreements each governed by the same terms as the agreement dated 3 November 2009. It may also be necessary to identify the nature of the proceeding for which the costs agreement dated 3 November 2009 was originally entered. It seems to me that there may have to be findings of fact made on at least those issues.

36    In the meantime, I am satisfied that the applicants have established that it is likely, in the sense of being on the cards, that the indemnity principle has been displaced in relation to senior counsel’s fees for VID 1183/10.

Whether there is likely to be a contingency that has not been satisfied

37    The applicants’ next submission commences with the proposition that where a lawyer acts on a contingency basis, the client is only liable to pay fees where the condition triggering the liability has been satisfied. They submit that if such a condition has not been satisfied, they will not have any liability for costs to the respondents. The applicants then submit that a relevant condition may not have been satisfied here.

38    It is apparent from the evidence before the Court that the respondents’ solicitors and counsel conducted VID 1183/2010 on a contingency basis. I accept that there must be a condition that had to be satisfied in order to trigger the respondents’ liability to pay their lawyers.

39    When asked to identify the condition that may not have been satisfied, counsel for the applicants responded:

Well that’s the very reason, your Honour, that we’re seeking an order that the respondents go on affidavit in relation to their costs agreements.

40    The applicants have not pointed to any evidence suggesting that a condition necessary to trigger the liability of the respondents to pay costs to their lawyers has not been satisfied. Rather, they seek the provision of affidavits and documents in order to find out whether there might be any such unsatisfied condition. That is fishing. It is not a permissible basis for the applicants to have the interlocutory relief they seek: see Shaw v Yarranova at [26]-[27]. The applicants have not demonstrated that it is likely that the indemnity principle has been displaced, in whole or part, on the basis they assert.

Whether the respondents have no liability for costs on the basis that they have received litigation funding or an indemnity

41    The applicants’ next submission is that the respondents may have received litigation funding, such that the respondents do not have any liability to pay costs themselves. The applicants point to a number of pieces of evidence which they submit demonstrate these matters.

42    A composition proposal was put by the second respondent to his creditors dated 11 February 2011 stating that:

Mio Art will, on the basis of Mio Art as principal litigant and prosecutor of interests, fund and facilitate the funding of the whole of the following matters required to pursue the interests of the estates viz:

...

•    any other legal actions(s) necessary to enforce the rights associated with the Mango Hill broadacres joint venture agreements.

...

•    any necessary further proceedings for the furtherance of the interests of all of Mio Art, Spencer and Perovich

....

Mio Art will fund and/or facilitate these means in toto in conjunction with a litigation funder...the estates and their creditors will have no liability nor be required to make any funding contribution towards the litigation or professional fees, success fees and costs at any time; same will be the responsibility of Mio Art at all times.

43    The third respondent also put a composition proposal dated 11 February 2011 to her creditors in similar terms, except that it contained the following sentence:

The estates and their creditors will not be required to provide any funding towards the litigation or professional fees, success fees and costs at any time; same will be the responsibility of Mio Art at all times.

44    It may be noted that the 2011 compositions proposals were superseded by new ones in 2015: see Mango Boulevard v Whitton Pty Ltd (2015) FCA 1295 at [9]. The terms of the new proposals are not relied on by the applicants in this application.

45    There is an affidavit sworn on 20 August 2014 by the respondents’ solicitor, prepared in response to an application for security for costs in the arbitration. The affidavit responds to “various speculations concerning the firm of Delta Law and litigation funding” raised by the applicants. The solicitor deposes that a Mr Galea of Award Litigation Funding had decided not to fund the “Mango Hill litigation and arbitration”. The solicitor also deposes that he had “discussed funding with a number of other possible prospects without success”. The affidavit does not expressly define the “Mango Hill litigation”, but refers to several pieces of litigation, including VID 1183/10. The solicitor’s affidavit also exhibits a “Summary of Litigation Mango Hill Joint Venture”, which was described as “a summary of the Mango Hill litigation surrounding the joint venture entered with the BMD Group in June 2003”. That document specifically discusses VID 1183/10. It is apparent that the litigation for which the solicitor deposed that he had been unable to obtain funding included VID 1183/10.

46    A director of Mio Art wrote a letter to the first respondent dated 19 August 2014 stating that funding was being sourced by Mio Art for various litigation, including VID 1183/10.

47    On 6 November 2015, the respondents’ solicitor deposed, in the context of the composition proposals, that the respondents “are obliged to rely on the efforts of third parties in order to arrange funding”.

48    The applicants rely on the following evidence given by the applicants’ solicitor before this Court on 10 November 2015 concerning Mr Galea and Award Litigation Funding:

Well, I met Mr Galea...all of the conversations that I’ve had with Mr Galea have involved the funding of this matter and all other matters involved with the – with my clients and Mango Boulevard.

…I’ve never had any reason to question him as he had provided funding previously.

I’m aware that there have been a number of parties who, at various stages, wanted to put money into this…but as to whether or not they specifically wanted to fund this, I’m not totally – I can’t say…I was confident that Galea was coming up with the money because of my dealings with him previously.

49    These extracts of evidence must be placed in their proper context. The application before the Court was for an abridgment of time for the provision by the trustee in bankruptcy of material in relation to the proposed compositions to the creditors of the bankrupt estates: see Mango Boulevard Pty Ltd v Whitton [2015] FCA 1295 at [9]-[13], [34]-[36]. The abridgment was required because the bankrupts were late in paying $55,000 as a surety for the trustee’s costs of calling and holding the creditors meeting. Mr Galea of Award Litigation Funding had sourced funding for the surety, but there was a delay in the funds arriving. The solicitor’s evidence was concerned with that delay. In context, and having regard to the transcript as a whole, the solicitor was discussing funding of the surety, and was not referring to funding of legal fees in VID 1183/10.

50    On 28 January 2016, in proceedings QUD 1088/15 in this Court, the respondents’ solicitor deposed that “the funders of Mio Art, Spencer and Perovich have, on the strength of the compositions, continued to work on the Mango Hill litigation”. That affidavit confirms that Award Litigation Funding had provided funding for the trustee’s surety and had sourced funding for the compositions themselves, although there had been delay in the provision of the funds for the compositions. Again, it does not refer to funding of the legal fees in VID 1183/10.

51    In order to obtain the final relief they seek, it will be necessary for the applicants to prove that under no circumstances do the respondents have any liability to pay legal fees in VID 1183/10 on the basis that Mio Art, Award Litigation Funding or another funder, assumed liability for payment of those fees. For the purposes of the interlocutory application, the question is whether the evidence demonstrates the likelihood of those matters. It would be enough for the applicants to demonstrate that there is evidence showing the likelihood that a third party had paid the respondents’ legal costs (or even a part of their legal costs). That was the approach taken in Abbott, where there was evidence that a third party had paid the legal costs. It may also be enough to demonstrate the likelihood that a third party agreed to pay the legal costs or part of them.

52    The evidence demonstrates that the respondents sought funding from third parties for their legal costs for proceedings VID1183/10 in at least 2014. It indicates that the respondents’ composition proposals were put in 2011 on the basis that the bankrupt estates of the respondents would have no liability to make any funding contribution towards the professional fees for related litigation, such fees to be the responsibility of Mio Art. Further, the respondents later obtained funding for the trustee’s surety and an agreement for the funding of the compositions themselves.

53    Against these matters is the direct evidence from the respondents’ solicitor that no litigation funding had been obtained for VID 1183/10 by 20 June 2014. Although litigation funding continued to be sought after that date, there is no evidence that any was obtained. The 2011 composition proposals were superseded by new proposals in 2015, and the applicants have not relied on those new proposals (and, in addition, while the 2011 proposals indicate that the bankrupts’ estates would not be liable for legal costs, they do not indicate that the bankrupts themselves would not be liable). I cannot conclude that because funding was obtained for the trustee’s surety and the compositions, it is likely that funding was also obtained for the legal fees in VID 1183/10.

54    In my opinion, the evidence does not demonstrate the likelihood, in the sense of being on the cards, that Award Litigation Funding, Mio Art, or another funder provided or agreed to provide funding for the respondents’ legal fees in VID 1183/10. Further, the evidence does not demonstrate the likelihood that any third party assumed liability for the payment of the respondents’ legal fees in VID 1183/10, such that the respondents would in no circumstances be liable for those fees, or some part of those fees. Therefore, there is no basis for orders that the respondent provide affidavits concerning, or disclose any funding agreements with, any third parties.

Interlocutory relief

55    I have found that there is a likelihood that the indemnity principle has been displaced in relation to senior counsel’s fees for VID 1183/10. The question is as to what interlocutory orders should be made consequent upon that finding.

56    The applicants originally sought orders that, amongst other things, the respondents disclose all communications with their lawyers evidencing any retainers. After I indicated that I would not be prepared to make orders in such wide terms, the applicants redrafted the orders to narrow their scope.

57    The redrafted orders seek, inter alia, that the respondents depose as to the terms of any costs agreements with their lawyers and annex documents containing the terms of the agreement. The terms of those draft orders remain, in my opinion, problematic.

58    One difficulty is that the construction of a contract is a question of law: The Life Insurance Co of Australia Limited v Phillips (1925) 36 CLR 60 at 78-79; Westport Insurance Corporation v Gordian Runoff Limited (2011) 244 CLR 239 at [82]; Pioneer Shipping v BTP Tioxide Ltd [1981] 2 All ER 1030 at 1035. The applicants’ draft orders requiring the respondents to depose as to the terms of their senior counsel’s costs agreement would effectively require them to give their opinions upon a legal issue. That cannot be required of them.

59    Further, as senior counsel’s costs agreement was with the solicitor, rather than directly with the respondents, the respondents are unlikely to be able to shed any light on the terms of the agreement beyond producing relevant documents. It has not been suggested that the respondents’ solicitor or counsel can or should be ordered to provide affidavits (although if senior counsel is to identify precisely what his costs agreement was in relation to VID 1183/10, it may eventually be necessary for him to do so).

60    The respondents should be required to provide affidavits identifying documents in their control that may provide evidence of the terms of their senior counsel’s costs agreement in relation to VID 1183/10. The limitation to documents in the respondents’ control is consistent with the scope of discovery under r 20.14(1)(c) of the Federal Court Rules. The documents disclosed can be expected to include relevant fee notes and correspondence between the respondents’ senior counsel and solicitor. The documents should be annexed to one of the affidavits. The affidavits should be filed and served within 14 days.

61    I will give the parties liberty to apply. This will allow the parties to raise any further issues that may arise, including any questions of legal professional privilege and leave to issue subpoenas.

62    I do not propose to order that the taxation of costs be stayed. It is a matter for the taxing office to determine what course to take in respect of the taxation.

Associate:    

Dated:    26 March 2018