ACN 131 110 220 Pty Ltd v Lakic and Anor (No.3)

[2017] VCC 75

IN THE COUNTY COURT OF VICTORIA Revised
Not Restricted
Suitable for Publication

AT MELBOURNE

COMMERCIAL DIVISON
GENERAL LIST

Case No. CI-15-00344

ACN 131 110 220 PTY LTD	Plaintiff
v.
BOGDANKA LAKIC and ZDRAVKO LAKIC	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	14 February 2017
DATE OF JUDGMENT:	15 February 2017
CASE MAY BE CITED AS:	ACN 131 110 220 Pty Ltd v. Lakic & Anor (No.3)
MEDIUM NEUTRAL CITATION:	[2017] VCC 75

REASONS FOR DECISION

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Catchwords:              Interest – Damages awarded in separate Supreme Court proceeding involving an unrelated party – Basis for the award of damages was the likelihood that judgment (with interest) would be awarded in this proceeding – Whether interest should be awarded to give effect to the decision in the Supreme Court.

Interest – Although no judgment was given in its favour, the plaintiff recovered $125,262.24 from a third party as a result of orders made in the proceeding – Sum claimed as damages in the proceeding – However, orders made as a result of an amendment to the plaintiff’s statement of claim at the hearing – Interest sought pursuant to section 29(1)(c)(i) of the Civil Procedure Act 2010 (Vic) – Interest not allowed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S. McGregor of Counsel	Wisewould Mahony
For the First Defendant For the Second Defendant	Mrs B. Lakic (in person) Mr Z. Lakic (in person)

HIS HONOUR:

1The proceeding returned to Court on 14 February 2017 for the determination of issues of interest on the foreshadowed judgments on the claim and counterclaim, and for further directions on the other outstanding issues in the case. These are my reasons for the decisions I reached and the orders I made. They will be sent electronically to the parties.

Interest on judgments

2There were three matters requiring a decision:

a.interest on the sucessful claim by the plaintiff (“VCL”) to recover the sum of $51,093.45 as the solicitor-client costs incurred by VCL in the application by the first defendant, Mrs Lakic, for an extension of time to bring a proceeding, determined by Her Honour Judge Kings on 22 October 2012;

b.interest on the payment of $125,262.24 made by the Transport Accident Commission (“TAC”) to VCL in December 2016 as VCL’s share of the party-party costs incurred in relation to the application by Mrs Lakic for a serious injury declaration, determined by His Honour Judge Saccardo on 13 February 2012;

c.interest on the award of damages in the sum of $25,222.52 in favour of Mrs Lakic on her counterclaim.

3a. $51,093.45 costs of the extension of time application: I determined that, in addition, the judgment should include the interest allowed by Macaulay J in the Supreme Court proceeding by Mrs Lakic against Stephen Prior, of $7,065.01. I also ordered interest pursuant to statute of $3,211.03 from the date of Macaulay J’s order, making a total judgment of $61,369.49.

4Justice Macaulay had assessed Mrs Lakic’s damages, for the negligence of Mr Prior which necessitated the extension of time application, as the legal costs of $51,093.46 claimed by VCL in the present proceeding. Justice Macaulay allowed interest on that sum, at least partly on the basis that it was likely that VCL would recover, not only its legal costs, but also interest on the sum claimed in this proceeding.

5In the circumstances, it is appropriate that the Court should make an order for equivalent interest in this proceeding. In addition, interest should be ordered in respect of the period from the date of Macaulay J’s judgment to today. The judgment has continued to accrue interest after the date of judgment pursuant to section 101 of the Supreme Court Act 1986.

6Further, the sum ordered by Macaulay J was set off against an indebtedness Mrs Lakic had to Mr Prior in respect of an earlier Magistrates’ Court judgment. Mrs Lakic therefore obtained an immediate benefit from the judgment of Macaulay J, whereas VCL has been kept out of its money. The further order for interest will compensate VCL for that matter.

7Mrs Lakic relied on section 3.4.21(3) of the Legal Profession Act 2004 which disentitles a law practice from charging interest “on unpaid legal costs unless the bill for those costs contains a statement that interest is payable if the costs are not paid and of the rate of interest”. There was no issue that the relevant bill of costs did not contain these statements.

8It was submitted by Mrs Lakic that this provision overrides the power to award interest granted by section 60 of the Supreme Court Act 1986, as section 60(2)(f) provides that nothing in section 60 “limits the operation of any enactment or rule of law which, apart from this section, provides for the award of interest”.

9Plaintiff’s counsel, Mr McGregor, submitted that section 3.4.21 “does not apply to interest after the date of issue” as this would defeat one of the purposes of section 60 “which is to encourage the early resolution of litigation”.

10I was of the view that the operation of section 60 did not displace the requirement of section 3.4.21. I did, however, consider that the basis for Macaulay J’s decision required me to order interest in conformity with his decision and to compensate VCL for the period since the order of Macaulay J.

11The power of the Supreme Court in its “inherent equitable jurisdiction to award interest when the interests of justice demand” has been discussed in the recent decisions of Talacko v Talacko [2009] VSC 579 (Kyrou J), Kirk v Kirk [2015] VSC 173 (Macaulay J) and Caple v Wilson [2016] VSC 704 (Robson J).

12Although the circumstances of those cases differ from the present case, I consider that the power is available to the County Court and should be exercised in favour of VCL in this case.

13b. $125,262.24 paid by the TAC to VCL: In the proceeding, VCL had claimed the sum of $158,905.78 in respect of its party-party costs and disbursements for the serious injury application determined by Judge Saccardo. On 13 February 2012, Judge Saccardo, in addition to granting Mrs Lakic leave to bring a common law claim, made a costs order in her favour.

14VCL sought interest on the said sum from 16 July 2014, the date VCL provided Mrs Lakic with a “copy of a bill of costs in the sum of $158,905.78” and informed her that it would not seek solicitor-client costs in respect of the application. Mrs Lakic later told TAC that VCL no longer acted for her. As a consequence, the taxation of VCL’s bill of costs did not proceed.

15By the statement of claim in the proceeding, VCL alleged that all or part of the sum of $158,905.78 should be paid to VCL by Mrs Lakic for reasons which were not clear from the pleading. Near the conclusion of the trial, VCL sought leave to amend its statement of claim to broaden the basis upon which it sought recovery.

16In my reasons for judgment, I allowed the amendment and made orders permitting the proposed taxation of the costs resulting from the order of Judge Saccardo to proceed and requiring Mrs Lakic to cooperate in the process. Eventually, after negotiations with VCL, the TAC agreed to pay the total sum of $149,232.07. I approved the resolution on the basis that $125,262.24 was paid to VCL, and the balance of $23,969.83 into Court. I will return to discuss this sum in due course.

17In these circumstances:

a.orders were only made, which ultimately resulted in the payment of $125,202.24 to VCL, after VCL was given leave to amend its statement of claim;

b.no judgment was entered for that sum against Mrs Lakic.

18Further, I am not satisfied that Mrs Lakic’s notification to the TAC in August 2014, that VCL was no longer acting for her, was inappropriate or breached any obligation she owed to VCL.

19The primary basis upon which VCL sought interest was pursuant to section 29(1)(c)(i) of the Civil Procedure Act 2010 (Vic) which gives the Court power, where it is satisfied that “a person has contravened any overarching obligation”, to “make any order it considers appropriate in the interests of justice including…an order that the person compensate any person for any financial loss or other loss which was materially contributed to by the contravention of the overarching obligation including…an order for penalty interest…in respect of any delay in the payment of an amount claimed in the civil proceeding”.

20Various contraventions of the overarching obligations were asserted, including Mrs Lakic’s “refusal to allow VCL to negotiate directly with the TAC” and Mrs Lakic’s allegation in her defence that VCL had wrongfully retained part of the proceeds of her common law claim judgment.

21I reject VCL’s claim for interest on the sum of $125,202.24 for the following reasons:

a.the statement of claim, before amendment, did not provide a basis for VCL to recover any sum;

b.although the sum was claimed as a debt or damages, the sum was not recovered by a judgment of the Court;

c.no application under section 29 was appropriately brought;

d.there was insufficient evidence of any contravention by Mrs Lakic of an overarching obligation, or that financial loss by VCL had been materially contributed to by a contravention.

22c. $25,222.52 judgment on Mrs Lakic’s counterclaim: VCL conceded that interest should be paid in respect of the judgment. It was submitted, however, that interest should be payable, not from 1 June 2015 when the counterclaim was issued, but from 22 February 2016 when Mrs Lakic “successfully filed the counterclaim”.

23After the counterclaim was filed, VCL challenged the pleading of Mrs Lakic’s counterclaims. Mrs Lakic eventually obtained the assistance of counsel and, by court order, the counterclaim was appropriately limited in a repleaded document. However, the complaints upon which Mrs Lakic was successful were substantially pleaded by her in the initial pleading.

24I rejected a submission from Mrs Lakic that interest should be calculated from about May 2012 when VCL had committed the acts of negligence.

$23,569.83 paid into Court by the TAC on about 1 February 2017

25Part of VCL’s bill of costs in the sum of $158,905.78, arising out of the successful serious injury application before Judge Saccardo, included work performed by Prior & Prior before VCL was instructed.

26In the Magistrates’ Court and Supreme Court proceedings, between Mrs Lakic and Stephen Prior, it is to be assumed that all possible claims by either of the parties that might have been litigated, were dealt with in that litigation. Any such claims could not now be raised, by reason of an “Anshun estoppel”, a matter I briefly referred to at paragraph 17 of my reasons for judgment.

27In the Supreme Court proceeding before Macaulay J, the judgment in favour of Mrs Lakic was set off against the amount owing to Mr Prior under the earlier Magistrates’ Court judgment. However, Macaulay J made a costs order in favour of Mr Prior, which is likely to be taxed in a substantial sum because of the length of the trial. In these circumstances, it is probable that Mr Prior rather than Mrs Lakic, as well as VCL, may have a claim to at least a share of the money in Court.

28I gave directions to deal with this matter. As Mr Prior and VCL were represented in the Supreme Court and in this proceeding by the same insurer and lawyers, it is likely that agreement will be reached as to how the money in Court should be disbursed.

Costs of this proceeding and other unresolved issues

29I gave directions for the resolution of costs issues. It is likely that after I have determined who should pay the costs of the proceeding that, how to deal with the further issues which I have permitted to be raised in the proceeding since the trial, will be clearer. These include the continuation of the freezing order and the proceeding against Mr and Mrs Lakic (and possibly their sons) in respect of the properties in which Mrs Lakic has or had an interest.

Reservation of liberty to apply

30Mrs Lakic represented herself at this hearing. Her son interpreted for her. Apparently, the interpreter she had organised, cancelled at the last minute.

31During the discussion of the orders I proposed, Mrs Lakic asked that the proceeding be adjourned to the following day so that she might consult someone in relation to the orders. I took the view that the freezing order should be continued and the proceeding resolved on the day of hearing to avoid further costs. However, I included a process in the orders which would give Mrs Lakic time to seek advice, and to have these reasons available for at least part of that time.

Further claims by Mrs Lakic

32Towards the end of the hearing, Mrs Lakic asked me how she might pursue other claims relating to the matters in the proceeding. I indicated to her that I could not give her legal advice and she should seek appropriate assistance from a lawyer.

33I did, however, attempt to explain the concept of Anshun estoppel and how it may limit her chances of pursuing claims which might have been pursued against the opposite parties in the litigation which is now largely concluded.

34This litigation includes:

a.the Magistrates’ Court and the Supreme Court proceeding heard by Justice Macaulay, involving Stephen Prior;

b.the Supreme Court proceeding heard by Justice Rush, involving the TAC;

c.this proceeding, involving VCL.

35As the High Court stated in Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 at paragraph 22, Anshun estoppel precludes “the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding”.

36I record this matter, so that any lawyers consulted by Mrs Lakic will be aware that this is an issue of continuing concern to Mrs Lakic.

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Certificate

I certify that these 6 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 15 February 2017.

Dated: 15 February 2017

Carla Cianfaglione    

Associate to His Honour Judge Anderson