New South Wales Court of Appeal CITATION: Sweeney v Australian Securities and Investments Commission [2006] NSWCA 230 HEARING DATE(S): 6 November 2006 JUDGMENT DATE: 6 November 2006 JUDGMENT OF: Handley JA at 1, 28; Tobias JA at 18; McColl JA at 27 EX TEMPORE JUDGMENT DATE: 11/06/2006 DECISION: 1. Leave to appeal refused.; 2. Summons dismissed with costs. CATCHWORDS: COSTS – bill of costs included work done by solicitors involved in decision to commence proceedings – objection that solicitors disqualified and costs should be disallowed – objection overruled LEGISLATION CITED: Civil Procedure Act 2005 Legal Profession Act 1987 Caccia v Haines (1994) 179 CLR 403 Campbelltown City Council v Vegan [2006] NSWCA 284 CASES CITED: Parramatta City Council v Palmyra Freeholds Pty Ltd (1974) 2 NSWLR 83 Wentworth v Rogers [2006] NSWCA 145 Williams v Spautz (1992) 174 CLR 509 PARTIES: Charles Sweeney (Claimant) Australian Securities and Investments Commission (Opponent) FILE NUMBER(S): CA 40156 of 2006 COUNSEL: in person (Claimant) D R Stack (Opponent) SOLICITORS: Noel F Bracks & Co (Claimant) Australian Securities and Investments Commission (Opponent) LOWER COURT JURISDICTION: Supreme Court - Common Law Division LOWER COURT FILE NUMBER(S): SC 10792 of 2005 LOWER COURT JUDICIAL OFFICER: Hoeben J LOWER COURT DATE OF DECISION: 2 March 2006 LOWER COURT MEDIUM NEUTRAL CITATION: [2006] NSWSC 103 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40156 of 2006 HANDLEY JA TOBIAS JA McCOLL JA 6 NOVEMBER 2006 CHARLES SWEENEY v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION CATCHWORDS COSTS – bill of costs included work done by solicitors involved in decision to commence proceedings – objection that solicitors disqualified and costs should be disallowed – objection overruled FACTS The claimant sought leave to appeal against a decision of a Judge in the Common Law Division setting aside subpoenas directed to witnesses to attend to give oral evidence on an appeal under s 208L of the Legal Profession Act 1987 from a decision of a costs assessor. The claimant objected to costs claimed for work done by a solicitor who had earlier acted as an investigator and urged the opponent to commence the underlying proceedings, and for work done by another solicitor who, as a delegate of the opponent, had participated in the decision to commence proceedings. The claimant wished to argue that for reasons of public policy and because each of the solicitors had a conflict of interest, the costs claimed in respect of their work should have been disallowed. The costs assessor held that these allegations were not relevant to the assessment and allowed costs for work done by those solicitors. The subpoenas set aside required the solicitors to attend to give oral evidence. HELD: (1) Oral evidence is not relevant on an appeal under s 208L which is limited to questions of law; (2) Costs assessors have no power to conduct oral hearings nor to require witnesses to attend for that purpose; (3) The allegations the claimant sought to investigate on the appeal were not relevant to the costs assessment under the Act or the general law; (4) per Handley JA: An appellate decision maker exercises, within the right of appeal, the jurisdiction of the original decision maker: Parramatta City Council v Palmyra Freeholds Pty Ltd (1974) 2 NSWLR 83, 87; Campbelltown City Council v Vegan [2006] NSWCA 284; (5) per Handley JA: In an appeal by leave under s 208M on a question of fact there is no power to receive oral evidence; (6) Leave to appeal was refused and the summons dismissed with costs. ORDERS 1. Leave to appeal refused. 2. Summons dismissed with costs. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40156 of 2006 HANDLEY JA TOBIAS JA McCOLL JA 6 NOVEMBER 2006 CHARLES SWEENEY v AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Judgment 1 HANDLEY JA: The Court has before it a summons for leave to appeal from decisions of Hoeben J. His Honour upheld applications to set aside subpoenas directed to a Mr Riordan and Ms Redfern requiring them to give evidence in proceedings in the Common Law Division by way of an appeal under s 208L of the Legal Profession Act 1987 from the decision of a cost assessor. His Honour set aside both subpoenas in his first decision and in his second decision refused to reconsider his first. 2 The proceedings before the cost assessor involved the assessment of the opponent's costs of proceedings in the Equity Division and this Court brought in 2000 seeking declarations of contraventions of the Corporations Act and associated relief. Those proceedings were ultimately dismissed by consent subject to the claimant giving an undertaking to the Court, without admissions, that he would not manage a corporation without the consent of the opponent or the approval of the Court. Existing costs orders remained in force but otherwise there was no order as to costs. 3 The assessment of the opponent's costs pursuant to the existing orders was referred to a cost assessor in 2004 and he completed his assessment on 13 February 2005. The claimant appealed pursuant to s 208L on questions of law. He sought declarations that the assessor had erred in refusing to consider issues raised by the claimant. The first was whether a claim for costs in respect of Mr Riordan who had been an investigator, and had urged the opponent to commence the underlying proceedings, was liable to be defeated because of his so called conflict of interest. It was suggested that his employer should not be allowed to charge for his time, either on grounds of public policy or because the person concerned was not acting as a solicitor. 4 The second matter was that Ms Redfern acting as the opponent's delegate had participated in the decision to commence the proceedings. It was said that, for this reason, the opponent cannot recover costs in respect of her later work as a solicitor. 5 The third matter was that Ms Redfern is alleged to have acted improperly when she decided to commence proceedings because of a conflict of interest and the opponent cannot recover for her time spent in the prosecution of those proceedings although otherwise she was acting as a solicitor. 6 Mr Sweeney was unable to refer the court to any authority which established that conduct of the kind alleged against Mr Riordan and Ms Redfern is relevant in the taxation or assessment of costs or disqualified those practitioners from acting as solicitors in the proceedings. 7 It might be noted for example that a solicitor who acts for himself or herself in proceedings that he or she commences is entitled to recover professional costs: Caccia v Haines (1994) 179 CLR 403. The claimant's submissions attempt to convert the professional and fiduciary duty owed by a solicitor to the client into a duty owed to the other party in the litigation. It is unusual for a solicitor acting for one party to have any duty to the other party in the proceedings. The limited exceptions have involved some assumption of responsibility to the other party which is absent in this case. 8 In my judgment therefore the underlying issues that the claimant seeks to raise lack a foundation in principle. They also, as Hoeben J and the assessor held, stand outside the issues remitted to the assessor by s 208F of the Act. Section 208F(1) requires the costs assessor to consider whether or not it was reasonable to carry out the work and what is a fair and reasonable amount of costs for the work. Section 208G makes other matters relevant but they do not include the issues raised by the claimant. 9 A further difficulty arises from the limited nature of the appeal which is on foot. Section 208L limits the appeal to questions of law. It is obvious that oral evidence from witnesses could not be relevant on such an appeal. 10 However the claimant has foreshadowed an application for leave to amend the summons to raise issues of fact open on an appeal under s 208M. Section 208M(1) permits a party to an assessment to seek leave of the Supreme Court to appeal against the determination of the application by a cost assessor and if leave is granted the Court can consider questions of fact. Section 208M(4) allows the Court to receive further evidence. 11 The claimant acknowledged that the costs assessor had no power to conduct an oral hearing or to require witnesses to attend for that purpose and this is confirmed by Wentworth v Rogers [2006] NSWCA 145. However he submitted that the powers of the Supreme Court on an appeal under s 208M were wider and that the additional evidence which s 208M(4) allowed to be called on such an appeal, could include oral evidence. He relied on certain passages in Wentworth v Rogers [2006] NSWCA 145 in support of this proposition. Santow JA did not decide that oral evidence was admissible on an appeal under s 208M, and Basten JA certainly did not decide that either. The question did not arise in that case because the issues then before the Court concerned the construction and effect of a costs agreement between Mr Rogers and his lawyers. 12 As a general rule an appellate decision maker exercises, within the limits of the right of appeal, the jurisdiction or power of the original decision maker. Hence in Parramatta City Council v Palmyra Freeholds Pty Ltd (1974) 2 NSWLR 83, 87 Reynolds JA, giving the principal judgment of the Court said: "It may be stated as a general proposition that an appellate tribunal is not, in the absence of express provision, invested with power to do that which the subordinate tribunal could not have done." 13 This statement was recently cited with approval by two of the Judges in Campbelltown City Council v Vegan [2006] NSWCA 284. 14 There is no express provision in s 208M which would allow oral evidence to be called on such an appeal. It follows that the further evidence which is admissible on such an appeal is limited to written evidence which could have been tendered before the assessor. 15 I therefore conclude that on an appeal under s 208M there is no power to require the attendance of a witness for the purpose of giving oral evidence. However there is power by subpoena to require persons to produce documents for the purposes of such an appeal. 16 Conduct of the kind alleged by the claimant might have been relevant on an application for a stay of the underlying proceedings for abuse of process. It might also have been relevant in proceedings for malicious prosecution if these extend to civil proceedings for a penalty. However it is an essential condition of this cause of action that the underlying proceedings should have terminated favourably to the plaintiff suing for malicious prosecution. Under the agreement which brought the principal proceedings to an end the opponent obtained relief in the form of an undertaking to the Court. Thus an essential condition for an action for malicious prosecution was not satisfied and no such proceedings could ever have been brought. 17 The conduct of a party's legal advisers might conceivably be relevant in an action for collateral abuse of process that was considered in Williams v Spautz (1992) 174 CLR 509, 522-527. However, the claimant's allegations, even if proved, would not have established this tort. Thus the allegations which the claimant seeks to investigate in the appeal are not relevant to the costs assessment under the Act or under the general law. In those circumstances I would propose that leave to appeal should be refused and the summons should be dismissed with costs. 18 TOBIAS JA: I agree with the orders proposed by Handley JA and with one exception upon which I have no concluded view, with his reasons. However, I would wish to add the following observations. The gravamen of the question of law which Mr Sweeney wishes to agitate in the appeal against the assessor's decision which has been instituted by him pursuant to s 208L of the Legal Profession Act, is accurately articulated in paras 7, 8 and 9 of Hoeben J's judgment of 6 March 2006 when an application was made to him to reconsider his judgment of 2 March 2006. 19 The basis of that principle, as I understand it, is that Mr Riordan and Ms Redfern, by virtue of their previous conduct, were disqualified from taking an active part in the Equity proceedings which were brought by the opponent against the claimant as a consequence whereof the opponent was not entitled to charge for their services pursuant to the costs orders that had been made and which were to remain on foot as part of the settlement of those proceedings. The analogy relied upon by Mr Sweeney is that those persons were in the same position as solicitors who purported to provide legal services for which charges were made in circumstances where they did not have practising certificates or were otherwise unqualified to act as a legal practitioner. Those persons would, of course, be providing legal services unlawfully. 20 The conduct of Mr Riordan and Ms Redfern upon which Mr Sweeney relies, even if established, could not be regarded as unlawful. The basis upon which, as I understand it, Mr Sweeney seeks to disqualify the opponent from charging for their services is not one based on illegality but based on public policy, a very amorphous concept in the circumstances of the present case. Understandably, when asked, Mr Sweeney was unable to point to any decision or any authority which either directly or indirectly supported the propositions of law that he was espousing, even if their factual underpinning was in some way established. 21 So long as his appeal remains under s 208L the primary judge was clearly correct to set aside subpoenas for the purposes of calling evidence on such an appeal which, as the presiding Judge has indicated, is confined to questions of law. 22 However, it has been foreshadowed by Mr Sweeney that he may seek leave to appeal pursuant to s 208M of the Legal Profession Act, which would at least permit the tendering of documentary evidence, which may be sufficient for Mr Sweeney's purposes. 23 But before any subpoena could be issued for the purposes of obtaining the production of further documents, there still lies the hurdle that Mr Sweeney would need to overcome, which is that the Supreme Court's leave for the bringing of any such appeal would be necessary. 24 The factual circumstances upon which Mr Sweeney relies must have been known to him at all material times and in particular as at the time the Equity proceedings were instituted against him. Furthermore, the solicitor's costs allowed by the costs assessor are largely based on the legal services provided by Mr Riordan and Ms Redfern for if that was not the case then the bringing of the appeal would not have served any particular purpose. 25 Given the nature of the agreement that was reached between the claimant and the opponent that all existing costs orders should remain on foot, and given what I would infer was Mr Sweeney's knowledge of the factual basis of the principle which he now wishes to espouse, a real question will arise as to whether leave will actually be granted under s.208M. Unless and until leave is granted, the issuing of any subpoenas for Ms Redfern and Mr Riordan to produce documents on any such appeal is premature. 26 As I indicated at the outset of these remarks I agree with the reasons of Handley JA except with respect to one matter. His Honour has expressed the opinion that in an appeal under s.208M in respect of which leave has been granted, there is no power in the Supreme Court to require the attendance of a witness for the purpose of giving oral evidence on the hearing of any such appeal. Although I acknowledge the force of the reasons of his Honour for holding that opinion, as the matter was not fully argued and is at present academic, I prefer not to form a concluded view on the issue. I have therefore confined my remarks to the tendering of documentary evidence on any such appeal. Subject to the foregoing, I agree with the orders proposed by his Honour. 27 MCCOLL JA: I agree with Handley JA, save that, like Tobias JA, I would not wish to express a concluded view about s 208M. 28 HANDLEY JA: The orders of the Court will be as I have announced. [LEGAL ARGUMENT] 29 HANDLEY JA: After the Court had given its ex tempore reasons in this matter, Mr Stack, counsel for the opponent, invited the Court to assess the opponent's costs at a lump sum figure in exercise of the Court's power under s 98(4)(c) of the Civil Procedure Act 2005, a power recognised by s 208I(1) of the Legal Profession Act 1987 and the current Act. 30 The Court is not accustomed to exercising this power and none of us can recall an occasion when we were invited to, or did, exercise this power or its equivalent under earlier legislation. The Court considers it is ill-equipped to assess costs either of the solicitors or counsel. We have no reason to think that the amounts claimed are unreasonable, but we have no positive experience on which to draw in finding that they are reasonable. These are matters normally remitted to costs assessors. 31 Of course a lump sum assessment would considerably reduce the costs of the assessment process. A bill would not have to be prepared, the filing fee would not have to be paid, the costs assessor's fees would not have to be paid nor would the parties incur the costs of the actual assessment. But these are matters which Mr Sweeney may like to consider in due course with a view to possibly agreeing on an assessment of the costs, but the Court, for the reasons given, does not propose to exercise its power in this case. ********** 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.