Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Atanaskovic v Birketu Pty Ltd [2023] NSWCA 312 Hearing dates: 1 May 2023 Date of orders: 15 December 2023 Decision date: 15 December 2023 Before: Ward P at [1]; Kirk JA at [167]; Simpson AJA at [312] Decision: 1. If leave be necessary, grant leave to appeal. 2. Appeal allowed. 3. Set aside the orders made by the primary judge on 26 October 2022 and in lieu thereof make the following orders: (a) The summons filed on 2 August 2022 is dismissed. (b) The plaintiffs are to pay the defendants' costs. 4. The first and second respondents are to pay the appellants' costs of the appeal. Catchwords: COSTS – General rule that self-represented litigants cannot recover costs for their own time – Chorley exception – Impact of Bell Lawyers v Pentelow on litigants recouping costs of employed solicitors – Inclusion of "remuneration" in definition of "costs" in the Civil Procedure Act 2005 (NSW) – Where the litigant party has obtained a costs order in their favour – Where the litigant party is also the solicitor on the record – Whether an unincorporated law firm litigant is entitled to recover costs for work done by its employed solicitors during the litigation JUDGMENTS AND ORDERS — Court of Appeal — Review of previous decision of another intermediate Court of Appeal — Whether previous decision interpreted what the High Court said or developed the common law — Court of Appeal not bound by a coordinate court's interpretation of what the High Court said Legislation Cited: Act Interpretation Act 1987 (NSW) Civil Procedure Act 2005 (NSW), ss 3, 98 Legal Profession Uniform Law Application Act 2014 (NSW), ss 32, 74 Statute of Gloucester (1278) 6 Edw 1 c 1 Supreme Court (General Civil Procedure) Rules 2015 (Vic) Supreme Court Act 1970 (NSW), s 101 Supreme Court Act 1986 (Vic), ss 3, 24 Uniform Civil Procedure Rules 2005 (NSW), Pt 42 Cases Cited: Archer Capital 4A Pty Ltd as trustee for the Archer Capital Trust 4A v Sage Group Plc (No 2) [2013] FCA 1098; (2013) 306 ALR 384 Atanaskovic v Birketu Pty Ltd – Costs [2020] NSWSC 779 Atanaskovic v Birketu Pty Ltd [2019] NSWSC 1006 Atanaskovic v Birketu Pty Ltd [2020] NSWSC 573Attorney-General v Shillibeer (1849) 4 Ex 606 [154 ER 1356] Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485; [1993] HCA 15 Banksia Securities Limited v The Trust Company (Nominees) Ltd [2017] VSC 583 Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29 Birketu v Castagnet [2022] NSWSC 1435 Burrows v MacPherson & Kelley Lawyers (Sydney) Pty Ltd [2021] NSWCA 148 Cachia v Hanes (1994) 176 CLR 403; [1994] HCA 14 Commonwealth Bank of Australia v Hattersley (2001) 51 NSWLR 333; [2001] NSWCA 60 Coshott v Commonwealth Bank of Australia [2020] NSWCA 279 Coshott v Commonwealth Bank of Australia [2020] NSWSC 503 Coshott v Spencer [2019] HCATrans 183 Day v Ocean Beach Hotel Shellharbour Pty Ltd (2013) 85 NSWLR 335; [2013] NSWCA 250 Dyktynski v BHP Titanium Minerals Pty Ltd (2004) 60 NSWLR 203; [2004] NSWCA 154 Ex parte King; Re Blackley (1938) 38 SR (NSW) 483 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 Galloway v Corporation of London (1867) LR 4 Eq 90 Garcia v National Australia Bank Ltd (1998) 194 CLR 395; [1998] HCA 48 Gugy v Brown (1867) LR 1 PC 411 Guneser v Aitken Partners Pty Ltd [2020] VSC 329 Guss v Veenhuizen (No 2) (1976) 136 CLR 47; [1976] HCA 57 Hasler v Singtel Optus Pty Ltd; Curtis v Singtel Optus Pty Ltd; Singtel Optus Pty Ltd v Almad Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 Henderson v Merthyr Tydfil Urban District Council [1900] 1 QB 434 Hill v Zuda Pty Ltd (2022) 275 CLR 24; [2022] HCA 21 Hofer v The Queen (2021) 274 CLR 351; [2021] HCA 36 In re Eastwood (deceased) [1975] Ch 112 Irving v Gagliardi; Ex parte Gagliardi (No 2) (1895) 6 QLJ 200 Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 Jervis v Dewes (1836) 4 Dowl 764 John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 Kelly v Jowett (2009) 76 NSWLR 405; [2009] NSWCA 278 Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 Leaver v Whalley (1833) 2 Dowl 80 London Scottish Benefit Society v Chorley (1884) 13 QBD 872 Ly v Jenkins (2001) 114 FCR 237; [2001] FCA 1640 Maher v Commonwealth Bank of Australia [2008] VSCA 122 Maules Creek Coal Pty Ltd v Environment Protection Authority [2023] NSWCCA 275 McCullum v Ifield [1969] 2 NSWR 329 McGuire v Secretary for Justice [2019] 1 NZLR 335; [2018] NZSC 116 McIlraith v Ilkin (Costs) [2007] NSWSC 1052 New South Wales Land and Housing Corporation v Quinn [2016] NSWCA 338 Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404; [1994] HCA 54 Parsloe v Foy (1833) 2 Dowl 181 Pennington v Russell (No 2) (1883) 4 LR (NSW) Eq 41 Pentelow v Bell Lawyers Pty Ltd [2018] NSWCA 150 Ratkovic v Hadzic [2019] NSWSC 1627 Raymond v Lakeman (1865) 34 Beav 584; 55 ER 761 Registrar of Titles v Watson [1954] VLR 111 Riva NSW Pty Limited v Fraser; Fraser v Riva (NSW) (No. 4) [2022] NSWSC 1624 Salomon v A Salomon & Co Ltd [1897] AC 22 Spencer v Coshott (2021) 106 NSWLR 84; [2021] NSWCA 235 United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2020] VSCA 15 Vickers Cockatoo Dockyard Pty Ltd v El Ali (unreported, New South Wales Court of Appeal, 17 December 1987) Viro v The Queen (1978) 141 CLR 88; [1978] HCA 9 Walton v McBride (1995) 36 NSWLR 440 Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1; [2012] WASCA 157 Texts Cited: A Summary of the Law and Practice Relating to Attorneys (V&R Stevens, Sons and Hayne, 3rd edn, 1862) Lush's Practice of the Superior Courts of Law at Westminster (Butterworths, 3rd edn, 1865) Category: Principal judgment Parties: John Ljubomir Atanaskovic (First Applicant) Lawson Andrew Jepps (Second Applicant) Birketu Pty Ltd (First Respondent) WIN Corporation Pty Ltd (Second Respondent) Maurice Jocelyn Castagnet (Third Respondent) Representation: Counsel: DFC Thomas SC with D Birch (Applicants) B Walker SC with A Vincent (First and Second Respondents) Solicitors: Atanaskovic Hartnell (Applicants) HWL Ebsworth (First and Second Respondents) Crown Solicitor for NSW (Third Respondent) File Number(s): 2022/00342349; 2022/00377300 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Common Law Division Citation: [2022] NSWSC 1435 Date of Decision: 26 October 2022 Before: Brereton JA File Number(s): 2022/00226444 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment] In 2018, the partners of an unincorporated law firm commenced proceedings seeking to recover professional fees and disbursements from two clients, being the first respondent (Birketu) and the second respondent (WIN). Judgment, including a costs order, was entered in the firm's favour. The firm had acted for itself in the litigation. The firm's proposed costs application served on Birketu included costs for work done by the firm's employed solicitors, although not its partners. Birketu's solicitors objected to the claim for such costs. This objection was founded on the decision in Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29 ("Bell Lawyers"), in which the High Court held that solicitors, like other self-represented litigants, may not recover costs for time spent in representing themselves in litigation. A costs assessor, the third respondent, was appointed. The costs assessor declined to make a determination as to whether the firm was entitled to recover the professional costs of its employed solicitors. Birketu and WIN commenced proceedings in the Common Law Division, seeking judicial review of the costs assessor's interim decision. The firm joined Birketu in inviting the Court to resolve the substantive legal question of the application of Bell Lawyers to the professional costs of employed solicitors of a litigant law firm operating in an unincorporated partnership. The primary judge made the declaration sought by Birketu and WIN, being that the partners of the firm were not entitled to recover in the assessment process the professional costs of their employed solicitors. In so doing, his Honour concluded that the decision of the Victorian Court of Appeal in United Petroleum v Herbert Smith Freehills [2020] VSCA 15 was both on point and correct in principle, and held that the partners of the firm were precluded from recovering costs in respect of work done by their employed solicitors. The applicants, being the firm's partners, sought leave to appeal (to the extent necessary). The application was heard concurrently with the substantive appeal. The primary issue on appeal was whether the partners of an unincorporated law firm are entitled to recover costs for work done by the employed solicitors of that firm in prosecuting or defending legal proceedings brought by or against the partners of the firm. The Court held, granting leave to appeal (per Ward P, Kirk JA and Simpson AJA agreeing on this point) and allowing the appeal (per Kirk JA, Simpson AJA agreeing as to the orders, Ward P dissenting): Per Kirk JA: 1. The court's power to award costs derives from s 98(1) of the Civil Procedure Act 2005 (NSW), which provides that "costs" are in the discretion of the court; the court has full power to determine by whom, to whom and to what extent costs are to be paid; and the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis: [173]. "Costs" is defined in s 3(1) of that Act to include "fees, disbursements, expenses and remuneration": [174]. 2. The notion of "remuneration" is a general one, referring to money paid for work or services rendered. The remuneration paid by an unincorporated law firm to its employed solicitors falls within that term. Accordingly, absent any textual or contextual basis from excluding such remuneration from the definition of "costs", an unincorporated law firm is entitled, by statute, to charge for the costs incurred by its employed solicitors in representing the firm: [178]-[188]. This point is sufficient to resolve the appeal: [189]. Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29, applied. 1. This conclusion also follows as a matter of legal principle. The general principle affirmed in Bell Lawyers is that costs are awarded as (partial) indemnity for legal costs actually incurred. Bell Lawyers confirmed that this may include the cost of legal services provided by an employed or "in-house" solicitor, notwithstanding that cost of that employment is a general overhead paid by the litigant (the "employed lawyer rule"). Such costs are quantified by reference to what an independent solicitor may have charged, on the assumption that actual cost to the litigant would not exceed that sum in any substantial amount. Accordingly, the "employed lawyer rule" is an application of the general principle of indemnity, rather than an exception to it. There is no basis to exclude unincorporated law firms from the application of these principles: [190]-[213]. Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29; Cachia v Hanes (1994) 176 CLR 403; Guss v Veenhuizen (No 2) (1976) 136 CLR 47; [1976] HCA 57, considered. 1. This view is supported by an understanding of the historical origins of the relevant principles, which suggest that the "employed lawyer rule", on which the applicants rely, cannot be equated with the Chorley exception, which was abolished in Bell Lawyers: [214]-[241]. London Scottish Benefit Society v Chorley (1884) 13 QBD 872; Attorney-General v Shillibeer (1849) 4 Ex 606; 154 ER 1356; Raymond v Lakeman (1865) 34 Beav 584; 55 ER 761; Galloway v Corporation of London (1867) LR 4 Eq 90; Pennington v Russell (No 2) (1883) 4 LR (NSW) Eq 41; Irving v Gagliardi; Ex parte Gagliardi (No 2) (1895) 6 QLJ 200; Henderson v Merthyr Tydfil Urban District Council [1900] 1 QB 434, considered. 1. This Court was not bound to follow the contrary decision of the Victorian Court of Appeal in United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2020] VSCA 15 unless "plainly wrong". That is because that decision was made upon different statutory provisions. Further, it proceeded from a contrary interpretation of relevant High Court authority; it was that High Court authority by which this Court was directly bound, rather than the construction given to it by a coordinate court: [277]-[283]. Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22; Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266, applied. 1. Accordingly, in New South Wales, partners in an unincorporated law firm who obtain a costs order in their favour are entitled to claim costs with respect to the work done by solicitors employed by the partnership: [310]. United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2020] VSCA 15, not followed. Per Simpson AJA: (7) Resolution of the appeal turns on the meaning of "costs" in s 98(1) of the Civil Procedure Act, as defined in s 3. The inclusion of the word "remuneration" in that definition indicates that it encompasses costs payable to employed legal practitioners, even if those costs are paid by the litigant as overheads rather than fees: [330]-[343]. This is consistent with the general principle that costs are awarded by way of indemnity for professional legal costs actually incurred: [344]. (8) This view is also consistent with the acceptance by the plurality in Bell Lawyers (although obiter) that government and (non-lawyer) corporations (for example banks) are not precluded from recovering the costs of professional services rendered by employed legal practitioners. It is difficult to identify any basis on which a government department, agency or instrumentality, or a corporation, or a bank that employs legal practitioners who undertake legal work in litigation, or an incorporated legal practice, should be in a different position from a partnership of legal practitioners that employs legal practitioners for the provision of legal services to clients, but who also provide legal services where the partnership is the litigant: [341]. Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333, Commonwealth Bank of Australia v Hattersley (2001) 51 NSWLR 333 at 337; [2001] NSWCA 60, discussed. (9) Having regard to the differing definitions of "costs" in Victoria and New South Wales, this Court was not bound to follow United Petroleum v Herbert Smith Freehills [2020] VSCA 15 unless it was plainly wrong: [348]-[359]. Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22, applied. Per Ward P (dissenting): (10) To enable an unincorporated law firm to recoup the cost of employed solicitors amounts to recovery of the partnership's own time and effort as professional legal costs, in effect results in a reversion to a position where solicitor litigants are in a privileged position compared to other self-represented litigants (inconsistently with the policy of equality extolled in Bell Lawyers). Any solicitor litigant, like every other litigant who is party to proceedings, is entitled under a costs order to recover costs where it actually incurs professional legal costs. It does not incur these costs when acting for itself. Any departure from the application of the general rule in this context must be for the High Court (or the legislature) to determine. The ability for government bodies (or corporate entities not being legal firms, such as banks) to claim in-house solicitors/counsel fees must be an acceptance that policy permits it (they being sufficiently independent and their employer not being in the position of someone who operates to profit from litigation). Thus, there is a real and meaningful distinction between a corporation or government department represented by its employed in-house lawyers and the partners of an unincorporated law firm represented by their own employed solicitors: [161]-[164]. Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29, followed. Judgment 1. WARD P: The applicants (now the sole partners of an unincorporated law firm carrying on business under the name Atanaskovic Hartnell, Mr John Atanaskovic and Mr Lawson Jepps) seek leave to appeal (if leave be necessary) from orders made by Brereton JA sitting in the Common Law Division in Birketu v Castagnet [2022] NSWSC 1435 (the primary judgment). The application was heard as a concurrent hearing with the appeal should leave to appeal be granted (or found to be unnecessary). The applicants maintain that they are able to appeal as of right but in any event they argue that the appeal raises an important question of principle (such that leave should be granted if necessary), namely, whether the partners of an unincorporated law firm are entitled to recover costs for work done by the employed solicitors of that firm in prosecuting or defending legal proceedings brought by or against the partners of the firm. Background 1. Proceedings were commenced by the then six partners of Atanaskovic Hartnell in 2018 (the plaintiffs) in the Commercial List of the Equity Division in the Supreme Court (2018/00164411) (the Equity proceedings), the partners seeking recovery of solicitors' fees and disbursements, totalling in excess of $1 million, plus interest from two clients, Birketu Pty Ltd (the first respondent in the present proceedings) (Birketu) and WIN Corporation Pty Ltd (the second respondent) (WIN). 2. On 9 August 2019, Hammerschlag J, as his Honour then was, gave judgment in the plaintiffs' favour in the sum of $928,982, plus interest, relating to six of the seven invoices in question and reserved for further consideration the seventh invoice (Atanaskovic v Birketu Pty Ltd [2019] NSWSC 1006). Subsequently, on 15 May 2020, his Honour held that the plaintiffs were not entitled to recover on the seventh invoice (an invoice relating to a retainer to investigate the circumstances in which a former employee of the law firm had perpetrated frauds on Birketu for which the firm was ultimately held to be vicariously liable), save for a small amount of $14,930 (Atanaskovic v Birketu Pty Ltd [2020] NSWSC 573). Thus, ultimately, the plaintiffs were awarded the sum of $943,912 plus interest. 3. In the Equity proceedings, the legal representative identified in the summons and the subsequent commercial list statements was the first applicant, Mr Atanaskovic, a partner of the firm. Another then partner of Atanaskovic Hartnell (Mr Michael Sophocles, himself one of the plaintiffs in the Equity proceedings) was initially identified in the court documents as the contact person at Atanaskovic Hartnell but, by the time of filing of the amended commercial list statement on 5 September 2018, Mr Paul Springthorpe (then an employed solicitor but subsequently a salaried or "non-equity" partner) was named as the contact person. At all relevant times, therefore, the solicitor formally on the record for the plaintiffs (and himself one of the plaintiffs) in the Equity proceedings was Mr Atanaskovic (cf some of the submissions made in this Court to the effect that Mr Springthorpe was the solicitor on the record). The plaintiffs were represented by Counsel (instructed by Atanaskovic Hartnell) at the hearing before Hammerschlag J. 4. On 19 June 2020, after a hearing on the papers, his Honour made a costs order in favour of the plaintiffs, ordering Birketu to pay the plaintiffs' costs of the proceedings, up to and including 16 September 2019, attributable to the plaintiffs' claims on six of the invoices, to be assessed on the ordinary basis. His Honour also ordered that the plaintiffs pay Birketu's costs of the proceedings from 10 August 2019 (the date of the first judgment), to be assessed on the indemnity basis (see Atanaskovic v Birketu Pty Ltd – Costs [2020] NSWSC 779 (Costs Judgment)). 5. In the Costs Judgment, Hammerschlag J noted that the High Court (in Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29 (Bell Lawyers)) had (then only recently) reversed the so-called "Chorley exception" (eponymously named by reference to London Scottish Benefit Society v Chorley (1884) 13 QBD 872 (Chorley)), which allowed solicitors to charge for their own time in representing themselves; and his Honour there observed that the result was that the firm (i.e., Atanaskovic Hartnell) would not be able to recover for time spent by its own employees in bringing the Equity proceedings (see at [19] of the Costs Judgment). (The making of that observation gave rise to subsequent debate as to whether an estoppel arose on that issue – Hammerschlag J found that it did not and no issue is here taken with this.) 6. The plaintiffs filed an application for costs assessment on 1 February 2022, pursuant to s 74 of the Legal Profession Uniform Law Application Act 2014 (NSW), claiming the sum of $500,408.11. That sum comprised an amount of $305,463 for professional fees for legal services provided by solicitors employed by the law firm and $194,945.11 in disbursements . The applicants here (at [15] of their submissions) emphasise that the claim for the firm's professional fees was limited to the services provided by its employed solicitors; and that no claim was made for any work performed by any of the firm's partners (whether equity or salaried partners). In oral submissions before this Court, the applicants made clear that (although not conceding the point in relation to salaried partners) no fees were claimed for work performed by Mr Springthorpe after he became a salaried partner (see AT 1-2). 7. The third respondent in the present proceedings (who has filed a submitting appearance) was appointed as the costs assessor on 17 February 2022 (see the primary judgment at [5]). (As the costs assessor has not taken any active role in the proceedings, references to the respondents in these reasons are to Birketu and WIN only, unless otherwise indicated.) Both sides made submissions to the costs assessor. Relevantly, the respondents argued that the applicants were not entitled to recover the professional costs of their employed solicitors and requested that the costs assessor cease the assessment of those costs. When the costs assessor declined to make such a determination at that stage of the assessment process, the respondents filed a summons in the Common Law Division on 2 August 2022, seeking judicial review of what was identified as an interim decision by the costs assessor not to accede to the application that the costs assessor immediately determine that the partners of Atanaskovic Hartnell (the second defendant in the judicial review proceedings) were not entitled to recover the professional costs of the firm's employed solicitors and that the costs assessor immediately cease the assessment of those costs. 8. In the judicial review proceedings before Brereton JA , the relief sought included: a declaration that the partners of Atanaskovic Hartnell were not entitled to recover in the assessment process the professional costs of their employed solicitors; an order setting aside the costs assessor's decision not immediately to cease the assessment of those costs; and injunctive relief in relation thereto (see summons filed 2 August 2022; [8] of the primary judgment). 9. It was submitted by the partners of Atanaskovic Hartnell in the judicial review proceedings that there was no reviewable decision of the costs assessor but that, even if there was, there was no jurisdictional error nor error of law on the face of the record; and that prerogative relief ought be refused on discretionary grounds (see [9] of the primary judgment). However, as noted by the primary judge at [9], the parties joined in seeking a determination as to the question of the application of the High Court's decision in Bell Lawyers to the professional costs of employed solicitors of a litigant law firm operating in a traditional partnership (as distinct from an incorporated legal practice), provided that this could be done without resort to any contentious matters of fact (a caveat that is relevant to the current proceeding insofar as the respondents in their submissions make assertions as to factual matters that the applicants complain were accepted not to be in contention in the proceedings before his Honour – see below). 10. The primary judge considered that the application for judicial review was misconceived (as to which there is no challenge in the present proceedings) but made the declaration sought by the respondents for the reasons summarised below (see the primary judgment at [11]-[18]). Primary judgment 1. At the outset of his Honour's reasons, the primary judge observed (at [1]) that the case before him fell at the intersection of two principles (as had been identified was also the case in Burrows v MacPherson & Kelley Lawyers (Sydney) Pty Ltd [2021] NSWCA 148 (Burrows) – see at [110] per Leeming JA, albeit there in a materially different context), both of which principles had been confirmed by the High Court's judgment in Bell Lawyers. Those intersecting principles were described as: first, that a self-represented party who obtains a costs order in litigation (even a legal practitioner, following the decision in Bell Lawyers) may not recover costs in respect of his or her own time and effort deployed in the litigation in his or her own interest; and, second, that a party which employs salaried solicitors (such as a government department, statutory authority, bank or another private corporation) may recover costs for their time (by reference to rates charged in private practice) even though the employed solicitor represents a fixed cost to the employer. At least on one view, the distinction between the scenarios described in those two principles is the concept of a "self-represented" litigant. 2. The primary judge noted (at [1]) the different context in which the present case arose as being that, whereas in Burrows the incorporated legal practice that acted in the relevant proceedings as the solicitors for the solicitor litigant was a separate and distinct legal entity that was retained by the solicitor litigant (another incorporated legal practice), in the present case the lawyers in respect of whose work costs were claimed were the employed solicitors of the law firm which was the litigant. His Honour likened the situation in the present case to that of United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2020] VSCA 15 (United Petroleum). (Pausing here, the reference by his Honour to the law firm being the litigant must be understood as a shorthand expression for the partners of the law firm being the litigant, since the unincorporated law firm has no separate legal identity – a matter of which the primary judge was clearly aware.) 3. The primary judge, having addressed (from [10]-[18]), and dismissed as misconceived, the application for prerogative relief, turned at [19]ff to the respondents' claim for declaratory relief. His Honour noted (at [22]) that it is well established that the costs which a party is entitled to recover under a costs order do not include compensation for the party's own time and labour in preparing for or conducting litigation (citing Cachia v Hanes (1994) 176 CLR 403at 417; [1997] HCA 14 (Cachia v Hanes) (Mason CJ, Brennan, Deane, Dawson and McHugh JJ); Walton v McBride (1995) 36 NSWLR 440 at 452-3 (Kirby P) 461, 464 (Powell JA)). His Honour explained that the rule that self-represented litigants are not entitled to their time is not a special rule for self-represented litigants but, rather, an application of the general rule that costs are not recoverable in respect of a litigant's own time or labour (referring to Bell Lawyers at [33] per the plurality – Kiefel CJ, Bell, Keane and Gordon JJ). 4. That led to the consideration by his Honour of the Chorley exception and the "employed solicitor" exception. The primary judge explained those "exceptions" at [23], referring (at footnote 19 to [23]) to the Chorley exception as a rule of practice that had been stated in Chorley but earlier recognised in this State in Pennington v Russell (No 2) (1883) 4 LR (NSW) Eq 41 (Faucett J). As to the (separate) "employed solicitor exception", the primary judge noted that it had been acknowledged that this "exception" (i.e., that a litigant who employs an in-house lawyer rather than an external law firm is not prevented from recovering costs assessed on the same basis as would be the case had an external lawyer done the work) might not be appropriate if it was clear that allowing costs on such a basis might confer a substantial profit on the litigant and thus infringe the indemnity rule (there citing Bell Lawyers at [50] per the plurality). 5. Significantly, in light of the submissions made by the applicants in this Court (to which I refer below), in a further footnote to [23] (footnote 20), the primary judge explained what he meant by the use of the terminology of "employed solicitor exception": The authorities which establish this "exception" are discussed below, at [25]-[34]. For convenience I have retained the terminology of the "employed solicitor exception", though for reasons which will appear it might be better styled the "in-house solicitor exception". It has been suggested that it might not be an exception but an application of the general rule that a party is entitled to professional legal costs actually incurred in the conduct of litigation: Bell [Lawyers] at [68] (Gageler J); insofar as I treat it as an exception, it is an "exception" to the rule that a party is not entitled to recover costs for its own time and effort. 1. The applicants complain that the meaning of the above footnote is not clear; and that his Honour "persisted" in describing this as an "exception" notwithstanding his apparent recognition that this label for the principle was not consistent with the reasoning of Gageler J in Bell Lawyers (at [30] of their written submissions). I do not consider that criticism to be well-founded. It seems to me clear that what his Honour was explaining by this footnote was his view that this "exception" would be better styled as the "in-house solicitor" exception; and that, acknowledging that it might not be an exception (as such) but rather an application of the general indemnity rule (as Gageler J had suggested), insofar as his Honour treated it in his reasons as an exception he was treating it as an "exception" to the rule that a party is not entitled to recover costs for its own time and effort. 2. As I read the footnote, his Honour is there distinguishing between the general indemnity rule (that a party is entitled to professional legal costs actually incurred in the conduct of litigation) and the rule that a (self-represented) party is not entitled to recover costs for his or her own time or effort in the conduct of litigation. Whether there is a distinction between those two general rules (or they are simply aspects of the one overall indemnity rule) may be a matter for debate. Indeed, in Bell Lawyers, Nettle J (who concurred in the result but on more limited reasoning than the rest of the Court) stated that there is no "employed lawyer rule" in this country as such (see at [75]), his Honour there treating the "employed lawyer rule" as falling under (or perhaps within) the Chorley exception. In any event, I consider it tolerably clear that in this footnote (for whatever precedential value a footnote may have – see my observation in New South Wales Land and Housing Corporation v Quinn [2016] NSWCA 338 at [60]-[61]), the primary judge was eschewing any significance in the label of "exception" itself (consistent with the caution sounded in Owners of "Shin Kobe Maru" v Empire Shipping Co Inc (1994) 181 CLR 404; [1994] HCA 54 at 419-420) but, rather, was treating the recoverability of employed solicitors' costs as something to be determined having regard to the general principle that a party cannot recover costs for his or her own time in the conduct of litigation. 3. I interpose here to note that in my opinion the reference to "in-house" solicitors may itself be apt to lead to confusion. That is because "in-house" seems to me to be inapt to describe solicitors of a law firm (whether that be an incorporated or incorporated practice) the business of which is to provide legal services; at least unless there is within such a firm a separately styled and organised group of lawyers from the general body of lawyers working in the firm (such as, for example, may be seen where there is an office of general counsel that is separate from the fee earners providing services to external clients). Otherwise, the entirety of the legal practitioners in the law firm (including the partners or principals) would meet the description of in-house lawyers, which seems to me to make no sense. The "in-house" description is more apt when one considers a separate legal section within a corporation or entity (such as a bank or a government authority), often seen for example in large accounting firms where the lawyers are in essence providing an in-house service for the benefit of the firm but not usually acting for clients of the firm themselves, which to my mind explains the primary judge's preferences for that terminology. I accept that this analogy becomes more problematic with multi-disciplinary firms where legal services may be provided by the employed lawyers both externally and internally. In any event, I digress. 4. Returning to the reasoning of the primary judge, his Honour (addressing the question as to the applicants' entitlement to recover the costs of their employed solicitors as a matter of principle in light of the submission by the applicants that the Victorian Court of Appeal in United Petroleum was plainly wrong), considered (at [25]-[34]) the evolution and rationale of the "employed solicitor exception" before proceeding to analyse the cases of Bell Lawyers (at [35]-[46]) and United Petroleum (at [47]-[58]) and then briefly considering two decisions of this Court (Burrows and Spencer v Coshott (2021) 106 NSWLR 84; [2021] NSWCA 235 (Spencer v Coshott) (at [59]-[65])). 5. Ultimately, his Honour concluded that United Petroleum was both precisely on point and correct in principle; and held that the applicants (being partners of an unincorporated law firm) were precluded from recovering costs for work done by their employed solicitors (at [66]-[67]). Grounds of Appeal 1. The applicants raise the following grounds of appeal: 1. The primary judge erred in holding that, at law, an unincorporated law firm may not recover costs for work done by the employed solicitors of their own firm. 2. The primary judge erred in declaring that the appellants are not entitled to recover costs for work done by the employed solicitors of their own firm under the costs order made in proceedings 2018/164411 on 19 June 2020, being the subject of the costs assessment proceeding 2022/029349. Particulars of grounds 1 and 2 i. The primary judge ought to have found that the appellants are entitled at law to recover costs for work done by the employed solicitors of their own firm, including by reason of the principle commonly known as the 'employed solicitor rule'. 1. In essence, both grounds of appeal raise the same issue, that being (as stated earlier) whether partners of an unincorporated law firm may recover costs for work done by their own employed solicitors in prosecuting or defending legal proceedings brought by or against the partners themselves. The applicants (at [28]-[32] of their submissions) maintain that the import of the indemnity principle in relation to costs is that a party may recover expenses incurred by the litigant in acting in legal proceedings; and that the employed solicitor rule (which they say is not an "exception" but an application of the general indemnity principle, citing Gageler J's observation in Bell Lawyers at [68] – see below) makes clear that such expenses include the costs of solicitors employed by the litigant (the quantum of such costs being able to be calculated at professional or "market" rates). 2. Much emphasis was placed in the course of submissions by the applicants on the perceived perversity or inequality of an outcome whereby the costs of solicitors employed in an incorporated law practice may be recoverable by a litigant who in effect controls that incorporated law practice (say, as its sole director and shareholder) but those costs would not (on the primary judge's conclusion) be recoverable if the law practice is a traditional unincorporated partnership. The respondents dispute the proposition that there is any perversity of outcome and emphasise the import of the separate corporate personality involved in the former instance. To my mind, the structure adopted by the principals of a law practice is a matter for them; and the fact that there may be advantages or disadvantages of any particular partnership or corporate structure should not determine the outcome of the question here in issue. Leave to appeal 1. It is convenient first to address the applicants' contention that they have a right of appeal pursuant to s 101(1) of the Supreme Court Act 1970 (NSW) (Supreme Court Act). 2. The applicants submit (at [26] of their written submissions) that leave is not required under s 101(2)(c) (which, relevantly, applies where the proposed appeal is from a judgment or order "as to costs only which are in the discretion of the Court") nor under s 101(2)(q) (which applies where the judgment or order is with respect to the taxation or assessment of costs); noting that the amount in issue in the costs assessment process in respect of the applicant's professional costs of their employed solicitors ($305,463) exceeds the threshold specified in s 101(2)(r) in relation to an appeal from a final judgment or order. 3. The applicants argue (at [20] of their written submissions) that there is therefore an appeal as of right from the declaration given on a final basis of the parties' rights at law (noting that at [19] of the primary judgment, his Honour made reference to a declaration that binds the parties and will conclusively establish their rights). 4. In any event, if leave be necessary, the applicants submitted (at [22]ff of their written submissions) that it should be granted on the basis that the present case involves an issue of principle which raises a question of public importance (satisfying the test in Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 at [46] per Campbell JA). The applicants submit that a grant of leave will assist in resolving divergences which it is perceived have arisen between New South Wales and Victoria in the wake of Bell Lawyers; and that the present case is a suitable vehicle for determination of the question posed, the matter having been dealt with at first instance on the basis that the question of declaratory relief could be determined on the basis of uncontested facts. 5. In my opinion, leave to appeal is not necessary. The appeal is from a final declaration made as to the applicants' entitlement (pursuant to the costs order already made in the Equity proceedings) to recover their employed solicitors' costs; and is thus not a judgment in the exercise of the costs discretion or given as to costs only. That said, nothing turns on this because, if leave were to be necessary, I would grant leave to appeal for the reason that the issue raised is clearly one of principle that is of general importance, as the applicants contend. Appeal 1. Turning then to the appeal itself, I propose to deal with the grounds of appeal together. 2. The applicants have emphasised that the starting point must be construction of the relevant statutory regime in this State. Certainly, as recognised in Bell Lawyers at [33] by the plurality (their Honours citing, among others, Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 (Latoudis) at 557 (per Dawson J) and Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 (Oshlack) at 85-86 [33]-[34] (per Gaudron and Gummow JJ), 120 [134] (per Kirby J)), costs are a creature of statute. The power to award costs is conferred by s 98 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act). Although there is a broad judicial discretion as to costs, it is clear that costs are awarded by way of indemnity (for professional legal costs actually incurred in the conduct of litigation) rather than being compensatory in nature (see Cachia v Hanes at 410-411 per Mason CJ, Brennan, Deane, Dawson and McHugh JJ); and hence such costs are not awarded as compensation for lost earnings or as a reward for success (see Bell Lawyers at [33]) or for travel and lost time (see Cachia v Hanes at 411, referring to Coke's observations on the Statute of Gloucester (1278) 6 Edw 1 c 1). 3. There is no dispute in the present case that the costs recoverable by a successful litigant in this State may include costs referable to the professional legal services of employed solicitors. "Costs" is defined in s 3(1) of the Civil Procedure Act to mean "costs payable in or in relation to the proceedings" and it includes "fees, disbursements, expenses and remuneration". As recognised in Bell Lawyers (at [44]), the reference to "remuneration" encompasses remuneration for professional services rendered under a contract for services; the plurality considering that the reference to remuneration makes plain that the costs of professional legal services rendered by an employed lawyer are included in the definition of costs, though also noting that remuneration is not a word apt to include the notion of payment to a person by himself or herself for work done by himself or herself. 4. The applicants argue that there is nothing in the definition of "costs" in s 3(1) of the Civil Procedure Act (or the High Court plurality's explanation of that definition in Bell Lawyers) which allows a conclusion that the remuneration which a company or government agency pays its employed solicitors falls within the definition of "costs" but that the remuneration which a law firm pays its employed solicitors falls outside the definition of "costs". Thus, the applicants maintain that professional legal services rendered by an employed lawyer are included in the definition of "costs". 5. However, the fact that there can now be no dispute that the definition of costs in s 3(1) of the Civil Procedure Act can encompass costs referable to services performed by an employed solicitor (as was made clear in Bell Lawyers) rather begs the question in the present case as to whether, applying the general rules which have been developed by the courts and form part of the common law of Australia (see Edelman J in Bell Lawyers at [80]-[81]; and the discussion by Leeming JA in Burrows at [122]), the partners of an unincorporated law firm may recover the costs referable to services performed by their own employees. That issue was not the particular issue confronting the High Court in Bell Lawyers. Rather, the issue in that case was as to whether the so-called Chorley exception (permitting recovery by a self-represented solicitor litigant in respect of his or her professional costs of acting in his or her own litigation) should be extended to apply to a barrister; and, in considering that issue, the High Court considered its premise, namely whether the so-called Chorley exception was, or should remain, part of the common law of Australia. The majority concluded that it should not (Nettle J's dissent on this conclusion is referred to above). 6. Thus, the principles of statutory construction do not here arise for consideration. Rather, as already noted, the relevant question is whether there is, as part of the common law of Australia, either an entitlement under the general indemnity principle for the partners of an unincorporated law firm to recover costs of their employed solicitors for professional legal services rendered in the conduct of litigation to which the partners are party or, if not within the application of the general indemnity principle (whether because of the principle that a self-represented litigant cannot recover for his or her own time or otherwise), whether there is nevertheless an "employed solicitor exception" to the general indemnity rule pursuant to which the applicants in the present case may recover costs referable to the professional legal services rendered by their employed solicitors. Bell Lawyers 1. With that introduction, it is convenient now to address the complaint by the applicants that the primary judge erred in reaching the conclusion that the effect of Bell Lawyers was to prevent a law firm operating as a traditional partnership from claiming the professional costs of its employed solicitors. 2. The issue in Bell Lawyers arose in the following way. Ms Pentelow, a barrister who had been retained by Bell Lawyers Pty Ltd (an incorporated legal practice) in proceedings before the Supreme Court of New South Wales, brought proceedings against the firm for the payment of outstanding legal fees owed to her. During those fee proceedings, Ms Pentelow was represented by different solicitors and by senior counsel, but Ms Pentelow also did some of the preparatory legal work for the matter. Ms Pentelow's claim for costs included the time and work undertaken by herself as a barrister in the conduct of the proceedings brought by her. It was not disputed that she was entitled to the fees of the solicitors and senior counsel retained in the matter. However, the law firm disputed her entitlement to costs relating to her own professional legal services. 3. The High Court allowed the appeal brought by the law firm from the decision of the New South Wales Court of Appeal under which Ms Pentelow had been permitted to recover her own costs of the fee recovery litigation. By majority (Nettle J deciding the matter on the more limited basis as referred to above), the High Court held that the Chorley exception was not part of the common law of Australia (see the plurality at [3]; with whom Gageler J agreed at [63], as did Edelman J at [99]). 4. In so concluding, the plurality expressed the view that it was "undesirable, as a matter of professional ethics, for a solicitor to act for himself or herself in litigation" (at [19]). Citing Brereton J (as his Honour then was) in McIlraith v Ilkin (Costs) [2007] NSWSC 1052 (McIlraith v Ilkin (Costs)) at [25], the plurality noted the importance for a solicitor to act impartially and independently as an officer of the Court, and for the Court be entitled to expect as such, as now codified in the various Australian Solicitors' Conduct Rules across Australia; and identified the consequence of encouraging a solicitor to act for himself or herself through the prospects of a costs order (or monetary reward) as being the removal of any independent or impartial advice. Further, the plurality noted the observation in Cachia v Hanes as to the questionable nature of a situation in which a successful solicitor litigant not only receives the amount of the verdict but is able, by recovering recompense for their legal services, also to profit from the litigation (Bell Lawyers at [23]). The plurality considered it "an affront to equality before the law" (and something which would impermissibly exalt the position of solicitors in the administration of justice, conferring on them a privilege inconsistent with the notion of equality before the law) to quantify the value of a solicitor litigant's time but not that of a non-solicitor litigant (see at [24]-[25]), finding unpersuasive the reasoning of Bowen LJ in Chorley as to the difficulty in measuring the "private expenditure of labour and trouble by a layman". 5. Significantly, for present purposes, the plurality noted that the justification for the general rule is that costs are awarded by way of indemnity (or partial indemnity as it ordinarily will be as a result of costs assessment) for professional legal costs actually incurred in the conduct of litigation. At [32], the possibility that a solicitor might profit from his or her participation in the conduct of litigation was regarded by the plurality as unacceptable in point of principle. 6. The plurality considered the use of in-house solicitors in the context of a submission by the respondent law firm to the effect that non-recognition of the Chorley exception would mean that "governments and other employers, and incorporated legal practices operating through a sole director" would be precluded from recovering for professional legal services rendered by employed solicitors (see from [46]). Their Honours considered that the use of in-house solicitor arrangements was to be treated as outside the general rule because recovery of their professional costs enured by way of indemnity to the employer. Reference was there made to the situation where the government or corporation had been "represented" by an employed solicitor (at [47]). 7. At [50], the plurality said that: A decision by this Court that the Chorley exception is not part of the common law of Australia would not disturb the well-established understanding in relation to in-house lawyers employed by governments and others, that where such a solicitor appears in proceedings to represent his or her employer the employer is entitled to recover costs in circumstances where an ordinary party would be so entitled by way of indemnity. 1. At [51], their Honours suggested that the position might be different where a solicitor was employed by an incorporated legal practice of which he or she was the sole director or shareholder, querying whether there would then be sufficient professional detachment for the solicitor to be characterised as acting in a pure legal capacity and whether those costs would fall within the expansive view of indemnity. Their Honours considered this issue to be problematic but ultimately a question for the legislature. In Spencer v Coshott at [101], Simpson AJA (Bell P, as his Honour then was, and Emmett AJA agreeing) understood this to mean that the existing law that recognises the separate legal personality of a corporation, including an incorporated legal practice, is to be applied unless and until the legislature intervenes or consideration of the already existing legislation dictates a different result. In Burrows, Meagher JA considered (at [16]) that this passage of the plurality's reasoning resolved the question as to the recoverability of legal costs when an incorporated legal practice sues or is sued and acts for itself by its employed solicitors "provided that the self-represented incorporated legal practice is not a 'vehicle for a sole practitioner'". 2. Gageler J, as his Honour then was. in his separate judgment concurring with the plurality as to the rejection of the Chorley exception, when referring to the decision of the Supreme Court of New Zealand in McGuire v Secretary for Justice [2019] 1 NZLR 335; [2018] NZSC 116, where the Court had chosen not to abandon the Chorley exception, said (Bell Lawyers at [68]) that: Recovery of costs by a party using an employed solicitor predated introduction of the Chorley exception. The better view, explained in a number of cases to which the Supreme Court of New Zealand appears not to have been referred, is that recovery of costs by a party using an employed solicitor is an application of the general principle rather than an exception to it. The general rule is engaged on the basis that the costs of using the employed solicitor are still awarded as indemnity for professional legal costs actually incurred in the conduct of litigation by the employer who is a party to the litigation, albeit that those professional legal costs are incurred in the form of an overhead and are therefore not reflected in a severable liability. 1. In the above passage, his Honour was explaining why the abandonment of the Chorley exception as part of the common law of Australia encountered neither of the obstacles of concern to the New Zealand Supreme Court (namely, that the rules of the Court were there seen to have been framed on the basis of the continued operation of the exception and it was considered that there was no principled basis to abandon the exception and yet maintain the ability of a party to recover costs of an employed lawyer) and why it involved no adoption of the view specifically rejected by the New Zealand Supreme Court that costs could only be awarded by way of reimbursement for fees actually invoiced. 2. Justice Nettle did not consider that there was a need or justification to decide that the Chorley exception be abolished, identifying the real problem with that exception being that it permitted profit from the conduct of litigation (at [71]). His Honour said (at [75]) that in Australia there is no employed lawyer rule as compared to New Zealand, but that the position was similar in that it was long accepted that "firms of solicitors, corporations and government and semi-government agencies that employ solicitors may, under the Chorley exception, recover the taxed costs of the work performed by such employed solicitors in representing their employers" (citing the authorities at footnote 128 which included Attorney-General v Shillibeer (1849) 4 Ex 606 [154 ER 1356], among others). Thus, his Honour seems to have treated the position of employed solicitor costs as falling within the Chorley exception, rather than as an application of the general indemnity principle quite apart from the Chorley exception; and focused on the fact that employed solicitors in question were "representing their employers". His Honour considered that, logically, abolition of the Chorley exception meant that the entitlement to recover such costs ceased. 3. Insofar as the plurality considered that the abolition of the Chorley exception should not be taken to disturb the well-established understanding in relation to in-house solicitors employed by governments "and others", Nettle J queried why there should be such a distinction and was of the opinion that the analysis of considerations relevant to a determination of whether the employed solicitor rule should be permitted to survive the Chorley exception and, if so, in what form could not be undertaken in the matter then before the Court (concluding that abrogation of the Chorley exception was a determination better left to the legislature). 4. Finally, as already noted, Edelman J agreed with the conclusion of the plurality as to the abrogation of the Chorley exception, considering that it was impossible as a matter of principle to justify an exception that recognises costs for expenditure of time in litigation by an unrepresented solicitor litigant who performs work on the case but not by any other unrepresented litigant (at [91]). Court of Appeal decisions after Bell Lawyers 1. It is convenient at this stage to note that the question as to what is encompassed by the expression "in-house lawyers employed by governments and others" (as used in Bell Lawyers) was considered in two decisions of this Court: Burrows and Spencer v Coshott. 2. Burrows concerned the question of recompense for the costs of an incorporated legal practice that acted in the relevant proceedings for the solicitor litigant but was a separate and distinct legal entity from the solicitor litigant. Similarly, in Spencer v Coshott, the solicitor who was a party to civil proceedings was represented by an incorporated legal entity of which he was the sole director and shareholder. 3. In both cases, it was held that the litigant was entitled to recover costs, primarily on the basis of the separate legal personality of the respective corporations (Burrows at [18] (per Meagher JA), [109], [129]-[133] (per Leeming JA), [162] (per White JA); Spencer v Coshott at [101]-[102] (per Simpson AJA, with whom Bell P and Emmett AJA agreed)). 4. So, for example, in Burrows, Meagher JA said at [18] that: If her contention that M&K Sydney and M&K Lawyers Group were to be regarded as one and the same legal entity (whether incorporated or not is not clear) is made out, it would follow that there could be no "costs payable" within the first part of the [Civil Procedure Act] section 3(1) definition. However, for the reasons given by Leeming JA there is no basis in the evidence for disregarding the legal reality of the separate incorporated legal practices. The first was alleged to have incurred a liability to Ms Burrows at a time when it was carrying on a legal practice as Macpherson Kelley. The second then provided legal services to the first in the proceedings subsequently brought by Ms Burrows and at a time when it was carrying on that legal practice. from which it is clear that his Honour considered that there would be no costs payable if the legal services were provided by one and the same legal entity, whether incorporated or not. 1. In Burrows, Leeming JA, after referring to the intersection of the two principles confirmed by the High Court's judgment in Bell Lawyers (at [110]), said (at [112]) that it was clear that "whatever be the scope of "the Chorley exception" which was abrogated by the High Court, it did not alter the ability of a litigant to recover amounts calculated at professional rates for the work done by salaried solicitors as part of party/party costs". 2. Leeming JA had earlier observed (at [94]) that, insofar as the statutory regime regulates "law practices" (which may be, inter alia, a natural person, a partnership of natural persons, or an incorporated legal practice) there was force in the submission that this statutory regime is "inconsistent with an implied restriction which prevents an incorporated legal practice from recovering on the assessment of a costs order amounts representing a fair and reasonable amount for work done by its employed lawyers acting on its behalf as a party to litigation". 3. In Spencer v Coshott, Simpson AJA considered the answer to the question whether the bill of costs rendered by the incorporated legal practice (of which Mr Spencer was the sole director and shareholder) to Mr Spencer (the solicitor litigant) represented "costs payable in or in relation to the proceedings" was found in what was said at [53] in Bell Lawyers, namely the plurality's recognition of the separate legal personality of the corporation, which meant that the costs were so payable. 4. At [60]ff of the primary judgment in the present case, the primary judge addressed (and dismissed) the argument put forward by the applicants that Burrows and Spencer v Coshott told against the extension of Bell Lawyers to work done by a solicitor litigant's employees. Primary judge's analysis of Bell Lawyers 1. Turning then to the primary judge's analysis of the decision in Bell Lawyers, the primary judge considered that what the plurality had in mind, when making it clear that it was not intending to displace the "employed solicitor exception", was not the litigant solicitor's own employed solicitors (referring to the plurality judgment at [46]-[51]) but, rather, the position of "in-house" lawyers employed by government departments and corporations (who act as solicitors for the employing department or corporation in litigation), contrasting these with "employed solicitors in a law firm which as a party to litigation has some or all of the work done by those employees" (see primary judgment at [36]-[40]). His Honour considered that the authorities cited by Gageler J at [68] of Bell Lawyers (see above) confirmed that what Gageler J was there addressing was the position where a party is represented in the proceeding by a solicitor who is an employee of the party "typically a government officer or instrumentality" (see the primary judgment at [39]). 2. The primary judge considered that the High Court's rejection of the Chorley exception was founded on three main considerations (as identified by the primary judge at [41]) and that these considerations unambiguously favoured the position that a solicitor litigant should not be able to recover costs in respect of work done by his or her own employees, any more than work done by himself or herself (since to permit the solicitor to recover such costs would provide an incentive for solicitors to act for themselves, while allocating as much work as possible to their employees; and it would preserve the appearance that the solicitor was in a privileged position as a self-represented litigant in being able to recover costs for work done by his or her own firm) (at [42]). 3. At [45], his Honour said that the recovery of costs where work was done by the solicitor litigant's own employee was thought to be justified by the Chorley exception rather than the in-house solicitor rule (referring to Chorley at 877 per Bowen LJ; Cachia v Hanes per the plurality in the High Court at 412); and hence his Honour considered that the rejection in Bell Lawyers of the reasoning of Bowen LJ in Chorley (as not persuasive) involved rejection of the rationale that a solicitor litigant could recover costs for work done by his or her employed solicitor. (This reflects the reasoning of Nettle J at [75] – see above.) 4. Brereton JA concluded that the policy reasons which moved the High Court to abrogate the Chorley exception equally favoured denying a law firm litigant recovery of costs for work done by its employed solicitors and the rationale which had previously been supposed to support recovery by a solicitor litigant of costs for work done by his or her employed solicitor was rejected (at [46]). Applicants' submissions that primary judge erred in analysis of Bell Lawyers 1. As noted above, the applicants contend that the primary judge erred in his analysis of the High Court decision in Bell Lawyers. They argue that the primary rationale for the High Court's abolition of the Chorley exception was that it was an affront to the fundamental value of equality of all persons before the law; and they maintain that the exclusion of unincorporated law firms from the employed solicitor rule is also an affront to that fundamental value of equality. 2. As to the primary judge's first reason for his conclusion as to the effect of Bell Lawyers (see at [40] of the primary judgment) (namely that what the High Court had in mind was the position of in-house lawyers employed in government departments and corporations, not employed solicitors in law firms), the applicants submit that the cases referred to at [25]-[34] of the primary judgment as demonstrating the evolution and rationale of the employed solicitor exception were not principally concerned with providing a rationale for the principle that a party can recover professional costs in respect of employed solicitors; rather, they assumed that such costs were recoverable and were concerned with the manner in which those costs are calculated (whether by reference to the employed solicitor's salary, or by reference to the employed solicitor's charge-out rate, i.e., the market value of their services as if the solicitor had been an independent solicitor). 3. The applicants submit that the passages cited by the primary judge from the reasons of the plurality and of Gageler J in Bell Lawyers demonstrate that it is part of the ratio decidendi of that decision that the abolition of the Chorley exception leaves the entitlement to employed solicitor costs as part of the law of Australia; and they emphasise that the language used by the plurality to explain the ongoing operation of the employed solicitor rule was inclusive rather than exhaustive (referring to in-house lawyers employed by governments "and others" at [50]). The applicants argue that there is nothing in the reasons of the plurality at [46]-[51] to suggest that the removal of the Chorley exception was intended to place law firms (however structured) in a worse position than other litigants, by preventing them (and only them) from recovering costs for professional legal services rendered by employed solicitors. Rather, the applicants contend that the plurality proceeded on the basis that the removal of the Chorley exception would have no impact on such arrangements. 4. The applicants place emphasis on the fact that the plurality (at [51]-[53]), when raising as problematic the position of an incorporated legal practice, referred to the situation of an incorporated legal practice that operated as a vehicle for a sole practitioner. They say that the selection of this as the "edge case" suggests that the High Court plurality had no difficulty with law firms in general recovering the professional costs of their employed solicitors (referring in this context to the observations of Simpson AJA at [101] in Spencer v Coshott; and Meagher JA in Burrows at [16] in relation to this passage from Bell Lawyers – see above). The applicants argue that the plurality must have intended that unincorporated legal practices (for example, law firms operating as traditional partnership) should also be entitled to recover the legal fees of their employed solicitors. It is submitted (at [43] of their written submissions) that there is nothing in the reasons of the plurality which supports a distinction being drawn purely based on the business structure in which a law firm is operated. 5. Referring to the observation of Leeming JA in Burrows at [94] as to the statutory regime regulating "law practices" (see above), the applicants argue that the statutory scheme for recovery of costs is inconsistent with an implied restriction which permits an incorporated legal practice from recovering costs but prohibits a partnership of natural persons from so doing. 6. As to the second of the primary judge's reasons (the three considerations that the primary judge considered founded the High Court's rejection of the Chorley exception and weighed against an unincorporated law firm seeking to recover the professional costs of its employed solicitors), the applicants make the following criticisms (at [45]-[56] of their written submissions). 7. First, as to the view that solicitors should not be encouraged to act for themselves in litigation (it being considered undesirable as a matter of professional ethics), the applicants say that the plurality's comments (at [18]-[20]) were limited to the case of an individual solicitor acting for himself or herself, or where an incorporated legal practice is a vehicle for a sole practitioner (noting the plurality's citation of McIlraith v Ilkin (Costs) at [25] and references to the relevant Australian Solicitors' Conduct Rules concerning the risk of an individual solicitor becoming a material witness or acting as the mouthpiece of the client). The applicants maintain that neither of those examples is applicable to a multi-partner firm, with salaried employees (the applicants referring to Leeming JA's observation in Burrows at [132] to the effect that the plurality evidently viewed their comments at [18]-[20] as compatible with the continued ability of a litigant to recover the professional costs of its employed solicitors, save perhaps for the specific situation which the plurality considered as problematic at [51]-[53]; namely, where the incorporated legal practice is a vehicle for a sole practitioner). 8. At the outset of their written submissions, the applicants say that the view that it is unwise for unincorporated partners to act for themselves (cf [42] of the primary judgment) is not a valid basis for confining the employed solicitor rule so as to exclude such persons from recovering the expense of using their employees (at [9]). The applicants point out that there was no suggestion in the proceedings below that the course taken by them in defending the proceedings was prohibited by relevant professional rules; and they argue that there may be entirely valid reasons why the use of employed solicitors (rather than an external firm), will result in a more efficient defence or prosecution of litigation. The applicants point out that employed solicitors owe professional obligations to the Court (whether they be employed by a law firm, a bank or a government body) and they point out that no criticism was made of the conduct of the employed solicitors of Atanaskovic Hartnell in the conduct of the proceedings against the respondents. 9. Insofar as the primary judge considered (at [42]) that "[t]o permit a solicitor to recover such costs would be to provide an incentive for solicitors to act for themselves, while allocating as much of the work as they could, to their employees", the applicants submit (at [49] of their written submissions) that this would be just as much an incentive for other litigants with solicitor employees (because they can also claim their employed solicitors' costs at their charge-out rate rather than the actual cost to the employer), yet the plurality in Bell Lawyers (at [47]) accepted that employed solicitors are entitled to have their costs assessed on the same basis as that of independent solicitors exercising comparable skills in the performance of comparable work (the plurality there referring to Commonwealth Bank of Australia v Hattersley (2001) 51 NSWLR 333 at 337; [2001] NSWCA 60). Indeed, the applicants argue that the supposed incentive for a law firm operating in the traditional partnership model is less than for any other litigant, as the partners of the law firm will inevitably need to supervise the work of the employed solicitors at least to "some extent", and on any view the partners' time will not be recoverable. Pausing here, apart from the speculation involved in this last submission (as to the likely extent or level of supervision) it is difficult to see why this would lessen the incentive for allocation of work to employed solicitors as here suggested (one might equally think that it would increase the incentive for only cursory supervision which would hardly be a desirable outcome). In any event, the applicants argue that concern for the potential to profit from litigation did not significantly feature in the reasoning of any of the majority in Bell Lawyers (nor in the reasoning of the Victorian Court of Appeal in United Petroleum); and they say that any concern about undue profiteering can be controlled through the taxation of costs rather than denial of recovery (at [51] of their submissions). 10. As to the second consideration that the primary judge identified as founding the High Court's rejection of the Chorley exception (namely, that it would exalt the position of solicitors in the administration of justice to an extent that is an affront to equality before the law), the applicants argue that this consideration has no relevance to the present question, given that the High Court was content to preserve the general entitlement for litigants to claim professional costs for employed solicitors and the applicants have never sought recovery of the costs of their own work in defending the litigation. 11. As to the third consideration identified by the primary judge (that the exception amounts to a privilege afforded to solicitors of a kind inconsistent with the equality of all persons before the law), the applicants again argue that this has no relevance to the present question, as the ability to recover an employed solicitor's professional costs is not in any way a solicitor's privilege but one that accrues to any litigant who has employed solicitors. The applicants say at [56] of their written submissions (cf the primary judge's reasons at [42]) that permitting a solicitor to recover such costs does not preserve the appearance that a solicitor was in a privileged position as a self-represented litigant to that of other self-represented litigants (since it would be open to other self-represented litigants to recover the cost of an employed solicitor who had performed work relevant to the litigation). The applicants argue that this third consideration belies the primary judge's own analysis since the effect of his Honour's reasoning is to disadvantage partners of unincorporated law firms when compared to all other litigants. 12. As to the third reason for his Honour's conclusion (see at [43]-[46] of the primary judgment) (i.e., that the High Court's rejection of the reasoning underlying the Chorley exception also weighs against a solicitor being able to claim the professional costs of an employed solicitor), the applicants point to Gageler J's recognition that recovery of costs by a party using an employed solicitor predated the introduction of the Chorley exception (referring to Bell Lawyers at [68]). The applicants argue that the plurality's rejection (Bell Lawyers at [22]) of Bowen LJ's reasoning in Chorley at 877 did not attack the premise from which Bowen LJ proceeded; rather, that the plurality observed that the legal services rendered by a solicitor to himself or herself, regardless of whether they are measurable, are not "professional legal costs actually incurred in the conduct of litigation". 13. The applicants maintain that, prior to Bell Lawyers, the combined effect of the Chorley exception and the employed solicitor rule meant that a self-represented law firm could claim professional costs for both the time spent by principals (for example, partners) and by employed solicitors; and it was therefore not necessary for any court to determine precisely what was the principled basis upon which a solicitor litigant could recover for the professional costs of his or her employed solicitor(s). The applicants argue that the High Court's rejection of the reasoning which established the Chorley exception does not undermine the pre-existing principle that a solicitor (as any other litigant) could claim professional costs for an employed solicitor (that, they say, being a principle that pre-dated Chorley and not one which was questioned in subsequent cases). 14. Accordingly, the applicants submit that Bell Lawyers does not prevent them from recovering the professional costs of their employed solicitors in the costs assessment, and that the primary judge erred in finding to the contrary. Respondents' submissions as to alleged erroneous treatment of Bell Lawyers 1. As to the criticism by the applicants of the primary judge's conclusion at [40] as to what the High Court had in mind in relation to the concept of "in-house" lawyers, the respondents point to [39] of the primary judgment where his Honour stated that "the authorities cited by Gageler J confirm that his Honour was addressing the position where a party is represented in the proceeding by a solicitor who is an employee of the party, typically a government officer or instrumentality". The respondents point out that the same view was taken of Gageler J's reasons by the Victorian Court of Appeal in United Petroleum at [105] (see below); and they refer to the primary judge's reasons in the present case (at [45]-[46]), which explain his Honour's reasoning in this regard (see at [30]-[34] of the respondents' written submissions). 2. I note that the applicants, in their submissions in reply at [34]ff, point out that the primary judge's reasons at [39] relates only to the consideration of Gageler J's reasons (the applicants maintaining their criticism that the primary judge did not offer any specific analysis of the plurality's reasons to support his Honour's conclusion at [40] of the primary judgment, which refers to what the plurality "had in mind"). Further, the applicants contend that the flaw in the primary judge's reasoning at [39] that the principle is confined only to situations involving employed solicitors of government departments or corporations (because the cases cited by Gageler J at [68] were such cases) is that it is inconsistent with the express statement of principle by Gageler J, the applicants noting that Gageler J referred to "recovery of costs by a party using an employed solicitor" as an application of the general principle and said that "[t]he general rule is engaged on the basis that the costs of using the employed solicitor are still awarded as indemnity for professional legal costs actually incurred in the conduct of litigation by the employer who is a party to the litigation". (The applicants similarly criticise the primary judge's observation at [37] on the basis that it limits the effect of the plurality's statements of principle by reference to the particular factual situation of a case which the plurality cited.) 3. Returning then to the respondents' submissions, the respondents say (as to the applicants' contentions in relation to the three considerations identified by the primary judge at [41]), that the applicants' reliance on Burrows is misguided and that the decision in Burrows is distinguishable on the facts (that being a case which concerned two incorporated legal practices, one being the litigant client and the other acting as the former's solicitor) (see at [37]-[38] of the respondents' written submissions). The respondents argue that the separate legal personalities of each of the incorporated legal practices (and the benefits attributed to those separate legal personalities) was a key circumstance in Burrows (the respondents here referring to [162] of that decision where White JA said that to deny the respective entities the benefits of separate legal personality "on the ground that to do so would advance substantially the same policy reasons for which the High Court in Bell Lawyers rejected the Chorley exception would exceed the limits of the judicial role"). 4. The respondents argue that there are clear differences in the characteristics of a law partnership and an incorporated legal practice: that an incorporated legal practice has the various incidents of being a corporation whereas the law partnership does not; and that ownership and control of a law practice conducted by partners are generally coextensive, with those in control also being entitled to the profits and liable for the losses; and that, whereas a director of an incorporated legal practice must be an Australian lawyer holding a practising certificate, there is no such requirement for shareholders of the legal practice. The respondents say that Burrows therefore cannot be relied on to provide guidance with respect to law firm partnerships (since to do so would disregard the fundamental differences arising from their separate legal personalities). 5. The applicants in their submissions in reply at [3]-[5], reject the proposition that they have conflated the position of an incorporated legal practice which acts for itself and an incorporated legal practice which acts for its natural person controller. They say that in both situations the incorporated legal practice is entitled to claim the professional costs of its employed solicitors and argue that the doctrine of separate corporate personality has no direct relevance to the present proceedings and arises only insofar as the doctrine was the basis upon which Burrows was decided. The applicants submit that the fact that Burrows was grounded in that doctrine does not detract from the reasoning of Leeming and Meagher JJA, respectively, concerning the effect of Bell Lawyers (the applicants referring to [101]-[122], [131]-[132], [134] and [5]-[16] and [19], of their Honours' respective reasons in Burrows). The applicants argue that the effect of both Burrows and Spencer v Coshott (in finding that an incorporated legal practice is entitled to claim the professional costs of its employed solicitors) highlights a marked disparity in treatment and undercuts the suggestion that to permit a partnership to recover costs for its employed solicitors would place the partnership in a privileged position when compared to other litigants. 6. As to the applicants' criticism of the reasons at [43]-[46] in relation to the third of the considerations that his Honour identified as informing the High Court's rejection of the reasoning underlying the Chorley exception, the respondents accept that Bell Lawyers did not disturb the "employed solicitor rule" but they maintain that this rule does not assist the applicants in the present case, as the applicants are to be regarded as self-represented. (Pausing here, this seems to me to be the nub of the issue in the present case, as I explain in due course.) 7. In their written submissions in reply at [27]-[31], the applicants maintain their argument that there is significance in the inclusion of "remuneration" in the statutory definition of "costs" in this State; and their reliance on the decision in Burrows. Further, insofar as the respondents (in their written submissions at [46]) contend that there must be "costs payable" between separate entities and therefore that there must be evidence of separate costs agreements or tax invoices, the applicants emphasise that they are claiming the professional costs of their employed solicitors. The applicants say that the remuneration which the applicants paid to their employed solicitors are "costs" for the purposes of s 3(1) of the Civil Procedure Act; and that those costs were actually incurred in the conduct of litigation by the applicants (albeit that those professional legal costs were incurred by reason of the employment of the solicitor(s) allocated to the litigation in question and were therefore not reflected in a severable liability (referring to Gageler J's judgment in Bell Lawyers at [68])). The applicants further say that the notion that separate costs agreements and/or invoices are required fails to recognise that no such conditions qualify the costs entitlement of a company or governmental agency under the same regime. United Petroleum 1. The case most closely on point with that of the present is United Petroleum. There, a firm of lawyers operating under the traditional partnership model (i.e., an unincorporated legal practice), Herbert Smith Freehills, was sued by its client, United Petroleum. Judgment was entered in favour of the law firm and there was an award of costs (partly on an indemnity basis). United Petroleum successfully relied on Bell Lawyers in its appeal on costs. 2. Addressing a submission that Bell Lawyers could be distinguished because the statutory power to order costs under the Supreme Court Act 1986 (Vic) and the Supreme Court (General Civil Procedure) Rules 2015 (Vic) permitted recovery independently of the common law position propounded in Bell Lawyers, the Victorian Court of Appeal stated (referring to Bell Lawyers) at [93]-[95] that (footnotes omitted): 93 The reasons for judgment in Bell Lawyers do not expressly answer whether a firm of solicitors, which is itself a party to litigation, is entitled to recover professional costs in relation to legal and other services provided by its employees. 94 It is clear, in our opinion, that the answer does not lie in any differences between the statutory powers to award costs in Victoria and those of New South Wales considered in Bell Lawyers. The analysis undertaken by the High Court involved a discussion of the broader question whether the Chorley exception should be recognised as part of the common law of Australia. That exception developed as a rule of practice grafted on to generally expressed powers to order costs. Its abolition reflects a development of the common law rather than the application of any statutory language particular to New South Wales. There is no reason to treat the Victorian provisions as giving rise to any different result. Like the New South Wales provisions, they are expressed in very general terms. The definition of 'costs' in s 3 of the Supreme Court Act 1986, on which Freehills relied, includes 'fees, charges and disbursements', but it does not provide any basis for recovery independently of the common law principles. 95 Applying the approach of the plurality, the issue is whether a claim by a firm of solicitors to recover costs for the work of its employees fits within the general rule and is only justified under the Chorley exception, or whether it fits within the 'well-established understanding' relating to employed solicitors and stands outside the general rule. If it is the former, then as a matter of logic and principle the claim must fail once the Chorley exception was abandoned as part of Australian law. If it is the latter, then costs would appear to be recoverable on the same basis as in the case of other employed solicitors. 1. The Victorian Court of Appeal found that Herbert Smith Freehills was a self-represented litigant in the proceedings, as the partnership was a party to the proceedings and also the solicitor on the record (at [97]). It was noted by the Court that Herbert Smith Freehills did not seek recompense for costs incurred by the partner in question but for the solicitors which reported to him during the litigation, over which he had oversight and control (at [98]). 2. The Victorian Court of Appeal held that, by maintaining the "employed solicitors" exception (or application), the High Court in Bell Lawyers could "not include self-represented litigants" and that Herbert Smith Freehills, by being the solicitor on the record and the party in proceedings, was a "self-represented litigant" (at [102]), concluding that the High Court's decision precluded the law firm from recovering costs for the time spent by its employees in the litigation (at [120]-[121]). In so doing, the Court did not find there to be any differences of distinguishable significance between the statutory provisions applicable in Victoria and this State (at [94]) (the fact that the Victorian statute does not include "remuneration" in the definition of costs, not being considered relevant to the determination of the appeal in that case). 3. At [102] the Victorian Court of Appeal said: … most significant, the relevant class of cases does not include self-represented litigants. The applicants rightly point out that a government, government agency or corporate litigant may be represented in litigation by employed solicitors. In those cases the party is separate and distinct from the solicitor on the record. In no meaningful sense would a government or a corporation, represented by an employed solicitor, be described as a self-represented litigant. That is not true of Freehills in the present proceedings. The firm is the solicitor on the record, and the litigation is under the control of one of its partners, albeit no claim for costs is sought in respect of the partners. 1. It was said that although there was a degree of functional separation between the partners and employee lawyers who had acted in the matters that gave rise to the litigation, the partner in question retained a critical role at the apex and he remained jointly and severally liable for the profits and losses arising from acting and from the result of the litigation. The Court stated that if complete functional separation had any significance (which the Court doubted), it could not be said to exist in that case. 2. The Court considered that Gageler J in Bell Lawyers at [68] had been addressing the position where a party was represented in the proceedings by a solicitor who was an employee of the party or of a related interested person or entity "usually a government officer or instrumentality" and referred to the observations by Nettle and Edelman JJ, respectively, to representation (the Court noting that Edelman J "emphasised that where the solicitor is both party and lawyer the solicitor is unrepresented and the solicitor's role as agent for another is absent", the Court concluding that "it is not the position where an employed solicitor represents, and is the solicitor on the record for, their employer") (see at [107]). At [108], the Court said that "allowing a solicitor to recover fees when acting for him or herself would perpetuate the unequal treatment that Bell Lawyers sought to eradicate. The fact that the work was done by an employee is not, in that respect, significant. There is no reason why a firm of solicitors should be permitted to recover in circumstances where an individual solicitor cannot". 3. At [110], their Honours said that none of the cases referred to in Bell Lawyers establishes that solicitors employed by a law firm have been treated as falling within the employed solicitor rule, though the Court in effect acknowledged that this was a point of limited if any weight (in that, because the Chorley exception rendered such an analysis redundant, no such cases would be expected). Primary judge's analysis of United Petroleum 1. Turning then to the analysis by the primary judge of this decision, his Honour, from [47], addressed the arguments put by the applicants to the effect that the Victorian Court of Appeal decision in United Petroleum was distinguishable or its conclusion "problematic". 2. His Honour did not accept the argument that United Petroleum was distinguishable because the Victorian legislation did not expressly include "remuneration", noting that the Victorian Court of Appeal had itself eschewed any such basis for its decision (at [49]). (The applicants here complain that the Victorian Court of Appeal's reasoning at [94] was not persuasive given that no real attempt was made to grapple with the significance (or lack thereof) of the inclusion of "remuneration" in the New South Wales statute and its omission from the Victorian statute (see [68] of their written submissions).) 3. Nor did his Honour accept the applicants' submission that the distinction referred to by the Victorian Court of Appeal (United Petroleum at [103], the Court referring to Bell Lawyers) (i.e., the distinction between solicitors who are parties representing themselves and the position where a party is represented by an employed solicitor) was illusory (at [51]). The primary judge said at [51]: In the cases of solicitors employed by government departments or corporations, the litigation is being prosecuted or defended for the benefit of the department or corporation that is the employed solicitor's client, albeit that it is also his or her employer. That employed solicitor is on the record as the solicitor acting for the client/employer. The employer is not self-represented: it has a solicitor acting for it, who has his or her own independent professional obligations. It is therefore not self-represented, but represented by a solicitor in the litigation, albeit one that is "employed" rather than "retained". In the case of a law firm's own employed solicitors, however, the position is otherwise. The litigation is being prosecuted or defended for the benefit of the firm; the partners in which do not engage their employees to act for them, but merely allocate the work to them. The firm does not have a solicitor as a distinct entity acting for them; the firm is acting for itself, albeit that some of the work is performed by employees of the firm. Although some of the work may be performed by its employed solicitors, the firm is acting for itself… In the context of the conduct of litigation, in the eyes of the law the salaried in-house solicitor is independent of his or her employer, whereas a law firm's employed solicitors are not. 1. As to the Victorian Court of Appeal's conclusion (at [108]) that allowing a solicitor to recover fees when acting for himself or herself would perpetuate the unequal treatment that Bell Lawyers sought to eradicate (and that there was no reason why a firm of solicitors should be permitted to recover in circumstances where an individual solicitor cannot), the primary judge considered that this was in substance the same as his own conclusion that the policy underlying Bell Lawyers of removing an apparent privilege supported its removal in the case of work done by a solicitor's employees as well as work done by the solicitor personally (at [53] of the primary judgment). 2. At [56], the primary judge agreed with the conclusion of the Victorian Court of Appeal that the absence of authority (on the issue whether solicitors employed by a law firm have been treated as falling within the employed solicitor rule) was of limited significance but went on to say that the very fact that recovery of costs for work done by an employed solicitor of a litigant law firm had hitherto been treated as based on the Chorley exception was a reason for treating the abrogation of that exception as extending to deny recovery for work done by an employed solicitor as well as work done by a principal of the firm. 3. Brereton JA thus considered the analysis in United Petroleum at [117]; [119]-[120] as consistent with what he had identified as the policy reasons underlying Bell Lawyers (at [58]). Applicants' submissions 1. As they did before the primary judge, the applicants submit that the decision in United Petroleum is distinguishable (on two bases) or in the alternative is plainly wrong. 2. The applicants argue that the decision is distinguishable: first, on the basis that it concerned an entitlement to costs under the Victorian costs regime, which differs materially from the New South Wales scheme (the central difference here identified being the absence of a reference to remuneration in the concept of costs in the Victorian scheme); and, second, that a component of the Victorian Court of Appeal's reasoning in United Petroleum was that the person ultimately responsible for the legal conduct of the litigation was a partner in the firm with a direct personal interest in the outcome (referring to [99], [117] of United Petroleum) whereas, in the present case, it is said that the solicitor on the record for Atanaskovic Hartnell at the relevant times was Mr Springthorpe, a "non-equity partner" (i.e., a salaried partner) who did not have a direct personal interest in the outcome and was not jointly and severally liable for the profits and losses arising from acting and from the result of the litigation (at [63]-[70] of the applicants' written submissions). Pausing here, as noted earlier, the person identified as the legal representative of the plaintiffs in the Equity proceedings (as discerned from the summons and commercial list statements filed in these proceedings) was Mr Atanaskovic, not Mr Springthorpe; the latter simply being the contact person at the law firm for part of the proceedings. 3. As to the first of those bases for distinguishing between the cases, the applicants emphasise the recognition in Bell Lawyers that costs are "a creature of statute" (referring to Bell Lawyers at [15]). They complain that the Victorian Court of Appeal could not speak authoritatively (or persuasively) on the position that pertained in this State. 4. As to the second, the applicants say that, in any event, the course adopted in this State means that it is not open to impugn the independence of employed solicitors solely on that basis (referring to Burrows at [132]). The applicants complain that the reasoning in United Petroleum at [117] does not explain why (for example) a solicitor employed by a corporation (such as a bank) is considered to have more objectivity and professional detachment than a solicitor employed by a multi-partner law firm, when each is acting in litigation for their employer. 5. The applicants argue, in the alternative, that the decision of the Victorian Court of Appeal in United Petroleum is clearly wrong and should not be followed (at [71]-[88] of their written submissions). They maintain that each of the three key reasons advanced by the Victorian Court of Appeal (and endorsed by the primary judge) is "problematic". 6. As to the first reason (that in the case of a government agency or corporate litigant represented in litigation by employed solicitors, the litigant is not "self-represented" in any meaningful sense), the applicants argue that the distinction which the Victorian Court of Appeal and the primary judge each sought to draw is illusory and offers no support for the conclusion they reached. 7. The applicants submit that where a large law firm conducts litigation on its own behalf, what in substance is occurring is that the partners of the partnership are the litigants; and the partners are "represented" in the litigation by the solicitors of the firm with carriage of the matter (including the solicitor on the record). It is submitted that, at all times, the solicitor employees, and any partners overseeing their work, have their own independent professional obligations. 8. I note that the respondents submit that, notwithstanding that an employed solicitor is subject to personal ethical obligations to the Court, such a solicitor is not independent of his or her employer (at [64] of their written submissions). It can readily be accepted that each solicitor employee owes his or her own professional obligations to the Court; indeed those obligations are paramount. However, in my opinion it does not necessarily follow (without there being any suggestion of misconduct in that regard) that those employed solicitors are independent of the partners of the law firm whom they represent (as discussed below). Moreover, it is not necessarily the case that an employed solicitor, as opposed to a partner of the firm, will be the named solicitor on the record – presumably, that would depend on the practice of the law firm in question (and as noted in the course of oral submissions by the respondents, there has been judicial deprecation of such a course, referring to Kelly v Jowett (2009) 76 NSWLR 405; [2009] NSWCA 278 at [96]-[97] per Barrett J (as his Honour then was)). 9. Further, the applicants submit at [76] (of their written submissions) that if a corporate litigant conducts litigation through an employed solicitor it is "self-represented" in a meaningful sense; that it acts through solicitors (being natural persons employed within its organisation) and that those solicitors act as the corporation's agent and have work allocated to them in accordance with the litigant's corporate structure. It is submitted that they are not "engaged" in any relevant sense. 10. The applicants submit (at [77]) that, in holding at [51], that employed solicitors of corporations are axiomatically independent "in the eyes of the law" but employed solicitors of law firms are not, the primary judge imposed a distinction that diverts from the position taken by the courts in other contexts (most notably legal professional privilege, where the applicants note that in some cases the status of in-house counsel has been considered and attention has been drawn to the importance of establishing that the in-house counsel was, in making the communications over which privilege is invoked, acting in a legal professional capacity, entailing an element of independence and detachment from the commercial activities of the business at large; reference being made by way of example to Banksia Securities Limited v The Trust Company (Nominees) Ltd [2017] VSC 583 at [47]ff, citing by way of example Archer Capital 4A Pty Ltd as trustee for the Archer Capital Trust 4A v Sage Group Plc (No 2) [2013] FCA 1098; (2013) 306 ALR 384 at [59]-[73]). I interpose here to note that the requirement for independence of in-house counsel in the context of determining whether communications are legally privileged is not a particularly helpful analogy in cases where those in-house counsel are in a separate or confined group from other employed solicitors. 11. The applicants (at [78]) also rely on the fact that in Bell Lawyers at [75], Nettle J did not see any distinction between the position of a corporation and a law firm when it came to the operation of the employed solicitor rule and proceeded on the basis that the rule captured the costs of work performed by employee solicitors of "firms of solicitors" as well as employee solicitors of corporations and government and semi-government agencies. 12. Finally, the applicants say that, even if there is some relevant distinction between the position of litigants generally and a litigant law firm operated as a traditional partnership, neither the Victorian Court of Appeal nor the primary judge sought to explain why that distinction leads to the conclusion that the former is entitled to claim for the professional costs of a solicitor which it employs, but the latter is not. It is submitted that, at least in the New South Wales context, each is claiming "remuneration" within the definition of "costs payable" in s 3 of the Civil Procedure Act. 13. As to the second key reason identified by the Victorian Court of Appeal (namely, that this would perpetuate the inequality of treatment that Bell Lawyers sought to eradicate), the applicants argue that the reasoning which motivated the decision in Bell Lawyers was that an individual solicitor as a party should not be entitled to recover for his or her own time. The applicants identify this as the position of "privilege" which solicitors received as a result of the Chorley exception. They refer to the observation by the plurality at [22]-[24] that, if a solicitor litigant was entitled to recover for his or her own time, then that would also require the quantification of the value of the time of non-solicitor litigants in person. 14. The applicants maintain that this concern had no application to the facts in United Petroleum; and that, in that case (as is here), the costs sought to be recovered were for work done by employees, not for work done by any partner. The applicants again emphasise that the High Court in Bell Lawyers expressly preserved the ability of a litigant to recover amounts calculated at professional rates for the work done by salaried solicitors as part of party/party costs (implicitly relying on Leeming JA's decision in Burrows at [112]). The applicants argue that the concern of the Victorian Court of Appeal is thus addressed by denying the ability of the partner who is the litigant to recover for his or her own time. The applicants say that to prohibit even the recovery of employed solicitor costs establishes a different form of "unequal treatment" (this time, to the self-evident prejudice of partner litigants). 15. In that regard, the applicants submit that, as matters now stand in this State, the effect of Bell Lawyers is (at least) that: all non-lawyer litigants in person are entitled to claim the professional costs of employed solicitors (referring to Coshott v Commonwealth Bank of Australia [2020] NSWCA 279 at [31] which affirmed Coshott v Commonwealth Bank of Australia [2020] NSWSC 503); where an incorporated legal practice sues or is sued and acts for itself by its employed solicitors, it is entitled to claim the professional costs of its employed solicitors; where a solicitor enters into a costs agreement with the solicitor's own incorporated legal practice, of which the solicitor is the principal, sole director and shareholder, the solicitor is entitled to recover the professional legal costs of that incorporated practice (referring to Spencer v Coshott and Riva NSW Pty Limited v Fraser; Fraser v Riva (NSW) (No. 4) [2022] NSWSC 1624); but that, pursuant to Brereton JA's decision, an unincorporated law firm may not recover the professional costs of employed solicitors. The applicants complain that this leaves unincorporated law firms in an anomalous position; and they submit that there is no good reason in principle or policy for that anomaly to stand. 16. As to the third key reason noted by the Victorian Court of Appeal in United Petroleum (albeit one which the Court considered was of limited significance), namely, the absence of authority, the applicants cavil with the proposition that the fact that recovery of costs for work done by an employed solicitor of a litigant law firm has hitherto been treated as based on the Chorley exception is a reason for treating the abrogation of that exception as extending to deny recovery for work done by an employed solicitor as well as work done by a principal of the firm. The applicants argue that a right to recover costs for work done by an employed solicitor of a litigant pre-existed the Chorley exception; and they say that, after Chorley, it was not necessary to examine the source of the ability to recover costs for work done by an employed solicitor of a litigant law firm. 17. As to the respondents' proposition that there is no case in which a litigant law firm partnership has successfully recovered the professional costs of its employed solicitors, the applicants refer to my decision in Ratkovic v Hadzic [2019] NSWSC 1627 (Ratkovic v Hadzic), where orders were made (ultimately by agreement between the parties) for a partnership (Turner Freeman Lawyers) to recover the costs of its employed solicitor despite a submission raising Bell Lawyers (see Ratkovic v Hadzic at [17]-[19], [34]-[35]). It is of little assistance in the present case not least because the argument, as I recall it, was more focused on the claim to costs on the basis that the lawyers asserted they were trustees in respect of moneys held by them and entitled to their costs on that basis. In any event, it was not the subject of any reasoned submissions or debate (unlike the present case). 18. In any event, the applicants submit in reply that an appeal to absence of authority is hardly compelling where the question of a partnership's entitlement to recover the costs of its employed solicitors only arises since Bell Lawyers was decided on 4 September 2019, where United Petroleum was decided on 13 February 2020, and where no intermediate court of appeal has considered the issue since. It is said that, prior to Bell Lawyers, litigant law firms routinely recovered their costs and it was not necessary to consider whether their entitlement to recover the costs of employed solicitors was on the basis of the Chorley exception or on the basis of the employed solicitor rule. 19. The applicants submit that even if it were open to the Victorian Court of Appeal to do so in light of the express reasoning in Bell Lawyers, none of the reasons which motivated the Victorian Court of Appeal to overturn the employed solicitor rule insofar as it applies to a law firm operating as a partnership justified that conclusion. Respondents' submissions 1. The respondents submit that the differences in the statutory regimes between this State and Victoria are not relevant (noting that the Court of Appeal in United Petroleum observed that the abolition of the Chorley exception reflected a development of the common law rather than the application of any language particular to New South Wales legislation and that there was no reason to treat the Victorian provisions as giving rise to any different result). 2. The respondents say that in the present case there are no "costs payable" between separate entities; that no liability arises as between the partners of Atanaskovic Hartnell and Mr Springthorpe; and that there was no evidence adduced at trial that there was any separate costs agreement, let alone tax invoices subsequently rendered. The respondents argue that these circumstances tend strongly against any form of liability (referring to Burrows at [18]-[17]). The respondents further say that the separate legal status of a limited company and its incorporators must, as held in Salomon v A Salomon & Co Ltd [1897] AC 22, normally receive full effect in relations between the company and persons dealing with it. 3. Insofar as the applicants draw a distinction between the position of Mr Springthorpe and the applicants (on the basis that the former did not have a direct personal interest in the outcome and was not jointly and severally liable for the profits and losses arising from acting and from the result of the litigation), the respondents maintain that this distinction is of little consequence where the evidence demonstrates that it was the appellants themselves who were at the apex of the team conducting the litigation on behalf of the law firm partnership. 4. Reference is made in this context to the timesheets submitted by Atanaskovic Hartnell in its costs application filed 1 February 2022, which the respondents submit disclose that the applicants were intimately involved in the conduct of the litigation including: regularly conferring with and instructing counsel; and regularly conferring with and directing Mr Springthorpe regarding strategy, preparation of court documents and other matters relating to the conduct of the litigation. In particular, reference is made to the narrations in relation to various time entries by Mr Springthorpe in August 2018 which refer to communications as to the proceedings with the applicants and attendances by the applicants with Counsel. The respondents maintain that, in light of the timesheets submitted as part of the applicants' costs application, the applicants share in the profits generated by legal work undertaken by Mr Springthorpe. 5. The respondents point to the profit that the partnership will make from the conduct of this litigation, if the partners are able to recover the costs of their employed solicitors (see at [52]ff of their written submissions). It is submitted that the position is the same as was the case in United Petroleum: the applicants are not seeking to recover costs for time spent by the partners; the lawyers who performed the work (irrespective of whether he or she was a salaried partner) reported to the applicants as partners of Atanaskovic Hartnell and it is those partners who had oversight and control of the litigation (as evidenced by the timesheets); the applicants, in particular Mr Atanaskovic, retained a critical role at the apex of the litigation; and even if there was a degree of functional separation between the applicants and Mr Springthorpe, the applicants remained jointly and severally liable for the profits and losses arising from acting and from the result of the litigation. Thus, it is said that there is no complete functional separation in existence here. The respondents submit that the lack of professional detachment (in the sense considered by the plurality in Bell Lawyers at [18]) on the part of Mr Springthorpe from the subject matter of the fee proceedings is evident on the face of the timesheets and invoices that comprise the assessment application the subject of the costs assessment. 6. At [63], the respondents submit that, in the present case, Mr Springthorpe clearly had an interest in Atanaskovic Hartnell recovering fees, in that any solicitor employed by a legal partnership has a kind of financial interest in the partnership being paid and in recovering fees since his or her salary would, in all likelihood, depend, albeit indirectly, on continuing revenue. Further, it is said that the applicants were clearly involved in the self-interested strategy and conduct of the litigation. As such, it is submitted that Mr Springthorpe and the applicants lacked any independent objectivity. The respondents maintain that the fact that a solicitor on the record may or may not be a partner of the firm under the Uniform Civil Procedure Rules 2005 (NSW) is not evidence of independence. 7. The respondents argue that, although not decisive in Bell Lawyers, there is a risk of a lack of objectivity and professional detachment when lawyers appear for themselves or effectively appear to advance or protect their personal position, in litigation. It is submitted that, although there may be a degree of separation within the firm, and each lawyer has his or her own professional obligations, nevertheless the person ultimately responsible for the legal conduct of the litigation is likely to be a partner in the firm with a direct personal interest in the outcome. The respondents say that this was precisely the case in United Petroleum and the issue in this case. 8. In their submissions in reply, as to the respondents' submissions (at [52]-[64]; [72]-[73]) concerning the asserted lack of independence and lack of professional detachment of the applicants' employed solicitors, the applicants say that it is not open to the respondents to make such contentions in light of their conduct of the proceedings at first instance. 9. In that regard, the applicants note that the respondents (being the plaintiffs at first instance) had made in their written submissions at first instance (at [41]-[43]) factual allegations concerning the asserted lack of independence and lack of professional detachment of the applicants' employed solicitors, which the applicants disputed. The applicants refer to their written submissions at first instance (at [74]-[79], [84]-[85]) where it was submitted that so long as those disputed matters were pressed, it was inappropriate to grant declaratory relief reference also being made to the primary judgment at [19]. It is noted that, during the course of oral submissions before the primary judge, the applicants maintained their position and the respondents eschewed any contention that an asserted lack of independence was relevant (see T 15.31-47), on which basis the primary judge was able to conclude that declaratory relief was appropriate (at [19] of the primary judgment). The applicants contend that, in light of that position, it is not open to the respondents to reagitate on appeal the very matters which they eschewed below (referring to the respondents' written submissions below at [41]-[43] compared to their written submissions on appeal at [52]-[64], [72]-[73]), being the basis upon which they obtained declaratory relief. 10. The applicants argue that there is no basis to find that the applicants' employed solicitors lacked sufficient professional detachment so as to be acting in a professional legal capacity, noting that there is nothing before the Court to impugn the employed solicitors, or to suggest that they performed their roles other than in accordance with professional and ethical standards. As to the respondents' submission (at [61]) to the effect that the applicants failed to lead evidence to support a contention that their employed solicitors had sufficient professional detachment, the applicants say that this seeks to reverse the onus. The applicants refer to the observation of Leeming JA in Burrows at [132] that it would be inconsistent with the reasoning in Bell Lawyers to find that an employed solicitor (who is subject to personal ethical obligations to the Court) lacks independence and therefore the costs are irrecoverable merely on the basis that they are employed by the litigant. 11. As to the reliance by the respondents (in their submissions at [53]-[55], [61], [72]) on time entries which are said to demonstrate that the applicants were "intimately involved" in the conduct of the litigation, the applicants argue that the selected entries provide no logical basis to infer that the employed solicitors lacked the requisite degree of independence and professional detachment. The applicants say that the respondents' submission (at [63]) appears to rise no higher than the submission that the solicitor on the record (to who they seemingly incorrectly assert is Mr Springthorpe) had a personal interest in Atanaskovic Hartnell recovering fees on the basis that he had an interest in the firm being paid, because his ability to derive income depended on the firm's revenue. The applicants say that this logic applies with equal force to any employed solicitor which represents his or her employer in litigation; and they maintain that it therefore cuts across the express endorsement in Bell Lawyers of the proposition that costs associated with an employed solicitor are recoverable. It is submitted that it would be inconsistent with Bell Lawyers to impugn Mr Springthorpe's objectivity on the basis of his "merely derivative" interest, as with all employees, in the partnership's success in the litigation. 12. Insofar as the respondents contend that there is some relevance to the fact that the partners of Atanaskovic Hartnell stood to profit from the litigation (see their submissions at [56], [59], [71]), the applicants say that this issue was unexplored at first instance given the way in which the case was run by the respondents but in any event they argue that the fact that the employer stands monetarily to profit or lose from the litigation will almost always be the case when in-house lawyers represent their employer in litigation. It is submitted that, as a result of Bell Lawyers, this cannot be a basis for impugning an employer's ability to recover the professional legal costs of its employed solicitors. 13. Referring to the applicants' submissions as to the contention that United Petroleum is clearly wrong, the respondents maintain that the distinction between the salaried in-house solicitor on the record and a law firm's employed solicitors is not illusory; and they submit that the applicants' submission to that effect fails to take into consideration the benefits of a "separate legal personality" afforded to an incorporated legal practice, as alluded to by White JA in Burrows at [162]. 14. The respondents refer to the explanation given in Guneser v Aitken Partners Pty Ltd [2020] VSC 329 (Guneser v Aitken) (at [67]) of the fundamental differences between in-house lawyers of companies and government agencies, on the one hand, and incorporated legal practices on the other, in connection with the generation and use of legal services; namely, that the essential enterprise of the government agency or private corporation that employs in-house lawyers is generally non-legal, with the provision of in-house legal services being ancillary to that primary enterprise; whereas, the essential enterprise of an incorporated legal practice is the provision of legal services; and that a company or government agency receives advice from its employed in-house lawyers as the "consumer" of their legal services; whereas, ordinarily, an incorporated legal practice, through its director-principals, oversees the legal work of its employed lawyers in order to supply legal services to consumers of those services. 15. The respondents, as noted earlier, maintain that there are clear differences in the characteristics of a law partnership and an incorporated legal practice. It is submitted that this allows for a lack of overlap, or even a complete separation, between the control of the legal practice (through its directors) and the ownership of it. The respondents accept that separate control and ownership of an incorporated legal practice may (where that is the case) reduce concern about the potential for there to be a conflicting financial interest to profit from the litigation such as may exist where those features are coextensive, as in the case of a law partnership. However, they submit that the applicants do not address the pertinent issue that the partners of Atanaskovic Hartnell still profit in the litigation from the work performed by Mr Springthorpe and others, even if the partners themselves do not record their time. It is submitted that the fact that the partners of Atanaskovic Hartnell are not claiming the costs of their personal time in the litigation is irrelevant when they stand to profit from the litigation in any event. 16. The respondents argue that it is clear from the timesheets that comprise the costs application that: the lawyers who did the work reported to Mr Atanaskovic and he had oversight and control over the strategy and decision making of the litigation; Mr Atanaskovic retained a critical role at the apex of Atanaskovic Hartnell and the litigation; and Mr Atanaskovic remained jointly and severally liable for the profits and losses arising from the conduct and result of the litigation. Thus, it is submitted that the applicants cannot establish any degree of meaningful functional separation between Mr Springthorpe and Atanaskovic Hartnell in this case; and that the primary judge correctly held that the Victorian Court of Appeal's decision in United Petroleum (at [65]) was precisely on point with the present case. 17. In their submissions in reply, as to the distinctions drawn by the respondents between the functions of in-house lawyers of companies and government agencies on the one hand and employed solicitors on the other, the applicants say that; to reason that: in every case, a company or government agency receives legal services from its employed solicitors while a law firm supplies such services to third-parties; and only entities that receive legal services are entitled to indemnity, is unsupported by evidence and circular (cf Guneser v Aitken at [67]). 18. The applicants argue that the present case illustrates that a law firm which is representing itself in complex litigation may choose to use one of its employed solicitors to provide legal services to the firm in relation to that litigation. The applicants say that there are ample practical and commercial reasons why a law firm might choose to do so, including savings in time and cost. It is submitted that, by directly choosing the solicitor who is to be employed, the firm maximises the efficiency and competence with which the services are provided (for example, by using a single person who already has familiarity with the complex facts rather than one or more external solicitors who need to be briefed). Further, it is said that the law firm also protects itself against the possibility of over-servicing and duplication of work by members of an external law firm's team. It is submitted that these are the same considerations which lead large corporations and government departments to employ considerable numbers of in-house solicitors to conduct litigation, instead of always engaging external solicitors. 19. The applicants say that, in any event, even if it be assumed that the distinction in Guneser v Aitken is universally applicable, it provides no reason to conclude that companies or government agencies should be entitled to recover the professional costs of their employed solicitors, while law firms should not; nor does it provide any reason to conclude that corporations or government agencies which act through an employed solicitor are not "self- represented"; but that law firms in the same situation are "self-represented". The applicants argue that it shows how problematic concepts of "self-representation" can be when applying a statutory regime that draws no such distinction. 20. Insofar as the respondents (at [69]-[70] of their written submissions) implicitly assert that, even if incorporated law firms can recover for the professional costs of their employed solicitors, unincorporated law firms should not be permitted to do so; the applicants say that this reasoning is tenuous and dependent on unsubstantiated factual assertions concerning the prospect of non-lawyer shareholders of an incorporated law firm. They note that Macaulay J eschewed these matters as "not of telling significance" and "of lower importance" in Guneser v Aitken at [71]-[72]. The applicants say that it would be anomalous if the recoverability of employees' professional legal costs depended on whether the law firm operated as a conventional partnership or as an incorporated legal practice; and they maintain that there is nothing in Bell Lawyers that supports such a distinction. 21. The respondents argue that the applicants' central grievance (that the decision leads to a perverse outcome which is antithetical to the High Court's motivation to ensure equality of all before the law) incorrectly implies that, following the High Court's abolition of the Chorley exception in Bell Lawyers, incorporated legal practices are entitled to recover the professional fees of solicitors employed by them. The respondents, in written submissions, maintain that there is no authority in this State where an incorporated legal practice that was a party to litigation and which acts for itself has been entitled to recover the professional fees of its employed solicitors (cf Ratkovic v Hadzic referred to above). The employed solicitor rule 1. Given the significance attributed to the employed solicitor rule in the present appeal, it is worth setting out separately the parties' entitlements as to the so-called rule. 2. The respondents argue that the fundamental flaw in the applicants' argument is that the applicants conflate the position of a self-represented incorporated legal practice with the position of an individual solicitor who is a party to litigation in a personal capacity and who engages an incorporated legal practice of which he or she is the sole director and shareholder. The respondents maintain that there is a critical difference; namely, that the former is self-represented while the latter is not. The respondents maintain that an incorporated legal practice is not one and the same as a natural person who is that corporation's sole director and shareholder. 3. The respondents thus argue that the applicants' true grievance is not with the primary judge's "approach" nor in the way his Honour treated Bell Lawyers but, rather, with the well-settled doctrine of separate corporate personality; and they say that is not the issue before the Court in this appeal. The respondents argue that any perceived controversy caused by application of Bell Lawyers to litigants that are incorporated legal practices is not something that this Court is required to resolve in this appeal, noting that the present case involves a traditional law firm partnership (the partners of which are both the litigant parties and the solicitors on the record in the proceedings before the Supreme Court). Thus, the respondents say that the applicants were, and remain, self-represented. 4. The respondents argue that, however the "employed solicitor rule" should be characterised (whether as an exception to the general rule or an application of it), the rule does not assist the applicants. The respondents say that there is no authority which supports the proposition that a legal practice, regardless of business structure, may recover its costs of representing itself in proceedings on the basis of the "employed solicitor rule"; and that in all cases where the "employed solicitor rule" has applied to entitle a party to recover the professional fees of its employed solicitor, that party: has not been an entity capable of conducting legal practice; and has not been (and could not have been) self-represented, but instead, was represented by its employed in-house solicitor. 5. The respondents emphasise that the legal personality of a corporation is separate from that of an individual who controls the corporation; and hence that an individual who is the sole director and shareholder of a corporation may contract with that corporation for the provision of services, so as to give rise to a legally binding and enforceable obligation to pay the corporation for those services; contrasting this position with law firm partnerships (which do not have a separate legal personality from the partners that comprise them). It is noted that this places law firm partnerships in the same position as an individual legal practitioner and hence the respondents point to the statement of the Victorian Court of Appeal in United Petroleum that there is no reason why a firm of solicitors should be permitted to recover in circumstances where an individual solicitor cannot. 6. The respondents say that the general rule to which the Chorley exception applied (prior to its abolition in Bell Lawyers) applies to prevent self-represented litigants from recovering costs for their own professional services deployed in their own interest. They say that, conversely, the "employed solicitor rule" does not apply to self-represented litigants; rather, it applies to litigants who are represented by a solicitor employed by the litigant to act as its in-house solicitor (the difference being that the litigant is represented by its employed solicitor and is not self-represented). 7. Further, the respondents maintain that there are fundamental differences in the relationship between an in-house solicitor and his or her employer on the one hand, and an employed solicitor of a law firm partnership and that partnership on the other, which they argue demonstrate how the application of the "employed solicitor rule" can never apply to any self-represented litigant. It is said that an in-house solicitor is engaged by its employer for the very purpose of providing legal services to its employer as client; whereas a solicitor employed by a law firm is engaged to provide legal services, on behalf of and as agent for, the employer law firm to third party clients. 8. The respondents maintain that a sole director and shareholder solicitor is able to recover the legal costs he or she has incurred to the incorporated legal practice that he or she controls, not by virtue of the "employed solicitor rule" (whether as an exception to or extension of the general rule) but, instead, by virtue of the separate legal personality between the individual solicitor as litigant and the incorporated legal practice as the legal practice acting on his or her behalf. Reference is made in this context to the High Court's consideration of the employed solicitor rule, including Gageler J's comments at [68], in Bell Lawyers as summarised by the Victorian Court of Appeal in United Petroleum. 9. The respondents note that the relevant authorities cited by Gageler J at [68] of Bell Lawyers concerned application of the "employed solicitor rule" to in-house solicitors employed by a bank, acting as the bank's solicitor on the record and with general conduct of the proceedings on the bank's behalf, and a solicitor employed by the Crown on a salary. The respondents argue that it is clear from the High Court's analysis that the "employed solicitor rule" has no application to self-represented litigants, such as the appellants in the present case; and that this result follows regardless of the characterisation of the "employed solicitor rule" as an exception to, or extension of, the general rule. 10. The respondents argue that to treat employee solicitors of a law firm partnership as falling within the "well-established understanding" that underpins the "employed solicitor rule" would considerably undermine Bell Lawyers; and that such an extension of the rule would in fact perpetuate a significant degree of special treatment not accorded to non-lawyer litigants, referred to in Chorley as "ordinary litigants". The respondents say that in substance this would, anomalously, allow firms of solicitors to recover for their own time spent in the litigation; it would also mean that a legal practice with employees could recover fees when a sole practitioner could not. 11. In response, the applicants say that, insofar as the respondents contend that incorporated legal practices are not entitled to recover their employed solicitors' professional fees when that practice acts for itself in litigation (referring to the respondents' submissions at [3] and footnote 3), is incorrect, referring to Bell Lawyers. The applicants point to the following passages in that decision: [44], in which the plurality emphasised that the cost of professional legal services rendered by an employed lawyer is included in the definition of "costs" in s 3(1) of the Civil Procedure Act (an observation which the applicants note would apply regardless of the identity of the employer); [46]-[47], in which the plurality rejected the submission that overturning the Chorley exception would occasion inconvenience "in relation to the use of in-house solicitors by governments and corporations, including incorporated legal practices"; [50], in which the plurality expressed the ongoing operation of the employed solicitor rule in inclusive terms: "in-house lawyers employed by governments and others"; [51]-[53], in which the plurality expressly left open only the situation of "a solicitor employed by an incorporated legal practice of which he or she is the sole director and shareholder" (said to be a matter for the legislature); and [68], in which Gageler J expressed the employed solicitor rule in expansive terms, as applying to: "a party using an employed solicitor" and "the employer who is a party to the litigation". The applicants point out that the observations by the plurality and by Gageler J, respectively, at [44], [50] and [68], apply equally to unincorporated legal practices. 12. The applicants also point to the observation by Meagher JA in Burrows at [16] that Bell Lawyers had resolved the question as to the recoverability of legal costs when an incorporated legal practice sues or is sued and acts for itself by its employed solicitors, with the only situation left open being the situation where the self-represented incorporated legal practice was a "vehicle for a sole practitioner" (and they refer also to [19] of that decision). 13. The applicants submit that the respondents' argument rests on the contentions that the "employed solicitor rule" does not apply to "self-represented litigants"; that a corporation or government agency which acts through an employed solicitor is not "self-represented"; and that a law firm in the same situation is "self-represented". The applicants maintain that the respondents' argument is inconsistent with the reasoning in Bell Lawyers and should be rejected. 14. The applicants submit that it is equally as meaningful to describe a corporation as self-represented where an employed solicitor appears on its behalf as it is to describe an unincorporated law firm for whom an employed solicitor appears. It is said that each employed solicitor has his or her own independent professional obligations, and each his or her own place within the broader organisational structure of their employer; yet, under United Petroleum conception, only the corporation is entitled to recover the professional legal costs of its employee. 15. The applicants argue that even if the distinction drawn by the respondents in their submissions at [22] between in-house solicitors and employed solicitors of a law firm partnership is accepted, it does not demonstrate how the application of the "employed solicitor rule" can never apply to any self-represented litigant. The applicants argue that an employed solicitor of a law firm is usually employed to provide legal services to third party clients; and that if that solicitor does provide legal services to their employer as a client, the solicitor does not do so in a relevantly different way to an in-house lawyer employed by a corporation or government agency. 16. The applicants argue that (contrary to the respondents' submissions at [12] and [28], which rely on United Petroleum at [108]), there is a reason why a firm of solicitors should be entitled to recover the professional costs of employed solicitors while an individual solicitor cannot. The applicants say that an individual solicitor cannot seek an indemnity for an employee's professional legal costs because, by definition, an individual practitioner does not employ any solicitors; thus, the only professional legal services for which an individual solicitor could seek compensation is his or her own services (something that is impermissible since Bell Lawyers). The applicants say that the fact that an individual solicitor was not conceptually seeking an indemnity against the expense of professional legal costs incurred was a significant component of the plurality's reasons (referring to Bell Lawyers at [33]-[39]). The applicants argue that allowing a law firm to recover the professional legal costs of its employed solicitors on the basis of the "employed solicitor rule" does not give rise to some anomaly which unfairly privileges law firms over individual legal practitioners; rather, it reflects the fact that a law firm in that situation incurs actual professional legal costs in the course of the litigation, albeit that those costs are incurred by reason of the employment of the solicitor allocated to the litigation in question. The applicants argue that (contrary to the respondents' submissions at [12]), this is not a result of the fact that a law firm partnership does not have a separate legal personality from the partners that comprise the partnership; it simply reflects the fact that the "employed solicitor rule" cannot apply to a person who does not employ solicitors. Determination 1. The relevant starting point, noting that "costs" for the purposes of the statutory costs regime in this State includes "remuneration" and that this reference to remuneration has been held to encompass remuneration paid under a contract for services (and hence the costs referable to the provision of legal services by employed solicitors in an appropriate case), must be the general principle or rule that costs are awarded to compensate for actual costs incurred in relation to the provision of professional legal services (and not as compensation for lost time or the like). 2. Also relevant to note at the outset are the observations of Leeming JA in Hasler v Singtel Optus Pty Ltd; Curtis v Singtel Optus Pty Ltd; Singtel Optus Pty Ltd v Almad Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 (at [93]ff) as to the passage in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 (Farah) at [135], in which the High Court emphasised, relevantly, that intermediate appellate courts should not (unless convinced that the interpretation is plainly wrong) depart from decisions in intermediate appellate courts in another jurisdiction on both the interpretation of Commonwealth legislation or uniform national legislation or in relation to non-statutory law (as to the latter, this being because there is a common law of Australia rather than of each Australian jurisdiction). Leeming JA, in the context of considering the decision of the Western Australian Court of Appeal in Westpac Banking Corporation v Bell Group Ltd (in liq) (No 3) (2012) 44 WAR 1; [2012] WASCA 157 as to the meaning to be attributed to the reasons of the High Court in Farah, noted that although considerations of comity required regard to be had to decisions of intermediate appellate courts in applying and developing the common law of Australia, this Court is not bound indirectly by another court's interpretation of what the High Court had said (see at [98]-[100]). 3. The relevance of this in the present context is that, while this Court is bound by what the High Court has said in Bell Lawyers (for example as to the Chorley exception not forming part of the common law of Australia), this Court would not be bound (though it would be required to pay proper regard to) by the understanding of the Victorian Court of Appeal as to the import of that decision applied to the present fact situation. Hence, the applicants emphasise that this Court is not bound by what was said in United Petroleum about Bell Lawyers. That, however, does not gainsay the persuasive force of the reasoning in United Petroleum nor does it mean that the primary judge was in error in following that decision. 4. The relevant question in the present case was not addressed in Bell Lawyers nor was it the issue determined in either Burrows or Spencer v Coshott (in both of which cases this Court was careful to confine the consideration to the particular circumstances of the case). It was, however, the issue determined in United Petroleum, albeit that the statutory provision was there different in the respect identified in the submissions in this Court. I do not accept that the primary judge erred in rejecting the submission that United Petroleum was relevantly distinguishable, since nothing in the reasoning of the Victorian Court of Appeal placed any significance on the concept of "remuneration" and the Court effectively approached the matter on the premise that costs referable to employed solicitors were capable of falling within the statutory provision for costs in that State. Nor is it distinguishable in the second of the ways argued by the applicants. 5. As noted, there was a divergence in the High Court as to the status in the common law of Australia of the "employed solicitor rule" (i.e., the rule that a litigant may recover the costs referable to an employed solicitor notwithstanding that the employed solicitor represents in effect an overhead): Gageler J considered that it pre-dated the Chorley exception and saw it as an application of the general indemnity rule; Nettle J did not consider it to be part of the common law of Australia and treated it as falling within the Chorley exception. The plurality considered the recoverability of costs of "in-house" solicitors in the context of solicitors employed by government bodies or corporations ("and others") and raised particular concern in relation to the position of incorporated legal practices where the employed solicitor was the sole director and shareholder. 6. I accept the submission for the respondents that, in cases where an incorporated legal practice is involved, it is necessary to pay heed to the separate legal personality of such a corporation but I consider that the question thrown up on the present fact situation (which does not involve an incorporated law practice) is best answered by reference to whether the partners of the unincorporated legal practice were, as a matter of substance, effectively acting for themselves (i.e., self-represented) when they defended the Equity proceedings (and, for that matter, when they later prosecuted the judicial review proceedings). My view is that they were, and hence they fall outside the scope of the general indemnity principle because they are seeking in essence to be compensated for the time spent by their employed solicitors in representing the "firm" in the litigation. In that regard, it is significant that the solicitor on the record in the litigation was one of the applicants (and a plaintiff in the proceedings himself). Work done by employed solicitors of the "firm" and for which the partners of the "firm" are ultimately responsible is effectively work of the firm. 7. I consider that the principles articulated by the plurality in determining the (different) question as to the maintenance or abolition of the Chorley exception, equally lead to the conclusion that the applicants are not entitled to recover the costs of their employed solicitors, for the reasons that the primary judge gave (and for the reasons that led to the similar result in United Petroleum). The question is not whether there was criticism as to the conduct of the particular employed solicitors in the present case – clearly, there was not. However, the concept of independence emphasised by the plurality in Bell Lawyers is one that requires sufficient professional detachment on the part of the lawyers concerned; and the reality is that employed solicitors in an unincorporated legal practice cannot be viewed as sufficiently independent of the partners of the firm to satisfy that requirement. True it is that such legal practitioners owe their paramount duty to the Court and it may be assumed that they observed that duty faithfully in the present case. However, they remain subject to the direction of the partners who have a direct supervisory role and are responsible for the allocation and overview of the legal services performed by them; and those partners have a direct personal interest in the outcome of the litigation (and its costs implications). 8. The facts of the present case, as recognised by the primary judge, more closely follow the factual matrix in United Petroleum than that which was considered in Burrows or Spencer v Coshott, and I am not persuaded that the primary judge erred in reaching a similar conclusion to that reached in United Petroleum. The majority of the High Court, in the unequivocal abrogation of the Chorley exception in Australian common law, made clear that the High Court rejected the notion that legal practitioners who expend time litigating their own case should be entitled to recoup these as "costs incurred" during litigation (see Bell Lawyers at [38]ff). 9. Insofar as the applicants place weight on the inclusive reference by the plurality to government bodies, corporations "and others", this was in response to a submission that had been made regarding the "serious inconvenience" that would be "occasioned in relation to the use of in-house solicitors by governments and corporations, including incorporated legal practices" following an abrogation of the Chorley exception (see at [46] of Bell Lawyers). Although the plurality went on at [46] to refer to "governments and other employers, and incorporated legal practices operating through a sole director", this concern is dismissed by the plurality there referring to "a government or corporate litigant" (at [47]). Therefore, it appears reasonably clear that (leaving aside government entities) this finding was in relation to corporate employers, which necessary precludes an unincorporated law firm operating in a partnership. That is consistent with an understanding of "in-house" lawyers as being other than the ordinary solicitor workforce of a law firm that provides legal services in the main to external clients. 10. To enable an unincorporated law firm to recoup the cost of employed solicitors amounts to recovery of the partnership's own time and effort (albeit through the partnership's employed solicitors) as professional legal costs, in effect reverting to a position where solicitor litigants are in a privileged position compared to other self-represented litigants (inconsistently with the policy of equality extolled in Bell Lawyers). 11. I do not consider that the fact that this gives rise or may give rise to an anomaly as between the position of incorporated and unincorporated legal practices should lead to the opposite result because, as noted above, the structure of legal practices is a matter for the principals of those practices (and in any event the High Court in Bell Lawyers considered the position of incorporated law practices to be problematic in this regard – at least those that operated with a sole director and shareholder). 12. As to the submission by the applicants that the reference by the plurality to an "incorporated legal practices operating through a sole director" indicates that the plurality "had no difficulty with law firms in general recovering the professional costs of their employed solicitors" (in the applicants' words at [41] of their submissions). As I read the plurality's reasoning, the question is whether the litigant is a distinct and separate legal entity (or sufficiently professionally detached) from its legal representative (or otherwise the legal professional providing the advice) for the purposes of characterising a party as a self-represented litigant. The plurality's explicit reference in relation to incorporated legal practices says nothing as to the application of the general indemnity rule in relation to unincorporated legal practices. I note that Simpson AJA's reasoning in Spencer v Coshott at [101] confirms that this passage of Bell Lawyers is to be interpreted as the High Court recognising the separate legal personality of a corporation (which led to the outcome that a litigant party advised by its incorporated law practice which he or she is the sole shareholder and director is entitled to costs). In supporting this conclusion, her Honour had considered that United Petroleum was not relevant as it had no bearing on the question of an incorporated legal practice, which suggests that the incorporation of the legal practice was the distinguishing factor (see Spencer v Coshott at [64]-[66]). 13. The applicants submit at [39], that law firms (however structured) would be placed in a worse position than other litigants by preventing them from recovering costs for professional legal costs, and that this would be an affront to equality before the law. However, any solicitor litigant, like every other litigant who is party to proceedings, is entitled under a costs order to recover costs where it actually incurs professional legal costs. It does not incur these costs when acting for itself. Any departure from the application of the general rule in this context must be for the High Court (or the legislature) to determine. The ability for government bodies (or corporate entities not being legal firms, such as banks) to claim in-house solicitors/counsel fees, to my mind, must be an acceptance that policy permits it (they being sufficiently independent and their employer not being in the position of someone who operates to profit from litigation). 14. The primary judge's conclusion with respect to unincorporated law firm litigants does not, in my opinion, import incoherence into the law (as the applicants suggest). The application of the general indemnity rule applies such that one must determine whether the particular litigant is in essence a self-represented litigant. I thus consider that Brereton JA was correct in concluding that there is a real and meaningful distinction (as recognised in Bell Lawyers) between a corporation or government department represented by its (employed) in-house lawyers and the partners of an unincorporated law firm litigant represented by their own employed solicitors. This is not an exception but, rather, the application of the general rule. Orders 1. For the above reasons, I propose the following orders: 1. If leave be necessary, grant leave to appeal. 2. Dismiss appeal with costs. 1. KIRK JA: This appeal concerns whether partners of an unincorporated law firm who obtained a costs order in their favour in proceedings in the Supreme Court are entitled, as part of their costs recovery, to claim with respect to work done by solicitors employed by the partnership. In my view they can. 2. That result: 1. is mandated by the relevant statutory text, as construed by the High Court in Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29; 2. follows as a matter of legal principle in light of the High Court's decisions in Cachia v Hanes (1994) 179 CLR 403; [1994] HCA 14 and Bell Lawyers; 3. is supported by an understanding of the historical origins of the relevant principles; and 4. whilst contrary to the conclusion reached by the Victorian Court of Appeal in United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2020] VSCA 15, that decision is not one that this Court is required to follow unless plainly wrong given the different statutory context and given that, at heart, both courts are seeking to understand and give effect to binding High Court authority. 1. The circumstances of the current dispute are outlined by Ward P, and her Honour also summarises the decision of Brereton JA (the primary judge) and the submissions of the parties. 2. The case raises a significant issue of principle. I agree with Ward P that if leave to appeal is required – an issue which need not be determined – it should be granted. The appeal should be upheld. 3. I will address the issues that arise by: referring to the statutory provisions (as construed in Bell Lawyers); examining relevant High Court authority as to common law principle; explaining the evolution of the principles at issue in prior case law; considering three appellate decisions subsequent to Bell Lawyers; then drawing the threads together by setting out the ways in which I respectfully disagree with the conclusions of the primary judge. The statutory provisions 1. As explained by the primary judge, the order of the Supreme Court that is at issue required the first respondent to pay the appellants' costs of the proceedings, assessed on the ordinary basis up to 9 August 2019 and on an indemnity basis thereafter: Birketu v Castagnet [2022] NSWSC 1435 (PJ) at [2]. 2. That order was authorised by statutory provisions and must be understood in the context of those provisions. Section 98(1) of the Civil Procedure Act 2005 (NSW) (CPA) provides that, subject to the Act and any rules of court, "costs" are in the discretion of the court; the court has full power to determine by whom, to whom and to what extent costs are to be paid; and the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. 3. The term "costs" is defined in s 3(1) of the CPA as follows: costs, in relation to proceedings, means costs payable in or in relation to the proceedings, and includes fees, disbursements, expenses and remuneration. 1. The word "remuneration" is not defined in that Act, nor in the Interpretation Act 1987 (NSW). Part 42 of the Uniform Civil Procedure Rules 2005 (NSW) deals with various aspects of costs orders, but not in a way that is material here. 2. In Bell Lawyers, in this Court, the majority held that a barrister litigant was entitled to costs for her own work, applying the "Chorley exception" (as explained further below): Pentelow v Bell Lawyers Pty Ltd [2018] NSWCA 150. Meagher JA dissented. His Honour accepted that he was bound by authority to recognise that exception as a matter of general law, but did not consider it should be extended to encompass barristers. Relevantly, he expressed scepticism that the Chorley exception was consistent with the statutory definition of "costs" in the CPA, picking up on earlier judicial doubts about that point. That was so because it did not represent any cost that was "payable" to anyone else; it was a claim for an amount the claimant wanted for themselves for their own work: see at [134]-[141]. 3. In the joint judgment of Kiefel CJ, Bell, Keane and Gordon JJ in the High Court, their Honours noted that view of Meagher JA, then said that it was "preferable to address the proper effect of ss 3 and 98(1) of the Civil Procedure Act in the context of a discussion of the broader question whether the Chorley exception should be recognised as part of the common law of Australia" (at [16]). Their Honours held that the exception should no longer be recognised as part of the common law of Australia: see at [2]-[3], [39], [54] and [57]. The term "common law" is used here in the sense of judge-made law, albeit built on a statutory foundation: see similarly Gageler J at [63], Edelman J at [80]-[84]. But their Honours' statement that it was preferable to address the broader question did not mean that they were only determining the issue based upon the common law. 4. Their Honours came back to consider the significance of the definition of "costs" in the CPA, doing so in the context of an argument by the respondent that in fact the Chorley exception had effectively been incorporated by the terms of the Act – the opposite of the point raised by Meagher JA. Their Honours not only rejected that argument, they held, consistently with Meagher JA's suggestion, that the exception was excluded by the statutory language, stating as follows: [44] In s 3(1) of the Civil Procedure Act, the "means" part of the definition, in referring to "costs payable", is a restatement of the general rule that costs are awarded only for professional costs actually incurred. The "includes" part of the definition, in referring to "remuneration", can be seen readily enough to encompass remuneration for professional services rendered under a contract of service as well as remuneration for professional services rendered under a contract for services. In so doing, it "makes plain" that the cost of professional legal services rendered by an employed lawyer is included in the definition of "costs". The definition, being otherwise exhaustive, leaves no room for the Chorley exception as a matter of legislative intention. "Remuneration" is simply not a word which is apt to include the notion of payment to a person by himself or herself for work done by himself or herself. 1. This paragraph indicates that their Honours' rejection of the Chorley exception is also based upon the particular terms of the definition of "costs" in the CPA, that is, on top of being a broader rejection of the principle as a matter of common law. Paragraph 44 also spells out that the "employed solicitor rule" (to use the label employed by the parties in this case) is itself mandated by that statutory definition. I discuss that rule – which I shall call the "employed lawyer rule", given that it extends to employed barristers – further below. 2. That the joint judgment determined the issue based upon the statutory terms of the CPA is further supported by [47], which said of the employed lawyer rule: such arrangements have been treated as being outside the general rule because it is accepted that the recovery of the professional costs of in-house solicitors enures by way of indemnity to the employer, as is confirmed by the inclusion of "remuneration" in the definition of "costs" in the Civil Procedure Act. 1. That understanding of the decision is also reflected in this Court's decision in Burrows v MacPherson & Kelley Lawyers (Sydney) Pty Ltd [2021] NSWCA 148 at [8]-[17] per Meagher JA and [116] per Leeming JA. It also appears implicit in this Court's decision in Spencer v Coshott (2021) 106 NSWLR 84; [2021] NSWCA 235: see at [86] and [102]. I discuss those decisions below. 2. In Bell Lawyers, Gageler J agreed with the reasoning of the joint judgment as to why the Chorley exception should be abandoned (at [63]), and added some additional reasons. His Honour did not state that whether or not he agreed with the joint judgment as regards the independent statutory conclusion. He did expressly rely on the statutory definition of "costs", saying: [67] As to the immediate statutory setting for the present appeal, the reasons given by Kiefel CJ, Bell, Keane and Gordon JJ show that the definition of "costs" in s 3(1) of the Civil Procedure Act 2005 (NSW) reflects the general principle in a manner which leaves no room for an exception for recovery of costs by a legal practitioner acting on his or her own behalf. 1. However, as his Honour did not refer to the definition of "remuneration" in this regard, this part of his reasoning does not advance analysis of the significance of that word. 2. The appellants' claim at issue here is based upon remuneration for professional services paid to their solicitors employed under a contract of service (albeit the claim will not necessarily be quantified on that basis). It is thus "remuneration", and "costs", in the sense articulated by four members of the High Court. 3. The respondent's argument tended to present the issue for determination as though it were a matter of only considering and applying the general law. That is one important level of argument. But it is not the only one. The statutory text was an independent basis for the conclusion reached in the joint judgment. Their Honour's articulation of the meaning of "remuneration" in s 3(1) of the CPA is part of the ratio of the case and binding upon this Court. We are "not entitled to pick out one reason for the judgment as the ratio decidendi and neglect the other": Ex parte King; Re Blackley (1938) 38 SR (NSW) 483 at 490 per Jordan CJ; see also eg Day v Ocean Beach Hotel Shellharbour Pty Ltd (2013) 85 NSWLR 335; [2013] NSWCA 250 at [32]. 4. It may be possible to argue that, despite the clear and unqualified statutory construction adopted by four members of the High Court, a limitation should be read into the definition so as to exclude remuneration paid for work done by solicitors employed by an unincorporated law firm. That is a very specific sort of implication. There is no textual hook on which it might hang. Nor did the respondent point to any particular contextual matters which might support it. It is an unlikely sort of implication. The notion of "remuneration" is a general one, referring to money paid for work or services rendered. It has nothing in particular to do with the identity of the person paying. 5. No doubt the respondent might argue that purposive considerations are relevant, and would call in aid the common law arguments that they make and which were accepted below. Such arguments cannot simply be equated with purposive considerations relevant to construing the CPA. Indeed, the fact that the joint judgment reached its conclusion based also upon the statutory text necessarily implies that even prior to the High Court's alteration to the common law in rejecting the Chorley exception, the New South Wales Parliament had departed from that prior legal understanding (even if that fact had not yet been recognised). The general law is not a definitive guide to how the term "remuneration" in the CPA should be understood. 6. In my view there is no sound reason of statutory construction to read in a limit to the meaning of "remuneration" in the CPA which excludes employed solicitors of unincorporated law firms. That being so, the meaning of that term adopted at [44] of Bell Lawyers is determinative of this appeal. The primary judge did not address the argument at this level of statutory construction, although the appellant indicated it was put. His Honour did not refer to that paragraph, except when referring to whether or not the decision in United Petroleum was distinguishable: PJ [48]. In any event, the issue was squarely raised on appeal by the appellant. 7. Although this point is sufficient to resolve the appeal, it is appropriate that I also address the matter at the general law level argued by the appellant. The trio of High Court decisions 1. The High Court's decision in Guss v Veenhuizen (No 2) (1976) 136 CLR 47; [1976] HCA 57 concerned a claim for costs by a solicitor who acted as solicitor on the record for himself in a High Court appeal, which he won. It emerged that, through no fault of his own, the solicitor was not listed on the High Court roll. The issue was whether he could claim costs for himself given that fact. The applicability of the Chorley exception was presumed; the majority of Gibbs ACJ, Jacobs and Aickin JJ referred to "the well established rule of practice which entitles a person, being a solicitor, to certain professional costs" where they have acted for themselves (at 51). The majority viewed the rule of practice as based not upon a "privilege of a solicitor" but rather on the fact that solicitor's costs "can be quantified on a taxation of costs" (at 52). That being so, the solicitor could obtain the benefit of the exception even though not on the roll. The minority of Mason and Murphy JJ saw the issue as determined by the effect of certain statutory provisions. 2. In Cachia v Hanes, in 1994, a litigant in person had succeeded in a case in the Supreme Court of this State, with an order of costs made in his favour. The main issue was whether those costs extended to recompensing him for his lost time, for which he sought payment at the hourly rate he charged as a self-employed consulting engineer. The relevant court rule provided that all such costs could be allowed "as were necessary or proper for the attainment of justice or for enforcing or defending the rights of the party". The majority of Mason CJ, Brennan, Deane, Dawson and McHugh JJ held that that did not extend to the time spent by the litigant, stating (at 410, citation omitted): Costs, within the meaning of the Rules, are reimbursement for work done or expenses incurred by a practitioner or practitioner's employee. Compensation for the loss of time of a litigant in person cannot be said to constitute costs within the meaning of the Rules. This is hardly surprising. It has not been doubted since 1278, when the Statute of Gloucester introduced the notion of costs to the common law, that costs are awarded by way of indemnity (or, more accurately, partial indemnity) for professional legal costs actually incurred in the conduct of litigation. 1. The majority referred subsequently to the "general rule" (at 411) or "general principle" (at 412 and 413), by which they referred to two linked points: that costs are awarded as an indemnity for costs actually incurred, limited to legal costs. The majority did not seek to delineate what constituted "legal costs", but it was clear that that phrase did not include a cost relating to the use or loss of the litigant's own time. Thus the engineer's claim for compensation for the opportunity cost of his own time failed: it was neither a payment for costs he had actually incurred, nor was it legal costs. 2. The majority referred to the "somewhat anomalous exception" introduced by Chorley (at 411), whereby a solicitor acting for themselves could recover for their own time, even though costs had not actually been incurred. They referred to the "the privileged position afforded to a solicitor acting for himself" in that regard (ibid). Their Honours indicated that "the logical answer may be to abandon the exception in favour of the general principle rather than the other way round", but it was not necessary to go that far in order to resolve the case (at 412-413). The majority's decision implicitly rejected the view expressed in Guss v Veenhuizen that the basis of the Chorley exception was not a privilege of solicitors but was simply based on the ability to quantify costs claims of solicitors as opposed to others. It was entirely possible to quantify the opportunity cost to the engineer. 3. The decision did not touch upon the employed lawyer rule. But the statement of the general principle is at the least consistent with recognising claims for employed solicitors, as a legal cost actually incurred. 4. Bell Lawyers concerned a litigant who was a barrister. She was represented by a solicitor in Local Court proceedings in which she sued a law firm for unpaid fees, and by the solicitor and counsel in a Supreme Court appeal. However, she had done some legal work involved in the litigation herself (eg preparing written submissions). The issue was whether she could claim payment for that work. The High Court unanimously held that she could not. Justice Nettle so decided based upon the narrow view that the Chorley exception should not be extended to barristers. The other members of the Court decided the case upon the broader basis that the Chorley exception should no longer be regarded as part of Australian law. As already addressed, the joint judgment also based their decision upon the statutory language in the CPA. 5. The joint judgment commenced as follows (citations omitted): [1] As a general rule, a self-represented litigant may not obtain any recompense for the value of his or her time spent in litigation. Under an exception to the general rule, a self-represented litigant who happens to be a solicitor may recover his or her professional costs of acting in the litigation. This exception is commonly referred to as "the Chorley exception" … 1. The judgment refers a number of times to the "general rule", to which Chorley was an exception. Their Honours did not use the label of the "general principle" employed by the majority in Cachia (whereas Gageler J did). However, their Honours did quote and rely on the majority's statement of that general principle: at [22] and [33]. Their Honour's statement of the general rule is the corollary of that general principle: because costs are awarded by way of indemnity for professional legal costs actually incurred (the general principle) they do not extend to the value of the litigant's own time (the general rule). It should be noted, incidentally, that this general rule is not limited to where the litigant is self-represented. It applies even if they are represented, as the barrister was in the proceedings in question. 2. Their Honour's reasons for overturning the Chorley exception to the general rule, as a matter of common law, were in summary as follows. It was not self-evidently true that there was an efficiency or benefit in a solicitor acting for themselves, where they are not then independently and impartially advised (at [17]-[19]). The suggestion that there were undue difficulties in quantifying the value of the time of a litigant in person was incorrect (at [21]-[24]). In that context, to allow recovery by solicitors for their own time was to grant them a privilege which was an affront to equality before the law (at [24]-[25]). The argument that the Chorley exception had been assumed and acted upon by the legislature was rejected (at [40]-[45]). As the exception was the product of judicial decision, reform was not a matter which should be left to legislatures (at [54]). Their Honours rejected the argument put by the respondent that "serious inconvenience would be occasioned in relation to the use of in-house solicitors by governments and corporations, including incorporated legal practices, if the Chorley exception were not recognised by this Court as part of the common law" (quoting [46]). 3. That last reason is significant here, and it is appropriate to quote their Honour's reasons at length (citations omitted): [47] This submission fails to appreciate that in relation to the use of in-house solicitors, such arrangements have been treated as being outside the general rule because it is accepted that the recovery of the professional costs of in-house solicitors enures by way of indemnity to the employer, as is confirmed by the inclusion of "remuneration" in the definition of "costs" in the Civil Procedure Act. Where a government or corporate litigant has been represented by an employed solicitor, the courts have proceeded on the footing that the actual cost to the government or corporation of the legal services provided by its employed solicitor would not exceed, in any substantial amount, the sum recoverable by it for professional legal costs. In Commonwealth Bank of Australia v Hattersley, Davies A-J explained that: "[W]here an employed solicitor is involved, the traditional approach has been to award costs on a basis comparable to the costs which would have been incurred and allowed on taxation had an independent solicitor been engaged. The assumption has been made that, in an ordinary case, the indemnity principle will not be infringed by taking this approach." … [50] A decision by this Court that the Chorley exception is not part of the common law of Australia would not disturb the well-established understanding in relation to in-house lawyers employed by governments and others, that where such a solicitor appears in proceedings to represent his or her employer the employer is entitled to recover costs in circumstances where an ordinary party would be so entitled by way of indemnity. [51] Whether the same view should be taken in relation to a solicitor employed by an incorporated legal practice of which he or she is the sole director and shareholder stands in a different position. It might be queried whether such a solicitor has sufficient professional detachment to be characterised as acting in a professional legal capacity when doing work for the incorporated legal practice. And it might be queried whether costs claimed by an incorporated legal practice for work of its sole director and shareholder are within the expansive view of indemnity that has been adopted in the authorities. In this regard, in McIlraith, Brereton J was disposed to attribute "no significance" to the circumstance that the party seeking an order for costs was an incorporated legal practice whose director was the solicitor who actually performed the work for which costs were sought. It is neither appropriate nor necessary to come to a conclusion as to whether Brereton J was correct in this regard. [52] The resolution of this question may require close consideration of the legislation which provides for incorporation of solicitors' practices and the intersection of that legislation with the provisions of the Civil Procedure Act in light of the general rule; and so the resolution of this question may be left for another day, when all the legislation that bears on the question has been the subject of argument. [53] It is sufficient for present purposes to say that whether or not an incorporated legal practice that is a vehicle for a sole practitioner should be able to obtain an order for costs for work performed by its sole director and shareholder is ultimately a matter for the legislature. Whether the Chorley exception is part of the common law of Australia is a matter for this Court. 1. Their Honours thus confirm that abolishing the Chorley exception did not disturb the employed lawyer rule. As indicated in this passage, that rule has two aspects: a litigant can claim costs for in-house (ie employed) solicitors; and such claims are quantified by reference to what an independent solicitor may have charged. 2. At [46], referring to the respondent's submission, their Honours spoke of the use of in-house solicitors "by governments and corporations, including incorporated legal practices". It does not appear that they took issue with the description of the category. At [47] their Honours referred to "[w]here a government or corporate litigant has been represented by an employed solicitor", which is consistent with what was identified at [46]. At [50] their Honours referred in a more open fashion to "in-house lawyers employed by governments and others" (at [50]), suggesting that there the rule was not exclusively associated with governments and corporations. And at [51] their Honours referred to "the expansive view of indemnity that has been adopted in the authorities". 3. It thus seems implicit that their Honours accepted that incorporated law firms would be covered by the rule, that is, that such a firm could claim costs of employed solicitors if the firm obtained a costs order in its favour in litigation in which it was a party. So much is supported by separately addressing a subset of that category, namely where costs are claimed for "a solicitor employed by an incorporated legal practice of which he or she is the sole director and shareholder" (at [51]). The doubt about the solicitor in the possible exceptional situation identified was not to do with the fact that they were a solicitor per se, but in relation to whether the solicitor has "sufficient professional detachment to be characterised as acting in a professional legal capacity when doing work for the incorporated legal practice" (ibid). In other words, the concern is that in substance the solicitor is really claiming for work they have done themselves as litigant – being, in effect, the same situation covered by the Chorley exception. As discussed below, a variant of this very issue has now been addressed by this Court in Spencer. 4. There was no suggestion that the identification of the category was meant to exclude unincorporated law firms. That issue was simply not addressed. 5. It is important to note their Honours' explanation of why the employed lawyer rule was not disturbed. Such arrangements "have been treated as being outside the general rule because it is accepted that the recovery of the professional costs of in-house solicitors enures by way of indemnity to the employer, as is confirmed by the inclusion of 'remuneration' in the definition of 'costs' in the Civil Procedure Act" (at [47], emphasis added). In other words, the employed lawyer rule was not affected by the general rule that litigants cannot recover for the value of their own time. The right to recovery of such costs "enures by way of indemnity", that is, it is an application of the general principle of indemnity, under which costs are awarded for professional legal costs actually incurred. That point is reinforced by the approval of Davies AJ's words in Hattersley that "[t]he assumption has been made that, in an ordinary case, the indemnity principle will not be infringed by taking this approach". The necessity to remunerate employed solicitors is a sufficiently linked form of expenditure to be claimable under the right of indemnity, even though the employed solicitor would (presumptively) be employed anyway and the cost of employment is a general overhead not linked in any particular way to the litigation. Claiming for such costs does not involve claiming for the litigant's own time. It involves claiming for an employment cost for work done by persons other than the litigant themselves. 6. As noted above, Gageler J agreed with the reasoning of the joint judgment as to why the Chorley exception should be abandoned as a matter of common law (at [63]). His Honour referred to the "general principle", as labelled in Cachia (at [60] and [67]-[68]). He was concerned to address why the step to overturn Chorley should be taken in the face of the fact that the New Zealand Supreme Court had recently declined to take that step. Part of that Court's concern was that relevant court rules had been framed on the basis of the exception; his Honour agreed with the joint judgment that that was not so in Australia (at [67]). Another key concern of the Supreme Court was about whether abolishing the exception would undermine the ability to claim costs for employed solicitors. Of this concern, Gageler J said the following: [68] Recovery of costs by a party using an employed solicitor predated introduction of the Chorley exception [citing Attorney-General v Shillibeer (1849) 4 Ex 606 [154 ER 1356]; Raymond v Lakeman (1865) 34 Beav 584 [55 ER 761]]. The better view, explained in a number of cases to which the Supreme Court of New Zealand appears not to have been referred, is that recovery of costs by a party using an employed solicitor is an application of the general principle rather than an exception to it [citing Registrar of Titles v Watson [1954] VLR 111 at 112-113; Commonwealth Bank of Australia v Hattersley (2001) 51 NSWLR 333 at 337 [11]-[12], 338-340 [17]-[25]]. The general rule is engaged on the basis that the costs of using the employed solicitor are still awarded as indemnity for professional legal costs actually incurred in the conduct of litigation by the employer who is a party to the litigation, albeit that those professional legal costs are incurred in the form of an overhead and are therefore not reflected in a severable liability. 1. His Honour's explanation makes express what, as I have sought to show, is also manifest in the joint judgment: the employed lawyer rule is an application of the general principle of indemnity rather than an exception to it. 2. As discussed below, that understanding of the employed lawyer rule is consistent with the case law dealing with the topic. But regardless of that being so, the explanation of that rule and its relationship to the general principle of indemnity by five members of the High Court is a key step in the reasoning as to why the Chorley exception should be overturned as a matter of common law. 3. Justice Nettle took a contrary view on that point, considering that the employed lawyer rule, to the extent it exists, is in fact a manifestation of the Chorley exception: [75] In this country, there is no employed lawyer rule as such. But the position is similar. It has long been accepted, and costs have long been taxed on the basis, that firms of solicitors, corporations and government and semi-government agencies that employ solicitors may, under the Chorley exception, recover the taxed costs of the work performed by such employee solicitors in representing their employers [fn: see and compare Attorney-General v Shillibeer (1849) 4 Ex 606 [154 ER 1356]; In re Eastwood (Deceased [1975] Ch 112; Commonwealth Bank of Australia v Hattersley (2001) 51 NSWLR 333; Ly v Jenkins (2001) 114 FCR 237; Dyktynski v BHP Titanium Minerals Pty Ltd (2004) 60 NSWLR 203; Council of the City of Sydney v Galanis [2012] NSWLEC 263; Deputy Commissioner of Taxation v Debaugy (2012) 263 FLR 193; Maher v Official Trustee in Bankruptcy (2013) 11 ABC(NS) 590]). Logically, abolition of the Chorley exception would mean that the entitlement to do so ceases to exist. It may be open to declare, as the plurality do, that the abolition of the Chorley exception should not be taken to disturb the well-established understanding in relation to in-house solicitors employed by governments and others. But why should there be a distinction? There are potentially many forensic and social considerations relevant to a determination of whether the employed solicitor rule should be permitted to survive the Chorley exception, and, if so, in what form; and none of that analysis has been or can be undertaken in this proceeding. 1. His Honour declined to overrule the Chorley exception in light of this concern, amongst others. He agreed in the orders of the Court on the basis that the exception should not be extended to barristers. 2. His Honour's characterisation is understandable. If one characterises the time spent on litigation by employed solicitors of a litigant as time spent by the litigant itself, then it is open to say that to allow recovery for the costs of employed solicitors is contrary to the general rule a litigant cannot recover for the value of their own time. However, if one characterises the general rule as focusing more precisely on the value of the time of the decision-makers or witnesses who are involved in defending themselves or otherwise making client-type choices about the conduct of the litigation, in distinction to the time spent by (other) employees engaged in performing the role of a solicitor not litigant, then the general rule and the employed lawyer rule sit together. Such matters of characterisation are disputable. But it is the latter characterisation which has been adopted by a majority of the High Court. 3. Justice Edelman, like the joint judgment, referred to the "general rule" against a litigant recovering for the value of their own time (at [90]). His Honour noted that that general rule had been departed from by rule in England, but to make such a change "might substantially increase the costs of litigation", and no party had submitted that step should be taken (ibid). His Honour said: [91] If the general rule is not to change then, as a matter of principle, it is impossible to justify an exception that recognises costs for expenditure of time in litigation by an unrepresented solicitor litigant who performs work on the case but not by any other unrepresented litigant. 1. His Honour agreed that the Chorley exception should be overruled, giving further reasons that there was no reason to treat solicitors differently from other professions; that solicitors acting for themselves are not truly "self-represented" as they are not an agent for themselves; and that "modern orthodoxy, as the joint judgment explains, is also that it is undesirable for solicitors to act for themselves" (at [92]). He did not address the employed lawyer rule. 2. The reasoning in the joint judgment and that of Gageler J relating to the employed lawyer rule directly supports the appellants' claim. Their claim is for costs referable to work done by their employed solicitors. They are not claiming for their own time. There was no suggestion in the judgments that the employed lawyer rule should be understood in a way so as to exclude claims by unincorporated law firms. Nettle J, although characterising the principle differently, expressly included law firms within it. I address further below arguments as to whether other aspects of the reasons in these judgments should be understood to preclude such claims. Authorities addressing the employed lawyer rule 1. The Chorley exception was authoritatively recognised in the decision of the English Court of Appeal in London Scottish Benefit Society v Chorley (1884) 13 QBD 872. There are aspects of the reasoning which lend some support to the view of Nettle J that the Chorley exception is linked to the employed lawyer rule. Bowen LJ, for example, said (at 877): Professional skill, when it is bestowed, is accordingly allowed for in taxing a bill of costs; and it would be absurd to permit a solicitor to charge for the same work when it is done by another solicitor, and not to permit him to charge for it when it is done by his own clerk. 1. Brett MR made a similar point (at 875). However, in substance the decision was not directed to claims made based on the costs of employed clerks or solicitors. Brett MR noted at the beginning of his judgment that in that case solicitors had defended an action brought against them in person, and had obtained a costs order. The solicitors "claimed to have their costs taxed as if they had been acting for a client, that is, a different person", and "[t]he question is whether this view can be maintained". In answering that question in the affirmative, Brett MR effectively accepted that the position of solicitors was regarded as exceptional. He acknowledged that "[w]hen an ordinary party to a suit appears for himself, he is not indemnified for loss of time", but said that "[w]hen, however, we come to the case of a solicitor, the question must be viewed from a different aspect" (at 875). Moreover, no member of the Court referred to case law relating to costs of employed solicitors. 2. The employed lawyer rule is of earlier and distinct provenance. The foundational decision is Attorney-General v Shillibeer (1849) 4 Ex 606; 154 ER 1356, which was referred to by both Gageler and Nettle JJ. It was decided some 35 years before Chorley. The issue was whether the Attorney-General could claim costs with respect to the Crown Solicitor, even though "the Crown employed the solicitor of Excise at an annual salary, and did not incur any expenditure in matters depending in the particular suit". The Court upheld the claim. Parke B, speaking for the Court, said (Ex at 612-613; ER at 1359) It is perfectly clear that the Crown incurred expenses about this suit, and that, unless the Crown is compensated by payment of the ordinary costs, there would be no mode of compensation; because it is impossible to say what proportion the expense of conducting this particular suit would bear to the entire salary for the year, until the end of the year, when all the suits are known, and when the expense of each can be calculated. 1. Thus the two aspects of the employed lawyer rule referred to above were present from the outset: a claim could be made for the work of employed solicitors, and this could be calculated at taxable rates. 2. Raymond v Lakeman (1865) 34 Beav 584; 55 ER 761 concerned a claim for costs by a company which employed standing solicitors at a fixed salary. It was objected that as the solicitors were paid by a fixed salary, the company had no right to charge by way of costs more than their own solicitors would have charged them. The report is somewhat opaque, but it seems the company was found to be entitled to costs, and the person liable to pay costs did not have the benefit of any private agreement between the solicitor and company as to costs. 3. In Galloway v Corporation of London (1867) LR 4 Eq 90 the plaintiff's suit against the defendant was dismissed with costs. The Corporation of London employed a "City Solicitor". The plaintiff argued that to award costs would infringe the indemnity principle by allowing the defendant to profit where the defendant's solicitor was employed on a salaried basis. The Court rejected the argument. Wood VC said (at 96): To describe an agreement of that kind as an engagement to carry on the business of a client for the profit of the client, would be, I think, a perversion of language. The agreement is simply this: that the solicitor, instead of charging his client with all those sums which he would be entitled to put down to his debit, charges the client with a fixed sum per annum, and agrees that he shall be remunerated in that way. When the client is ordered to be paid costs, the bill is to be taxed in the ordinary way, and the certified amount is to go in relief of the salary engaged to be paid, and the surplus, if any, is to be carried over. 1. These three cases predate Chorley. None of them involved solicitors claiming for the value of their own time in acting for themselves. As a matter of both timing and reasoning they support the view that the employed lawyer rule developed separately from the Chorley exception. 2. That being said, there is some basis for suggesting that the Chorley exception itself predates the decision for which it is named, at least as a matter of "practice". Lush's Practice of the Superior Courts of Law at Westminster (Butterworths, 3rd edn, 1865), vol 2 at 896, stated: A party not an attorney, suing or defending in person, is entitled to no more than his expenses out of pocket, or at most to a reasonable allowance beyond for his loss of time; but an attorney regularly qualified is allowed to make the same charges for business done when he sues or defends in person as when he acts as attorney for another. 1. No cases were cited in support of this proposition. 2. Alexander Pulling's A Summary of the Law and Practice Relating to Attorneys (V&R Stevens, Sons and Hayne, 3rd edn, 1862) at 267 stated the practice in a similar way: The allowance of costs being by way of indemnity, the expenses claimed must have been actually incurred. A litigant who dispenses with professional assistance, is, under ordinary circumstances, only entitled to his costs actually out of pocket, and not generally to remuneration for his own services; a rule, however, which allows of an exception in the case of an attorney or solicitor acting on his own behalf. 1. The cases cited for the latter proposition were Jervis v Dewes (1836) 4 Dowl 764; Parsloe v Foy (1833) 2 Dowl 181; and Leaver v Whalley (1833) 2 Dowl 80. Yet these cases do not actually appear to support that proposition – a point made by Faucett J in Pennington v Russell (No 2) (1883) 4 LR (NSW) Eq 41 at 43. Indeed, as Faucett J explained at 44, the latter two cases tend the other way. 2. In Pennington v Russell, decided in this State the year before Chorley, the defendant was a solicitor. He conducted his own defence and was awarded costs in his favour. The question was whether he was entitled to costs on the basis of a solicitor appearing for another person as their client. After describing the difficulty of identifying any clear authority answering the question, Faucett J referred to Gugy v Brown (1867) LR 1 PC 411, an appeal in which the Privy Council had upheld the ability of a lawyer who had acted for himself to claim fees as a matter of "old French law". In the end, the judge considered he should follow the views of the text writers, even given the cases cited did not support the proposition they had stated, because "I think I must take them … as indicating the practice in England" (at 46). 3. In sum, prior to Chorley itself, the employed lawyer rule was established by case law which had nothing to do with solicitors acting for themselves. As for solicitors who did act for themselves, it seems there may have been some practice whereby they could recover their costs which had been recognised in texts but not clearly in cases, till Pennington v Russell was decided in this State. 4. Subsequently to Chorley, the issue of recovery of the costs of the Crown Solicitor arose before the Full Court of the Supreme Court of Queensland in Irving v Gagliardi; Ex parte Gagliardi (No 2) (1895) 6 QLJ 200. Griffith CJ delivered the judgment of the Court. His Honour said that "[t]here is no doubt that, as a general rule, costs are given by way of indemnity" (at 200). He then referred to Shillibeer, Raymond and Galloway, and concluded that the Court was bound by them, saying (at 201): I confess that I do not like the possibility of the Crown making a profit by recovering costs in litigation which may amount to more than would pay the expenses of the Crown Solicitor's Department, or so much of the expense of that department as are attributable to litigation with unsuccessful parties; but I do not see how we can escape from the authority of those three cases, unless there is some subsequent law to the contrary. 1. The case makes no reference to Chorley or Pennington v Russell. It is thus consistent with the employed lawyer rule being regarded as a distinct principle. 2. In Henderson v Merthyr Tydfil Urban District Council [1900] 1 QB 434 a council employed a solicitor as at a fixed annual salary. It obtained a costs order. A registrar disallowed the items claimed as costs other than out of pocket expenses. The Court overturned the decision, holding that it is "for the party objecting to the allowance of the usual costs under such circumstances to show that the allowance will give more than an indemnity" (at 437). The case is consistent with the employed lawyer rule being an application of the general principle of indemnity. Chorley was not mentioned. Channell J said that "[c]ases such as this arise frequently, and I believe that they are always dealt with in the High Court in the way I have mentioned" (at 437-438). 3. Gageler J cited at [68] the decision of the Full Court of the Supreme Court of Victoria in Registrar of Titles v Watson [1954] VLR 111 at 112-113. The issue there was the ability to claim costs of employed counsel, being the Solicitor-General and the Crown counsel. The decision of that Court was delivered by Gavan Duffy J, who said that there "is no doubt that justice requires that the Crown should … have the ordinary right of a litigant to be remunerated by an unsuccessful party for the services of the Crown Solicitor, the Solicitor-General and Crown counsel generally who are paid for their work by a salary. His Honour said the "locus classicus appears to be" Shillibeer, and then referred to Raymond, Galloway, Irving v Gagliardi and two other cases. No reference was made to Chorley. The Full Court went on to hold that recovery could not be made for the identified counsel because it had not been "vouched by his signature", as required by a court rule, which rule the Court recommended be amended. The case illustrates that the rule the parties in this case labelled the employed lawyer rule is not in fact limited to solicitors. In any event, the case supports the view that that rule is distinct from the Chorley exception. 4. In McCullum v Ifield [1969] 2 NSWR 329, in the Supreme Court of this State, the employed solicitor of the Government Insurance Office acted for the insured defendant. Taylor J applied Irving v Gagliardi and Henderson in holding that the defendant was entitled to recover party-party costs (at 331). 5. The second case that Nettle J cited in the footnote at [75] of Bell Lawyers (ie after Shillibeer), in support of the proposition that costs of employed solicitors are recoverable under the Chorley exception, was In re Eastwood (deceased) [1975] Ch 112. That case concerned a taxation of costs of employed government solicitors. The Court of Appeal said (at 132): In our view, the system of direct application of the approach to taxation of an independent solicitor's bill to a case such as this has relative simplicity greatly to recommend it, and it seems to have worked without it being thought for many years to lead to significant injustice in the field of taxation where justice is in any event rough justice, in the sense of being compounded of much sensible approximation. In summary, therefore, in our opinion. (1) It is the proper method of taxation of a bill in a case of this sort to deal with it as though it were the bill of an independent solicitor, assessing accordingly the reasonable and fair amount of a discretionary item such as this, having regard to all the circumstances of the case. … 1. The Court cited no authority in its decision. The report indicates that counsel for the Attorney-General submitted that Shillibeer "was the basis of the longstanding practice" (at 128). There is no reference in the report to Chorley. The decision is quite consistent with regarding the employed lawyer rule as distinct from the Chorley exception. 2. The third case cited by Nettle J was Commonwealth Bank of Australia v Hattersley (2001) 51 NSWLR 333; [2001] NSWSC 60, being the decision quoted approvingly in the joint judgment in Bell Lawyers at [47]. Davies AJ there upheld the ability to recover costs for the work of solicitors employed by the defendant bank. As already noted, his Honour said that "where an employed solicitor is involved, the traditional approach has been to award costs on a basis comparable to the costs which would have been incurred and allowed on taxation had an independent solicitor been engaged" (at [11]), and cited In re Eastwood in support. That view is consistent with regarding the employed lawyer rule as a manifestation of the general indemnity principle, not an exception to it. His Honour did say at [13] that that approach "reflects a view taken in relation to party and party costs, namely, that, 'Professional skill and labour are recognised and can be measured by the law'", quoting Bowen LJ in Chorley at 877. However, he was not there suggesting that the basis of the rule lay in the Chorley exception. Rather, he said that the "general appropriateness of treating the work of an employed lawyer on the same basis as that of an independent lawyer has been accepted since the decision in Attorney-General v Shillibeer" (at [17]). Having then referred to Raymond, Galloway and other cases, his Honour said: [20] There is a point of principle behind the approach enunciated in all these cases. It is that employed solicitors are not to be treated as second-class professionals. Lawyers are entitled to practice in their profession in a number of ways, one of which is to be a legal officer in a corporation which engages in commercial activities. 1. The decision does not support the proposition that the employed lawyer rule is to be equated with the Chorley exception; if anything, it is to the contrary. 2. The fourth decision cited by Nettle J was the decision of the Full Court of the Federal Court in Ly v Jenkins (2001) 114 FCR 237; [2001] FCA 1640. The case barely touches upon the issues at hand, and Chorley is not cited. Kiefel J said that as regards certain costs incurred by solicitors employed by a corporation, "[t]he proper method is to treat the bill of costs as if it were the bill of an independent solicitor, and assess whether it is reasonable and fair", citing In re Eastwood (at [160]). The decision does not support the view that the employed lawyer rule depends on Chorley. 3. The fifth decision cited by his Honour is one of this Court, Dyktynski v BHP Titanium Minerals Pty Ltd (2004) 60 NSWLR 203; [2004] NSWCA 154. The issue in the case was "whether an agreement between the appellant and his solicitor which provided that the appellant would not have to pay any costs or disbursements to his solicitors in relation to Court of Appeal proceedings brought in his name but for the solicitors' benefit … precludes the appellant from recovering the costs of the appeal from the unsuccessful respondent" (quoting McColl JA at [35]). The case discussed the indemnity principle. McColl JA, with whom Davies AJA agreed, said the following: [96] Other illustrations can be given of the flexible application of the indemnity principle. [97] Solicitor litigants who represent themselves have been held entitled to recover professional costs associated with their personal litigation as if they had employed a solicitor: London Scottish Benefit Society v Chorley (1884) 13 QBD 872. … [100] Another exception to the indemnity principle applies in the case of employed solicitors. In such cases the costs of an ordinary solicitor are allowed on taxation as between party and party even though the solicitor who appeared for the successful party was remunerated by a salary. This exception was discussed in Commonwealth Bank of Australia v Hattersley (2001) 51 NSWLR 333 by Davies A-J who (at 340) observed that the exception operated in the context of applying the indemnity principle "flexibly and reasonably". 1. I respectfully disagree with her Honour's characterisation of the employed lawyer rule as an exception to the indemnity principle, for the reasons given above. Regardless, the fact that her Honour treated the employed lawyer rule as another exception – ie beyond Chorley – indicates that the decision does not lend support to the argument that the two are to be equated. 2. Nettle J referred to three further decisions: one of the Land and Environment Court of this State; one of the Federal Magistrates Court; and a first instance security for costs decision of the Federal Court. None of those decisions advances matters. 3. One other decision is worth noting. In Maher v Commonwealth Bank of Australia [2008] VSCA 122, Dodds-Streeton JA said the following (at [101], Redlich JA agreeing at [1]): "The approach to the award of costs for an employee solicitor may be viewed either as an exception to the indemnity principle [citing Dyktynski at [100]] or, in substance, consistent with it [citing Hattersley at [11]]". As noted, I take the latter view, consistently with the view manifest in the joint judgment and expressed in the decision of Gageler J in Bell Lawyers. 4. With great respect to the contrary view of Nettle J, the above history suggests that the employed lawyer rule evolved separately to the Chorley exception, represents a distinct principle, and has been accepted as such both in this country and in England. Intermediate appellate authority subsequent to Bell Lawyers 1. Three decisions of intermediate courts of appeal were invoked by the parties, two of this Court decided in 2021, and one of the Victorian Court of Appeal decided in 2019. Burrows v Macpherson & Kelley 1. Ms Burrows had been represented in Family Court proceedings by one incorporated law practice, which was referred to in the judgment as M&K Sydney. She subsequently brought proceedings against it in the District Court relating to an aspect of its representation of her. The firm was represented in that proceeding by M&K Lawyers Group, another incorporated law practice, which was also the sole shareholder of M&K Sydney. Ms Burrows was unsuccessful in the claim and ordered to pay M&K Sydney's costs. She then argued that in substance M&K Sydney had acted for itself given its close corporate relationship with M&K Lawyers Group, such that she should not be liable for such costs in light of Bell Lawyers. She placed significant reliance on the fact that the joint judgment in Bell Lawyers (at [51]) reserved the question of claims for costs with respect to a solicitor employed by an incorporated legal practice of which he or she is the sole director and shareholder. In separate judgments, all three members of the Court rejected the argument. At the heart of that conclusion was that the two entities had separate legal personalities such that the premise of Ms Burrows' claim was not made out. It is relevant to note some particular aspects of the reasoning. 2. Meagher JA emphasised the construction of "costs" as defined in the CPA and as construed in the joint judgment and that of Gageler J in Bell Lawyers: at [4] and [16]-[18]. 3. Leeming JA, too, gave some emphasis to that construction. His Honour explained at [110] that the issue on the appeal arose "at the intersection of two principles", both of which were confirmed in Bell Lawyers: first, that "a self-represented party, even a legal practitioner, may not recover costs for his or her own professional services deployed in his or her own interest"; secondly, that "an employer … which sues or is sued and which employs solicitors may recover for their time, and may do so by reference to rates charged in private practice, even though the employed solicitor represents a fixed cost to the employer". 4. His Honour quoted Gageler J's explanation of the employed lawyer rule at [68] of Bell Lawyers (quoted above at [205]), then said: [112] It is therefore clear that whatever be the scope of "the Chorley exception" which was abrogated by the High Court, it did not alter the ability of a litigant to recover amounts calculated at professional rates for the work done by salaried solicitors as part of party/party costs. 1. Then, having quoted [44] of the joint judgment (quoted above at [178]), his Honour said: [116] It is difficult to read that passage, which was determinative of what appears to have been an important submission of the respondent, as other than an endorsement of the proposition that the costs of an employed solicitor fell within the statutory power conferred by s 98. The passages at [50] and [68] reproduced above are also consistent with this. 1. As already noted (at [181]), the judgments of Meagher and Leeming JJA are consistent with the view expressed above that statutory construction was an independent basis for the decision in the joint judgment in Bell Lawyers. 2. Another aspect of Leeming JA's judgment of note is what his Honour said with respect to that part of the reasoning in Bell Lawyers concerning the absence of independence of solicitors who act for themselves. Having quoted [19] of the joint judgment, his Honour said this: [132] It may be necessary in some later case to reconcile that passage with the express confirmation later in the judgment (as well as by Gageler J) that a company which employs a solicitor to provide legal services can nonetheless recover professional costs. An employed solicitor is subject to personal ethical obligations to the Court. Nonetheless, he or she is scarcely independent of his or her employer. But for present purposes, it suffices to say that all of the natural persons who actually provided legal services on behalf of M&K Lawyers Group in defending the District Court action were solicitors employed by that company, each owing personal ethical obligations to the Court, and if the client M&K Sydney were unable to recover professional costs in respect of those employed solicitors, that would cut across the express endorsement of the proposition that costs associated with an employed solicitor are recoverable. 1. This reasoning, with which I agree, illustrates two points. First, the strand of reasoning in Bell Lawyers about the desirability of independence and impartiality in legal representation is not a factor that trumps all other considerations. Were it otherwise, the employed lawyer rule would not have been reaffirmed by the High Court. Secondly, and perhaps part of the reason for that conclusion, employed solicitors owe independent legal and ethical duties to courts. 2. White JA stated that he substantially agreed with the reasons of Leeming JA (at [140]), and added some of his own. His Honour noted that reasons given in Bell Lawyers for rejecting the Chorley exception were: the independence point; not allowing the solicitor litigant to profit from the litigation; and conferring a privilege on solicitors inconsistent with equality before the law (at [151]-[153]). He then said: [155] These grounds for rejection of the Chorley exception apply to the claim for recovery of professional fees payable to M&K Lawyers Group. But those grounds were advanced in Bell Lawyers as reasons for rejecting an exception to the indemnity principle. Unless the separate legal personalities of M&K Sydney and M&K Lawyers Group are to be disregarded, the indemnity principle is not infringed and no question of the Chorley exception arises. 1. This reasoning echoes the point made by Leeming JA at [132]. Spencer v Coshott 1. The issue in Spencer was a variant of the very point on which the joint judgment in Bell Lawyers had reserved the position. A litigant solicitor, Mr Spencer, had retained his own incorporated law firm – of which he was sole director and shareholder – to act for him in a dispute with a former client about costs (whether Mr Spencer was the proper party to that dispute, as opposed to his incorporated law firm, was not grappled with in the first instance judgment). This Court resolved the issue by holding that he could claim the costs charged by his own law firm – including, by implication, for work done by himself. Simpson AJA, speaking for the Court, concluded that as the joint judgment had indicated it was a matter for Parliament, and as the Parliament had provided for the incorporation of legal practices with separate legal personality, that sufficed to distinguish the position from a solicitor claiming for the costs of their own services (at [100]-[102]). In substance, thus, the issue was resolved by reference to the formal separate legal personality of a corporation, consistently with Burrows. Her Honour also relied on the construction given to the definition of "costs" in the CPA in Bell Lawyers (at [86] and [102]). 2. Implicit in this decision, as in Burrows, is the conclusion that the independence issue identified in Bell Lawyers is not a determinative consideration. There is no independent relationship between a sole practitioner and the law firm they have incorporated and which they control. 3. Her Honour referred to an earlier decision of Keane J, sitting by himself in the High Court (just after Bell Lawyers had been determined), in which his Honour upheld a decision by a taxing officer to allow Mr Spencer to recover costs in essentially the same situation in a High Court iteration of the dispute: Coshott v Spencer [2019] HCATrans 183. Keane J so held even though he noted that "it may be said that it is quite artificial that an individual may render services for a corporation, of which he or she is a sole shareholder and director, at the same time as the corporation provides those services for the same individual as a client of the corporation" (at lines 123-126). His Honour also referred to the employed lawyer rule (at lines 175-180): It is well settled that, in a case where the solicitor acts in proceedings on behalf of his or her employer, the employer is entitled to recover its costs quantified by a taxation of the costs of the services performed by the employed solicitor. In such a case, the employer is entitled to recover costs incurred on its behalf by its employee just as it would be entitled to an indemnity for costs payable to an external solicitor [citing Commonwealth Bank of Australia v Hattersley [2001] NSWSC 60; (2001) 51 NSWLR 333 at 337 [11]; Ly v Jenkins [2001] FCA 1640; (2001) 114 FCR 237 at 280 [160]]. 1. This description of the employed lawyer rule is expressed by reference to employers, not just government departments and corporations. It is consistent with the view I expressed above at [201]-[203] that there is nothing in the joint judgment in Bell Lawyers inconsistent with regarding the rule as encompassing unincorporated law firms. United Petroleum 1. In this matter an unincorporated law firm, Herbert Smith Freehills (HSF), was in dispute with a former client; it sued the client for unpaid fees, and the client sued it for negligence in separate proceedings. The two proceedings were heard together in the Supreme Court of Victoria. HSF acted for itself in the fee proceeding, and acted for itself for a time in the negligence proceeding, then retaining a separate law firm as solicitors on the record to represent it whilst continuing to do some legal work itself (see at [56]). HSF succeeded in both matters and obtained costs orders. It then claimed costs referrable to work done by employed solicitors, but not for any work done by partners of the firm. The HSF solicitors working on the litigation were subject to a confidentiality regime in order to preserve their independence, and recorded their time in the usual way (see at [58]). The Victorian Court of Appeal rejected HSF's claim for costs relating to work by its employed solicitors. 2. The applicable statutory definition of "costs", in s 3(1) of the Supreme Court Act 1986 (Vic), was simply that it "includes fees, charges and disbursements". Unlike the definition in the CPA, thus, it did not also include "remuneration". And the CPA definition spoke of "expenses" rather than "charges". The Court said this (citation omitted): [94] It is clear, in our opinion, that the answer does not lie in any differences between the statutory powers to award costs in Victoria and those of New South Wales considered in Bell Lawyers. The analysis undertaken by the High Court involved a discussion of the broader question whether the Chorley exception should be recognised as part of the common law of Australia. That exception developed as a rule of practice grafted on to generally expressed powers to order costs. Its abolition reflects a development of the common law rather than the application of any statutory language particular to New South Wales. There is no reason to treat the Victorian provisions as giving rise to any different result. Like the New South Wales provisions, they are expressed in very general terms. The definition of 'costs' in s 3 of the Supreme Court Act 1986, on which Freehills relied, includes 'fees, charges and disbursements', but it does not provide any basis for recovery independently of the common law principles. 1. In my respectful view the Court was correct to regard itself as bound by Bell Lawyers even noting the difference in language between the provisions, given that the High Court clearly did decide the point as a matter of common law. However, I respectfully disagree with the Court's suggestion that that was the only basis of the decision, and that it did not involve "the application of any statutory language particular to New South Wales". As I have sought to show above, the definition of "remuneration" was a further basis for the decision. 2. A significant step in the reasoning of the Victorian Court was to emphasise that HSF "was a self-represented litigant in the proceedings" (at [97]). The Court (at [96]) quoted the joint judgment in Bell Lawyers (at [1]) that "a self-represented litigant may not obtain any recompense for the value of his or her time spent in litigation". The Court distinguished where a law firm was the solicitor on the record from where a government, government agency or corporations was represented by employed solicitors, saying that "[i]n those cases the party is separate and distinct from the solicitor on the record" (at [102]). It contrasted that position with HSF which (it said) was the solicitor on the record and where the litigation was "under the control of one of its partners" (ibid). It stated: [103] It seems to us that all of the members of the Court in Bell Lawyers recognised a distinction between the position where solicitors who are parties represent themselves, and the position where a party is represented by an employed solicitor. In the latter case the party is not unrepresented or self-represented. It is represented by the employed solicitor, and an issue which has then arisen at times is what amount of costs should be recoverable given the employment relationship. 1. I respectfully disagree with the emphasis given by the Victorian Court to whether or not the law firm was self-represented. In my view the decision of the High Court did not turn on attaching the label "self-represented litigant" to a claimant, even though that term was employed in places. Rather, as I have sought to show above, it turned on the general indemnity principle and the general rule against a litigant claiming for the value of their own time. A litigant cannot make such a claim regardless of whether or not they are self-represented. The principles at issue here operate at a higher level than turning on whether or not the claimant had a separate solicitor on the record. As explained above, in Bell Lawyers the barrister claimant was not self-represented at any stage. The point was that she had done some of the preparatory legal work herself. Indeed, in United Petroleum itself HSF was not the solicitor on the record in one of the two proceedings after a certain point, albeit it still did significant legal work itself. The issues of principle do not hinge on whether or not there was a solicitor on the record such that the label "self-represented" could be attached. Regardless of whether or not the costs-claimant was self-represented, insofar as they used employed solicitors then they have incurred an actual cost that the law regards as falling within the general indemnity principle. 2. The Victorian Court did say, in this regard, that "[t]he employed solicitors did not represent their employer. They worked on the relevant matters as employees of the firm and under the supervision of partners who had overall responsibility for the carriage of the litigation" (at [97]). That aspect of the point would not turn on whether or not the costs-claimant was the solicitor on the record. In substance it seems to raise a concern about the independence of employees in a law firm. The Court returned to that point later in its judgment, saying: [117] Although not decisive in Bell Lawyers, it emerges clearly enough that there is a risk of a lack of objectivity and professional detachment when lawyers appear for themselves in litigation. Although there may be a degree of separation within the firm, and each lawyer has their own professional obligations, nevertheless the person ultimately responsible for the legal conduct of the litigation is likely to be a partner in the firm with a direct personal interest in the outcome. That was so in this case. 1. The joint judgment in Bell Lawyers did refer to the desirability of independent representation, saying that "the view that solicitors should be encouraged to act for themselves is contrary to the modern orthodoxy that it is undesirable, as a matter of professional ethics, for a solicitor to act for himself or herself in litigation" (at [19]). The point was made in response to a possible suggestion in the judgment of Brett MR in Chorley that it was beneficial for solicitors to be able to act for themselves (see the joint judgment at [17]-[18]). It was one factor in the reasoning overturning the Chorley exception. 2. However, as discussed above at [249]-[252], it is not a factor that trumps all other considerations. So much is illustrated by the High Court's affirmation of the employed lawyer rule. As Leeming JA said in Burrows at [132], employed solicitors are scarcely independent of their employer. The employer pays their salary, directs them as to the conduct of their work, and is owed a fiduciary duty of loyalty (see eg John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [86]-[87]). 3. Moreover, solicitors owe independent legal and ethical duties to courts, as Leeming JA also noted in Burrows at [132]. Those duties may override their duties to their employers, just as they may override the duty of independent legal practitioners to their client. That is so whether the solicitors are employed by a governmental entity, by a company, by an incorporated law firm, or by an unincorporated law firm. In New South Wales, pursuant to s 32 of the Legal Profession Uniform Law (NSW), "[l]egal services may be provided under any business structure, subject to the provisions of this Law and the Uniform Rules". However, consistently with basic principle, the Law then states in s 33(1) that "[a]n Australian legal practitioner must comply with this Law, the Uniform Rules and his or her other professional obligations, regardless of the business structure in which or in connection with which the practitioner provides legal services". 4. Solicitors employed by a legal partnership owe no lesser duties as legal practitioners than solicitors employed elsewhere. And there is no reason to think that such solicitors are any less capable of complying with, or likely to comply with, those duties than solicitors employed by governments, companies or incorporated law firms. 5. This Court's decision in Spencer illustrates that the independence factor is one of limited significance. It is plain that an incorporated law firm is not independent of its controlling sole director and shareholder. 6. The Victorian Court also addressed the possible concern about a litigant profiting from the use of employed solicitors, saying (citations omitted): [118] In Bell Lawyers, Nettle J regarded the fact that a costs order may entail a degree of profit as critical factor weighing against the Chorley exception. The plurality likewise regarded the possibility of a solicitor profiting from conducting their own litigation as 'unacceptable in point of principle'. However, that prospect is also present where there is recovery for an employed solicitor in government or the private sector. In that context, it has not been regarded as decisive. As Gageler J noted, in those cases recovery is of costs incurred in the form of an overhead. The avoidance of profit can be achieved by a limit on the amount recovered rather than by entirely precluding recovery. That has been the approach taken in relation to employed solicitors generally. 1. I respectfully agree with this reasoning. Further, the employed lawyer rule has been consistently applied even though it has long been recognised that there was a possibility of profit: see eg Galloway at 96; Irving v Gagliardi at 201; Henderson at 437. 2. The Victorian Court acknowledged that there were arguments in favour of allowing unincorporated law firms to recover by reference to their employed solicitors: [112] Against these matters, the most powerful consideration that might justify allowing costs recovery is that an order for costs relating to employed solicitors is more than compensation for the loss of time. It also compensates the employer/litigant for the cost of employment. Left unrecompensed, the firm has lost more than the time of its partners. It has also incurred the expense of the salary and overheads associated with those of its employees who are engaged in the litigation. If the organising principle in relation to costs orders is to ensure that costs are an indemnity or reimbursement for expenses actually incurred then they should be recoverable in respect of employed solicitors regardless of whether the employer is a solicitor or not. The functional equivalence between a payment to a third party and an overhead expense that justifies the 'well-established understanding' is applicable equally to lawyers and non-lawyers. 1. This reasoning is consistent with the High Court's articulation of the general principle of indemnity and the employed lawyer rule. 2. The Court's ultimate weighing up of these matters was as follows: [119] Ultimately, we have come to the conclusion that to treat employee solicitors of a legal firm as falling within the 'well-established understanding' would considerably undermine Bell Lawyers. It would extend the 'well-established understanding' to cases of self-represented legal firms and perpetuate a significant degree of special treatment not accorded to non-lawyer litigants, referred to in Chorley as 'ordinary litigants'. [120] In substance it would, anomalously, allow firms of solicitors to recover for their own time spent in the litigation. It would also mean that a legal practice with employees could recover fees when a sole practitioner could not. 1. I respectfully disagree with this conclusion. The Court is referring to the joint judgment in Bell Lawyers talking of its decision not disturbing the "well-established understanding in relation to in-house lawyers employed by governments and others" (at [50]). It is not apparent why the Court considered that this understanding needed to be extended as opposed to simply being applied. As noted above, the High Court did not suggest that unincorporated law firms were excluded from the employed lawyer rule. 2. The Court's decision means that the only type of litigant which cannot claim for the costs of its employed solicitors is an unincorporated law firm. It would mean that unincorporated law firms are excluded, uniquely, from application of the foundational principle articulated in Cachia and applied in Bell Lawyers, namely the general principle of indemnity whereby costs are awarded by way of indemnity for professional legal costs actually incurred. As explained, the employed lawyer rule is a manifestation of that principle; as the joint judgment put it in Bell Lawyers, "the recovery of the professional costs of in-house solicitors enures by way of indemnity to the employer" (at [47]). In that context, the issue is not whether the employed lawyer rule should be extended but whether an unincorporated law firm should be excluded from application of these basal principles. 3. Seeking to achieve equality before the law was a critical factor in Bell Lawyers. That was achieved by removing the particular privilege that solicitors had in being able to claim for the value of their own time, where no other type of litigant had that right. There is no suggestion in the High Court's decision that solicitors were to be treated in a disadvantageous way, only that they are to be treated equally to other litigants. In my respectful view the decision of the Victorian Court involves a departure from principles of equality before the law. 4. The Victorian Court's reference at [120] to "anomalously, allow[ing] firms of solicitors to recover for their own time spent in the litigation" elides the difference between being able to claim for the costs of the partners as litigants, which is not permitted, and claiming for the costs of their employed solicitors performing the role of solicitors. The latter is what is at issue. The suggestion that is anomalous that "a legal practice with employees could recover fees when a sole practitioner could not" also elides that point. Is this Court bound to follow United Petroleum unless plainly wrong? 1. An issue was raised as to whether this Court is bound to follow the decision of the Victorian Court of Appeal unless it considers that the decision is plainly wrong, invoking Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [135]. In my view it is not. 2. As regards the independent statutory basis for the joint judgment, this Court must follow the decision of a majority of the High Court rather than the decision of another intermediate court of appeal. I agree with the following observations of Leeming JA in Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266: [98] This court is bound by what the High Court said … It is bound directly. Ultimately, it is bound by reason of s 73 of the [Commonwealth] Constitution. This court is not bound indirectly by another court's interpretation of what the High Court said. To paraphrase the words of McHugh J in Marshall, the primary guide to understanding the law as stated by the High Court is the language of that court's reasons, and a judicial decision as to what those reasons mean is at best a guide to, but cannot control, the meaning of that language. 1. The principle about intermediate courts of appeal following decisions of coordinate courts on issues of common law or the interpretation of federal or uniform legislation is a principle which "concerns the relationships between intermediate appellate courts and between intermediate appellate courts and trial judges": Hill v Zuda Pty Ltd (2022) 275 CLR 24; [2022] HCA 21 at [26]. It reflects the importance attributed to uniformity of decision-making: Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492; [1993] HCA 15; note also Farah at [135]. Uniformity is a significant legal value but not one of overriding importance. Thus it militates in favour of following decisions of coordinate courts, but not at all costs – in particular, not if they are considered to be plainly wrong by the court considering the question. 2. The relationship between intermediate courts of appeal and the High Court is different to the relationship between themselves; it is hierarchical. And it is "the duty of judges in the hierarchy of courts, including judges of this Court, to obey the authority of the rationes decidendi of decisions which are binding on them": Vickers Cockatoo Dockyard Pty Ltd v El Ali (unreported, New South Wales Court of Appeal, 17 December 1987, per Kirby P); see also eg Viro v The Queen (1978) 141 CLR 88 at 129 per Stephen J, [1978] HCA 9. Thus it is "for [the High] Court alone to determine whether one of its previous decisions is to be departed from or overruled": Garcia v National Australia Bank Ltd (1998) 194 CLR 395; [1998] HCA 48 at [17]. It is not relevant whether or not a court lower in the hierarchy considers the ratio of a decision of a court above it to be right or wrong. The "duty of judges in the hierarchy of courts is to obey authority; not to be convinced by it": Vickers per Kirby P, quoted approvingly by Gageler J in Hofer v The Queen (2021) 274 CLR 351; [2021] HCA 36 at [96]. 3. Thus the duty to obey binding precedents overrides any consideration of whether or not a decision of a court on the same level of the hierarchy is plainly wrong or not. That issue is not to the point. For the same reason, it is not necessary for a court of appeal to decide whether earlier decisions of its own are plainly wrong if those decisions have been overtaken by subsequent High Court authority: Maules Creek Coal Pty Ltd v Environment Protection Authority [2023] NSWCCA 275 at [65]. 4. In this context, given my understanding of the independent statutory basis of the joint judgment in Bell Lawyers I must apply that decision. 5. As regards the position at common law, there is more room for argument on the point. The difference between just interpreting what the High Court said on an issue of common law on the one hand, and developing the common law on the other, can be unclear. However, the ultimate conclusion of the Victorian Court was that "to treat employee solicitors of a legal firm as falling within the 'well-established understanding' would considerably undermine Bell Lawyers" (at [119]). The decision is thus founded on that Court's understanding of the High Court's decision. As senior counsel for the respondent himself put it, "at the heart of the proposition that the Victorian Court of Appeal was plainly wrong lies the tussle between us as to what the High Court means for courts below it concerning these issues". That being so, this is an area where, as Leeming JA said in Hasler, this Court is not bound by a coordinate court's interpretation of what the High Court said. I respectfully disagree with that understanding. It is not necessary for me to consider whether that Court's view on the common law should be characterised as plainly wrong. The primary judge's decision 1. It is necessary now to address directly the reasons of the primary judge and, in so doing, to draw together the threads of analysis set out above. 2. At PJ [23] his Honour used the label of the "employed solicitor exception" for what I have called the employed lawyer rule. In a footnote, he said: It has been suggested that it might not be an exception but an application of the general rule that a party is entitled to professional legal costs actually incurred in the conduct of litigation: Bell v Pentelow at [68] (Gageler J); insofar as I treat it as an exception, it is an "exception" to the rule that a party is not entitled to recover costs for its own time and effort. 1. As explained above at [204]-[207], the view expressed by Gageler J in Bell Lawyers that the employed lawyer rule is a manifestation of the principle of indemnity rather than an exception to it is also a step in the reasoning in the joint judgment, in particular at [47]. Furthermore, as addressed above at [214]-[241], examination of the historical case law reveals that the employed lawyer rule developed distinctly from the Chorley exception. That fact serves to reinforce that the employed lawyer rule is distinct from the exception which was overruled by the High Court in Bell Lawyers. 2. Characterising the basal principles correctly is important. When it is understood that the employed lawyer rule was not undermined by Bell Lawyers, and is in fact a manifestation of the general principle of indemnity which was affirmed in both that decision and Cachia, then it is incumbent on the respondent to show why unincorporated law firms should be excluded from application of these general principles. 3. In the primary judgment his Honour then gave three reasons in favour of his conclusion, prior to his consideration of United Petroleum. First, he referred to the history of the employed lawyer rule, considered how it had been addressed in Bell Lawyers, and then said: [40] In my view, the High Court had in mind "in-house" lawyers employed by government departments and corporations, who act as solicitor for the employing department or corporation in litigation, and not employed solicitors in a law firm which as a party to litigation has some or all of the work done by those employees. 1. As discussed above at [201], I disagree with that understanding of the joint judgment, and the other two judgments that address the issue are not supportive of his Honour's characterisation. The joint judgment referred to "the use of in-house solicitors by governments and corporations, including incorporated legal practices" (at [46]) and "employed by governments and others" (at [50]). Gageler J referred simply to an "employed solicitor" (at [68]). Nettle J included "firms of solicitors" (at [75]), although, as was correctly noted in United Petroleum (at [111]), none of the cases his Honour cited in that paragraph involved a claim by a firm of solicitors as a party. Edelman J did not address the issue. 2. His Honour's next reason was as follows (citations omitted): [41] Secondly, the High Court's rejection of the Chorley exception was founded on three main considerations, namely: (1) the view that solicitors should be encouraged to act for themselves is contrary to the modern orthodoxy that it is undesirable, as a matter of professional ethics, for a solicitor to act for himself or herself in litigation; (2) to act upon a principle that evidence enabling the quantification of the value of the time of non-solicitor litigants in person should not be received or acted upon by the courts is to exalt the position of solicitors in the administration of justice to an extent that is an affront to equality before the law; and (3) the exception was recognised as the solicitor's privilege that, to modern eyes, it patently is. A privilege of that kind is inconsistent with the equality of all persons before the law. 1. As to the first of these reasons, as explained above at [249]-[252] and [262]-[267], whilst that consideration was one of the factors at play in Bell Lawyers it is of limited weight, as has subsequently been illustrated by this Court's decisions in Burrows and Spencer. 2. The second and third reasons seem to amount to essentially the same point, namely that affording a particular privilege to solicitors was unjustifiable and contrary to the principle of equality before the law. That was the most significant reason for overturning the Chorley exception. When it is understood that the Chorley exception is distinct from the employed lawyer rule, the question is not whether some aspect of unjustifiable privilege should be maintained, but whether unincorporated law firms should uniquely be disadvantaged by being denied the ability to claim costs for employed solicitors where other litigants can do so (see above at [276]-[275]). I can see no proper basis for discriminating against unincorporated law firms in that way. 3. That understanding also answers the third reason of the primary judge, in which his Honour – having quoted what Brett MR said in Chorley about work done by a solicitor's "own clerk" (see above at [214]) – said this: [45] Thus recovery of costs where work was done by the solicitor litigant's own employee was thought to be justified by the Chorley exception (rather than by the in-house solicitor rule). The rejection in Bell v Pentelow of the reasoning of Bowen LJ set out above as "not persuasive" involves rejection of the rationale upon which it had until then been supposed that a solicitor litigant could recover costs for work done by his or her employed solicitor. 1. In my view that is not a correct characterisation of the principles at issue. 2. The primary judge then turned to consider United Petroleum. At [48] he quoted [94] of that judgment (quoted above at [258]), in which the Victorian Court of Appeal declined to attribute significance to differences between the statutory powers to award costs in Victoria and in this State. His Honour said that decision "cannot be distinguished on a basis that the Court itself eschewed as one for its decision" (PJ [49]). I respectfully disagree. As explained above at [177]-[188], in my view the definition of "remuneration" was a further, independent basis for the decision in the joint judgment in Bell Lawyers. That understanding is consistent with this Court's subsequent decisions in Burrows and Spencer. That aspect of the High Court decision was not determinative for the Victorian Court of Appeal. However, it is determinative for this Court when applying the very provisions considered by the High Court. As discussed above at [277]-[283], this Court is obliged to follow the decision of that Court regardless of whether or not it considers United Petroleum to be plainly wrong. 3. The primary judge then addressed, and agreed with, the reasoning in United Petroleum (at [50]-[58]). I have already explained why I disagree with that reasoning. The primary judge said that "[i]n the context of the conduct of litigation, in the eyes of the law the salaried in-house solicitor is independent of his or her employer, whereas a law firm's employed solicitors are not" (at [51]). No authority is cited for this point, although it follows a discussion of the significance attributed in United Petroleum to law firms acting for themselves as being self-represented. I have already expressed the difficulties I have with that part of the Victorian Court's reasoning above at [260]-[267]. 4. Part of the primary judge's reasoning at [51] in this regard was as follows: The employer is not self-represented: it has a solicitor acting for it, who has his or her own independent professional obligations. It is therefore not self-represented, but represented by a solicitor in the litigation, albeit one that is "employed" rather than "retained". In the case of a law firm's own employed solicitors, however, the position is otherwise. The litigation is being prosecuted or defended for the benefit of the firm; the partners in which do not engage their employees to act for them, but merely allocate the work to them. 1. For my part, I struggle to see a substantial difference. In support of such reasoning, the respondent sought to emphasise that the employed lawyer rule does not apply to "self-represented litigants". It sought to delineate that category, in particular when involving an unincorporated law firm, by the following overlapping propositions: 1. Even if an employed solicitor was the solicitor on the record, that employee was answerable to the firm. 2. Whereas in-house solicitors were internally focused on servicing the needs of the entity which employed them, solicitors in a law firm were outwardly focused on servicing clients. 3. Linked to that point, even if the partners were not claiming for their own time, they stood to profit by charging commercial rates for the time of their employed solicitors, just as they would in charging a client. 4. Employed solicitors in a law firm did not have the degree of independence that in-house solicitors of a government or commercial entity would. They were under the direction of their employers as to how to conduct their legal work. As senior counsel for the respondent put it, "if I can use the old language, the master solicitor can tell the new solicitor, 'This is how...to plead it', or, 'I disagree with [x] it is discoverable', or whatever else". 5. Further, "[a]ny solicitor employed by a legal partnership has a kind of financial interest in the partnership being paid and in recovering fees. Their salary would, in all likelihood, depend, albeit indirectly, on continuing revenue". 1. The respondent placed some reliance in that regard on a decision of the Victorian Supreme Court holding that an incorporated law firm involved in a dispute could not obtain costs of employed solicitors: Guneser v Aitken Partners Pty Ltd [2020] VSC 329. The decision was handed down prior to this Court's decision in Spencer, and seems inconsistent with it. Further, Macauley J regarded the essential question as being "whether the position of an incorporated legal practice is more closely analogous to the unincorporated law firm, with partners and employees, or to in-house solicitors employed by government agencies or private corporations" (at [63]). That was an entirely understandable way of framing the issue given his Honour was bound by the decision of the Victorian Court of Appeal in United Petroleum. This Court is not so bound, and the very issue here relates to the position of an unincorporated law firm. 2. In any event, turning to the respondent's first proposition, that can be accepted. But an in-house solicitor would equally be answerable to their supervisor, and on up the chain of managerial responsibility. Whether the litigant is a profit-seeking corporation, a governmental entity, or a law firm, each institution has its own self-interest, which interest will (in general) have been defended in the litigation. 3. As to the second proposition, it is difficult to see why that makes any relevant difference, at least beyond the issues raised by the third and further points. 4. As to the third proposition, such profits could also potentially be made by corporations, governmental entities or incorporated law firms charging, at taxable rates, for the work of their employed solicitors. As discussed above at [268]-[269], that possibility has been raised and rejected before in considering the employed lawyer rule. No different issue arises for unincorporated law firms. 5. There are two difficulties with the fourth proposition. First, the employed solicitor of a corporation or department who is on the record – the representative so much emphasised by the respondent – is not necessarily the senior solicitor of the entity. Any litigator with experience of working for large corporations or government agencies knows that they may have numerous lawyers. Some businesses – for example, some with largescale engagement with the public in circumstances giving rise to claims – effectively maintain their own internal law firm. An employed solicitor running litigation for such an entity is likely to be supervised by another lawyer, who may themselves report to the general counsel (who will report in turn to the CEO or board). The employed solicitor on the record for such an entity is entirely likely to have their judgment call on pleadings or discovery or the like supervised by a more senior person in the chain of responsibility. 6. Secondly, as addressed above, all employed solicitors owe independent duties to the courts. Insofar as the suggestion is that solicitors employed by a law firm are less likely to comply with their ethical obligations then solicitors employed by a corporation or governmental entity, I see no basis for it. Moreover, it is very difficult to see how any such distinction can be drawn once it is accepted – as it implicitly was in the joint judgment in Bell Lawyers (see above at [201]-[202]) – that incorporated law firms may recover for the costs of their employed solicitors. There is no substantive difference between the position of a solicitor employed by an unincorporated firm as compared to an incorporated one. Both will likely be supervised by more senior solicitors. 7. As to the fifth proposition, this seems to involve a recognition that a litigant is generally pursuing its own self-interest when litigating. If a corporation can recover costs of in-house solicitors who acted for it in important litigation, it is difficult to see why an unincorporated law firm should be placed in a different category when engaged in a dispute seeking payment of its costs (the controversy which led to the costs order at issue here). 8. More generally, all of these propositions are a distraction from the basic, simple nature of the employed lawyer rule. It manifests the general indemnity principle by accepting that litigants can claim as professional legal costs an amount referable to work performed by their employees, even though the cost to them of such employment is a general overhead not specific to the litigation. 9. Returning to the decision of the primary judge, his Honour then addressed a submission about the significance of this Court's decisions in Burrows and Spencer. His Honour concluded that "neither … governs the present situation" (at [65]). I agree that neither governs. However, as addressed above at [243]-[255], they are consistent with the view that I have reached. 10. In sum, I disagree with the conclusion of the primary judge for two essential reasons. First, in my view the Supreme Court and this Court are bound to apply the meaning of the word "remuneration", as used in the definition of "costs" in s 3(1) of the CPA, as expounded at [44] of the joint judgment of Bell Lawyers. As explained above at [187]-[188], there is no reason why unincorporated law firms should be regarded as falling outside that understanding as a matter of statutory construction. 11. Secondly, even if the matter is approached simply as a matter of common law principle, it follows from the joint judgment and the judgment of Gageler J that the employed lawyer rule involves an application of the general indemnity principle. There is no proper basis to take the step of excluding unincorporated law firms, uniquely, from the benefit of that rule and that principle. Orders 1. The appeal should be upheld with costs. In my view the partners of an unincorporated law firm are entitled in this State, as part of their costs recovery for a proceeding, to recover in relation to work done by solicitors employed by the partnership performing legal work with respect to the litigation in their capacity as solicitors. 2. The orders of the Court should be as follows: 1. If leave be necessary, grant leave to appeal. 2. Appeal allowed. 3. Set aside the orders made by the primary judge on 26 October 2022 and in lieu thereof make the following orders: 1. The summons filed on 2 August 2022 is dismissed. 2. The plaintiffs are to pay the defendants' costs. 1. The first and second respondents are to pay the appellants' costs of the appeal. 1. SIMPSON AJA: The facts and circumstances relevant to this appeal are fully set out in the judgments of Ward P and Kirk JA, each of which I have read in draft. Other than as is necessary to explain my reasoning, I will not restate the facts. I agree with their Honours, that, if leave to appeal is necessary, that leave ought to be granted. I will therefore refer to Messrs Atanaskovic and Jepps (the partners in Atanaskovic and Partners) as the appellants. 2. As is made clear in the judgments of Ward P and Kirk JA, the High Court in Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333; [2019] HCA 29 ("Bell Lawyers") identified and left untouched a "general rule" that a self-represented litigant is not entitled to recompense for the value of time spent in the litigation. 3. The Court also identified, but did not leave untouched, a long-standing exception to the general rule. The exception was derived from the decision of the English Court of Appeal in London Scottish Benefit Society v Chorley (1884) 13 QBD 872 and was to the effect that, where the self-represented litigant happened to be a solicitor, the general rule did not apply and the self-represented solicitor was entitled to recover his or her professional costs of acting in the litigation ("the Chorley exception"). 4. The plurality in the High Court (Kiefel CJ, Bell, Keane and Gordon JJ) adopted an earlier description of the Chorley exception as "anomalous": Cachia v Hanes (1994) 179 CLR 403; [1994] HCA 14 ("Cachia") (see also Gageler J at [62] and Edelman J at [86]-[87]). All members of the Court declined to extend the exception to barristers who represent themselves in litigation. The Court went further and, by majority (Nettle J dissenting), declared the Chorley exception to be not part of the common law of Australia: the plurality at [3]-[39] and [57], Gageler J at [63], Edelman J at [93], [99]. 5. The relevant facts in Bell Lawyers were relatively straightforward. A barrister (Ms Pentelow) successfully brought proceedings against Bell Lawyers, an incorporated legal practice, for fees she claimed to be owed to her pursuant to a retainer. Ms Pentelow was represented in the proceedings, but performed some of the legal work herself. A costs order was made in her favour. Bell Lawyers refused to pay those amounts claimed for work undertaken by Ms Pentelow herself. A majority of this Court (Beazley ACJ and Macfarlan JA, Meagher JA dissenting) held that Ms Pentelow, as a barrister, was entitled to rely on the Chorley exception (Pentelow v Bell Lawyers Pty Ltd [2018] NSWCA 150) notwithstanding that the exception was expressed in Chorley to apply to solicitors and did not expressly include barristers. This Court was bound by earlier decisions of the High Court (Cachia and Guss v Veenhuizen [No 2] (1976) 136 CLR 47; [1976] HCA 57) that, while not endorsing the Chorley exception, proceeded on the basis that it was part of the common law of Australia. 6. It was in relation to that set of circumstances that the High Court declared that the Chorley exception is not part of the common law of Australia. Post Bell Lawyers (in the absence of legislation to the contrary) an Australian legal practitioner acting for himself or herself may not recover, by way of a costs order, any amount representing the professional costs of legal work undertaken by himself or herself. That is, the "general rule", since the decision in Bell Lawyers, applies to self-represented legal practitioners (whether solicitors or barristers) along with all other self-represented litigants. While the Chorley exception has thus been abolished, the scope of the abolition has yet to be explored. 7. The rationale for the "general rule" is that, as a "general principle": "… costs are awarded by way of indemnity (or, more accurately, partial indemnity) for professional legal costs actually incurred in the conduct of litigation": Cachia at 410, extracted by Gageler J at [60] of Bell Lawyers (and see additional authorities cited in footnote 99 thereof). 1. In this State the relevant statutory provision for present purposes is s 98(1) of the Civil Procedure Act 2005 (NSW) which provides: "(1) Subject to rules of court and to this or any other Act— (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis." 1. The more important provision is s 3, which contains a definition of "costs" as used in that Act. Section 3 provides: "costs, in relation to proceedings, means costs payable in or in relation to the proceedings, and includes fees, disbursements, expenses and remuneration." "Remuneration" is not defined; the inclusion of "remuneration" is a matter of some significance, to which it will be necessary to return. 1. As I have suggested above, Bell Lawyers was a relatively straightforward case, where the issue was whether the costs to which Ms Pentelow was entitled and which Bell Lawyers was obliged to pay extended to legal work actually performed by Ms Pentelow on her own behalf. There was no issue that Bell Lawyers was obliged to pay the costs incurred by her in retaining lawyers who represented her. 2. There are, however numerous other scenarios that are not so straightforward, and which cannot readily be seen to come within the reasoning in Bell Lawyers. Possible scenarios include: (i) a legal practitioner litigant who represents himself or herself (or, as in the case of Ms Pentelow), who, although represented, performs, and claims costs for, some legal work in pursuit or defence of the litigation; (ii) a government body or agency, or a corporate litigant, which employs one or more legal practitioners by whom it is represented in litigation; (iii) a legal practitioner litigant in a private legal practice which is structured as an incorporated legal practice, of which the legal practitioner is the sole director and shareholder (and effectively the controlling mind or the alter ego of the corporation), and who is represented in the litigation by the incorporated legal practice; (iv) conversely, an incorporated legal practice litigant having a single director and shareholder who is a legal practitioner, the incorporated legal practitioner being represented in the litigation by the legal practitioner; (v) a legal practitioner litigant in a private practice which is structured as an incorporated legal practice of which there are multiple or numerous shareholders and multiple or numerous directors, the incorporated legal practice being represented in the litigation by one or more of the directors and shareholders; (vi) a legal practitioner litigant in a private practice which is structured as an incorporated legal practice, the legal practitioner litigant being (personally) represented in the litigation by one or more legal practitioners employed by the incorporated legal practice; (vii) a legal practitioner litigant in a private practice with others, structured as a partnership, with employed legal practitioners, who is represented in the litigation by a partner where legal work is undertaken by employed legal practitioners; (viii) a legal practitioner litigant (or litigants) in a private practice with others, structured as a partnership, with employed legal practitioners, the litigant or litigants being represented in the litigation by an employed legal practitioner (or practitioners); (ix) an incorporated legal practice litigant, with employed legal practitioners, the incorporated legal practice being represented in the litigation by an employed legal practitioner. This list does not purport to be exhaustive. 1. It is clear that a legal practitioner described in scenario (i) cannot claim any recompense for the work done in the litigation. That was determined in Bell Lawyers. It is also clear that a government agency or corporation described in scenario (ii) is able to recover its costs of representation in litigation by its employed legal practitioners. That is because the plurality in Bell Lawyers held (although in obiter), in response to an argument advanced on behalf of Ms Pentelow "…that governments and other employers, and incorporated legal practices operating through a sole director, would be prevented from recovering costs for professional legal services rendered by employed solicitors", that: "47. This submission fails to appreciate that in relation to the use of in-house solicitors, such arrangements have been treated as being outside the general rule because it is accepted that the recovery of the professional costs of in-house solicitors enures by way of indemnity to the employer, as is confirmed by the inclusion of 'remuneration' in the definition of 'costs' in the Civil Procedure Act. Where a government or corporate litigant has been represented by an employed solicitor, the courts have proceeded on the footing that the actual cost to the government or corporation of the legal services provided by its employed solicitor would not exceed, in any substantial amount, the sum recoverable by it for professional legal costs …" 1. Their Honours then referred, with apparent approval, to the decision of the Supreme Court of New South Wales in Commonwealth Bank of Australia v Hattersley (2001) 51 NSWLR 333; [2001] NSWSC 60 at [11] ("Hattersley"), where Davies AJ said: "… where an employed solicitor is involved, the traditional approach has been to award costs on a basis comparable to the costs which would have been incurred and allowed on taxation had an independent solicitor been engaged. The assumption has been made that, in an ordinary case, the indemnity principle will not be infringed by taking this approach." It should be acknowledged that Hattersley was a case in which the costs claimant was a banking corporation, within the class of litigants to which the plurality in Bell Lawyers referred in [47] and in scenario (ii) above. 1. It also appears that the legal practitioner described in scenario (iii) is able to recover the costs of representation in litigation by the incorporated legal practice of which he or she is the sole director and shareholder. In Bell Lawyers, the plurality left open that question, saying: "51 Whether the same view should be taken in relation to a solicitor employed by an incorporated legal practice of which he or she is the sole director and shareholder stands in a different position. It might be queried whether such a solicitor has sufficient professional detachment to be characterised as acting in a professional legal capacity when doing work for the incorporated legal practice. And it might be queried whether costs claimed by an incorporated legal practice for work of its sole director and shareholder are within the expansive view of indemnity that has been adopted in the authorities. … 52 The resolution of this question may require close consideration of the legislation which provides for incorporation of solicitors' practices and the intersection of that legislation with the provisions of the Civil Procedure Act in light of the general rule; and so the resolution of this question may be left for another day, when all the legislation that bears on the question has been the subject of argument. 53 It is sufficient for present purposes to say that whether or not an incorporated legal practice that is a vehicle for a sole practitioner should be able to obtain an order for costs for work performed by its sole director and shareholder is ultimately a matter for the legislature. …" 1. That question could not be escaped in Spencer v Coshott (2021) 106 NSWLR 84; [2021] NSWCA 235 ("Spencer"), the legislature having resisted the invitation to intervene. The point in Spencer was a narrow one. Mr Spencer was the sole director and shareholder of an incorporated legal practice, Kejus Pty Ltd, which traded under the name "Spencer & Co Legal". Mr Spencer was the beneficiary of a costs order against Mr Coshott, in proceedings in which he had been represented by Spencer & Co Legal, which rendered bills of costs to him. Mr Spencer was, in reality (but not in law), a sole practitioner who represented himself. The separate legal personality of Spencer & Co Legal (or Kejus Pty Ltd) was sufficient to distinguish the incorporated legal practice from Mr Spencer. The distinction is a truly artificial one, as Keane J said in related proceedings between the same parties in the High Court (Coshott v Spencer [2019] HCA Trans 183 (11 September 2019) ("Coshott v Spencer (HCA)")). As quoted in Spencer at [29], his Honour said: "It may be said that it is quite artificial that an individual may render services for a corporation of which he or she is a sole shareholder and director at the same time as the corporation provides those services for the same individual as a client of the corporation. It may fairly be said that this 'meta-physical bifurcation', as it was described by Bray CJ in R v Goodall [(1975) 11 SASR 94 at 99-100], is as unattractive as it is unnatural. But as Bray CJ also recognised, it is 'the logical consequence of Salomon's Case' [Salomon v A Salomon & Co Ltd [1897] AC 22], in which the House of Lords affirmed that the legal personality of a corporation is separate from that of an individual who controls the corporation. And so an individual who is the sole director and shareholder of a corporation may contract with that corporation for the provision of services by it so as to give rise to an obligation to pay for those services." 1. In Burrows v Macpherson & Kelley Lawyers (Sydney) Pty Ltd [2021] NSWCA 148 ("Burrows") two incorporated legal practices were involved, M & K Sydney, which was the client and wholly owned subsidiary of M & K Lawyers Group. M & K Lawyers Group represented M & K Sydney in proceedings brought against it by Ms Burrows. M & K Sydney was successful and was awarded costs. Rejecting a contention that the two incorporated legal practices should be regarded as one and the same entity, this Court held that there was no basis in the evidence for disregarding the legal reality of the separate incorporated legal practices (at [18]), and M & K Sydney was entitled to recover the costs of its representation by M & K Legal Group. 2. The present case is an illustration of scenario (viii) above. The appellants are the partners in an unincorporated association, constituting a legal practice, who employ legal practitioners. The appellants were parties to litigation against the respondents. For the purpose of the litigation, the employed legal practitioners undertook professional legal work. The appellants were successful in the litigation and were the beneficiaries of a costs order. At issue is whether, pursuant to that costs order, the appellants are able to recover costs representing the costs of legal professional work undertaken by their employed legal practitioners. 3. These reasons, and the determination of this appeal, directly concern only scenario (viii). In the interests of coherence, however, the alternative scenarios ought not be ignored or overlooked. These scenarios were not before the High Court in Bell Lawyers and the reasons do not directly address any scenario other than that which I have labelled scenario (i) and (although indirectly) scenario (ii). 4. The starting point is that, pursuant to s 98(1) of the Civil Procedure Act, an order was made that the respondents pay the appellants' costs of proceedings in the Equity Division of the Supreme Court up to and including 16 September 2019, assessed on the ordinary basis. By reference to s 3 of the Civil Procedure Act those costs are the "costs payable in or in relation to the [Equity Division] proceedings", and include "fees, disbursements, expenses and [importantly] remuneration". As mentioned above, "remuneration" is not defined in the Civil Procedure Act. 5. Two questions immediately arise: 1. what costs were payable in or in relation to the Equity Division proceedings?; and 2. was any remuneration (and if so, what) included in the "costs payable"? 1. The answers to those questions depend upon what is meant by (or included in) "costs payable in or in relation to" the Equity Division proceedings and what is encompassed in "remuneration" as the word is used in the s 3 definition. No clear answer to these questions, so far as they apply to the present case, emerges from the reasons in Bell Lawyers. 2. To repeat, costs are awarded by way of "indemnity … for professional legal costs actually incurred in the conduct of litigation": Cachia at 410. That excludes costs of a self-represented legal practitioner, who does not incur costs payable to himself or herself. Similarly, "remuneration" in the extended meaning of "costs" in the s 3 definition, does not extend to a self-represented legal practitioner, because, as the plurality said in Bell Lawyers at [44]: "… '[r]emuneration' is simply not a word which is apt to include the notion of payment to a person by himself or herself for work done by himself or herself." 1. These observations in Bell Lawyers answer the questions in relation to self-represented legal practitioner litigants in the uncomplicated class of case that is illustrated in Bell Lawyers. They do not answer the question in relation to the more complicated class of cases illustrated in scenarios (iv), (v), (vi), (vii), (viii) or (ix). These reasons do not attempt to provide answers to those questions in respect of scenarios (iv), (v), (vi), (viii) or (ix). But they must provide answers to the questions in respect of scenario (viii) – preferably answers that do not create potential incoherence if and when a court is confronted with answering the same questions with respect to those scenarios. 2. The outcomes in both Burrows and Spencer show that, where the entity to which the legal costs are payable is an incorporated legal practice, the costs are not payable by the legal practitioner to himself or herself. They are payable to a separate entity, the incorporated legal practice. 3. In the present case, the costs were not payable to an incorporated legal practice. Nor can it be said that they were payable to the employed legal practitioners who performed the legal work. Those legal practitioners were, presumably, paid by way of remuneration from the partnership – that is, by the partners (the appellants). It may be assumed that their salaries were not dependent on the quantity or nature of the work they undertook in this particular litigation. They were, nevertheless, paid by the appellants, for the professional legal work they undertook. In my opinion, those salaries, to the extent that they covered the legal professional work involved in the litigation against the respondents, are properly characterised as "professional legal costs actually incurred in the conduct of [the] litigation". 4. That is consistent with an important observation in Bell Lawyers by Gageler J, at [68]. There, his Honour said: "Recovery of costs by a party using an employed solicitor predated introduction of the Chorley exception. The better view … is that recovery of costs by a party using an employed solicitor is an application of the general principle rather than an exception to it. The general rule is engaged on the basis that the costs of using the employed solicitor are still awarded as indemnity for professional legal costs actually incurred in the conduct of litigation by the employer who is a party to the litigation, albeit that those professional legal costs are incurred in the form of an overhead and are therefore not reflected in a severable liability." (Internal citations omitted) 1. Gageler J's observation, which does not appear to have been either adopted or rejected by any other member of the Court, would support the view that an incorporated legal practice such as Bell Lawyers and a partnership such as the present appellants would be entitled to recover, as "costs actually incurred in the conduct of litigation", an appropriate amount by reference to the costs of employing the legal practitioners to whom the legal work was assigned, in a way similar to that which applies where the litigant is a government instrumentality or corporation using employed legal practitioners. It would also engage the concept of "remuneration" in the s 3 definition, which is, as noted above, inapplicable where the legal work has been performed by the legal practitioner litigant. It does not, in my opinion, involve payment by the litigant to himself or herself. 2. There are reasons of coherence that support the view that a legal practitioner litigant who is a beneficiary of a costs order is entitled to include, in the costs recoverable, amounts referable to the costs of the legal professional work undertaken by the employed legal practitioner. It is difficult to see any rationale for allowing, as was done in Burrows and Spencer, costs payable to an incorporated legal practice that is in fact the alter ego (Spencer) or the parent company (Burrows) of the litigant (in Burrows the client being itself an incorporated legal practice). 3. It is worth observing here that, while the plurality in the High Court referred to incorporated legal practitioners of which the legal practitioner litigant is the sole director and/or shareholder, no reference was made to multi-director or multi- shareholder incorporated legal practices. It may be that the observation was a recognition of the artificiality of which Keane J spoke in Coshott v Spencer (HCA). 4. The view that a legal practitioner litigant is entitled to recover the costs incurred in litigation by the use of employed solicitors is consistent with the acceptance by the plurality in Bell Lawyers (although obiter) that government and (non-lawyer) corporations (for example banks – see Hattersley) are not precluded from recovering the costs of professional services rendered by employed legal practitioners. It is difficult to identify any basis on which a government department, agency or instrumentality, or a corporation, or a bank that employs legal practitioners who undertake legal work in litigation, or an incorporated legal practice, should be in a different position from a partnership of legal practitioners that employs legal practitioners for the provision of legal services to clients, but who also provide legal services where the partnership is the litigant. This was a question asked by Nettle J (in dissent on this issue) in Bell Lawyers at [75], with respect to litigants in the position of Ms Pentelow. It has more force when asked with respect to a partnership of legal practitioners for which professional legal work is undertaken by legal practitioners employed by the partnership. 5. It may be that "remuneration" in the NSW definition is intended to provide for the professional costs of those employed legal practitioners in government departments and corporations that the plurality in Bell Lawyers expressly recognised as being outside the general rule. Equally, the term could have been intended to encompass the remuneration of employed legal practitioners in legal practices. I see no reason to adopt the narrower version. "Remuneration" in this sense is not "payment to a person by himself or herself for work done by himself or herself"; it is payment to another person for the costs of legal professional work undertaken by that other person. 6. In my opinion resolution of the questions in this appeal comes down to the construction of the terms of the s 3 definition. I would give a wider meaning to "costs payable in or in relation to the proceedings", so that the phrase encompasses costs payable to employed legal practitioners. While "costs payable" is not apt to include what can be no more than the notional costs of a self-represented legal practitioner (such as Ms Pentelow) it is apt to (and in the case of government departments and incorporations does) include the actual costs attributable to the use of employed legal practitioners, even if, as Gageler J said, the quantification is by reference to overheads rather than fees (as are payable to retained legal practitioners). 7. That is consistent with "the general principle" that "costs are awarded by way of indemnity … for professional legal costs actually incurred in the conduct of litigation". While a self-represented legal practitioner does not incur any actual professional costs, a legal practitioner litigant using an employed legal practitioner does incur the professional costs of the employment of that legal practitioner. 8. The fundamental reasoning of the High Court in Bell Lawyers concerned the unjustifiable "affront to the fundamental value of equality of all persons before the law" that underlay the Chorley exception, and placed solicitors in a privileged position vis a vis other litigants (such as Mr Cachia) who represent themselves, by allowing them to be compensated for the time expended in the litigation. 9. On these bases I would conclude that the appellants are entitled to recover costs representing the costs of the professional services rendered to them by their employed solicitors. In reaching this conclusion I have not overlooked other aspects of the reasoning in Bell Lawyers. Perhaps the strongest argument against the conclusion I have reached is this. In Cachia Mason CJ, Wilson, Dawson, Toohey and Gaudron JJ described as "questionable" a "situation in which a successful litigant not only receives the amount of the verdict but actually profits from the conduct of the litigation". In Bell Lawyers the plurality (at [32]) considered that possibility to be "unacceptable in point of principle". Plainly, if costs recovered in relation to work undertaken by employed legal practitioners is assessed at usual commercial rates, an element of profit will be included in what is recovered by the partner litigant. While I am conscious of the force of this point, it does not seem to me that it overcomes the other powerful reasons for accepting that recovery of costs for work done by an employed legal practitioner is an example of an indemnity for costs incurred in the conduct of the litigation. 10. There remains for consideration the decision of the Victorian Court of Appeal in United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2020] VSCA 15 ("United Petroleum"), the circumstances of which, one major departure aside, are materially identical to the present case, in which a contrary view was taken. The major departure is the statutory definition of "costs" applicable in the two jurisdictions. The Victorian definition does not include, as does the NSW definition, "remuneration". United Petroleum v Herbert Smith Freehills 1. As I have indicated, the relevant facts in United Petroleum were very nearly identical with the facts of the present. The respondent in United Petroleum (Herbert Smith Freehills, to which the Victorian Court of Appeal referred as "Freehills", nomenclature it is convenient to adopt) was a large multi-member legal practice structured as a partnership. Freehills became embroiled in litigation with United Petroleum. There were two strands to the litigation – a claim by Freehills for unpaid fees, and a claim by United Petroleum against Freehills in negligence. Freehills succeeded in both. According to the Court of Appeal judgment (at [56]-[58]), "Freehills were the solicitors on the record for the fees proceeding and in the applications for leave to appeal arising from that proceeding", and the solicitors on the record for the negligence proceeding, until (later) they were represented by external lawyers. "Freehills staff" carried out "substantive legal work" in both proceedings, even after the external lawyers had assumed carriage of the negligence proceedings. Each of the "Freehills staff" who carried out work held a practising certificate and recorded the time spent working on the proceedings "in the usual way", which I take to mean in the same way as they would have done had they been undertaking work for external clients. 2. As in the present case, Freehills sought to recover costs in respect of the work performed by employed solicitors but did not seek to recover costs in respect of any work performed by partners. 3. The Victorian Court of Appeal identified the relevant issue as "whether Freehills [was] precluded from cost recovery because it acted for itself in the proceeding[s]": at [6]. 4. Section 24(1) of the Supreme Court Act 1986 (Vic) relevantly provides that, unless otherwise provided, the costs of and incidental to all matters in the court are in the discretion of the court and the court has full power to determine by whom and to what extent the costs are to be paid. There is no material difference between that provision and s 98(1)(a) and (b) of the Civil Procedure Act. 5. Section 3 of the Supreme Court Act 1986 (Vic) defines "costs" to include "fees, charges and disbursements". There is no mention of "remuneration". The Court of Appeal concluded, having analysed the reasoning in Bell Lawyers, that Freehills were not entitled to recover costs "for the time spent by its own employees": at [121]. 6. A preliminary question is whether, having regard to the obligation of this Court to follow a relevant decision of a court of co-ordinate jurisdiction unless satisfied that it is "plainly wrong" (Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [135]), this court ought to apply that decision. 7. Although the Victorian Court of Appeal considered that its determination did not depend on any differences between the statutory powers to award costs between NSW and Victoria (at [94]) (with which I respectfully agree), I am of the view that there is a material difference in the definitions of "costs" that are applicable in the two jurisdictions. The inclusion of "remuneration" in the NSW definition is not insignificant and should not be disregarded. I therefore do not consider that this Court is bound adopt the reasoning (and the conclusion) in United Petroleum. 8. The Victorian Court of Appeal appears to have placed considerable weight on the fact (as stated in [56] and [97]) that "Freehills" was the solicitor on the record in that case. Their Honours drew a distinction, which they said was recognised in Bell Lawyers, between "the position where solicitors who are parties represent themselves, and the position where a party is represented by an employed solicitor". In the latter case, their Honours said, the party is not unrepresented or self-represented, but is represented by the employed solicitor. 9. Their Honours went on to observe that in those cases an issue had arisen as to what amount of costs should be recoverable given the employment relationship. No instances of cases in which those issues have arisen was cited. 10. I have difficulty in accepting that the nomination of a solicitor as the solicitor on the record is a relevant distinction. Exactly the same considerations would apply; the partner litigants would, on the view I have expressed, incur professional legal costs in the conduct of the litigation, although in the form of overheads. In any event, the question is not determined by the identity of the solicitor on the record. It is commonplace for legal professional costs to be incurred by work done by solicitors other than the solicitor on the record. 11. At [105] their Honours addressed [68] (extracted above) of Bell Lawyers, in which Gageler J said that recovery of costs by a party using an employed solicitor is an application of the general rule rather than the exception to it. Their Honours appear to confine Gageler J's observations to circumstances where: "A party is represented in the proceeding by a solicitor who is an employee of the party (or of a related interested person or entity), usually a government officer or instrumentality". (emphasis in original) This is a further instance of the emphasis placed on the identity of the solicitor on the record. In any event I do not see Gageler J's observations as so confined. They are equally capable of applying to solicitors employed in an incorporated legal practice or a partnership. 1. Having regard to the differing definitions of "costs" in the two jurisdictions, I do not consider that questions of comity bind this court to adopt the reasoning in United Petroleum. For the reasons given above, I am of the view that the appellants are entitled to recover the professional legal costs incurred in the litigation by the use of employed legal practitioners. 2. I agree with the orders proposed by Kirk JA. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 December 2023