AJH Lawyers v Mathieson Nominees Pty Ltd

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2015 0021

AJH LAWYERS	Applicant
v
MATHIESON NOMINEES PTY LTD	First Respondent
IAN MATHIESON	Second Respondent

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JUDGES:	HANSEN and McLEISH JJA and ROBSON AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	3 August 2015
DATE OF JUDGMENT:	26 August 2015
MEDIUM NEUTRAL CITATION:	[2015] VSCA 227
JUDGMENT APPEALED FROM:	AJH Lawyers v Mathieson Nominees Pty Ltd & Anor [2015] VSC 37 (McDonald J)

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APPEAL – Costs order by Judicial Registrar – Notice of Application to Reconsider Costs Order of Judicial Registrar – Application heard by Costs Judge – Nature of review under s 17HA of Supreme Court Act 1986 – Whether review by way of hearing de novo – Appeal dismissed – Constitution Act 1975 s 75A; Supreme Court Act 1986 s 17HA.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr D G Robertson QC with Ms A Peek	AJH Lawyers
For the Respondents	Mr D J Williams QC	Victorian Legal Cost Assessors

HANSEN JA
McLEISH JA:

In February 2012, the respondents to this application for leave to appeal (‘Mathieson’) entered into a written costs agreement with the applicant (‘AJH’) in relation to the provision of legal services by AJH to the liquidator of a company in respect of whom the first respondent was a creditor. The respondents are ‘third party payers’ within the meaning of the Legal Profession Act 2004 (‘the LP Act’).

AJH rendered three bills of costs in the total amount of $35,709.10 in February and March 2012. Mathieson filed and served a summons for taxation in respect of those bills of costs. After extensive hearings, including the hearing and determination of a matter referred to a judge in the Trial Division pursuant to r 63.51 of the Supreme Court (General Civil Procedure) Rules 2005 (‘the Rules’), Gourlay JR ordered on 17 February 2014 that AJH pay Mathieson the sum of $1,000 in respect of the bills of costs. Gourlay JR then heard submissions as to costs and ordered that AJH pay Mathieson 50 per cent of their costs of the proceeding, save for the costs of the referral to the Trial Division and the costs of 17 February 2014. No order was made as to AJH’s costs.

AJH purported to seek reconsideration of the decision of Gourlay JR by filing a notice of application for reconsideration pursuant to r 63.56.2 of the Rules. The only aspect of the decision which was the subject of challenge was the orders in respect of costs. In their place, AJH sought an order wholly ‘disallowing’ Mathieson’s costs and ‘allowing’ its own costs in full. It is not now in issue that the notice was ineffective as a notice under r 63.56.2 but that it was properly treated in the Costs Court as an application for review by a Costs Judge pursuant to s 17HA of the Supreme Court Act 1986. The relevant provisions are set out later in these reasons.

Wood AsJ, the Costs Judge constituting the Costs Court, dismissed the application on 26 June 2014. In doing so, he held that the costs order of Gourlay JR could only be overturned if ‘clear error’ was demonstrated. AJH then appealed pursuant to s 17I of the Supreme Court Act to a judge sitting in the Trial Division. That appeal raised 14 grounds, all of which were dismissed. Most of those grounds are not pressed in the present application for leave to appeal.

In this Court, AJH seeks leave to appeal on three grounds. The first ground is that the judge in the Trial Division erred in holding that a review under s 17HA of the Supreme Court Act is not required to be conducted as a hearing de novo and in holding that Wood AsJ was therefore correct to require error to be shown. Consideration of that ground calls for an examination of the office of judicial registrar of the Supreme Court and the powers of that office in connection with the Costs Court, in particular. The second ground is that the judge was wrong to hold that, by reason of the way it conducted the review before Wood AsJ, AJH was not entitled subsequently to contend that this review was required to be a hearing de novo. Thirdly, AJH contends that it was denied procedural fairness by Wood AsJ because it had no proper opportunity to address matters raised in eight of its grounds of appeal. As already noted, the judge rejected each of those grounds of appeal. It is not suggested that, in doing so, the judge denied AJH procedural fairness. The argument is that procedural fairness was denied in the Costs Court in relation to those matters.

For the reasons that follow, the application for leave to appeal should be granted but the appeal should be dismissed.

Jurisdiction of judicial registrars

Section 75(2) of the Constitution Act 1975 provides that the Supreme Court consists of the judges of the Court, the associate judges of the Court and the judicial registrars of the Court.

The Supreme Court Act also makes provision for the appointment of judicial registrars and their exercise of the jurisdiction of the Court. Section 113F of the Supreme Court Act empowers the Governor in Council to appoint a person as a judicial registrar of the Court for a period not exceeding five years. Section 17AA provides that the Trial Division may be constituted by a judicial registrar where the Rules so permit and that a judicial registrar may hear and determine any matter if the Rules provide for the delegation to judicial registrars of powers of the Court in relation to the hearing and determination of the relevant matter. Section 11(4A) provides similarly in relation to the jurisdiction and powers of the Court of Appeal. As set out further below, the Constitution Act makes similar provision in s 75A.

The Supreme Court Act provides also for the review and appeal of decisions of judicial registrars. The general provision is s 113M, the wording of which at the time of the decision of Wood AsJ in this matter,[1] is set out below. While it is apparent that this section does not apply in respect of the decision made by Gourlay JR in the present case, it forms part of the context in which the governing provision falls to be construed. Section 113M stated:
[1]The wording of s 113M was substituted by s 84 of the Courts Legislation Miscellaneous Amendments Act 2014, with effect from 9 September 2014. Section 113M(4) now contemplates the Rules providing for a review or appeal to be conducted other than as a hearing de novo, but s 113M(5) still provides in its original terms.

(1)Subject to this Act and the Rules, the Court of Appeal constituted by a Judge of Appeal or by an Associate Judge may direct that the hearing and determination of a proceeding (whether civil or criminal) by the Court of Appeal constituted by a judicial registrar be reviewed by the Court of Appeal constituted by a Judge of Appeal or by an Associate Judge.
(2)Subject to this Act and the Rules, the Trial Division constituted by a Judge of the Court or by an Associate Judge may direct that the hearing and determination of a proceeding (whether civil or criminal) by the Trial Division constituted by a judicial registrar be reviewed by the Trial Division constituted by a Judge of the Court or by an Associate Judge.
(3)A direction may be given under subsection (1) or (2)—
(a)at the request of a party to the proceeding; or
(b)by the Court of its own motion.

(4)A review under this section is to be conducted as a hearing de novo.
(5)This section does not apply to a determination of the Costs Court constituted by a judicial registrar under Division 2B of Part 2 which is to be dealt with in accordance with section 17HA and the Rules.

Costs Court

Section 17C of the Supreme Court Act establishes the Costs Court within the Trial Division of the Court, consisting of ‘such Associate Judges as are from time to time allocated to the Costs Court by the Chief Justice’. A Costs Judge is an associate judge allocated to the Costs Court as a Costs Judge by the Chief Justice under s 17E of the Supreme Court Act: s 3(1). Wood AsJ sits as the Costs Judge, as he did in the present matter, on this basis.

The powers and functions of the Costs Court are set out in s 17D. Among other things, the Costs Court has jurisdiction to hear and determine the assessment, settling, taxation or review of costs in all proceedings in the Supreme Court and, if so provided by or under any Act or rules of court or so ordered by the relevant court or tribunal, the County Court, the Magistrates’ Court and the Victorian Civil and Administrative Tribunal (‘VCAT’): s 17D(1)(b)–(c). It also has jurisdiction to hear and determine the assessment, settling, taxation or review of costs in an arbitration, subject to the Commercial Arbitration Act 2011: s 17D(1)(e). In addition, the Costs Court ‘must hear and determine costs reviews’ under the relevant provisions of the LP Act: s 17D(1)(f).

The Costs Court has such powers of the Court as are necessary to enable it to exercise its jurisdiction: s 17D(2). It must exercise its jurisdiction with as little formality and technicality, and with as much expedition, as the requirements of the Supreme Court Act, the Rules and the proper consideration of the matters before it permit: s 17D(3). When the Costs Court determines a matter relating to costs in a proceeding in another court or VCAT, its order is taken to be an order of that other court or VCAT: s 17J(1).

The Chief Justice may assign a judicial registrar to the Costs Court if the operational requirements of the Costs Court so require: s 17EA. It is not in dispute that Gourlay JR has been so assigned. A Costs Judge may direct that costs, or costs of a specific class or kind, be assessed, settled, taxed or reviewed by a judicial registrar or a costs registrar: s 17F(a).

Section 17GA of the Supreme Court Act relevantly provides:

(1)Subject to the Rules and the general direction and control of a Costs Judge, a judicial registrar may—
…
(b)exercise the powers of the Costs Court conferred on a judicial registrar by or under this Act or any other Act or by the Rules.

The Supreme Court Act also provides for costs registrars. Unlike judicial registrars, they are not judicial officers of whom the Court consists. A costs registrar is employed under s 106(ac) of the Supreme Court Act. Section 17G provides that, subject to the Rules and the general direction and control of a Costs Judge, a costs registrar may exercise the powers of the Costs Court conferred on a costs registrar by or under the Supreme Court Act or any other Act or the Rules.

Sections 17H and 17HA provide for review of determinations made by costs registrars and judicial registrars. Subject to the Rules, a party who objects to a determination made by a costs registrar may apply to the Costs Court constituted by a judicial registrar for a review, to be heard and determined in accordance with the Rules: s 17H. Again subject to the Rules, a party who objects to a determination made by a judicial registrar (including a review under s 17H) may apply to the Costs Court constituted by a Costs Judge for a review, to be heard and determined in accordance with the Rules: s 17HA. Section 17HA is set out later in these reasons. Section 17I provides that an appeal lies to the Trial Division constituted by a judge from a determination of the Costs Court constituted by a Costs Judge.

The Rules go on to make provision for review within the Costs Court. Part 5 of O 63 applies to the costs of proceedings in the Court, other courts and VCAT, and the costs of arbitrations which are to be taxed in the Court; it also applies to the taxation of costs payable to a solicitor by the solicitor’s client: r 63.37.

First, r 63.56.1 provides for a party who objects to an order of the Costs Court constituted by a Costs Judge allowing or disallowing any item in a bill, or allowing some amount in respect of any item, to apply to the Costs Court constituted by that Costs Judge to ‘reconsider the order’ on stated ‘grounds of objection’. Upon the application, the Costs Court constituted by a Costs Judge ‘shall reconsider the taxation upon the objections stated in the notice’ and ‘shall make an order confirming, setting aside or varying the taxation or make such further or other order as may be necessary’.

Secondly, r 63.56.2 provides for reconsideration or review of decisions of the Costs Court constituted by a judicial registrar or costs registrar. It was under this provision that AJH purported to seek reconsideration or review of the decision of Gourlay JR. Rule 63.56.2 relevantly provides:

(1)If any party interested objects to an order of the Costs Court constituted by a judicial registrar—
(a)         allowing or disallowing, wholly or in part, any item in a bill; or
(b)         allowing some amount in respect of any item—
the Costs Court constituted by that judicial registrar, on the application of that party, may reconsider the order.
(2)If any party interested objects to an order of the Costs Court constituted by a Costs Registrar (who is not a judicial registrar) or by a Deputy Costs Registrar—
(a)         allowing or disallowing, wholly or in part, any item in a bill; or
(b)         allowing some amount in respect of any item—
the Costs Court constituted by a judicial registrar, on the application of that party, may review the order.
(3)An application under paragraph (1) or (2) shall be made by notice.
(4)The notice under paragraph (3) shall—
(a)state by a list each item in the bill in respect of which the party objects to the order of the Costs Court constituted by a judicial registrar, a Costs Registrar or a Deputy Costs Registrar, as the case requires; and
(b)state specifically and concisely the grounds of objection to that order and the order sought in its place.

…
(6)Upon the application, the Costs Court constituted by a judicial registrar—
(a)shall reconsider or review the taxation upon the objections stated in the notice;
(b)shall make an order confirming, setting aside or varying the taxation or make such further or other order as may be necessary; and

(c) may make any other order the case requires.
(7)For the purposes of the reconsideration or review, the Costs Court constituted by a judicial registrar may receive further evidence in respect of any objection.
…

It can be seen that the Rules distinguish between ‘review’ by a judicial registrar of a decision of a costs registrar, and ‘reconsideration’ by a judicial registrar of a determination of that judicial registrar. The latter step is not specifically provided for in the Supreme Court Act.

Next, r 63.56.4 provides for review by a Costs Judge of an order made under the above rule. It relevantly provides:

(1)An order of the Costs Court under Rule 63.56.2(6) may be reviewed by the Costs Court constituted by a Costs Judge.
(2)If any party interested objects to an order of the Costs Court under Rule 63.56.2(6), the Costs Court constituted by a Costs Judge, on the application of that party, may review the order if the Costs Court has given reasons under Rule 63.56.2(8).

(3) An application under paragraph (2) shall be made by notice.
(4) The notice under paragraph (3) shall—
(a)state by a list each item in the bill in respect of which the party objects to the order of the Costs Court constituted by a judicial registrar on the review; and
(b)state specifically and concisely the grounds of objection to that order and the order sought in its place.

…
(6)On the review, unless the Costs Court constituted by the Costs Judge otherwise orders—
(a)further evidence shall not be received;
(b)the party giving notice shall not raise any ground of objection not stated in the notice.

(7) On the review, the Costs Court constituted by the Costs Judge may—
(a)exercise all the powers and discretions of the Costs Court with respect to the subject matter of the review;
(b)confirm, set aside or vary the order of the Costs Court or make such further or other order as may be necessary;
(c)remit any item in the bill to the Costs Court;
(d)make any other order the case requires.

…

Finally, r 63.57 provides for an order of the Costs Court under rr 63.56.1(6) or 63.56.4(7) (which both provide for the powers of a Costs Judge) to be reviewed by a judge of the Court. Rule 63.57 is in substance relevantly the same as r 63.56.4.

The disputed order in the present case

Section 3.4.38(2) of the LP Act provides that a third party payer may apply to the Costs Court for a review of the whole or any part of legal costs payable by that third party payer. Section 3.4.44 sets out the criteria to be applied by the Costs Court in conducting a review of legal costs. Its terms are not relevant for present purposes.

Section 3.4.45 of the LP Act provides for the costs of the review, in the following terms:

(1) The Costs Court must determine the costs of a costs review.
(2)Unless the Costs Court otherwise orders and subject to subsection (3), the law practice to which the legal costs are payable or were paid must pay the costs of the review if—
(a) on the review the legal costs are reduced by 15% or more; or
(b)the Costs Court is satisfied that the law practice failed to comply with Division 3.

(2A)Unless the Costs Court otherwise orders and subject to subsection (3), if the law practice is not, under subsection (2), liable to pay the costs of the review, the costs of the review must be paid by the party ordered by the Costs Court to pay those costs.
(3)A Costs Judge of the Costs Court may refer to the Supreme Court constituted by a Judge of the Court within the meaning of the Supreme Court Act 1986 any special circumstances relating to a costs review and the Supreme Court constituted by a Judge of the Court may make any order the Court thinks fit concerning the costs of the costs review.

The disputed order of Gourlay JR was made in the exercise of the jurisdiction of the Costs Court under this provision. It is necessary to set out some of the background which led to the making of the order.

As already observed, the present dispute arose upon a summons for taxation in respect of three bills of costs rendered by AJH. The taxation commenced on 24 September 2012. At the commencement of the proceedings, AJH submitted that Gourlay JR should not follow the decision of Wood AsJ in Law Institute of Victoria v Keen.[2]That decision was the authority for the proposition that the Costs Court is required to consider the fair and reasonable amount of legal costs under s 3.4.44 of the LP Act when conducting a review of costs where there is an applicable costs agreement.
[2](Unreported, Supreme Court of Victoria, Wood AsJ, 25 July 2008) [17] (‘Keen’).

Gourlay JR indicated that she would apply this decision. The taxation then continued over five days. By the fifth day, approximately $8,500 had been taxed off the bills. On 28 February 2013, AJH applied under r 63.51 for the questions decided in Keen to be referred from the Costs Court to a judge of the Trial Division. Gourlay JR granted the application and the matter was heard before Ferguson J on 12 April 2013. Judgment on the referral was delivered on 21 June 2013. It is not now in issue that the answers to the questions on the referral had little ultimate impact on the taxation.

The effect of Ferguson J’s judgment was that Gourlay JR had erred in following Keen. The taxation resumed on 2 September 2013 and, in response to a submission by AJH, Gourlay JR appears to have accepted that the taxation should start afresh.

After further adjournments, on 17 February 2014 the taxation resumed and AJH made a submission that Gourlay JR should recuse herself on the ground of apprehended bias. Gourlay JR rejected the application. She then made directions to facilitate the taxation continuing on the following day. Counsel for AJH at that point informed the Court that the parties had recently exchanged open offers of compromise. On 5 February 2014, Mathieson had offered to compromise the proceeding on terms that AJH pay Mathieson $1,000 and that AJH pay the legal costs of and incidental to the review. On 10 February 2014, AJH indicated that, given the offer by Mathieson, AJH did not consider it necessary for the parties to continue to proceed to conduct the review afresh. AJH indicated that it did not agree to pay the costs of the review. Instead, it offered to pay the sum of $5,500 with each party bearing its own costs in full and final settlement of the proceedings. The offer was said to be open for acceptance until 9:30am on 17 February 2014. Counsel for AJH made submissions in relation to the letter. In particular, he submitted that the parties were only at odds with one another in respect of costs, which were in the discretion of the Court. Counsel indicated that the counter offer by AJH was ‘effectively in respect of the costs over and above the $1,000’.

Gourlay JR indicated after hearing submissions that she was going to order that AJH pay Mathieson the sum of $1,000 in respect of the bills of costs the subject of the summons for taxation. She then heard submissions regarding costs and gave the following ruling:

I doubt that there is anything more that can be said that is going to affect the decision that I make. I really think that both parties have had broad range and much time has been spent through the whole matter with parties making lengthy submissions on each side and there has been little or no ground given by either party. It has been a hard-fought and difficult issue right from the start.
My impression has been that the solicitor has from the start taken umbrage at the fact that his bills have been reviewed. The summons that was issued at the time was a summons which was a fairly standard form for summonses for review under the Act and it seems to me that from the start of the commencement of the proceedings under 3.4.38 of the Act that the cost lawyers have sought orders, they have in fact not sought orders pursuant to the section but sought orders outside the section broadly.
The objections that were drawn at that time largely arose because of a failure to comprehend the work that was done, largely because access to the file was prevented and my impression is that it was really only as a result of the court’s directions that access to the file was in fact granted, and then there were issues about it being delivered and taken away and it had to be produced to the court rather than the solicitor making it available at their offices. There have just been disputes and issues all the way through this.
It has also been a standard practice of people bringing applications under s 3.4.38 and 40, or the respondents in 3.4.40 to attack the costs agreement and costs disclosure. It is not helpful for the parties to behave in that way, and although there may be disclosure breaches they only in fact at the end of the day go to a reduction of the bill under 3.4.17.
The conduct all the way through has been repeated. The fact that these solicitors at the time of the application on 24 September having heard my ruling — on 24 September 2012 — having heard my ruling chose not then to seek to refer the matter across the road, rather the matter proceeded through taxation and was almost complete before they repeated that application, was not helpful. The late affidavits of Mr Rubenstein and Mr Armitage again were controversial and difficult and really did not help again, and all in all the conduct of the parties has not assisted the court very much in the whole taxation.
However, when I consider that in fact this has resulted in an order that the respondent is to repay moneys that the respondent has had the use of for over three years and has seriously resisted making any offer other than basically a payment of costs, in the two offers that the respondent appears to have been made, or the three offers the respondent has been made have been made as all-in offers for small amounts of costs that don’t nearly reflect the costs of the proceeding at any time when the offers were made. It cannot in my view be said to be reasonable to award the respondent any costs in this matter.
The question arises whether the applicant should recover any or part of the costs of the taxation, and in my view the applicant should recover some costs of the taxation.
The costs that the applicant will recover are 50 per cent of its costs, save for the costs of the referral to Ferguson J under Rule 63.51 and also the applicant will not recover the costs of today.
Each party will bear their own costs in relation to the costs of the referral to Ferguson J and will bear their own costs of today. They are the orders that I intend to make.[3]

[3]Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Gourlay JR, 17 February 2014) T204.

The application for reconsideration or review

After the above ruling, AJH filed a ‘notice of application to reconsider order of judicial registrar’ dated 3 March 2014. That notice sought an order that Mathieson’s costs of the review be ‘disallowed’ and that AJH’s costs be ‘allowed’ in full. The notice stated that AJH applied to the judicial registrar to reconsider the order. However, since AJH was not objecting to an order allowing or disallowing any item in a bill or allowing some amount in respect of any item, r 63.56.2 was not engaged. Since neither the Supreme Court Act nor the Rules provided for reconsideration by a judicial registrar of an order in respect of the costs of a review, the application in the notice was heard and determined instead by Wood AsJ sitting as the Costs Judge. The judge in the Trial Division accepted that Gourlay JR had ordered that the notice stand as a notice of review and had referred it for hearing by Wood AsJ. In any event, the notice was treated as an application for review by the Costs Judge pursuant to s 17HA of the Supreme Court Act.

Section 17HA of the Supreme Court Act relevantly provides:

(1)Subject to the Rules, a party who objects to a determination made by a judicial registrar in accordance with this Division (including a review under section 17H) may apply to the Costs Court constituted by a Costs Judge for a review of that determination.

(2) An application for review under subsection (1) is to be made—
(a) within the time period allowed by the Rules; and
(b) otherwise in accordance with the Rules.

…
(5)A review under this section is to be heard and determined in accordance with the Rules.

…

Although s 17HA(5) provides for the hearing and determination of a review under the provision to be conducted in accordance with the Rules, the Rules provide only in respect of a review of a decision of a judicial registrar made under r 63.56.2(6) on a reconsideration or review under r 63.56.2. In the present case, there had been no such reconsideration or review, nor could there have been. Accordingly, the Rules were silent as to the procedure on the review before the Costs Judge. In those circumstances, r 1.15(1)(b) governed the situation. It states:

(1) Where the manner or form of the procedure—
…
(b)by which the jurisdiction, power or authority of the Court is exercisable—

is not prescribed by these Rules or by or under any Act, or for any other reason there is doubt as to the manner or form of that procedure, the Court shall determine what procedure is to be adopted and may give directions.

As mentioned, Wood AsJ held that the notice seeking reconsideration was in reality an application for review by a Costs Judge under s 17HA. He relied in part on r 1.15(1)(b) to decide that, in order to overturn a costs order in the exercise of that jurisdiction, ‘clear error’ must be demonstrated. In support of that approach he cited a passage from the judgment of Williams J in Owens v Oakley Thompson & Co.[4] In effect, as the judge in the Trial Division held, the Costs Judge conducted the review on the basis that AJH needed to demonstrate error of the type identified by the High Court in House v The King.[5]
[4][2014] VSC 198, [20].
[5](1936) 55 CLR 499, 505.

First ground of appeal – nature of ‘review’ under s 17HA

Reduced to its essentials, the first proposed ground of appeal is that the judge erred in holding that a ‘review’ under s 17HA of the Supreme Court Act of a decision of a judicial registrar constituting the Costs Court is not required to be conducted as a hearing de novo.

AJH first contends that it is necessary to examine s 17HA by reference to its context. In particular, emphasis is placed on s 75A(5) of the Constitution Act. Section 75A relevantly provides:

(1) The Court is divided into—
(a)the Court of Appeal; and
(b)the Trial Division.

(2) The Court of Appeal consists of—
(a)the Chief Justice, who is the senior member of the Court of Appeal;
(b)the President of the Court of Appeal;
(c)the other Judges of Appeal;
(d)the additional Judges of Appeal appointed or acting under section 80B.

(2A)The Court of Appeal may be constituted by an Associate Judge in the case of a proceeding for which provision is made by an Act or enactment or by rules of court for the Court of Appeal to be so constituted.
(2B)The Court of Appeal may be constituted by a judicial registrar appointed in accordance with Division 2A of Part 7 of the Supreme Court Act 1986 in the case of a proceeding for which provision is made by the Supreme Court Act 1986 or by rules of court for—
(a) the Court of Appeal to be so constituted; and
(b)the delegation to judicial registrars of powers of the Court of Appeal to hear and determine such a matter or proceeding.

(3)The Trial Division consists of—
(a) the Chief Justice;
(b) the other Judges of the Court referred to in section 75(3).
(4)The Trial Division may be constituted by an Associate Judge in the case of a proceeding for which provision is made by an Act or enactment or by rules of court for the Court or the Trial Division to be so constituted.
(5)The Trial Division may be constituted by a judicial registrar appointed in accordance with Division 2A of Part 7 of the Supreme Court Act 1986 in the case of a proceeding for which provision is made by the Supreme Court Act 1986 or by rules of court for—
(a)the Court or the Trial Division to be so constituted; and
(b)the delegation to judicial registrars of powers of the Court or Trial Division to hear and determine such a matter or proceeding.

…

AJH relies in particular on the words in s 75A(5) contemplating that the Supreme Court Act or the Rules will make provision for the delegation to judicial registrars of the powers of the Court or the Trial Division. The determination of Gourlay JR was not made pursuant to any express delegation of power by the Costs Judge. AJH contended instead that s 75A(5) of the Constitution Act (and perhaps s 17AA of the Supreme Court Act) effect an implied delegation of that kind. It was submitted that the exercise by a judicial registrar of the delegated power to determine costs under s 3.4.45 of the LP Act cannot confine the exercise of the same discretion by the Costs Judge who constituted the Costs Court and in whom the power was primarily reposed. Viewed in that light, it was contended that the review for which s 17HA provides is necessarily in the nature of a fresh hearing.

Mathieson contended in response that the ‘delegation’ to which s 75A(5) refers is achieved, not as a true delegation from the Costs Judge to a judicial registrar, but as a conferral of power by the Rules or legislation itself. The critical provision for present purposes was therefore s 17GA, which provides an express source of power for the judicial registrar to exercise the powers of the Costs Court conferred on a judicial registrar by or under the Supreme Court Act, any other Act or the Rules. It was submitted that nothing in that provision requires the judicial registrar to be seen as a delegate of the Costs Judge.

In our opinion, it would be wrong to treat s 75A of the Constitution Act as operating to limit in any way the power conferred on a judicial registrar under s 17GA of the Supreme Court Act. In the first place, s 75A(5) is directed to the manner in which the Trial Division is constituted. Section 17GA instead concerns the manner in which the Costs Court, which is ‘within’ the Trial Division, may be constituted. More fundamentally, s 75A(5), like s 17AA of the Supreme Court Act, contemplates powers to be conferred on judicial registrars under the Supreme Court Act or the Rules in the manner specified. Neither section purports to be exhaustive as to the powers of judicial registrars, or the manner in which such powers may be conferred, and Parliament may therefore legislate to confer powers and functions on judicial registrars in other ways. This is what it has done in s 17GA(1).[6]
[6]To the extent that the enactment of s 17GA might be thought to have altered or varied s 75A(5) of the Constitution Act, it should be noted that the Bill that inserted the provisions for the Costs Court was passed with absolute majorities at its third reading, in accordance with s 18(2AA) of the Constitution Act: see Victoria, Parliamentary Debates, Legislative Assembly, 6 May 2010; Legislative Council, 9 June 2010.

However, AJH relied on more fundamental considerations inherent in the nature of the office of judicial registrar. It was submitted that the legislative scheme envisaged that judicial registrars, being appointed for fixed terms, were to exercise the jurisdiction and powers of the Court on the basis that their decisions were always subject to the ability of an affected party to seek a fresh hearing of the matter before a judicial officer with full judicial independence (being a judge or associate judge, including the Costs Judge). In other words, with or without an express delegation, judicial registrars are to be treated as if they were delegates of judges or associate judges of the Court, and in the case of the Costs Court were to be treated as delegates of the Costs Judge.

AJH relied especially on the judgments of the High Court in Harris v Caladine.[7]In that case, a constitutional challenge was brought in relation to the powers of deputy registrars of the Family Court of Australia. Section 37A of the Family Law Act 1975 (Cth) permitted the making of rules of court delegating to registrars of the Family Court all or any powers of the Court. The Family Court consisted of the Chief Justice, the Deputy Chief Justice, Judge Administrators, Senior Judges and other judges, but not registrars. Order 36A of the Family Law Rules delegated various powers to registrars, and r 7 relevantly provided that the Family Court was to exercise powers of review of a decision of a registrar by way of a hearing de novo, but having regard to the proceedings before the registrar.
[7](1991) 172 CLR 84.

The contention in Harris v Caladine was that the delegation of the judicial power of the Commonwealth to registrars in these circumstances offended ch III of the Constitution. A majority of five members of the Court rejected this argument. AJH contended that, within that majority, the judgments of Dawson J, Gaudron J and McHugh J indicated that the review of an exercise of delegated judicial power, at least where that power was discretionary, necessarily involved a complete rehearing of the matter.

AJH accepted that Harris v Caladine, being a case about the exercise of the judicial power of the Commonwealth, did not apply to fix constitutional limits to the exercise of State judicial power. The argument was, instead, that it revealed an essential characteristic of delegated judicial power, namely that (at least where the power in question is discretionary), the delegate’s exercise of power is subject to a full rehearing by way of review. It was submitted that the taxation of costs involved substantial questions of discretion at all stages, and that, at the least, the making of a costs order such as that under review in the present case was plainly an exercise of discretion.

It is necessary to consider each of the majority judgments in Harris v Caladine. It is convenient to commence with the joint judgment of Mason CJ and Deane J. They held that, so long as two conditions were observed, the delegation of part of the jurisdiction, powers and functions of the Family Court to officers other than the judges constituting the Court was constitutionally permissible. The second of the two conditions was identified as follows:

The second condition is that the delegation must not be inconsistent with the obligation of a court to act judicially and that the decisions of the officers of the court in the exercise of their delegated jurisdiction, powers and functions must be subject to review or appeal by a judge or judges of the court. For present purposes it is sufficient for us to say that, if the exercise of delegated jurisdiction, powers and functions by a court officer is subject to review or appeal by a judge or judges of the court on questions of both fact and law, we consider that the delegation will be valid. Certainly, if the review is by way of hearing de novo, the delegation will be valid.[8]

[8](1991) 172 CLR 84, 95.

It can be seen, as the judge in the Trial Division held, that this analysis does not assist AJH. The provision of a hearing de novo is advanced as only one way of securing a valid delegation. The minimum requirement is described as ‘review or appeal … on questions of both fact and law’. That is apt to include, not only a hearing de novo, but also a review in which the applicant for review is required to establish error on the part of the first decision-maker. As the judge pointed out, review of the kind described by Mason CJ and Deane J is precisely the kind of review which was conducted by the Costs Court in the present case.

There is more support for AJH’s argument in the judgment of Dawson J. He held that, while the rules provided that the review of a registrar’s decision was to proceed by hearing de novo, this merely emphasised that the registrar exercised power as a delegate and not pursuant to any independent authority.[9] He explained:

For where the function of exercising a discretion is delegated by a court, as it may be delegated to a Registrar, the exercise of the delegated discretion cannot confine the exercise of the same discretion by the person in whom it is primarily reposed … Upon a hearing by way of review of the decision of a Registrar the court is exercising its own discretion. There are not the same restrictions which exist when there is an appeal from a judge to whom a discretion is confided, rather than delegated, at first instance. In that event the appeal court must, before interfering, be persuaded that the judge was in error in the exercise of the discretion, either by acting upon wrong principles, mistaking the facts, or by taking into account irrelevant considerations or failing to take into account relevant considerations: House v The King …[10]

[9](1991) 172 CLR 84, 126.

[10](1991) 172 CLR 84, 125-6 (citations omitted).

To the extent that Dawson J’s reasons depended on the notion that the court, of which the registrars did not form part, had delegated power to persons outside the court, the present case may be distinguished because judicial registrars of the Supreme Court do form part of the Court.[11] Nor, as already observed, and consistently with that position, are judicial registrars the subject of an express delegation of powers of the Court. However, it may be accepted, as AJH submits, that the reasoning of Dawson J bears on the nature of the delegation contemplated by s 75A(5) of the Constitution Act. It may also be accepted that the judgment indicates that a review of a discretionary decision by a delegate of a judicial officer should involve a fresh hearing and exercise of the discretion.
[11]Constitution Act, s 75(2).

The reasoning of Gaudron J did not depend on the notion of delegation. She considered the effect of s 37A(9) of the Family Law Act, which provided for review by a judge of a registrar’s decision without specifying the nature of the review:

In so far as that sub-section provides for the ‘review’ of the ‘exercise of [a] power’ delegated to a registrar or deputy registrar in accordance with that section, it was clearly intended that there should be a process enabling complete consideration of the matter as dealt with and not merely a process, such as is involved in the appeal process under s 94 of the Act, directed to remedying errors of law. Such a review entails a consideration of whether, quite apart from legal or other error, a different result should be arrived at. But, as is clear from the word ‘review’ and from the expression ‘exercise of power’, it was also intended that a decision made in exercise of delegated power should have force and effect unless and until set aside in or in consequence of the review process. Thus, a decision is not one that is provisional or, as argued on behalf of the appellant, one that is set at nought by the filing of an application for review, with the consequence that in the present case the Family Court was automatically obliged to determine, as a contested matter, what order should be made under s 79 of the Act. Rather, the review process is one in which the Family Court must first determine whether the order should be set aside. That issue may be decided on the basis that, even though there is no discernible error in the decision in question, circumstances, including intervening circumstances, require a different result. Although the Full Court treated the review process as being of a more limited nature than that indicated, it was correct in rejecting the only argument put to it on behalf of the appellant concerning the nature of that process, namely, that merely by the filing of an application for review it was obliged to treat the question arising under s 79 as one to be determined as a contested matter.[12]

[12](1991) 172 CLR 84, 153-4.

This passage is directed to a narrow question, namely whether the filing of an application for review of itself caused the registrar’s decision to be ‘set at nought’. In holding that the court on a review must first determine whether the order of the registrar should be set aside, or a ‘different result’ was required, Gaudron J cannot be said to have been treating the court as exercising the power entirely afresh. In our opinion, this reasoning therefore does not assist in the resolution of the issue under consideration. If anything, it is closer to the analysis of Mason CJ and Deane J than that of Dawson J.

McHugh J held as follows:

It follows, in my opinion, that this Court or a federal court created under s 71 of the Constitution may be authorised to delegate the exercise of its judicial powers to an officer of that court provided that the exercise of the power is subject to review by way of a de novo hearing by a Justice or judge of that court who has been appointed in accordance with s 72 of the Constitution. It goes without saying that the Parliament cannot require the court to delegate any of its powers. Nor, in my opinion, will anything less than a hearing de novo to review the exercise of the power by the officer be sufficient. That is to say, appellate review is an insufficient condition of the delegation of the exercise of the power; there must be a complete rehearing of the facts and the law as they exist when the Justice or judge reviews the order made by the officer. Otherwise, the officer and not the Justices or judges of the court would be exercising the original jurisdiction of the court.[13]

[13](1991) 172 CLR 84, 164.

Plainly, this passage addresses the requirements of the Constitution in respect of courts created under ch III. Although AJH is correct to submit that it imposes a higher threshold for review of delegated judicial power than that identified in the joint judgment of Mason CJ and Deane J, the reasoning of McHugh J is ultimately of limited assistance in resolving the present issue.

At most, Harris v Caladine indicates that considerations of judicial independence entail that, when a person who is not a judicial officer of a court exercises the judicial power of the court as a delegate of such an officer, that exercise of power should be subject to review which either takes as its starting point the delegate’s decision (Mason CJ and Deane J and Gaudron J) or proceeds by way of hearing de novo (Dawson J and McHugh J). Accepting that to be so, the principle can have only indirect application to the present case. As noted, judicial registrars of the Supreme Court, unlike the registrars in Harris v Caladine, are among the judicial officers of whom the Court consists. There is no question of delegation to a person who is not a judicial officer of the court. Nor, for reasons already given, is there in truth a delegation at all when the power under s 17GA(1) is exercised.

AJH sought to rely on several other authorities which it contended supported its preferred construction of s 17HA. None of these authorities contained a provision in terms the same as, or even similar to, that now under consideration.

Wily Re LED (South Coast) Pty Ltd[14] concerned an application for discharge of an examination summons. The relevant rule provided that ‘the court may … review the … order, decision or other act and make such order, by way of confirmation, variation, discharge or otherwise as the court thinks fit’. The order in question in Wily was an ex parte order issuing examination summonses. As such, it was plain that, on an application inter partes to discharge the order, the hearing was to take place by way of rehearing.[15] Moreover, the reasoning of the New South Wales Supreme Court in Wily does not assist AJH. In particular, Barrett J cited, with evident approval, the observation of Hodgson JA in Tomko v Palasty (No 2)[16] to the effect that review of a decision of a registrar under s 121(3) of the Supreme Court Act 1970 (NSW) will ‘normally require at least demonstration of an error of law, or a House v The King error, or a material change of circumstances, or evidence satisfying the strict requirements for fresh evidence’.[17] These observations fall far short of stipulating a requirement of a hearing de novo.
[14](2009) 76 NSWLR 428 (‘Wily’).
[15](2009) 76 NSWLR 428, 431 [9].
[16](2007) 71 NSWLR 61, 64 [7]–[8].
[17](2009) 76 NSWLR 428, 434 [24].

CVW Group Holdings Pty Ltd v Addison[18] involved the construction of a rule of court that provided for an appeal from a registrar to a judge to be by way of rehearing. Le Miere J held that the appeal ‘involves many of the features of a hearing de novo’ and that the court may exercise its power regardless of error by the registrar.[19] At the same time, the requirement to state grounds of appeal indicated that the appeal was not a hearing anew as if there had been no hearing before, or decision by, the registrar.[20] Despite the similarities in the issues considered, the case illustrates how the question is ultimately a matter of construction, and it involved different provisions for review.
[18][2011] WASC 267.
[19][2011] WASC 267, [17].
[20][2011] WASC 267, [17].

Director of Public Prosecutions v Bryar[21] concerned s 16K of the Magistrates’ Court Act 1989. That section permitted a magistrate to direct that the hearing and determination of a proceeding by a judicial registrar be reviewed by the Magistrates’ Court constituted by a magistrate, and provided that the review was ‘to be conducted as a hearing de novo’. In the course of deciding whether a prosecutor in a criminal matter could seek a review under s 16K, Rush J held that it was fundamental to the lawfulness of the delegation of magistrates’ jurisdiction to judicial registrars that the delegation not impinge on judicial independence such that it could be said that ‘judges no longer constitute the court’ and that the delegated exercise of power be subject to ‘review or an appeal by a magistrate by way of a hearing de novo’.[22] Self-evidently, the question of construction presented by s 17HA did not arise, given the explicit language of s 16K. In those circumstances, this decision too is of limited assistance.
[21][2014] VSC 224.
[22][2014] VSC 224, [30].

Reliance was also placed on Karam v Palmone Shoes Pty Ltd,[23] in which this Court held that review by the Court of Appeal under s 11(5) of the Supreme Court Act of a judgment, order or direction given or made by a judicial registrar is a hearing de novo (albeit giving to the registrar’s decision such weight as it warrants).[24] Again, this decision casts no light on the meaning of the word ‘review’ in s 17HA. Section 11(5) does not use the word ‘review’ at all. It empowers the Court of Appeal to discharge or vary a judgment, or direction given or made by an associate judge or a judicial registrar. Moreover, the relevant decision of the registrar in Karam was a decision that three related applications not be heard on different days. Review of such a decision obviously does not call for any detailed analysis of the nature of the power the Court is called upon to exercise. It is unlikely to matter how the power is described or defined when the matter in issue is of such a mundane nature.
[23][2014] VSCA 148 (‘Karam’).
[24][2014] VSCA 148 [45(e)].

AJH then relies on the statement of compatibility in respect of the Bill which introduced the office of judicial registrar into the Supreme Court Act. That statement, made under s 28 of the Charter of Human Rights and Responsibilities Act 2006, included the observation that the ‘provisions for the review of a decision of a judicial registrar have been modelled on the requirements identified in Harris v Caladine’ and that the Bill ‘provides, subject in the Supreme Court to its rules, for review de novo by a judicial officer of the same court.’ The statement continues that, in this way, ‘the right to a fair hearing is ensured because the exercise of jurisdiction by a judicial registrar is subject to review or oversight of the judicial officers of the court’.

In our view, the statement of compatibility is of no assistance in resolving the present issue. The general observation that the provisions are modelled on the requirements of Harris v Caladine takes the matter no further. Nor does the statement that the exercise of jurisdiction by a judicial registrar is subject to ‘review or oversight’ by the judicial officers of the relevant courts.

In the case of the Supreme Court (but not other courts or VCAT), it is made explicit that the legislation provides for review de novo subject to the Rules. This expressly contemplates that the Rules may provide for a review not to proceed by hearing de novo. Section 113M(5) made clear that this qualification related, in particular, to review under s 17HA. If anything, the statement of compatibility therefore tends against AJH’s argument that a hearing de novo is mandated.

In any event, the reference to review de novo is readily explicable when it is recalled that the office of judicial registrar involves the exercise of powers well beyond the Costs Court. Section 17HA is a specific provision for review, whereas the general provision is s 113M of the Supreme Court Act. That section, which is not applicable to a determination of the Costs Court (s 113M(5)), stated at the relevant time that a judge or associate judge could direct that the hearing and determination of a proceeding by a judicial registrar be reviewed by a judge or an associate judge, and provided that such a review was ‘to be conducted as a hearing de novo’: s 113M(4). In the case of a determination of the Costs Court, s 17HA and the Rules applied instead: s 113M(5).

It can therefore be seen that the statement of compatibility does no more than refer to the position that obtains under s 113M. It is telling, as Mathieson submitted, that in the case of the Costs Court this position is itself subject to the Rules. Not only does that indicate a measure of flexibility at odds with AJH’s preferred construction, but it suggests that the reference in the statement of compatibility to Harris v Caladine contemplated an approach closer to that of Mason CJ and Deane J than that of Dawson J or McHugh J.

Similarly, a statement in the Second Reading Speech that ‘[d]ecisions of judicial registrars will be subject to review or appeal by a judicial officer of the courts by way of a rehearing de novo’[25] is not decisive. Section s 113M makes provision of that kind (albeit that the word ‘appeal’ did not appear in its original form). But again, it is apparent from s 113M, as the statement of compatibility recognises, that the legislation provides for no absolute position. Section 17HA is expressly in a different category.
[25]Victoria, Parliamentary Debates, Legislative Assembly, 15 April 2010, 1375 (Robert Hulls, Attorney-General).

In construing the word ‘review’ in s 17HA, regard must be had to the statutory context, which includes the provisions already referred to governing the office of judicial registrar in general and providing for the Costs Court in particular. That general context points to a legislative concern with the matters of judicial independence in issue in Harris v Caladine, but it also points to those matters being addressed in a way inconsistent with AJH’s submissions regarding that case. Rather than provide for review or appeal by hearing de novo, the Supreme Court Act leaves the matter to the Rules and specifies a de novo hearing only as a general default position.

The position regarding the Costs Court in particular is left again to the Rules, but this time without any default position. In effect, then, AJH seeks to read in to s 17HA words such as those found in s 113M. The very difference between the provisions suggests this was not their intended operation. Moreover, the provisions governing the Costs Court provide no support at all for such an interpretation. First, s 17D(3) of the Supreme Court Act requires the Costs Court to exercise its jurisdiction ‘with as little formality and technicality, and with as much expedition, as the requirements of this Act, the Rules and the proper consideration of the matters before the Court permit’. As Mathieson pointed out, if a party dissatisfied with an order of a judicial registrar had an unfettered right to seek a review by hearing de novo before a Costs Judge, this would act as an incentive for unsuccessful parties to prolong proceedings in relation to costs. Given that the Supreme Court Act emphasises the desirability of expedition in the Costs Court, it would be surprising if provision was made entitling an unsuccessful party to a completely fresh hearing after any decision made by a judicial registrar sitting in the Costs Court. It is all the more unlikely when account is taken of the fact that the determination of the judicial registrar may well have been made after a fresh hearing on reconsideration or review of a determination by a costs registrar (and perhaps even a reconsideration by the same judicial registrar).

Secondly, s 17HA should be read in the context of well-established principles governing the judicial review of decisions of a taxing officer. In Australian Coal and Shale Employees’ Federationv Commonwealth,[26] Kitto J said:

the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgment is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong. A degree of satisfaction sufficient to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance: House v The King. So, too, in my opinion, the exercise of the jurisdiction to review a taxation of costs is subject to no narrower limitation than that which was stated by Bovill CJ and Brett J in Hill v Peel: — ‘A very wide discretion must necessarily be left to the taxing officer, which must be exercised by him after a careful consideration of the particular circumstances of each case; and where, after properly considering the matter, the master has arrived at a decision, it lies upon those who impeach his decision to satisfy the Court that he is wrong. Where a principle is involved, the Court will always entertain the question, and, if necessary, give directions to the master; but, where it is a question of whether the master has exercised his discretion properly, or it is only a question as to the amount to be allowed, the Court is generally unwilling to interfere with the judgment of its officer, whose peculiar province it is to investigate and to judge of such matters, unless there are very strong grounds to shew that the officer is wrong in the judgment which he has formed.’[27]

[26](1953) 94 CLR 621, 627–8 (citations omitted) (‘Australian Coal and Shale Employees’).

[27]See also Kuekv Devflan Pty Ltd (2011) 31 VR 264, 274.

In the present case, of course, the decision which is sought to be reviewed is one as to the costs of the proceeding in the Costs Court itself. In those circumstances, as the judge in the Trial Division pointed out, long-standing authority supports the proposition that review of costs orders, in particular, is generally subject to the principle in House v The King.[28] That is not to say that review of all matters under s 17HA must necessarily satisfy the principle in House v The King. The circumstances will depend on the nature of the case. The judge cited with approval the following passage in the judgment of Jordan CJ in Schweppes’ Ltd v Archer:

In appeals as to costs, the principles to be applied are these. The Court will always review a decision of a Taxing Officer where it is contended that he has proceeded upon a wrong principle, for the purpose of determining the principle which should be applied; and an error in principle may occur both in determining whether an item should be allowed and in determining how much should be allowed. Where no principle is involved, and the question is, whether the Taxing Officer has correctly exercised a discretion which he possesses and is purporting to exercise, the Court is reluctant to interfere. It has undoubted jurisdiction to review the Taxing Officer’s decision even where an exercise of discretion only is involved, and will do so freely on a proper case, using its own knowledge of the circumstances …, but it will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case.[29]

[28]His Honour referred to Country Endeavours Pty Ltd v Casacir Pty Ltd [2012] VSC 22, [34]; Slaveska v Elenchevski [2013] VSCA 283, [48]; Australian Coal and Shale Employees (1953) 94 CLR 621, 627–9.

[29](1934) 34 SR (NSW) 178, 183–4 (citations omitted).

This approach is consistent with that of Kitto J in Australian Coal and Shale Employees[30] and Hodgson JA in Tomko v Palasty (No 2),[31] cited with approval in Wily as mentioned above.
[30](1953) 94 CLR 621, 627–8.
[31](2007) 71 NSWLR 61, 64 [7]–[8].

For these reasons, the review for which s 17HA of the Supreme Court Act provides is not required to be conducted by a hearing de novo. Especially in the present case, there being only a challenge to the exercise of the discretion of the judicial registrar in relation to costs, it was entirely appropriate for the matter to proceed by reference to the errors alleged by AJH, rather than by the conduct of a fresh hearing. Section 17HA leaves undisturbed the long standing principles governing review of decisions on taxation in general and the exercise of discretionary decisions as to costs in particular.

For reasons set out at the end of this judgment, we would grant leave to appeal in relation to ground 1, but the ground fails.

Second ground of appeal – entitlement of AJH to advance the first ground

The second proposed ground of appeal contends that the judge was wrong in holding that AJH was not entitled to contend that a review under s 17HA was required to be conducted as a hearing de novo, because of the way it conducted the proceeding before the Costs Judge. It is submitted that the conduct of the hearing was consistent with a hearing de novo and that, in any event, it would be wrong in law to prevent a party from seeking appellate intervention to correct an unlawful exercise of jurisdiction.

As a result of the conclusion that the Costs Judge properly conducted the review under s 17HA, it is to a large extent unnecessary to consider ground 2. Even if the judge was wrong to hold that AJH was precluded from contending that the review had been wrongly conducted, nothing now turns on the point. It is therefore not necessary to examine the way in which AJH, in particular, conducted the review before the Costs Judge or to decide whether, as a result of its conduct, it was not entitled to take the point.

However, in respect of this ground AJH also contended that the Costs Judge had indicated during the hearing that he proposed to conduct a hearing de novo. It was submitted that, as a result, AJH had not pressed an argument that Gourlay JR ought to have upheld the application made by AJH that she recuse herself by reason of apprehended bias. While this argument does not address ground 2, or any of the proposed grounds, it was fully argued without objection and it is convenient to consider it here.

The background to this aspect of the argument is somewhat involved. The application was first made orally on 2 September 2013, when the taxation resumed after the decision of Ferguson J. The hearing was adjourned without the matter being ruled upon, and the application was subsequently made in writing and in written submissions by AJH. It appears that no further step was taken before the taxation resumed on 17 February 2014.

On that day, counsel for AJH referred to the written submissions and made oral submissions on the application, to which the solicitor for Mathieson responded. The application seems to have been refused on the same day, although the reasons do not appear in the transcript.

Immediately after the ruling, as already mentioned, counsel for AJH drew the Court’s attention to the open offers that the parties had exchanged, and invited Gourlay JR to make an order that disposed of the taxation based on a reduction in the bill of $1,000, on the basis of the offers. Mathieson’s lawyer joined in that proposal and submissions thereafter continued on the question of costs. Counsel for AJH summed up the position by submitting that ‘we are only at odds with one another in respect of costs’. After further argument, Gourlay JR indicated that she would fix the amount of the reduction at $1,000. She then heard argument, and ruled, as to costs.

The application for reconsideration or review, upon which Wood AsJ ruled, sought, by way of alternative relief, a reconsideration of the refusal of Gourlay JR to recuse herself. Wood AsJ raised this aspect of the matter with counsel for AJH at the start of the hearing and queried what relief would be appropriate if the apprehended bias claim ought to have succeeded. Counsel submitted that the relief would consist of ‘somebody else’ looking at the costs question, and agreed with the Court’s suggestion that this was what it was doing on the review anyway. Wood AsJ asked whether it could be concluded that there was no utility in spending time on the argument, and counsel said that this was so. The Court asked ‘so we are just talking about the costs?’ and counsel replied ‘Yes’. After handing up AJH’s outline of submissions later in the hearing, counsel indicated to the Court that there was ‘no point in Your Honour reading’ the paragraphs in respect of apprehended bias.

In our opinion, AJH’s contention regarding this course of events should be rejected for three reasons. First, although AJH’s written submissions, which formed the basis of its case before the Costs Judge, described the hearing as one de novo, the whole substance of the submissions, apart from the argument as to apprehended bias, was directed to identifying error on the part of Gourlay JR. The matter proceeded over two days. AJH relied on material not advanced before Gourlay JR. It was not suggested that there was anything more AJH could have said before the Costs Judge in support of the order it sought as to costs. In the circumstances, as a practical matter, the Costs Judge was correct to say that the question of costs, which AJH sought to agitate, fell to him to decide in any event. Nothing was therefore added by the apprehended bias ground.

Secondly, the premise of AJH’s argument in this Court, that the Costs Judge indicated that he would proceed by way of a hearing de novo, is not made out. The Costs Judge had not said that he would proceed in that manner, only that he would need to decide the question of costs in any event. In response to questions from the Court, counsel then indicated unequivocally that the ground was not pressed. The Court then heard and determined all the matters of substance which were raised by AJH on the review. In these circumstances, there is no injustice in holding AJH to the manner in which it ran its case.

Thirdly, it is incongruous, at least, for AJH to assert apprehended bias so as to disqualify the judicial registrar from deciding the costs question alone. The events founding the application for disqualification, and the refusal of the application, occurred before Gourlay JR made the substantive order on the taxation. That order was informed by the offers of the parties (including as to costs) and itself depended on discretionary considerations which inevitably overlapped with those relevant to costs. No complaint is made as to the substantive order. AJH did not explain on what basis Gourlay JR could, or should, be disqualified in respect of part only of the overall exercise of her jurisdiction after the events founding the bias application took place.

Third ground – procedural fairness before the Costs Judge

The third and final ground alleges denial of procedural fairness on the part of the Costs Judge. It is alleged that, in respect of eight of the grounds decided by the judge in the Trial Division, the Costs Judge had denied AJH procedural fairness by giving AJH no proper opportunity to address all those matters. The matters in question were:

(a) considering what might have happened if the hearing of the taxation had continued and resulted in the reduction of AJH’s costs by an amount larger than $1,000;

(b) finding that AJH breached, or may have breached, various obligations under the Civil Procedure Act 2010;

(c) finding that AJH caused the taxation to take too long;

(d) findings regarding AJH’s offers of settlement;

(e) findings of breach of s 20 of the Civil Procedure Act 2010; and

(f) findings regarding the form and manner in which AJH claimed for work performed and how it maintained its file.

As to these matters, the judge in the Trial Division held, first, that none of them could suffice to sustain a finding that the exercise of the discretion as to costs by Gourlay JR had miscarried. In other words, the matters in question were not significant to the decision of the Costs Judge to reject the challenge to Gourlay JR’s costs order. Secondly, the judge held that, over two days of hearing, all the relevant matters were fully ventilated before the Costs Judge. He held that a full opportunity had been given to AJH to present its case.

In addition, the judge held that, even had there been a denial of procedural fairness, the ground should be dismissed as futile in any event. That was because AJH had simply not discharged its onus to establish error on the part of Gourlay JR in respect of any of the matters as to which it is suggested that procedural fairness was denied.

The matters of which complaint was made were either the subject of submissions during an extensive hearing before the Costs Judge or, in any event, as the judge held, they had no ultimate bearing on the final result. In circumstances where, even on its application for leave to appeal, AJH does not point to House v The King or other error in respect of the relevant aspects of the exercise of the costs discretion by Gourlay JR, nothing would be served by granting leave on this ground.

Conclusion

As Mathieson points out, AJH has failed to provide persuasive reasons at any point as to why the costs order made by Gourlay JR, in the discretion of the Court, should not have been made. Even more tellingly, the order which AJH seeks to have made in its place, namely an order for costs in its favour, would be a remarkable one. AJH had persuaded Gourlay JR to bring the taxation to an end after offering to pay Mathieson $5,500, inclusive of costs, and this was done in part on the basis of that offer. AJH having been ordered to pay only $1,000 after that submission was accepted, it is hard to conceive of any basis upon which it would have been entitled to its costs.

Appeals from orders as to costs are rightly treated as exceptional. The Court exercises particular restraint before interfering with the exercise of a costs discretion at first instance. The decision-maker at first instance is almost always best placed to assess in whose favour and to what extent the discretion as to costs should be exercised.[32] Even less readily should the Court entertain an appeal from an unsuccessful appeal against a costs order.
[32]Hercules v Magistrates’ Court of Victoria [2008] VSCA 1, [15]; Velissaris v Fitzgerald [2008] VSCA 152, [8].

However, the first ground in the present case could not be dismissed as fanciful, and it raised a genuine issue about the nature of the jurisdiction of a Costs Judge under s 17HA of the Supreme Court Act. This is therefore one of those rare cases in which leave to appeal in respect of a costs order should be granted. But the appeal should be dismissed.

ROBSON AJA:

I have had the benefit of reading in draft the reasons of Hansen and McLeish JJA. I agree with the orders their Honours propose and their reasons.

In my view there is a further ground for upholding the decision of the learned Trial Division judge.

The submissions of AJH relied heavily on an analysis of the statutory and constitutional context of s 17HA which, AJH contends, suggests an interpretation of s 17HA as requiring a de novo hearing.

Hansen and McLeish JJA have found, however, and I agree, that in conducting the review which s 17HA of the Supreme Court Act calls for, it was entirely appropriate for the associate justice to proceed in his ‘review’ of the costs order by reference to the errors alleged by AJH in the making of that order rather than by conducting a fresh hearing.

The matter commenced by Mathieson Nominees seeking a ‘review’ of AJH’s costs under s 3.4.38(2) of the Legal Profession Act 2004 (LPA). Similarly, s 17HA provided for a ‘review’ by the Costs Court constituted by a Costs Judge of the determination by the judicial registrar in conducting her ‘review.’ Section 17I provides for an ‘appeal’ to the Trial Division from a determination of the Costs Court constituted by a Costs Judge.

There is no established distinction between a ‘review’ and an ‘appeal.’ Terms such as ‘review’, ‘rehearing’ and ‘appeal’ do not admit of a fixed interpretation but are to be read within the legislative framework in which they appear, construed according to established principles. Nor is there any rule of statutory construction that a contrast between these terms represents a difference in the nature of the hearing intended. The meaning or intent of either is a matter of statutory construction.

In Tasty Chicks Pty Ltd v Chief Commissioner of State Revenue (NSW) the High Court said, in the context of an appeal from an administrative decision:

Further, where a jurisdiction called an ‘appeal’ is enlivened, it is essential to identify its nature and the duties and power of the court in the exercise of that jurisdiction. The term ’review’ presents similar considerations. It takes its meaning from the context in which it appears. It may be used by the statute in question to empower decision-making by an administrative body, or to confer a species of original jurisdiction on a court. If the latter, again it will be necessary to identify the nature of the ’review’ and the duties and powers of the court in the exercise of that jurisdiction.[33]

[33](2011) 245 CLR 446, 450 [5] (French CJ, Gummow, Crennan, Kiefel and Bell JJ) (citations omitted).

There are indications against any legislative intent to contrast the manner of the hearing prescribed by the terms ‘review’ or ‘appeal.’ Section 113M of the Supreme Court Act provides at sub-s (4) that, subject to the rules, ‘a review or an appeal’ from the determination of a judicial registrar under that section should be ‘by way of hearing de novo’. Similarly, the second reading speech to the Courts Legislation Miscellaneous Amendment Bill 2010 which introduced s 113M states that ’Decisions of judicial registrars will be subject to review or appeal by a judicial officer of the courts by way of rehearing de novo.’

The relevant paragraphs of the original section (as it was at the time of the associate judge’s decision which the Trial Division judge was, in turn, asked to consider) read as follows:

113M Review of decisions of judicial registrar
…
(2)Subject to this Act and the Rules, the Trial Division constituted by a Judge of the Court or by an Associate Judge may direct that the hearing and determination of a proceeding (whether civil or criminal) by the Trial Division constituted by a judicial registrar be reviewed by the Trial Division constituted by a Judge of the Court or by an Associate Judge.

…
(4)A review under this section is to be conducted as a hearing de novo.
(5)This section does not apply to a determination of the Costs Court constituted by a judicial registrar under Division 2B of Part 2 which is to be dealt with in accordance with section 17HA and the Rules.

Subsection (5) expressly excludes reviews and appeals of costs decisions from the default provisions requiring a de novo hearing. Based on the carve out in s 113M(5), it cannot be said that there was a positive legislative intention to require a de novo hearing in respect of the judicial registrar’s decisions made pursuant to div 2B of pt 2 of the Supreme Court Act.

In any event, it is not necessary to determine how s 17HA should be interpreted in all cases to resolve the appeal. Under s 113M, decisions by judicial registrars under div 2B of pt 2 are to be ’dealt with in accordance with s 17HA and the Rules.’ Section 17HA provides, in turn, (in sub-s (5)) that a review under that section is to be ’heard and determined in accordance with the Rules.’

The Rules contain no procedure for the hearing of appeals under s 17HA in respect of costs orders made in taxations. Accordingly, r 1.15 was engaged.

Rule 1.15 allows the Court to determine its own procedure where none is prescribed by the Rules:

1.15 Procedure wanting or in doubt
(1) Where the manner or form of the procedure—
(a) for commencing, or for taking any step, in a proceeding; or
(b)by which the jurisdiction, power or authority of the Court is exercisable—

is not prescribed by these Rules or by or under any Act, or for any other reason there is doubt as to the manner or form of that procedure, the Court shall determine what procedure is to be adopted and may give directions.

The associate judge relied on this rule, correctly in my view, in order to carry out the review under s 17HA. In so relying on r 1.15, the associate judge was not required to give s 17HA an interpretation beyond what the evidence of the legislative intent would bear, or beyond the established common law rules regarding the reluctance to disturb the exercise of a discretion as to costs.

As explained in the reasons of Hansen and McLeish JJA, it was entirely appropriate for the learned associate judge to adopt as the procedure for determining the review ’the long standing principles governing the review of decisions on taxation in general and the exercise of discretionary decisions as to costs in particular.’

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Citations

AJH Lawyers v Mathieson Nominees Pty Ltd [2015] VSCA 227

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[2015] VSCA 227

26 August 2015