In this section of the paper, some recent cases in which the inherent or analogous implied jurisdiction has been resorted to are considered in detail.

Re Jabe (2021)

Re Jabe; Kennedy v Schwarcz [2021] VSC 106 is a decision of Justice McMillan in the course of considering whether to approve the settlement of a testators family maintenance claim.[1] It was cited with approval in Hartnett v Bell [2023] NSWCA 244 at [123].

The parties’ solicitors had charged their clients $50,000 and $46,270 respectively in a dispute about an estate worth about $325,000. The Court was asked to approve a settlement under which the claimant would receive $100,000 inclusive of his costs out of the estate.

Expressly in the exercise of its inherent supervisory jurisdiction over its officers, the Court raised of its own motion concerns about the parties’ costs and ‘enquired whether’ they would take the opportunity to make submissions in relation to specific matters, such as whether their solicitors’ costs disclosures were void for non-disclosure. Each party did so through their solicitors. No criticism was advanced that the solicitors had a conflict of interest and duty.

Neither party had raised any concern as to the amount of their lawyers’ fees and disbursements, and no one applied for any such hearing. Following submissions, the Court made findings that costs agreements were void and that solicitors (who were not joined to the proceedings) had breached the Civil Procedure Act 2010, and that fees were not fair and reasonable, and ordered that both solicitors’ costs be taxed, as between solicitor and client, by the Costs Court. It made the taxation order pursuant to r. 63.65, which commences ‘This Rule applies where the Court by order, whether or not made by or under any Act, refers a bill of costs to the Costs Court for taxation or directs that a bill of costs be taxed’.

Keybridge Capital (2022)

The applicant for taxation in Keybridge Capital Ltd v Macpherson Kelley Pty Ltd [2022] VSC 831 was a public company, and so a sophisticated client to whom limited costs disclosure requirements applied. The respondent lawyers argued that the Court did not have the statutory jurisdiction they had sought to invoke because:

• • the final bill in the first matter, governed by the Legal Profession Act 2004, was more than 12 months prior to the summons for taxation, and as a sophisticated client, the applicant was not permitted to seek an extension of time in which to seek taxation; and
  • the second matter was governed by the Legal Profession Uniform Law which gave public companies (and so ‘commercial or government clients’) no right to have their costs assessed (s. 170).[2]

The Court found that there was only one matter, even though there were two different costs agreements with slightly different parties each referring to a different governing Act separated by a long period of inactivity in the engagement. The Court found that that matter was governed by the Legal Profession Act 2004, and that the summons was brought within 12 months of the final bill, and so was within time, and within the s. 17D(1)(f) grant of jurisdiction (‘must hear and determine reviews under … the Legal Profession Act 2004’). Accordingly, everything else the Court said was obiter dicta.

But the Costs Judge also found that the Costs Court had jurisdiction under s. 17D(1)(a) of the Supreme Court Act 1986(‘has jurisdiction to hear and determine the assessment, settling, taxation or review of costs in all proceedings in the Court’) because the costs assessment was in respect of legal costs charged by the solicitor respondent to the applicant client in Supreme Court litigation. Since no time limit is specified for an application for taxation under s. 17D(1)(a), the corollary seems to be that there is no time limit for a client to seek taxation of costs charged by their lawyers in Supreme Court proceedings.

Then the Court turned to s. 17D(1)(h) (‘any other jurisdiction in relation to costs given by’ the Supreme Court Act or the Supreme Court Rules), and considered two questions:

(a)        whether r. 63.58 gave the Costs Court jurisdiction; and

(b)       whether r. 63.35 gave the Costs Court the Supreme Court’s inherent jurisdiction.

The Court found that it did not have jurisdiction under s. 17D(1)(h) on the basis of the applicant’s first argument. That was that r. 63.58 allows taxation of costs as between solicitor and client pursuant to an agreement that costs may be taxed in the Costs Court.

The client pointed to a clause in the original costs agreement which said that costs could be taxed in the Costs Court. Because the parties had agreed that the solicitors’ costs could be taxed in the Costs Court they could be taxed, the client argued, even if but for the agreement that course would not have been permitted under the Legal Profession Act 2004. The Court found that r. 63.58 provided for procedures where the Court otherwise had jurisdiction, rather than being a grant of jurisdiction which would not ordinarily be found in rules of court, applying Woolf v Snipe (1993) 48 CLR 677.

But, most interestingly for present purposes, the Costs Court decided at [48] et seq that r. 63.35 was a grant of jurisdiction found in the Court’s rules and given to the Costs Court by s. 17D(1)(h) which did give the Costs Court the Supreme Court’s inherent jurisdiction. And had it needed to resort to it, it would have:

‘49 The Court has an inherent jurisdiction as to whether to tax the costs of a proceeding. Rule s. 63.35 of the Rules provides that on a taxation of costs, the Costs Court has the same powers which an associate judge has on the hearing of an application in a proceeding. The associate judge’s powers are found in r 77.01 of the Rules, which provides that an associate judge may, in any proceeding to which the Rules apply, give judgment or make any order including any judgment or order in the exercise of the inherent jurisdiction of the Court.’

The Court would have exercised the discretion to tax the solicitors’ costs at the suit of the public company in its inherent jurisdiction because they had given various estimates of what the litigation might cost the public company which turned out to be inaccurate, and the lawyers charged nearly $800,000 which was said to be a lot.

The lawyers pointed out that they were not obliged under the Legal Profession Act 2004 to give any costs disclosures to a public company, including to update any disclosures which had been given.  The Costs Court disagreed at [57]:

‘Pursuant to s 3.4.12 of the [Legal Profession Act 2004] disclosure is not required to be made to a public company. Even though the respondent was not required to make a disclosure to a public company – the applicant – it did. Once disclosure is made, then the respondent becomes subject to the ongoing disclosure obligations of s 3.4.16 of the [Legal Profession Act 2004]. Section 3.4.12 of the [Legal Profession Act 2004] simply refers to disclosure under ss 3.4.9 and 3.4.10. It does not refer to s 3.4.16, which provides that a law practice must disclose any substantial change to anything already included in a disclosure.’

Hartnett v Bell (2023)

In Hartnett v Bell [2023] NSWCA 244,[3] a mortgagor sought to invoke the inherent supervisory jurisdiction of the Supreme Court of NSW to obtain an order that the mortgagee’s solicitor disgorge to the mortgagor amounts by which the solicitor had overcharged the mortgagee and which had been deducted from the mortgage sale of the mortgaged property and appropriated by the solicitor.

The mortgagee had obtained a sale order from the Supreme Court of NSW upon the mortgagor’s failure to pay the mortgaged sum of $30,000 and an order that the mortgagor pay the mortgagee’s costs of that proceeding, and future costs, on an indemnity basis.

The proceedings were undefended but the mortgagee’s solicitor claimed to have managed to rack up $288,601, leaving just $33,834 available to the mortgagor from the sale proceeds of $376,000, after the mortgage and the mortgagee’s costs were paid.

The mortgagor had the past costs payable under that order assessed by the NSW equivalent of a taxation, i.e. a costs assessment by a Court-appointed costs assessor. Neither the mortgagee nor her solicitor cooperated or participated. So the costs assessor fixed the costs, as between the mortgagor and the mortgagee, at $40,000, 14% of what the mortgagee’s solicitor had charged.

The mortgagor’s claim against the mortgagee’s solicitor in the Supreme Court of NSW for the difference between the costs paid from the sale proceeds and the $40,000 costs assessment failed as a restitution claim but succeeded following invocation of the inherent supervisory jurisdiction.  Recognising that the solicitor was not bound by the costs assessment to which he had not been a party, the Court did its own quantification exercise of the reasonable costs, and — equally unaided by evidence from the solicitor as the costs assessor had been — came to the same result as the costs assessor had.

The trial judge’s decision rested on both the inherent jurisdiction and s. 99 of the Civil Procedure Act 2005 (NSW), which permits courts to deprive lawyers of their costs in civil proceedings: [85], but the Court of Appeal did not rest its decision on this provision: [95].  The Court did approve of the lower court’s invocation of ss. 56-60 of that Act in justifying its decision to roll up its sleeves and deal with the mortgagor’s dispute with the mortgagee’s solicitor in a broad brush fashion rather than leaving the question to a costs assessor in a costs assessment as between third party payer and the solicitor, even though both parties had agreed that that would be an appropriate course: [110], [142].

Lehrman v Network Ten Limited (2024)

Lehrman v Network Ten Limited [2024] FCA 102 is Justice Lee’s reasons for finding that Channel 10 was obliged to pay its employee Lisa Wilkinson’s legal costs despite having offered to defend her by the same lawyers as are defending Channel 10 in Bruce Lehrman’s not-yet-determined defamation claim about Ms Wilkinson’s interview with Brittany Higgins.

There remains a dispute between Channel 10 and its employee about whether and to what extent the quantum of costs charged to her is reasonable. Drawing inspiration from (and perhaps shocked by the procedural horror of) Hartnett v Bell, the Court foreshadowed resolving this question itself, rather than leaving the parties to the usual solicitor-client costs processes under the Legal Profession Uniform Law, by referring the question of the reasonable costs to a referee, at the same time as the question of costs as between party and party fell to be resolved.

It occurs to me that another reason why such a procedure might be appropriate is that costs which are reasonably incurred in the sense relevant to an employer’s indemnity of an employee might not be precisely co-extensive with what is ‘fair and reasonable’ as between the employee and her solicitor in the s. 200 Uniform Law sense.  If the employee’s solicitors had engaged in some costs disclosure default technically voiding their costs agreement, but in a way immaterial to the employee and which she did not wish to take advantage of, is that a question which should be taken into consideration in fixing the amount recoverable under an employer’s indemnity, for example?

His Honour observed at [55] that ‘I do not consider (and it has not been suggested) that the implied (not inherent) power of the Federal Court means its powers to control costs incurred in proceedings before the Court is necessarily restricted by the assessment process under the Uniform Law.’

[1] See Stephen Warne ‘Supreme Court flexes inherent jurisdiction of its own motion’ The Australian Profsesional Liability Blog, 16 July 2021.

[2] See Victorian Legal Services Commissioner v Barrett [2019] VCAT 290.

[3] See Stephen Warne ‘NSWCA takes inherent supervisory jurisdiction over its officers into new territory,’ The Australian Professional Liability Blog, 26 February 2024.

Section 17D(1)(h) gives the Costs Court any jurisdiction given to it under any Act (including the Supreme Court Act) or by the Supreme Court’s rules, a provision which might seem at first glance to be redundant, but which might be intended to avoid arguments that procedural rules are inapt to be read as granting jurisdiction.[1]

A. Section 17D(2) (ancillary powers)

As Bell J observed in Owerhall v Bolton & Swan Pty Ltd, s. 17D(2) of the Supreme Court Act 1986 gives the Costs Court such powers of the Court (defined to mean the Supreme Court) as are necessary to enable it to exercise its jurisdiction. This can be described as providing the Court’s ‘ancillary powers’.

Even if a taxation for costs is not a civil proceeding in the Supreme Court for the purposes of the Civil Procedure Act 2010, perhaps the Costs Court is given the Supreme Court’s powers under that Act by s. 17D(2) on the basis that they are ancillary powers necessary to enable it to exercise its jurisdiction.  On the other hand, query whether they are necessary.

In Gadens Lawyers v Beba Enterprises Pty Ltd [2012] VSC 519, Emerton J suggested in considered obiter dicta at [22] that even before a summons for taxation was issued, the Costs Court would have jurisdiction to order that a solicitor give a non-associated third party payer ‘sufficient information to allow [it] to consider making, and if thought fit to make, an application for a costs review,’ under s. 3.4.38(7) of the Legal Profession Act 2004.[2] Her Honour explained:

‘In my view, the legislature could not have intended that responsibility for one small part of the review process, albeit one that may be anterior to any application for costs review, be taken out of the hands of the Costs Court and vested in the judges of the Trial Division.’[3]

Her Honour obviously considered that jurisdiction may impliedly be given to the Costs Court by legislation, and a close reading of her remarks show that she was not relying on the Court’s ancillary powers in s. 17D(2).  Rather she was relying on a power impliedly given to the Costs Court by the Legal Profession Act 2004, i.e. she was relying on s. 17D(1)(h).

B. The Civil Procedure Act

Section 65C(1) of the Civil Procedure Act 2010 gives an extraordinarily broad costs power in civil proceedings to the courts which it covers:

‘In addition to any other power a court may have in relation to costs, a court may make any order as to costs it considers appropriate to further the overarching purpose.’

‘Costs’ is not defined, but order 60 of the Supreme Court Rules uses ‘costs’ to refer equally to costs claimable between parties to litigation and costs claimable by solicitors from their clients, e.g. r. 63.37(2), a matter the drafter of the Civil Procedure Act 2010 may be taken to have been aware of, and the Act has been used to adjust interests as between solicitor and own client.

The ‘overarching purpose’ is ‘to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute’: s. 7, and s. 8(1) says:

‘A court must seek to give effect to the overarching purpose in the exercise of any of its powers, or in the interpretation of those powers, whether those powers– (a) in the case of the Supreme Court, are part of the Court’s inherent jurisdiction, implied jurisdiction or statutory jurisdiction.’

Whether the Civil Procedure Act 2010 has direct operation in the Costs Court depends on whether a taxation of costs in the Costs Court is to be regarded as a civil proceeding in the Supreme Court for the purposes of its application provision, s. 4 read with the relevant definitions in s. 3.  It is routinely assumed that the Act does govern Costs Court proceedings.  One indicator that suggests the assumption is correct is that limb (r) of the s. 3 definition of ‘substantive document’ excludes ‘a summons for taxation of costs’, a provision which would be otiose, or nearly so, if the Act did not apply to taxations in the Costs Court in the first place.  Things would certainly be a lot simpler if the Costs Court were a court specifically mentioned in the Act’s application provisions.

C. Rule 63.35

Then the Supreme Court Rules bestow further powers on the Costs Court, which would be recognised by s. 17D(1)(h) of the Supreme Court Act 1986. Rule 63.35 provides that:

‘On a taxation of costs under this Order, in addition to any powers conferred by any Act, the Costs Court has the same powers which an Associate Judge has on the hearing of an application in a proceeding.’

Rule 77.01 says that, subject to O77, an associate judge may give judgment or make any order including any judgment or order in the exercise of the inherent jurisdiction of the Court. Order 77 says that ordinarily, an Associate Judge is not to hear the trial of a proceeding, unless directed to do so by a Justice of the Court.

The provision gives rise to three questions of interpretation:

• • What does ‘On a taxation of costs’ mean?
  • What does ‘under this Order’ mean?
  • What does ‘the Costs Court’ mean?

For the reasons which follow, it is arguable that what the provision means is that the Costs Court, however constituted, may exercise the Supreme Court’s inherent jurisdiction from the moment a summons for taxation, whether within time or not, is filed.

(i) ‘On a taxation of costs’

When I invoke r. 63.35 to argue that the Costs Court may exercise the Supreme Court’s inherent jurisdiction, the counter-argument is sometimes – we are only at a preliminary stage; we have not yet arrived at the taxation proper, or – you are out of time and the Costs Court will not have jurisdiction until the Supreme Court gives you leave to proceed out of time.

‘Taxation of costs’ is defined by r. 63.01(1) as ‘the assessment, settling, taxation or review of costs’. There can be no doubt that both party-party taxations of costs and solicitor-client taxations of costs are referred to (the latter is called ‘costs assessment’ under the Uniform Law).

But is there a ‘taxation of costs’ as soon as the summons for taxation is filed, or only once the preliminary issues about costs disclosure, costs agreements, and basis of taxation are sorted and the line by line hearing has started? The answer, I suggest, is the former. In Gallin v SC Lawyers [2020] VSC 80, Macaulay J exercised the Costs Court’s jurisdiction under a r. 63.51 referral from the Costs Court of ‘a question arising on a taxation’. The question was whether the applicant’s summons for taxation should be dealt with out of time. He said it should. Since, as Keogh J said in Owerhall v Bolton & Swan, a river cannot rise above its source, Macaulay J must have found that from the moment there was an out of time summons for taxation, it could be said that a question arose ‘on a taxation’.[4]

(ii) ‘under this order’

Order 63 applies to costs payable or to be taxed under the rules of the Supreme, County or Magistrates’ Courts, or under any order of any of those courts, or under any Act: r. 63.01(3). Broad as that scope is, not everything referred to the Costs Court will be within it. In Elvin v Davey [2022] VSC 214, a Magistrate referred to the Costs Court the quantification of compensation awarded under s. 29 of the Civil Procedure Act 2010. Keogh J found at [195] that such compensation is not ‘costs’ and so the Costs Court was not being asked to conduct a ‘taxation of costs’.  The same might be said of certain purported referrals to the Costs Court by the Appeal Costs Board.

(iii) ‘Costs Court’

References in the Supreme Court Rules to the Costs Court are to be read as references to the Costs Court constituted by a Costs Judge or by a judicial registrar; and to an exercise of a power of the Costs Court by a judicial registrar, Costs Registrar or a Deputy Costs Registrar: r. 1.13(2)(d).

D Can the Costs Court exercise the inherent jurisdiction through r. 63.35 and s. 17D(1)(h) where it does not otherwise have jurisdiction?

Can the Costs Court invoke the inherent jurisdiction to tax costs in circumstances where neither ss. 17D(1)(a)-(g) nor s. 17D(2) give it jurisdiction to do so, on the basis that s. 17D(1)(h) recognises the grant of the Supreme Court’s inherent jurisdiction to the Costs Court by r. 63.35?  In Keybridge Capital Ltd v Macpherson Kelley Pty Ltd, discussed below, the Costs Court seems to have said, in considered obiter dicta — yes, it can.

[1] Woolf v Snipe (1993) 48 CLR 677; Keybridge Capital Pty Ltd v Macpherson Kelley Pty Ltd [2022] VSC 831; see also the last paragraph of section 1 of this paper, above.

[2] As an aside, in Reardon v Hall & Wilcox [2016] VSC 188, McDonald J wondered at [7] whether the consequence of this finding was that the Costs Court had jurisdiction to the exclusion of the Supreme Court generally, but again, the possibility of resort to the Court’s inherent jurisdiction seems not to have occurred to the parties.

[3] Emerton J’s reasoning in this case does not seem to have been brought to Bell J’s attention in Owerhall v Bolton & Swan Pty Ltd [2015] VSC 417.

[4] See Stephen Warne, ‘Who can hear an application to extend time for taxation?’ The Australian Professional Liability Blog, 22 July 2022.

The Taxing Master was an officer of the Supreme Court.  But the Costs Court is something different from the Supreme Court, even though it is said by the amendments to the Supreme Court Act 1986 by which it came into existence to be created within the Trial Division of the Supreme Court.[1]

Its powers are spelt out in s. 17D(1):

(a)               taxation of costs in Supreme Court proceedings;

(b)-(d)        taxation of costs in the Magistrates’ and County Courts and VCAT proceedings;

(e)               taxation of costs in certain arbitrations;

(ea)-(g)       taxation of costs under the Legal Profession Uniform Law (Victoria) and its predecessors [i.e. as between solicitor and own client or barrister and solicitor, etc.];

(h)              any other power given to it by legislation, including the Supreme Court rules (such as s. 17D(2), perhaps the Civil Procedure Act 2010, and r. 63.35 of the Supreme Court’s General Civil Procedure Rules, all discussed below).

The Costs Court is not a superior court of record.  In Owerhall v Bolton & Swan Pty Ltd [2015] VSC 417 Bell J observed at [7] that the Costs Court is ‘a statutory court of limited jurisdiction’, and said:

‘In relation to matters within its jurisdiction, s 17D(2) gives the Costs Court such powers of ‘the Court’, ie the Supreme Court, as are necessary to enable the exercise of that jurisdiction. But, if a matter does not relate to [the jurisdiction identified under s 17D], the Costs Court does not have jurisdiction, and therefore may not exercise any powers, in relation to it.’

In that case, the Costs Court was found not to have jurisdiction to hear an application to set aside a settlement reached at a mediation it conducted which had compromised three matters, only one of which was the proceeding in the Costs Court.  The right to a taxation had merged in the settlement – Mr Owerhall acknowledged that the settlement had been arrived at but sought to have its contractual basis set aside – leaving nothing on which the Costs Court’s jurisdiction could be founded unless and until it was set aside.

The Costs Judge’s referral of the question to the Supreme Court under r. 63.51 did not assist matters, Bell J found, because if the Costs Court did not have jurisdiction in the first place, it did not have jurisdiction to refer the matter ([9] ‘A river does not rise higher than its source.’)  His Honour made Mr Owerhall commence a fresh proceeding in the Supreme Court to seek to have the settlement agreement set aside.[2]

The Supreme Court (General Civil Procedure) Rules 2015 do not necessarily have direct operation in the Costs Court, it seems to me. Order 63 has application in taxations by virtue of r. 63.01(3), not because of the Rules’ application provision, r. 1.05. The rules about offers of compromise have operation, in a modified way, only by virtue of being incorporated by reference into O63 by r. 63.36(3).[3]

Two characteristics of inferior courts of limited jurisdiction are worth noting:

• • The parties cannot give a statutory court of limited jurisdiction like the Costs Court jurisdiction that it does not otherwise have: Marriner v Meerkin & Apel [2019] VSC 36 at [67].
  • Orders of statutory courts of limited jurisdiction (unlike those of the Supreme Court) which are made without jurisdiction are nullities, and may lawfully be disregarded by those bold enough to do so even if they have not been set aside or declared to be nullities: Herald and Weekly Times Pty Ltd v VCAT [2006] VSCA 146 at [33].

[1] Section 17C(1).

[2] See Stephen Warne, ‘Man fails to set aside compromise of taxation of costs’, The Australian Professional Liability Blog, 11 March 2016.

[3] As an aside, that rule is expressly subject to the 15% rule in r. 63.85 and expressly subject to ‘any Act’. It might be argued that it is subject to s. 303 of the Legal Profession Uniform Law with its own 15% rule and its rules about costs disclosure defaulters being responsible for the costs of taxation, such that it has no operation in a costs assessment under the Uniform Law.

The supervisory jurisdiction is often spoken of as an inherent jurisdiction of superior courts of record.  So other states’ and territories’ Supreme Courts would have the same jurisdiction, albeit more amenable to statutory modification / influence than the Victorian Court’s jurisdiction.  Those other courts still jealously guard their jurisdictions against statutory incursion, though, holding that only statutes which prohibit a particular course will affect the inherent jurisdiction.[1]

In a nutshell, a statute which says that a client may tax a bill within a year of its giving will not preclude taxation in the inherent jurisdiction of a two year old bill, whereas a statute which says no client shall have taxation of any bill more than a year old will affect a non-Victorian court’s jurisdiction and, if it jumps through the hoops imposed by s. 85 of the Victorian Constitution, will affect even the Victorian Supreme Court’s jurisdiction.  As the opening paragraph of Keith Mason’s ‘The Inherent Jurisdiction of the Court’ (1983) 57 ALJ 449 says:

‘The mere fact that some statute or rule of court enables a court to deal with the particular problem in a particular way will not usually exclude inherent powers to deal with it in other ways. Indeed, this jurisdiction may be asserted even though the conduct complained of may be in literal compliance with some statute or rule of court.’

Inherent jurisdiction is not peculiar to superior courts,[2] according to Mason’s article’s part B commencing at ALJ 456:

‘except for those instances of the inherent jurisdiction ancillary to the Supreme Court’s role as a supervisor of inferior courts and tribunals, one would have thought that inferior courts would have as wide an inherent jurisdiction as that of superior courts. After all, “‘inherent jurisdiction’ is the power which a court has simply because it is a court of a particular description, [it] is not something derived by implication from statutory provisions conferring particular jurisdiction”. Judges of inferior courts should have the same concern to prevent abuses, delays and injustices as judges of superior courts. Generally speaking, the authorities support these propositions.’

Perhaps the supervisory jurisdiction which is the subject of this paper is a jurisdiction specific to courts which admit to practice and strike practitioners off and so peculiar to the Supreme Courts, like the jurisdiction to supervise inferior courts and tribunals.  But if federal courts, which do not admit people to legal practice, have implied jurisdiction to deal with solicitors, and their charges, in cases before them, why not also the Magistrates’ Court and VCAT?

Federal courts tend to find powers analogous to those within the Supreme Courts’ inherent jurisdictions within implied powers in the statutes which create them, albeit sometimes with recourse to the language of ‘inherent jurisdiction’.  For example, in Re P’s Bill of Costs [1982] 45 ALR 513, the majority of the Full Family Court said at 519:

‘Although the Family Court is a creature of statute it is a Court of Record and has inherent powers in appropriate circumstances.  Those are powers which arise as a necessary adjunct to the existence of the court itself, and such as are necessary to control and regulate the proceedings before it and to avoid injustice… As part of [its rules based jurisdiction over disputes about fees between solicitor and client] the court has both the power and the duty to determine any issue between the solicitor and client which may so arise. …

Such a dispute may arise in a number of ways.  For example: which regulation or combination of regulations apply; factual disputes as to time involved or the appropriateness of steps taken by the solicitor; if an agreement is alleged – a number of questions may arise including the question of its validity, interpretation and enforceability. The Family Court has the necessary power to regulate and determine those issues.’[3]

Sometimes, federal courts will have the inherent jurisdiction of the Supreme Court of the state in which they are sitting cross-vested to them: McInnes v Twigg (1992) 16 Fam LR 185 at 197.

[1] See Keith Mason ‘The Inherent Jurisdiction of the Supreme Court’ (1983) 57(8) Australian Law Journal 449 at 457 and the authorities cited at fn 8 on that page; Hartnett v Bell [2023] NSWCA 244 at [123(4)].

[2] One member of the Court in Kowalski v Bourne [2017] SASCFC 24 (Blue J) was willing to find an implied power to tax costs between solicitor and client in the South Australian statute which provided for costs orders as between parties to proceedings in the Industrial Relations Court and prohibited solicitors from recovering costs from their client without an order of the Court: [46].

[3] See also Steedman v Golden Fleece Petroleum Ltd (1987) 73 ALR 317 at 319 per Sir Edward Woodward and Johnson Tiles Pty Ltd v Esso Australia Ltd [1999] FCA 1363 at [35]-[36].

Woolf v Snipe (1933) 48 CLR 677 is a decision of the High Court in its original jurisdiction, constituted by Sir Owen Dixon who observed at 678-679 that ‘The superior Courts of law and equity possess a jurisdiction to ascertain, by taxation, moderation, or fixation, the costs, charges, and disbursements claimed by an attorney or solicitor from his client,’ and that there were three sources of that jurisdiction:

• • That ‘founded upon the relation to the Court of attorneys and solicitors considered as its officers.[1] This jurisdiction … enables it to regulate the charges made for work done by attorneys and solicitors of the Court in that capacity, and to prevent exorbitant demands.’
  • That to determine by taxation or analogous proceeding the amount of costs whenever a contested claim for costs comes before the Court which it has jurisdiction to determine.[2]
  • The statutory jurisdiction (now found in the Legal Profession Uniform Law).

Lissenden v Dellios [2021] VSC 520 is a decision very much in the same vein as Re Jabe, discussed below. Judicial Registrar Englefield observed, in a passage cited with approval by the Costs Judge in Keybridge Capital Ltd v Macpherson Kelley Pty Ltd [2022] VSC 831:

‘While this inherent jurisdiction to reduce solicitor-own client costs has been applied in reported decisions that involve exorbitant demands or serious professional misconduct, that does not mean that the Court’s inherent jurisdiction to deal with solicitor-own client costs is limited to such cases. The inherent power of a superior court cannot be restricted to defined and closed categories. The inherent jurisdiction of the Court to deal with a party’s solicitor-own client costs does not require a threshold determination of a certain qualifying level of misconduct by their solicitors, it applies when the need arises to ensure that legal costs are ‘fair and reasonable and no more.’[3]

Rather, the jurisdiction is exceptionally broad and flexible, ‘to do justice in the premises when dealing with one of their own officers’.[4] The Court is not limited by technicalities, and does not engage in a fixed determination of legal rights, but ‘determines whether one of its officers should be held to ethical and honourable behaviour’.[5]

It is not necessarily all bad news for lawyers. The jurisdiction has two purposes:

• • to ensure that lawyers are remunerated properly; and
  • to ensure that lawyers are not remunerated in excess of what is reasonable.[6]

It seems to me that the first purpose of the Court’s inherent jurisdiction might be useful in those cases where litigants seem to be taking steps collusively to diddle their respective lawyers of their fees, often in fruits of litigation relief applications.

Resort to the inherent jurisdiction is said to be discretionary, but in Re Morris Fletcher & Cross’ Bill of Costs (1997) 2 Qd R 228, in which the Court ordered a practitioner to give to his client a bill of costs and that it be taxed in circumstances where there was no statutory power to do so, Fryberg J said at 233:

‘The making of an order for delivery of a bill is a matter of discretion, but it can fairly be said that the courts lean toward ordering delivery. In Parramatta River Lodge Pty Ltd v. Sunman (1991) 5 B.P.R. 12,038 at 35 12,046 Young J. has said:

“The whole tone of most of the cases has been that a solicitor is the officer of the court and, no matter how inconvenient it might be, the court expects that in accordance with the highest standard of the profession the solicitor will give a fully detailed list of charges to 40 the person liable to pay the bill and if asked will submit the bill for moderation by an officer of the court. That is the price of being a member of an honourable profession: that is the price of being admitted by this court to practice law in this State.”’

Some recent applications of the inherent jurisdiction in the costs law space are explored in section 5 of this paper.  Meanwhile, the old cases reveal that recourse has been had to the inherent supervisory jurisdiction in the following instances:

• • A solicitor of the Crown to whose charges the relevant statute regulating lawyers did not extend had his bill taxed, and costs of the taxation were awarded against him by analogy with a precursor of the 15% rule, even though the statutory provision had no application to Crown solicitors: R v Bach (1821) 9 Price 349 :147 E.R. 115;
  • A solicitor withheld from the settlement of a dispute which did not go to proceedings an amount on account of fees.The statute permitted the taxation only of costs of proceedings.  The Court taxed the fees anyway: Re Barker (1834) 6 Sim 476.
  • The London agents of an English law firm gave a single bill for all of the agency work done for the year.The principals sought taxation of the bill insofar as it related to only one of the matters in which the agents had acted.  The relevant statute did not permit (but did not prohibit) taxation of only part of a bill.  The House of Lords said that the courts could in their inherent jurisdiction tax part of the bill anyway, and it was no impediment to exercising that jurisdiction that the summons for taxation sought exclusively to invoke the statutory jurisdiction: Storer & Co v Johnson and Weatherall (1890) 15 App Cas 203.
  • An applicant for taxation was out of time and the statutory test for an extension was not satisfied.The Court was sufficiently excited about some of the claims in the bill, however, that it marked those claims in red pen and directed the Taxing Master to ‘inquire and state whether any and which of the [marked items] … are fair and proper to be allowed and to what amount respectively.’: In re Park (1889) 41 Ch D 326.  (The propriety of such a course was reiterated in Jones & Son v Whitehouse [1918] 2 KB 61 by the Court of Appeal, but the court there declined because it was insufficiently excited about the prospect that there had been overcharging.)
  • In In re a Solicitor [1961] 2 All ER 321; [1961] Ch 491, the Court taxed a bill where the applicant was out of time to seek taxation and the relevant statute said no order for taxation under the statute could be made in those circumstances. The Court held that it could tax the bill in its inherent jurisdiction, and was moved to do so.
  • In Re Ladner Downs and Thauberger (1983) 149 DLR (3d) 21, the British Columbia Supreme Court found inherent jurisdiction to tax paid bills taxation of which was not afforded by the relevant statute. At 30 the Court rejected any notion that the jurisdiction should be exercised only in exceptional circumstances.
  • In Steedman v Golden Fleece Petroleum Ltd (1987) 73 ALR 317, the Federal Court was convinced by Ariel Weingart to tax Keith Hercules’ costs as between solicitor and client even though the usual way for that to occur was in the Supreme Court of Victoria, so as to avoid the wastage of two taxations, one in the Federal Court as between party and party and one in the Supreme Court as between solicitor and client, finding such a power to tax costs as between solicitor and client to be incidental to the Federal Court’s power to award costs between parties (at 319).

[1] Section 25 of the Legal Profession Uniform Law makes all Australian lawyers (i.e. people who have practising certificates in any Australian jurisdiction) officers of the Supreme Court of Victoria, which may extend the Court’s supervisory jurisdiction. The NSW Court of Appeal did not hesitate to act in its inherent jurisdiction in Hartnett v Bell [2023] NSWCA 244 even though the lawyers presumably did their work in enforcing a mortgage over NSW land through proceedings in the NSW courts principally in Queensland where their only office was located: [114].

[2] See Branson v Tucker [2012] NSWCA 310.

[3] Lissenden v Dellios [2021] VSC 520 at [42], cited in Keybridge at [48]. The best authority for this point is now Hartnett v Bell [2023] NSWCA 244 [123.18]

[4] Storer & Co v Johnson & Weatherall (1890) 15 App Cas 203, 206; Harrison v Tew [1989] 1 QB 307, 320; Pryles & Defteros v Green (1999) 20 WAR 541 at [23].

[5] Atanaskovic v Birketu Pty Ltd [2020] NSWSC 573 at [80]-[81]; Hartnett v Bell [2023] NSWCA 244 at [103], [123.12].

[6] Sutton v Sears [1960] 2 QB 97 at 102; Electrical Trades Union v Tarlo [1964] Ch 720, 724; Re Ladner Downs and Thauberger (1983) 149 DLR (3d) 21 at 30; Harrison v Tew [1989] 1 QB 307, 320; Pryles & Defteros v Green (1999) 20 WAR 541 at [22]; Re Jabe [2021] VSC 106 at [44]; Hartnett v Bell [2023] NSWCA 244 [123.16].

* * *

The unlimited jurisdiction of the Supreme Court

The Supreme Court of Victoria has a constitutionally entrenched unlimited[1] subject matter jurisdiction. Section 85(1) of the Constitution Act 1975 (Vic) says

‘Subject to this Act the [Supreme] Court shall have jurisdiction in or in relation to Victoria … in all cases whatsoever and shall be the superior Court of Victoria with unlimited jurisdiction.’

Service of the defendant in Victoria or abroad where service abroad has been authorised, or acquiescence of the defendant to jurisdiction is a sufficient link to Victoria.  So the Court could in such a case probably hear a claim between residents of Norway and Finland about a snowmobile accident in Canada governed by Taiwanese law.

Section 85(5) provides that:

‘A provision of an Act, other than a provision which directly repeals or directly amends any part of this section, is not to be taken to repeal, alter or vary this section unless [certain parliamentary procedures are followed and the amending provision expressly declares an intention to amend or repeal s. 85].’

Section 85(8) provides that:

‘A provision of an Act that confers jurisdiction on a court, tribunal, body or person which would otherwise be exercisable by the Supreme Court, or which augments any jurisdiction conferred on a court, tribunal, body or person, does not exclude the jurisdiction of the Supreme Court except as provided in subsection (5).’

But the Supreme Court’s jurisdiction given by a Victorian statute can be abrogated by a Commonwealth statute, because of the paramountcy of federal laws over state laws. Thus Family Court Rules made pursuant to the Family Law Act 1975 which provided for taxation of costs as between solicitor and client by the Family Court, in a manner inconsistent with the rules for taxation by the Costs Court, impliedly repealed the Legal Profession Act 2004 (Vic) provisions for taxation by operation of s. 109 of the Commonwealth Constitution.[2]

Other states and territories do not have provisions cognate with ss. 85(5) and (8),[3] and nor does the United Kingdom,[4]so authorities about the express and implied abrogation of their superior courts’ jurisdiction, and about the deference to parliament’s views in the exercise of the inherent jurisdiction, must be treated with caution in Victoria.  I suspect a failure to keep this in mind has contributed to a confusion or at least a lack of awareness in the profession and in parts of the judiciary about the supremity of the Supreme Court in the supervision of lawyers and how unaffected it should be by statute.

Whenever a question about the Supreme Court’s jurisdiction arises, three principles are germane:

• • First, because judges can be trusted to act judicially, grants of powers to courts are to be interpreted according to ‘the most liberal construction’ of the extent of that grant.[5]
  • Secondly, in civil proceedings governed by ss. 7-8 of the Civil Procedure Act 2010, courts are required to interpret their powers, and exercise their powers (expressly inclusive of the Supreme Court’s inherent jurisdiction powers) in a way which seeks to give effect to the overarching purpose of civil proceedings – the just, efficient, timely and cost-effective resolution of the real issues in dispute.
  • Thirdly, r. 1.06 of the Supreme Court (General Civil Procedure) Rules 2015 states that nothing in the Rules limits the jurisdiction, power or authority which the Court had immediately before their commencement date. Furthermore, rules made under a ‘practice and procedure’ rule making power must not alter or diminish any existing jurisdiction: McInnes v Twigg (1992) 16 Fam LR 185 at 197.

[1] The law was elegantly summarised recently in Thomas v The a2 Milk Company Ltd [No 2] [2022] VSC 725. As to ‘unlimited’: [28].

[2] See James (a pseudonym) v Taussig Cherrie Fildes [2022] VSC 559 at [41]-[45] and the authorities referred to there.

[3] John Waugh, ‘The Victorian Government and the Constitution of the Supreme Court’ (1996) 19 UNSWLJ 409.

[4] For an examination of the inherent jurisdiction in the UK, see Stuart Sime, ‘Inherent Jurisdiction and the Limits of Civil Procedure’ in Assy and Higgins (eds), Principles, Procedure and Justice, Essays in Honour of Adrian Zuckerman, 2020, Oxford University Press.

[5] Knight v FP Special Assets Ltd (1992) 174 CLR 178, 205 (Gaudron J); Mansfield v Director of Public Prosecutions (WA) (2006) 226 CLR 486, 492; Michelotti v Roads Corporation (2009) 26 VR 609, 614 [24]; Collection Point Pty Ltd v Cornwalls Lawyers Pty Ltd [2012] VSC 492 at [93].

Mabel Deakin-Bell died in 2013. She left a house in Ballina, near Byron Bay in NSW, to her son Anthony Bell which was subject to a $30,000 mortgage. The mortgagee was Gwendoline Deakin-Bell. Mabel and Gwendoline were two wives of Mr Bell’s father. The mortgaged sum was payable on Mabel’s death. Gwendoline was in her late 70s, and a few years later was in frail health and did not have a lot of money.

Mr Bell was named as Mabel’s executor, but his solicitors delayed in obtaining probate. The poor man did not have a lot of luck with solicitors and is now engaged in a negligence action against them. Meanwhile, the estate defaulted on the mortgage for reasons which are unexplained.

Gwendoline engaged lawyers on the Gold Coast in Queensland to recover the mortgage debt from Mabel’s estate. Ultimately this involved obtaining orders for the sale of the Ballina house. The lawyers’ initial costs estimate was $3,900 – $6,500, but the work in respect of which it was given is unclear. They did not at any stage produce any evidence that they updated their estimate before charging nearly $290,000.

The lawyers’ costs agreement, which was said to be governed by the Legal Profession Act 2007 (Qld), was particularly pernicious, which plainly did not assist their cause in this case. It provided for an uplift of 25%, justified by the lawyers’ willingness to defer their fees until the mortgage debt was recovered, even though it probably did not qualify as a conditional costs agreement and did not comply with the formal requirements of such costs agreements. For example, Gwendoline did not sign it, and there was no estimate of the uplift. Accordingly, it was probably void.

But in addition, a ‘care and consideration’ loading of up to 30% of the fees (including the uplift) otherwise chargeable was leviable where the urgency and difficulty of the case warranted it in the lawyers’ opinion.

It seems that the lawyers ended up somewhat confusingly charging one 25% increase described as a care and consideration allowance. Nevertheless, the Court treated it as an impermissible uplift fee: [151].

The lawyers demanded of Mabel’s estate, on Gwendoline’s behalf, about $2,500 in June 2014 in addition to the mortgaged sum. There was a clause in the mortgage which provided for the mortgagor to pay the mortgagee’s indemnity costs following a default. The authorities about the construction of these kinds of clauses, and the courts’ special statutory and non-statutory jurisdictions to moderate these costs as between mortgagor and mortgagee are well-rehearsed at [85], [100], [121]-[122], [160].

By November, the lawyers were claiming that Gwendoline’s costs were nearly $28,000. By December, they were said to be nearly $44,000.

Then, through the lawyers, Gwendoline sued Mabel’s estate for possession of the Ballina house, a case which took several years though it was undefended.

The lawyers sued the wrong defendant. Mr Bell should not have been sued when he had not yet obtained probate and so had not yet become the legal personal representative of Mabel’s estate, so the NSW Trustee and Guardian was substituted by the NSW Supreme Court.

The lawyers’ costs to May 2015 were said to be $77,739.

In April 2016, the Supreme Court of NSW ordered the Ballina house to be sold, and ordered the mortgagor to pay the mortgagee’s indemnity costs, including future costs, pursuant to a clause in the mortgage which provided for that course, plus interest. Any remainder after payment of the mortgage and the mortgagee’s costs was to be paid into court.

By September 2016, the lawyers had advised the NSW Trustee and Guardian that they estimated that Gwendoline’s fees recoverable under the mortgage would be between $302,000 and $330,000.

In October 2016, the property sold for $376,000.

In November 2016, the lawyers gave a bill of more than 100 pages for work between May 2015 and November 2016, in the sum of $210,862 (an average of $2,689 per week). That brought the fees total to $288,601.

The lawyers took their fees out of the proceeds of sale allegedly on Gwendoline’s instructions, and paid Gwendoline $39,090, keeping the paltry balance available to Mabel’s estate of $33,834 in trust contrary to the Court’s order that it be paid into court.

Mr Bell was eventually granted probate and as legal personal representative of the mortgagor, requested details of the legal costs paid from the mortgage sale. Obfuscation and threats were the lawyers’ response even though they could have shared their hundred page bill. Though their client Gwendoline as mortgagee owed duties to account to the mortgagor, and held the balance of the sale proceeds over and above the reasonable costs of the mortgagee on trust for the mortgagor, the mortgagee’s lawyers did not provide information about their costs and neither did the mortgagee. Queensland’s Legal Services Commissioner did not prove to be of much assistance.

Mr Bell sought a costs assessment from the NSW Supreme Court, not as a non-associated third party payer, but apparently for the quantification of the costs he was ordered to pay on an indemnity basis under the Court’s judgment for possession. The parties to that costs assessment were the mortgagor and the mortgagee. The lawyers were not party to it.

One would expect the costs agreement of a Queensland lawyer to specify that the law of Queensland would regulate relations with the client. Even if it did not do so, that would be a not unlikely legal conclusion. But the lawyers did not take any point about the NSW costs assessor’s jurisdiction and their costs agreement was probably void anyway. [For a resolution of a similar issue, see Fields v Martin Street Lawyers, Costs Court, Supreme Court of Victoria, Judicial Registrar Conidi, 2 November 2023, S ECI 2022 03707, which it is hoped the Court will publish on Austlii.]

The lawyers did not cooperate with the costs assessment. Nor did Gwendoline, even though it would clearly have been in her interests to do so. Accordingly, in May 2018 the costs assessor fixed the costs payable by Mr Bell to Gwendoline at $40,000, about 14% of what the lawyers had charged Gwendoline, leaving Gwendoline (according to the lawyers) with a liability to them for $288,601 and an entitlement to recover only $40,000 of that sum under the indemnity costs order in her favour.

Gwendoline died later in May 2018.

(As an aside, the lawyers argued that Gwendoline’s costs of the costs assessment were costs caught by the indemnity costs of default clause in the mortgage. The Court disagreed at [159]-[161].)

In August 2020, Mr Bell sued the lawyers for $285,047 as money had and received, being the proceeds of sale less the mortgage and less the assessed indemnity costs, by a proceeding described in the judgment as ‘the equity proceeding’. This somewhat novel restitutionary claim failed, but a claim on the inherent jurisdiction added into the proceeding along the way succeeded.

The lawyers claimed in the equity proceeding that they were not bound by the costs assessor’s costs assessment because they were not parties to it. Accordingly, the Court conducted its own analysis. Since the lawyers did not get into the witness box, or even produce critical documents in the lawyer client relationship with Gwendoline, the Court came to the same conclusion as the costs assessor had. The trial judge was not required to and did not engage in a line by line analysis of the bills. Rather, having identified some gross instances of overcharging, she took a broad-brush approach: [106].  At [150]-[158], the Court vindicated this approach, the lawyers’ own original costs estimate being used as probative evidence against them notwithstanding the uncertainty as to the scope of works it was in respect of.

On 8 September 2022 her Honour Peden J ordered the lawyers to pay the $33,792 wrongfully retained in their trust account to Mabel’s estate, with interest, and ordered them (not Gwendoline) to disgorge to Mabel’s estate $251,256, being the difference between the costs assessment and the amount appropriated by the lawyers from the mortgage sale proceeds, plus interest.

The trial judge effectively said that the inherent jurisdiction was not involved with causes of action between parties, so that the absence of a contractual relationship or restitutionary entitlement between Mabel’s estate and Gwendoline’s lawyers posed no obstacle to the Court stepping in to adjust rights between the two parties where one of its officers had charged more than fair remuneration: [103], citing Atanoskovic v Birketu Pty Ltd [2020] NSWSC 573 at [80]-[81].

Her Honour expressly refused to send the parties away to a costs assessment as between third party payer and the lawyers, even though the parties had previously agreed that to be an appropriate course.

The lawyers appealed, asserting that the inherent jurisdiction did not extend to allow the Court to do what it had done; that if it did, it should not have exercised the discretion to do so; and that even if it should have, the amount it ordered be disgorged was too much.

The Court held that its inherent jurisdiction extended to cover conduct of an interstate solicitor much of which occurred interstate: [114], citing a passage from Council of the NSW Bar Association v Siggins [2021] NSWCA 40 at [137]-[138] the relevance of which is not immediately apparent to me.

The Court dismissed at [126]-[140] the lawyers’ argument recorded at [116]-[117] that more orthodox modes of disposing of the parties’ dispute were available, such that it was not necessary for the Court to exercise its inherent jurisdiction, and it accordingly should not have done so. The argument was, essentially, that orthodox jurisdictions, such as a costs assessment at the suit of a non-associated third party payer to which the lawyers promised to regard themselves as bound by, or an accounting between mortgagor and mortgagee, should be exhausted before recourse was had to the extraordinary case of an exercise of the inherent jurisdiction. The Court held that the argument was inconsistent with Woolf v Snipe (1993) 48 CLR 677 and simply wrong as a matter of law.

In additional reasons for agreeing with Chief Justice Bell’s reasons, with which Griffiths AJA also agreed, Adamson JA observed that ‘I am not persuaded that the Court’s inherent jurisdiction ought be constrained by the principles which apply when its inherent jurisdiction is invoked in circumstances which do not involve the conduct of officers of the Court.’

‘Several statements of authority may be noted at the outset of the consideration in relation to the Court’s inherent and supervisory jurisdiction:

1. The Court’s inherent jurisdiction “can be exercised in any circumstances where the requirements of justice demand it and thus cannot be restricted to closed and defined categories of cases”: McGuirk v University of New South Wales [2010] NSWCA 104 at [178] (McGuirk); Reid v Howard (1995) 184 CLR 1 at 16; [1995] HCA 40 (Reid); Tringali v Stewardson Stubbs & Collett Ltd [1966] 1 NSWR 354; (1966) 66 SR (NSW) 335 at 344;

2. “The juridical basis of [the inherent jurisdiction] is therefore the authority of the judiciary to uphold, to protect and to fulfil the judicial function of administering justice according to law in a regular, orderly and effective manner”: IH Jacob, “The Inherent Jurisdiction of the Court” (1970) 23 Current Legal Problems 23 at 27-28, as cited in McGuirk at [185];

3. “The inherent power of a court to control and supervise proceedings includes the power to take appropriate action to prevent injustice”: Hamilton v Oades (1989) 166 CLR 486 at 502; [1989] HCA 21;

4. The inherent jurisdiction “is not confined to a situation in which there is no statute or rule of court that could possibly apply to what is to be done in that regard. The true rule is that a court may exercise its inherent or implied powers in a particular case, even in respect of matters that are regulated by a provision of a statute or rules of court, so long as it can do so without contravening any such provision”: Landsal Pty Ltd (in liq) v REI Building Society (1993) 41 FCR 421 at 427; [1993] FCA 121(Landsal) (with added emphasis), citing Taylor v Attorney-General [1975] 2 NZLR 675 at 680, 687-688and 692-693;

5. The Court can do whatever “may be necessary to prevent any injustice occurring with respect to matters which come within its cognizance”: Ex parte Farren; Re Austin (1960) 77 WN (NSW) 743 at 744, cited in Dwyer v National Companies & Securities Commission (1988) 15 NSWLR 285 at 287;

6. The inherent jurisdiction of the Court overlaps with, but is not displaced by, s 23 of the Supreme Court Act 1970 (NSW): McGuirk at [177];

7. On the other hand, “the inherent power and the jurisdiction conferred by s 23 of the Supreme Court Act are to be exercised only as necessary for the administration of justice”, and “the power is not at large”: Reid at 16-17;

8. The inherent jurisdiction cannot authorise the making of orders excusing compliance with statutory obligations or preventing the exercise of authority deriving from statute: Reid at 16; Commonwealth Trading Bank of Australia v Inglis (1974) 131 CLR 311 at 318-319; [1974] HCA 17; Doyle v The Commonwealth (1985) 156 CLR 510 at 518; [1985] HCA 46;

9. The inherent jurisdiction does not extend to making orders simply because the Court believes it would be fair to do so: see, for instance, Moore & Anor v Assignment Courier Ltd [1977] 2 All ER 842 at 846; see also The Siskina [1979] AC 210 at 262;

10. The Court has an inherent or general jurisdiction to regulate the costs, charges and disbursements claimed by officers of the Court, and to prevent exorbitant demands: Woolf at 678;

11. The Court may exercise its inherent jurisdiction in relation to a solicitor’s costs “in the way it might think fit”: Storer & Co v Johnson (1890) 15 App Cas 203 at 206.

12. This well-established supervisory jurisdiction is designed to impose on solicitors higher standards than the law applies generally. The jurisdiction is disciplinary and compensatory. It is not exercised for the purposes of enforcing legal rights, but for the purpose of ensuring honourable conduct on the part of the Court’s own officers. It is distinct from any legal rights or remedies of the parties, it is unaffected by anything which affects the strict legal rights of the parties, and it is not limited to technical principles: Atanaskovic First Instance at [29]-[30], approved in Atanaskovic at [127];

13. Statutory provisions dealing with the issue of lawyers’ costs are complementary to this inherent jurisdiction, and do not oust it: Woolf at 678; Pryles & Defteros (a firm) v Green [1999] 20 WAR 541; [1999] WASC 34 at [24] (Pryles); see also Re Jabe; Kennedy v Schwarcz [2021] VSC 106 at [46] (Re Jabe) and s 264 of the Legal Profession Uniform Law 2014 (NSW). The two jurisdictions are enlivened by different acts and must be analysed separately: Whyked Pty Limited v Yahoo!7 Pty Limited [2008] NSWSC 477 at [18];

14. Further, “there is an overlap between the Court’s general jurisdiction to review solicitors’ remuneration and the doctrines of undue influence, unconscionable transaction and fiduciary conflict as they apply to solicitors and clients”: Malouf v Constantinou [2017] NSWSC 923 at [136]; see also Kowalski at [25];

15. More specifically, “there remains an inherent jurisdiction of the Court to make orders that a legal representative personally pay the opposing party’s costs directly for unnecessary or wasted costs, that power arising out of the Court’s supervisory jurisdiction with respect to legal practitioners admitted by the Court”: NHB Enterprises Pty Ltd v Corry (No 5) [2020] NSWSC 1838 at [44], citing Re Felicity; FM v Secretary, Department of Family and Community Services (No 4) [2015] NSWCA 19 at [15];

16. The purpose of the jurisdiction of the Court with respect to costs charged by its officers is “to secure that the solicitor, as an officer of the court, is remunerated properly, and no more, for work he does as a solicitor” (emphasis added): Electrical Trades Union at 1050; see also Re Jabe at [44];

17. The exercise of supervisory jurisdiction over officers of the Court is not governed by “strict legal rights and duties or matters of technicality.” Rather, “in exercising supervisory jurisdiction, the Court does not engage in a final determination of legal rights but determines whether one of its officers should be held to ethical and honourable behaviour”: Atanaskovic First Instance at [80]-[81];

18. The jurisdiction to scrutinise the remuneration of officers of the Court is not limited to cases of exorbitant overcharging: Atanaskovic at [145]. Nor is it limited by any contractual arrangements made between the parties: Pryles at [24], which will engender “jealous” scrutiny by a Court: Clare v Joseph [1907] 2 KB 369 at 376;

19. The inherent jurisdiction extends to making orders for solicitors to repay an amount charged to their own client: see, e.g., Harrison at 538.’

Yet each of the Legal Practitioners Liability Committee, the NSW Bar Association, the journal of the Queensland Law Society and the Victorian Legal Services Board + Commissioner have published earnest guidance, all available on the internet. Respectively:

• ‘Limitations and Risks of Using AI in Legal Practice’
• ‘Issues arising from the use of ChatGPT and other AI Language Models in Legal Practice’
• David Bowles’s excellent ‘Artificial Intelligence: Do you have a usage policy?’ Proctor, April 2023
• ‘Generative AI and Lawyers‘, and ‘Tips for Developing Legal Self-Help Tools‘.

The exception is the confidentiality risk; some AI platforms use information revealed to them to train themselves. Some provide opt-out opportunities which should be availed of by lawyers.

To disclose client information, whether on an anonymised basis or otherwise, to an AI platform is prima facie impermissible without client consent: barristers’ conduct rule 114 (‘A barrister must not disclose … or use in any way confidential information unless or until … the person has consented’.)

Bowles points out that to provide unusual proprietary client information to an AI platform is to risk the re-use of that information by competitors who use the same platform, trained by the provision of that information, even if the data is uploaded on an anonymous basis.

It would be prudent, at least, to know the usage policy of the platform you are using, and to obtain client consent before uploading such information to an AI platform which uses queries to train itself. It is instructive that some if not all Victorian government departments are banned from using AI at all.

None of the earnest guidance refers to the ethical implications of the creation of AI, or to the legions of poor — an estimated two million in the Philippines alone — in digital sweatshops across the global south whose lives are heavily dependent on doing repetitive tasks used in the development of AI models (think those the whole internet using world is sometimes compelled briefly to perform in establishing that they are ‘not a robot’ in CAPTCHA puzzles) for less than US$1.50 per hour on US-owned micro-tasking platforms.

Time reported the trauma experienced by such ‘taskers’ in Kenya, obliged to review swathes of hate speech and other vile toxic text from the sewers of the internet, with a view to assisting ChatGPT to identify and hide such data in the formulation of its responses.

‘Law of Costs 

Professor Gino Dal Pont, (5th edn), 2021, LexisNexis, pb $460

Everyone thinks they know the law of costs and we look it up too infrequently, but costs lawyers spend their lives mopping up after errors made by litigators, KCs and judges included. Sometimes, a mop up is not possible, and in the realm of solicitor-client costs, lawyers are forced into quiet but devastating settlements by which they give up and disgorge costs to the tune of many hundreds of thousands of dollars at a time, more often than might be imagined.

Clients are let down by otherwise excellent lawyers more often in relation to costs than in any other sphere, both in terms of maximising recoverable party party costs and in terms of some billing practices. Such practices should be an urgent priority of the justice system. Justices John Dixon and Kate McMillan lead the charge in this regard, and all credit to them. Victoria, right now, is not a favourable jurisdiction for lawyers to be lazy in relation to costs. After Bolitho, barristers’ fees are likely to attract more searching scrutiny than before. Now is a good time for lawyers to consider buying a text on legal costs.

Professor Gino Dal Pont’s The Law of Costs was first published 18 years ago in 2003, and so is a mature text and probably the best of his many – a really astonishing achievement which plays an important role in the administration of justice throughout the land. The fifth edition is a comprehensive and easily looked-up treatment of all aspects of costs as between party and party, including the practice of their taxation. The text also deals comprehensively with costs in appeals and criminal proceedings, the burgeoning area of non-party costs orders, and security for costs.

Part 1 (Costs between lawyer and own client) and chapters 26 and 27 on liens over files and the fruits of litigation lien should be read by at least one person within each law firm, and provide the most accessible commentary on these important areas of practice. There is, however, room for expansion of Part 1 in future editions, eg, in relation to reviews from first instance decisions in taxation which plague costs litigation, the inherent jurisdiction to tax costs which is broader and more resilient to statutory incursion in Victoria than is commonly realised, taxation of counsel’s fees, the impact of the Civil Procedure Act 2010, and how in practice courts deal with ascertaining the allowance under the Legal Profession Uniform Law to a lawyer in the case of a void costs agreement (which is where a lot of the action is in Costs Court litigation these days).

Dal Pont’s excellent hallmark is that he writes practical texts useful to practitioners and judges. The work takes the published decisions of courts as its starting point. Because there are comparatively few such decisions in relation to the line by line allowances in taxation hearings proper, a practitioner could not read chapter 17 (Allowances on Costs Quantification Between Party and Party) and walk into such a taxation confidently, for to do so is to enter a world whose lore is known mainly in practice by a small group of costs lawyers and costs consultants which is not to be found in the law reports.

Though the Costs Court has been obliged to give reasons for its decisions in taxations as between lawyer and own client since 1 July 2015 (Legal Profession Uniform Law, s201) there are few decisions following a completed taxation to be found on AustLII or Jade BarNet. This is in part because few taxations governed by the Uniform Law have actually gone to judgment.

The diversity of procedures for assessing costs in Australia, combined with the parochial nature of the tribunals responsible for that task, make writing a text such as this enormously difficult. The adoption by Western Australia this year of the Uniform Law, so that the great majority of Australia’s lawyers are governed by it, is likely to promote a national costs law and allow for Dal Pont’s text to become even more useful in the future.’