and David Charles Wieland and Anor v Texxcon Pty Ltd (ACN 120 272 880) , , Nominexx Pty Ltd (ACN 121 396 503) and Anor and David Charles Wieland and Ors

[2015] VSCA 305

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2013 0093
DAVID CHARLES WIELAND and ANOR	Appellants
v
TEXXCON PTY LTD (ACN 120 272 880)	Respondent
S APCI 2013 0110
NOMINEXX PTY LTD (ACN 121 396 503) and ANOR	Appellants
v
DAVID CHARLES WIELAND and ORS	Respondents

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JUDGES:	BEACH JA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	16 November 2015
DATE OF JUDGMENT:	16 November 2015
MEDIUM NEUTRAL CITATION:	[2015] VSCA 305

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PRACTICE AND PROCEDURE – Costs – Gross costs order – Complex litigation – Whether appropriate to make a gross costs order – Appropriate court to consider question is Costs Court – Supreme Court (General Civil Procedure) Rules 2005, r 63.07(2)(d).

PRACTICE AND PROCEDURE –Application for leave to intervene by parties against whom non-party costs order might be sought – Leave to intervene granted – Application for a stay of the determination of costs questions, pending the determination or resolution of non-party costs issue – Application for stay refused.

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APPEARANCES:	Counsel	Solicitors
For Mr Wieland and  Mr Goldberger	Mr M H O’Bryan QC  with Mr M P Costello	Arnold Bloch Leibler
For Texxcon Pty Ltd and Nominexx Pty Ltd	Mr N D Hopkins QC	Corrs Chambers Westgarth
For Mr Gray and Mr Henderson	Mr J P Moore QC with Mr C Moller	HWL Ebsworth Lawyers

BEACH JA:

1. The relevant background of this matter is set out in this Court’s decision of Wieland & Anor v Texxcon Pty Ltd;  Porz & Anor v Texxcon Pty Ltd;  Nominexx Pty Ltd & Anor v Wieland & Ors.[1]  That decision (‘Wieland (No 1)’) determined and disposed of three notices of appeal, two notices of cross-appeal, four notices of contention and three applications for leave to appeal, all spawned from orders made in the Trial Division following an 18-day trial and a further hearing that was conducted following the delivery of the trial judge’s reasons for judgment in respect of the principal issues then in dispute between the parties.  The litigation itself commenced in November 2010 and involved a raft of contested interlocutory applications in the Trial Division before the orders that were made by the trial judge, which were the subject of the various appeals, cross-appeals and applications for leave to appeal, were dealt with in Wieland (No 1).

   [1][2014] VSCA 199 (Nettle, Hansen and Beach JJA).

1. Following the delivery of judgment in Wieland (No 1), this Court made costs orders in favour of Mr Wieland and Mr Goldberger against Texxcon in relation to the trial, and the appeal and cross-appeal in which Mr Wieland and Mr Goldberger were the appellants/cross-respondents and Texxcon was the respondent/cross-appellant.  At the same, this Court also made a costs order in favour of Mr Wieland and Mr Goldberger against Texxcon and Nominexx in relation to the appeal brought by Texxcon and Nominexx, and in which Mr Wieland and Mr Goldberger were two of the four respondents.

1. Mr Wieland and Mr Goldberger now seek to have the costs orders that have been made in their favour assessed by an Associate Justice as a gross sum instead of taxed costs under r 63.07(2)(d) of the Supreme Court (General Civil Procedure) Rules 2005 (‘the rules’).[2]  They also seek consequential orders that there be a reference to an Associate Justice under r 77.05 of the rules for the purpose of fixing the gross sums, and directions for the filing and serving of evidence. 

   [2]For a collection of the relevant principles governing an application for a gross costs order, see Pegela Pty Ltd v The National Mutual Life Association of Australasia Ltd [2013] VSC 137 (Wood AsJ).

1. The two directors of Texxcon and Nominexx, Mr Gray and Mr Henderson, seek leave to intervene in the applications of Mr Wieland and Mr Goldberger.  Mr Gray and Mr Henderson claim an interest in the outcome of the applications of Mr Wieland and Mr Goldberger on the basis that Mr Wieland and Mr Goldberger have previously foreshadowed the possibility of making an application against Mr Gray and Mr Henderson for the costs of the appeal and of the proceeding in the Trial Division.  Accordingly, as well as seeking leave to intervene, Mr Gray and Mr Henderson also seek an order that the application of Mr Wieland and Mr Goldberger be stayed until the earlier of:

(a)        Mr Wieland and Mr Goldberger confirming, in writing, that they will not apply for an order that Mr Gray and Mr Henderson pay the costs of the appeal or of the proceedings below;  or

(b)        the hearing and determination of any such non-party costs application.

1. Mr Wieland and Mr Goldberger do not oppose the applications of Mr Gray and Mr Henderson for leave to intervene in the gross costs applications, provided that such leave is conditioned upon Mr Gray and Mr Henderson meeting their own costs of the intervention.  Mr Wieland and Mr Goldberger contend that Mr Gray and Mr Henderson can then make submissions on the gross costs applications and be heard on the assessment of the costs to be ordered, without the need for any stay.  Further, they contend that there is no proper basis for Mr Gray and Mr Henderson to seek the confirmation that they seek.

1. Mr Wieland and Mr Goldberger have filed affidavit evidence suggesting that it would take six to eight months to prepare a bill in taxable form in relation to the trial, and a further six to eight weeks to prepare a bill in relation to the appeals.  The affidavit evidence filed discloses that there are hundreds of folders, and gigabytes of material, to be reviewed.  Further, there is said to be an issue as to the ability of Texxcon and Nominexx to pay the amount of costs that might ultimately be ordered.

1. The material filed by Mr Wieland and Mr Goldberger in support of their applications for gross costs orders also suggests what is described as an appropriate methodology for the assessment.  Mr Wieland and Mr Goldberger submit that the assessment methodology proposed by them (set out in paragraphs 35–38 of a report dated 19 June 2015 written by a costs lawyer, Ms Debra Paver) is one that is logical, fair and reasonable.  However, in argument this morning it was said by senior counsel for Mr Wieland and Mr Goldberger that the methodology suggested was the only available one that might be used in the assessment of the costs.

1. Having read all the material, and noting that Mr Henderson and Mr Gray may be sought to be made liable for the costs presently ordered against Texxcon and Nominexx, I am of the view that it is appropriate to give Mr Gray and Mr Henderson leave to intervene in the gross costs applications.  Further, I do not think that such leave should be conditioned upon them bearing their own costs of the intervention.  In my view, it would be more appropriate for the question of all parties’ costs of these applications to be reserved at this stage.

1. The question now becomes what to do with the gross costs applications.  Mr Gray and Mr Henderson request the opportunity to make submissions in opposition.  In my view, they should have this opportunity.  However, given the press of business in this Court, it is not appropriate for these applications to remain in the Court of Appeal.  The court with appropriate expertise, and the most experience, to resolve the question of whether gross costs orders should be made, and all issues of the assessment of the relevant costs, is the Costs Court.  In the circumstances, I propose to make orders giving Mr Gray and Mr Henderson leave to intervene in the applications of Mr Wieland and Mr Goldberger, and to refer the applications of Mr Wieland and Mr Goldberger to the Costs Court for hearing and determination.

1. As to the stay applications made by Mr Gray and Mr Henderson, I am of the view that, in the circumstances of this litigation, Mr Wieland and Mr Goldberger should not be required to provide the assurance sought or be shut out from obtaining a non-party costs order.  It may be that material might arise during the course of the assessment of costs, or some other event may come to pass, that might justify the making of an application for costs against Mr Gray or Mr Henderson.  That said, if a subsequent application is made on material, or a basis, that is not fresh, then this may tell against the granting of any such application.

1. There will be orders giving leave to Mr Gray and Mr Henderson to intervene in the applications of Mr Wieland and Mr Goldberger for gross sum assessments of the costs that have been ordered in their favour, and the assessments of those costs; the applications for gross sum assessments and the assessments will be referred to the Costs Court; the stay applications will be refused; and the costs of all applications will be reserved.   

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