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- Equuscorp Pty Ltd v Deacons Graham & James[2000] QCA 407
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Equuscorp Pty Ltd v Deacons Graham & James[2000] QCA 407
Equuscorp Pty Ltd v Deacons Graham & James[2000] QCA 407
SUPREME COURT OF QUEENSLAND
CITATION: | Equuscorp P/L v Short Punch & Greatorix & Ors; Equuscorp P/L v Deacons Graham & James & Anor [2000] QCA 407 |
PARTIES: | EQUUSCORP PTY LTD ACN 006 012 344 (applicant/applicant) v SHORT PUNCH & GREATORIX (a firm) (first respondent/first respondent) HALLCORP MANAGEMENT PTY LTD ACN 053 013 844 (second respondent/second respondent) PERMANENT TRUSTEE COMPANY LIMITED ACN 000 000 993 (third respondent/third respondent) EQUUSCORP PTY LTD ACN 006 012 344 (applicant/applicant) v DEACONS GRAHAM & JAMES (a firm) (first respondent/first respondent) PERMANENT TRUSTEE COMPANY LIMITED ACN 000 000 993 (second respondent/second respondent) |
FILE NO/S: | Appeal No 6987 of 2000 Appeal No 6988 of 2000 DC No 2529 of 2000 DC No 2528 of 2000 |
DIVISION: | Court of Appeal |
PROCEEDING: | Applications for leave s 118DCA (civil) |
ORIGINATING COURT: | District Court at Brisbane |
DELIVERED ON: | 3 October 2000 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 27 September 2000 |
JUDGE: | de Jersey CJ, McPherson JA and White J Separate reasons for judgment of each member of the Court, each concurring as to the order made. |
ORDER: | Applications for leave to appeal refused with costs to be assessed. |
CATCHWORDS: | PROCEDURE – COSTS – TAXATION – REVIEW – beneficiary under unit trust challenged reasonableness of bills of costs rendered by solicitors in relation to their clients, the unit trust’s trustee and manager – application for leave to appeal against District Court Judge’s dismissing application for review on the basis applicant not a “client” for the purposes of the act – whether applicant fell within extended definition of “client” – language and flow of act and contemplation of statutory scheme – whether applicant “liable to pay” the accounts – where deed enabled levying of unit holders for professional costs incurred by trustee or manager in administration of trust – court’s previously existing discretion to permit a beneficiary to refer a bill of costs for taxation considered Civil Justice Reform Act 1998 Costs Act 1867 s 24, s 30, s 31 District Court Act 1967 s 118(3) Queensland Law Society Act 1952 s 3, s 6ZA, s 6ZC, s 6ZE, s 6ZF Solicitors Act 1843 (Eng) s 38 Trusts Act 1973 s 72 Deputy Commissioner for Taxation v Moorebank Pty Ltd [1987] 1 QdR 414, referred to Hardoon v Belilios [1901] AC 118, referred to In re Gray [1901] 1 Ch 239, referred to In re Longbotham and Sons [1904] 2 Ch 152, referred to In re Negus [1895] 1 Ch 73, referred to Littlewood v George Wimpey & Co Ltd [1953] 2 QB 501, referred to Re Barber (1845) 14 M & W 719; 153 ER 665, followed Re Spencer (1881) 51 LJCh 271, referred to Sadler v Palfreyman (1834) 1 Ad&E 717; 110 ER 189, referred to |
COUNSEL: | GH Brandis for the applicant in Appeal No 6987/00 PE Hack for the first respondent in Appeal No 6987/00 AM Daubney for the second and third respondents in Appeal No 6987/00 GH Brandis for the applicant in Appeal No 6988/00 RIM Lilley for the first respondent in Appeal No 6988/00 AM Daubney for the second respondent in Appeal No 6988/00 |
SOLICITORS: | Thompson Redhead for the applicant in Appeal No 6987/00 Short Punch & Greatorix for the first respondent in Appeal No 6987/00 Blake Dawson Waldron for the second and third respondents in Appeal No 6987/00 Thompson Redhead for the applicant in Appeal No 6988/00 Deacons Graham & James for the first respondent in Appeal No 6988/00 Blake Dawson Waldron for the second respondent in Appeal No 6988/00 |
- de JERSEY CJ: The applicant Equuscorp Pty Ltd owns the majority of the units in a particular unit trust. The third respondent, Permanent Trustee Company Ltd, is trustee, and the second respondent, Hallcorp Management Pty Ltd, is manager. The applicant brought court proceedings against the trustee and the manager. The manager was represented by a firm of solicitors, Short Punch and Greatorix. The firm of solicitors, Deacons Graham and James acted for the trustee. The solicitors rendered bills of costs to their respective clients. The applicant unit holder sought to challenge those bills.
- Division 6A of the Queensland Law Society Act 1952 sets up mechanisms for reviewing such bills, by a costs assessor appointed by the clerk to the Solicitors’ Complaints Tribunal, with possible subsequent review by a court. A costs assessor did review these bills under s 6ZC, upon application by the trustee and the manager; and then the applicant unit holder applied to the District Court under s 6ZF, asking that court “to decide the reasonableness of the fees and costs charged”.
- The text of the presently relevant provisions of Division 6A follows:
“6ZA (1)This division applies if a client –
- is given an account that –
- is in a form agreed to in a client agreement between the client and the practitioner or firm; or
- clearly sets out all items of work done for the client and the amount charged for each item; and
- applies to the tribunal for an appointment by the clerk of the tribunal of a costs assessor to assess the account …
6ZC (1)The clerk of the tribunal may appoint a costs assessor from the tribunal’s register of costs assessors to assess a practitioner’s or firm’s account. …
6ZE (1)A costs assessment by an assessor appointed by the clerk of the tribunal is binding on the client and practitioner or firm only if –
- the client and practitioner or firm have agreed in writing that it will be; or
- at the end of 30 days after the assessment, no application has been made to a court to decide the reasonableness of the fees and costs charged in the assessed account. …
6ZF (1)Within 30 days after a costs assessment by an assessor appointed by the clerk of the tribunal, the client or the practitioner or firm may apply to a court having jurisdiction for the amount in the account for the court to decide the reasonableness of the fees and costs charged in the account.”
The term “client” is defined in s 3 as follows:
““client” includes a person who has paid, or is liable to pay, the account of a client.”
- As may be seen, the entitlement to apply to the court under s 6ZF is relevantly limited to “the client” of the solicitors, defined in s 3 to include “a person who has paid, or is liable to pay, the account of a client”. Plainly the applicant was not the client as that term is ordinarily understood: the manager and the trustee were the respective clients in that sense. It was however argued before the learned District Court judge that the applicant fell within the extended definition of “client”, being a person “liable to pay the account” of the client. The learned judge rejected that contention, on the basis there was no evidence of any relevant assumption of liability by the applicant. He accordingly dismissed the applications.
- The applicant now seeks leave to appeal against the dismissal of the applications, under s 118(3) of the District Court Act 1967. The proposed grounds of appeal would challenge the judge’s conclusion that the applicant was not a “client” of the solicitors within the extended definition.
- Leave should, in my opinion, be refused because, for reasons which I will shortly express, the judgment of the District Court dismissing the applications was plainly right.
- The fundamental reason why the applications to the District Court could not have succeeded relates to the text of the statutory provisions. Consideration of the language and flow of those provisions shows that the applicant to the court must in circumstances like these be the same party as sought review by a costs assessor (appointed by the clerk to the Tribunal).
- Section 6ZA(1) entitles “a client” to seek the appointment by the clerk of a costs assessor. That assessment then, in certain circumstances, binds “the client” (s 6ZE(1)), save that “the client” may apply to the court under section 6ZF(1). The provisions do not contemplate a change in the identity of the applicant: the reference to “client” must throughout be read as referring to the same person or entity.
- Here the appointment made under s 6ZA was sought by the trustee and the manager, what I might term the true clients. Yet it was the present applicant, the unit holder, which later sought review by the District Court. That did not fall within the contemplation of the statutory scheme. The learned judge did not refer to this point in his reasons for judgment, but it meant the applications could not succeed.
- That point aside, was the applicant shown to be “liable to pay (the client’s) account” to the solicitors, the matter agitated before the learned judge and comprehensively developed before us? The liabilities to the solicitors were in the immediate sense borne by the manager and the trustee, the entities I have called the true clients. The words “liable to pay” in s 3 carry their usual meaning, “responsible in law” (Littlewood v George Wimpey & Co Ltd [1953] 2 QB 501,515), and a person liable to pay is “a person against whom payment of the (costs) can be enforced” (Deputy Commissioner for Taxation v Moorebank Pty Ltd [1987] 1 QdR 414, 416). Neither the solicitors nor the true clients could successfully have sued the applicant for the amounts of these costs (qua costs).
- Of course the applicant’s ownership of units of itself created no liability to pay the solicitors’ costs, any more than would ownership of shares in a company which retained solicitors.
- There was no evidence before the learned judge of any independent assumption of liability by the applicant for payment of the costs as such. In an effort to establish such liability, the applicant relied on provisions of the unit trust deed (cll 13.01(a), 13.02), whereby unit holders could be levied in respect of “outgoings”, defined (cl 1.01, p 8) to include, among a number of other things, fees and professional costs incurred by the trustee and manager in relation to the administration of the trust. Although not established by evidence before the learned judge, it was accepted by the parties, before that judge and us, that the unit holders were levied for an amount which included, among other things, their “share” of the amount of these costs.
- Those provisions of the deed would not however establish any liability in the applicant, in terms of s 3, to pay “the account of (the) client”, being the solicitors’ account rendered to each of the trustee and the manager. Those provisions would go no further than to establish an obligation in the applicant, as unit holder, to meet a levy designed to facilitate the trustee’s and manager’s own payment of the solicitors’ accounts, or to reimburse them, their having made payment.
- Section 72 of the Trusts Act 1973, to which we were also referred, would entitle the trustee to reimburse itself out of the trust property for expenses reasonably incurred in the execution of the trust. That provision, authorising the trustee to take certain steps in relation to the trust property, likewise would not be apt to create a liability independently in a beneficiary directly to meet the trustee’s liability as in question here.
- On 10 September 1999 Fryberg J made orders on undertakings by the trustee and the manager that they would use their best endeavours to have the bills of costs assessed under Division 6A of the Queensland Law Society Act, and “so far as they (were) able, consent to a representative of the (applicant) being heard”. Interestingly, if not in the end significantly to the resolution of these applications, the form of those undertakings is consistent with a view that it fell to the manager and trustee, not the applicant, to mount the requisite review.
- It is the fact, as we were reminded, that s 31 of the Costs Act 1867, repealed by the Civil Justice Reform Act 1998 when introducing Division 6A to the Queensland Law Society Act, had previously conferred on the court a discretion to permit a beneficiary in circumstances like these to refer a bill of costs for taxation. The new provisions in Division 6A confer no comparable discretion. The circumstance that the Second Reading Speech of what became the Civil Justice Reform Act 1998 may not expressly have adverted to that change, of course does not of itself warrant construing the new and current definition of “client” in s 3 in an unnatural and unduly expansive way.
- The Costs Act 1867 provided for the taxation of bills of costs at the instance of a number of persons or entities: “the party chargeable” (s 24), that is, the client in ordinary parlance; any other person who is “liable to pay or shall have paid (the) bill either to the (solicitor) … or … the party chargeable” (s 30); and, at the discretion of the court, a beneficiary of the estate from which a trustee might draw reimbursement for the amount paid (s 31).
- Those entitled to apply under s 30 (or comparable provisions elsewhere) were accepted as including a lessee obliged to pay to his lessor relevant costs payable by the lessor to the lessor’s solicitor (In re Negus [1895] 1 Ch 73, In re Gray [1901] 1 Ch 239), and a mortgagor similarly liable for the mortgagee’s costs payable to the mortgagee’s solicitor (In re Longbotham and Sons [1904] 2 Ch 152).
- Although the point does not necessarily arise here, it seems that the definition of “client” in s 3 of Division 6A of the Queensland Law Society Act, referring to “a person who has paid, or is liable to pay, the account of a client”, was not intended to exclude situations where the liability is owed, or payment is made, to someone other than the solicitor – for example, a mortgagee or lessor. In other words, the scope of the s 3 definition of “client” appears consistent with an intention to preserve the right of review previously found in s 30 of the Costs Act. It would seem, however, that the right to seek review, subject to the court’s discretion, previously conferred by s 31 upon beneficiaries in trust estates, no long exists.
- The result in the District Court being plainly right, the applications for leave to appeal should in my view be refused, with costs to be assessed.
- McPHERSON JA: The question, broadly stated, is whether a beneficiary under a unit trust is, within the inclusive definition of "client" in s 3 of the Queensland Law Society Act 1952, a person "liable to pay" the account of a solicitor engaged by the trustee or manager of the unit trust for work done in relation to the trust property.
- Before its repeal in 1998, the Costs Act 1867, reflecting comparable provisions of the Solicitors Act 1843 (Eng) on which it was based, recognised three classes of persons (apart from the solicitor himself) as having the right to apply to refer a solicitor's bill of costs to taxation. They were: (1) the client or the party chargeable: Costs Act 1867, s 24; (2) a party who, though not so chargeable, was "liable to pay", or had paid, the bill: s 30; and (3) a party interested in property out of which a trustee had paid or was entitled to pay the bill: s 31. Under ss 24 and 30, the right to refer to taxation was absolute; under s 31, it was a matter for the discretion of the Court or judge.
- I should be sorry to see the words "liable to pay" in s 3 of the Act given a narrower interpretation than was ascribed to them in decisions under s 30 of the Act of 1867 or the equivalent English provision in s 38 of the Solicitors Act. There is no good reason for adopting such an interpretation. The right so to refer did not depend on the identity of the party to whom the bill or account was made out, nor on the existence of "privity" between the solicitor and the person liable to pay. See Sadler v Palfreyman (1834) 1 Ad & E 717; 110 ER 189, which involved an even earlier version 2 Geo 2 c 23, s. 23 of these statutes.
- The section corresponding to s 31 of the Costs Act 1867 has, perhaps through inadvertence, been omitted from the current Queensland legislation. There is no longer any express provision enabling a beneficiary or other person interested in property out of which the costs are paid or payable to obtain an order for taxation or, as it now is, an assessment of costs. The applicant's claim to have an assessment is therefore predicated on showing that it is liable to pay the bill or account of the solicitors engaged by the trustee or manager. For this purpose, the applicant relies on cl 13 of the unit trust deed enabling unit holders to be levied to meet various outgoings including fees and professional costs incurred by the trustee or manager in administering the trust.
- To my mind, the point is covered by the decision of the Exchequer Court in Re Barber (1845) 14 M & W 719; 153 ER 665, decided under the provision of the Solicitors Act 1843 corresponding to s 30 of the Costs Act 1867. The parish surveyor for the township of Rastwick incurred costs in taking legal proceedings to remove an obstruction to a local highway. To meet those costs, he exercised his statutory power of levying the ratepayers to obtain the funds from which to pay the solicitor. The Court held there was no right in a ratepayer to apply to refer the solicitor's bill for taxation. The question, said Pollock CB, was whether a person who contributed to a fund out of which an attorney's bill was to be paid was "liable to pay" the attorney. The Chief Baron held the case was not within the words of the section, saying (at 724):
"… the ratepayer is not liable to pay the bill, but only to pay the rate out of which the bill may by possibility be paid."
- Parke B, with whom Rolfe B agreed, said (at 725):
"This is a mixed fund in the hands of the surveyor consisting partly of the contributions of the ratepayers already in his hands and partly of the rates which he is empowered to make under the [statutory power], and out of which he is to pay not only the attorney's bill, but also other expenses, penalties, and forfeitures which may be payable out of it. He is, however, the party liable to the attorney for his bill, and the ratepayers are not in any sense the person liable to pay it within the meaning of s. 38."
- In my opinion, the fund raised here by levying the unit holders to meet the costs incurred by the trustee as manager to the solicitors bears a similar character to that considered in Re Barber. The unit holders were not liable to pay the solicitors' account, but liable to pay the amount of the levy to the trustee or manager, who was the person or persons liable to pay that account. Conceivably the result might have been different if the provision in s 31 of the repealed Act had been retained or incorporated in the new legislation. However, given the absence of any such provision, there is no power here to order an assessment of the solicitors' account. See Re Spencer (1881) 51 LJ Ch 271. Mr Brandis, rightly in my opinion, disclaimed reliance on the principle, however it is to be formulated, in Hardoon v Belilios [1901] AC 118 in order to achieve the result sought in this matter.
- It follows that the application for leave to appeal must be dismissed with costs.
- WHITE J: I agree with the Chief Justice whose reasons for judgment I have read that the applications for leave to appeal should be refused with costs to be assessed. It seems clear that the previous entitlement of beneficiaries of trust estates to apply to the court for review of a bill of costs to be paid out of the trust estate found in s 31 of the Costs Act 1867 has not been provided for in the Queensland Law Society Act 1952 as amended. I agree with McPherson JA that it is to be regretted that the previous discretionary relief is no longer available.