ASA Nominees Pty Ltd v Adamopoulos
[2019] VSC 296
•10 May 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COSTS COURT
S ECI 2018 00731
| ASA NOMINEES PTY LTD (ACN 084 232 306) (CONTROLLERS APPOINTED) & ANOR | Applicants |
| v | |
| IRENE ADAMOPOULOS | Respondent |
---
JUDICIAL REGISTRAR: | Gourlay JR |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 2 April 2019 |
DATE OF JUDGMENT: | 10 May 2019 |
CASE MAY BE CITED AS: | ASA Nominees Pty Ltd v Adamopoulos |
MEDIUM NEUTRAL CITATION: | [2019] VSC 296 |
---
COSTS COURT – Review of taxation of costs by a costs registrar – Application of Rule 63.56.2(2) to review where Summons for Taxation issued before amendment of Order 63 commencing on 1 October 2019 – Costs of obtaining advice on advisability of appeal – Application of Rule 63.85.
---
APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Ms S Cherry | HWL Ebsworth Lawyers |
| For the Respondent | Mr S Sizenko | Geelong Legal |
JUDICIAL REGISTRAR:
The applicants[1] issued a Summons for Taxation of a bill of costs drawn pursuant to two orders of Associate Justice Derham made on 20 December 2016 in proceedings No. S CI 2015 05653 and S CI 2016 0366. The hearing of the taxation of the bill of costs, together with an addendum bill, concluded on 5 December 2018 and the respondent was ordered to pay the applicants the sum of $61,709,18. The respondent was represented at the taxation by a solicitor who specialises in costs law and the applicants were represented by an unqualified costs consultant.
[1] In these reasons I refer to the parties as the applicants and the respondent, despite the respondent being the applicant seeking to review of the taxation orders. .
The review of the taxation order was brought pursuant to rule 63.91 of the Supreme Court (General Civil Procedure) Rules 2015. However, rule 63.109(2) of Part 9 of Order 63 provides that if the Summons for Taxation was filed before 1 October 2018 then rule 63.56.2(2) applies for the conduct of the review[2]. The respondent seeks to review determinations of the costs registrar in allowing items or amounts in the bill in respect of:
[2] 63.107 states that Part 9 applies to determinations made in proceedings commenced in the Costs Court after the commencement of this Part, that is after 1 October 2018.
(a) Items 1-4 of the bill were allowed in full. The items 1-3 claim costs for receiving, filing and perusing the order made on 8 October 2015 by VCAT and item 4 claims the costs of perusing reasons delivered on 17 September 2015. Both parties appealed the 8 October 2015 order.
(b) Item 5 was allowed in full and is a claim for preparation by the applicants’ solicitor of a letter advising on a possible appeal from the orders made on 8 October 2015, on the merits of such an appeal succeeding, and seeking instructions to appeal.
(c) Item 472 claims scale costs of drawing and engrossing the first bill of costs in the sum of $7,100.00 and allowed at $6,600.00[3].
(d) Item 69 claims scale costs of drawing and engrossing the addendum bill in the sum of $924.30 and allowed at $853.20.
[3] Based on the figure included in the Notice for Review.
The respondent’s review of items 472 and 69 states that the costs registrar refused to tax off those items and apply Rule 63.85 which provides that, subject to the Costs Court otherwise ordering, these items will be disallowed if the bills are reduced by more than 15%. In respect of these items the Notice of Review states:
The Registrar erred by failing to apply the ordinary meaning of the Order 63.85 as provided by the Rules and confirmed by Laro-Bashford and Ors v Mihos [2006]VSC77 as follows:
a) The Applicants bears an onus of proof to show to the Court that the ordinary meaning of 63.85 should not be applied.
b) The Registrar took into account an irrelevant consideration, that the total of the bill was more, but for a mistake in claimed amount of item 90 of the bill, suggesting, if a correct amount would be claimed, the total of the bill would be less than appears on the bill.
c) The Registrar took into account an irrelevant consideration that, items 503 and 504 should not be taken into account for the purpose of the total bill, as it would be obvious, that those items would not be allowed on taxation, as Mr Grant Pedler, costs consultant who acted on behalf of the Applicants, is not a legal practitioner and would not be entitled to recover his legal costs.
d) At no stage prior to or during the 2 days of taxation the Applicants, being aware of the objections raised by the Respondent, conceded items 503 and 504 prior to taxation of those items.
e) The Registrar took into account an irrelevant consideration that, most of the reductions where made as a result of exercising his judicial discretion.
Later in the Notice of Review the Respondent states that:
A typing mistake to the amount incurred or a mistake inserting into a bill of costs items, which should not be claimed at all, knowing the legal status of the costs consultant, cannot be sufficient grounds to deprive the party, who considered bills as claimed with an alleged mistakes within that bill, of its legal right and to benefit a wrongdoer, the applicant who caused for those items be claimed in the bill.
After reproducing Rule 63.85 the respondent’s notice states:
The respondent reduced the amount of professional costs and disbursements, including costs claimed in Addendum Bill dated 3 December 2018 by more than 15%, hence the section (sic) must apply in default, unless “the Court Orders otherwise.”
The parties agree that for the respondent to succeed on the review she must establish an error by the costs registrar that he either:
(a) applied wrong principles of law;
(b) considered extraneous or irrelevant matters to guide him or affect his decisions;
(c) made a mistake of fact, or
(d) did not take into account some material consideration
when making his determination, see House v The King.[4]As Beach J, as he then was, said in Isildur & Anor v Casdar Pty Ltd & Ors:[5]
10. It has long been established that the review by a judge of an order of the Taxing Master on a taxation of costs is governed by the same principles as apply to an appeal from the exercise of discretion, that is, there is a strong presumption in favour of the correctness of the decision appealed from and that decision should therefore be affirmed unless the Court of Appeal is satisfied that it is clearly wrong. The authority for that proposition is Australian Coal and Shale Employees' Federation v Commonwealth 1953, 94 CLR 621 per Kitto, J. at p. 627.
[4](1936) 55 CLR 499 (House v R).
[5] [2001] VSC 25.
No written reasons were delivered by the costs registrar in this matter. The respondent did not file any affidavit or other evidence[6] to support the submissions made at the hearing. Without written reasons for the decisions the only record of the determination not to apply order 63.85 are the costs registrar’s notes made on the bills of costs of items taxed off or reduced. The respondent’s lawyer sought to give evidence from the Bar Table of what occurred at the taxation. This was of little probative value.
[6]Rule 63.56(7) provides that For the purposes of the ... review, the Costs Court constituted by a judicial registrar may receive further evidence in respect of any objection.
Items 1-4 and 5
In addressing these items the respondent submitted that the costs registrar made an error in concluding that these items were costs of the appeals rather than the costs of the VCAT proceeding. Items 1-3 are claims of the solicitor for receiving, filing and perusing the VCAT order on 16 October 2015. Item 4 claims the scale costs of perusing reasons delivered on 17 September 2015. The respondent submitted that the cost registrar erred in allowing these costs as they are properly the costs of the VCAT proceeding as the order made by VCAT was interlocutory in nature and did not conclude the VCAT proceeding. Further he submitted that the costs are the costs of that proceeding.
Item 5 was described as costs of preparing a letter[7] to AIG reporting on the decision at VCAT, advising on further steps including a possible appeal from the orders made on 8 October 2015. The letter, which was provided to the Court at the taxation and again at the review sought instructions to commence an appeal. The respondent submitted that as the letter provided advice on the conduct of the VCAT proceeding as well as a possible appeal (an appeal was one of three possible options included in the letter) these costs are not costs of the appeal. Therefore the costs registrar erred in allowing items 1-5 as a costs of the appeal. He submitted that costs of an appeal commence once a solicitor had receives instructions to appeal and not when the solicitor provides advice to commence an appeal and seeks instructions in response to that advice. The costs registrar had therefore made an error in allowing the costs of items 1-5.
[7]The letter, dated 16 October 2015, is addressed to AIG. AIG was the insurer of a surveyor who made an error in amendments to a plan of subdivision between the occupation boundary and the title boundary of the applicant’s premises. AIG indemnified the surveyor in respect of a claim by the applicant to correct the plan of subdivision. The respondent opposed the amendment to the title.
The applicants submitted that the orders made on 20 December 2016 in each appeal were that the applicants’ costs of the appeals are to be paid by the respondent. It was further submitted that the orders are not limited and include the reasonable costs of and incidental to the appeals. The orders therefore include the costs of seeking instructions to appeal after giving advice on the likely success of an appeal. The applicants rely on Fifteenth Eestin Nominees Pty Ltd v Rosenberg & Anor (No 2)[8] where Appeal Justices Maxwell, Neave and Redlich state:
9Under s 24 of the Supreme Court Act 1986 (Vic), ‘the costs of and incidental to all matters’ are in the discretion of the Court, which has full power to determine ‘by whom and to what extent the costs are to be paid’. As this statutory language suggests, an order for ‘the costs of the proceeding’ is synonymous with – and has the same effect as - an order for ‘the costs of and incidental to the proceeding’. That has been the conventional understanding, and the consistent approach of the Taxing Master of this Court, for many years. When one party is ordered to pay the other party’s costs of a proceeding, that liability extends to the costs of such preparatory steps as are shown to be reasonably connected with the proceeding. That is so whether or not the words ‘and incidental to’ are included in the order.An order for the payment of costs
[8][2009]VSCA 178.
Osborn J (as he then was) said in Talacko & Ors v Talacko[9] that:
7The phrase ‘of and incidental to’ is usefully discussed by Sir Robert Megarry, the Vice Chancellor In Re Gibson's Settlement Trusts. On the one hand the phrase extends the award of costs to costs incurred in connection with matters in the court. On the other hand it requires such costs to be subordinate to or causally linked to such a matter.
8In the present case on the one hand the phrase extends the costs to those preparatory to the hearing, on the other hand it limits costs of the prior proceeding recoverable to those which were in fact preparatory to the hearing. Those costs would ordinarily include the costs of the preparation of evidence and documentation utilised in the hearing, and in this respect I note that the hearing proceeded by way of evidence given in the first instance by way of affidavit.
9Wood AsJ acting as the taxing officer is however the arm of the Court charged with deciding what costs were necessary or proper for the plaintiffs to incur in respect of the hearing of the preliminary issues.
[9][2009] VSC 446 at para 7-9.
In my view to prepare an advice on the likely success of an appeal the solicitors would need to peruse both the order and reasons. In respect of the usual allowances for costs from 1 September 2013 costs are allowed on a standard basis.[10] The usual practice of the Costs Court, subject to an exercise of discretion of order otherwise, on a party party taxation is not to allow the costs of obtaining an advice on the prospects of success in an appeal where the advice was given between the decision and lodging the appeal. However, such costs are usually allowed as reasonable costs on a solicitor and client basis.[11] With the change to the more generous standard costs basis which allows all costs that are reasonably incurred and of a reasonable in amount on taxation it would be reasonable to allow the costs of a letter of advice on the prospects of success of an appeal and seeking the clients instructions to appeal. Therefore the allowances made by the costs registrar were reasonable and do not demonstrate an error on the part of the costs registrar in respect of items 1-5 pursuant to the costs order.
[10]Order 63 was amended on 1 April 2013 to make the usual basis of taxation standard costs.
[11]Oliver, Law of Costs at pages 113 and 176 citing City Bank of Sydney v McLaughlin (1910) 10 C.L.R. 362; 16 ALR 591.
Items 472 and 69 and the application of Order 63.85
The respondent submitted that as more than 15% had been taxed off the bills of costs the costs registrar must rule 63.85 and further reduce the bills by disallowing items 472 and 69 of the addendum bill which claim drawing and engrossing of the bills of cost. Rule 63.85 gives a discretion to the taxing officer to allow the costs of filing the bill for taxation, for preparing the bill and for attending the taxation where the bill of costs has been reduced by 15% or more. This discretion is unfettered. The Rule states:
If the amount of the professional charges and disbursements in any bill of costs (including a bill of costs payable out of a fund) is reduced by 15 per cent or more, unless the Costs Court otherwise orders, no costs shall be allowed to the solicitor filing the bill for taxation for preparing the bill and for attending the taxation.
The respondent submitted that each the bills was reduced by more than 15%[12] and the cost registrar erred in refusing to apply the ordinary meaning of Rule 63.85 to reduce the bills of costs further by disallowing claims for preparation of the bills of costs. Although it appears both parties made submissions to the costs registrar at the conclusion of the taxation on the application of rule 63.85 no record of these submissions and the ruling made was provided at the hearing of the review. Items 472 and 69 claim the scale charges of drawing and engrossing the bills, being a total sum of $8,024.00. The respondent submitted that the costs registrar’s reasons for exercising his discretion in favour of the applicant and not reducing the bills of costs were that:
[12]Calculated at 19.47% taxed off both bills of costs by the respondent.
(a) The amount claimed in item 90 was incorrectly claimed and that if it had been correctly claimed the total of the bill would have been higher.
(b) Items 503 and 504 claim expected future costs of a solicitor appearing at a case conference and at a taxation.[13] However these costs would not been allowed as an unqualified costs consultant, who was not entitled to recover his costs of the appearances, appeared on behalf of the respondent at both the mediation and taxation, see Mietto v G4S Custodial Services Pty Ltd at paragraphs 57-58 and generally[14]. The respondent submitted that the costs registrar stated that it was obvious that these items would not be allowed and that the respondent’s advisers should have taken this into account in making offers and in the conduct of the taxation. The respondent’s costs lawyer is very experienced and would know that the applicants’ costs consultant was unqualified and that no order for his costs for each appearance would be made.
(c) The costs registrar stated that the applicants should not be penalised for failing to concede these items prior to or during the taxation as the respondent knew these items would be taxed off the bills.
(d) The costs registrar stated that many of the reductions made to the bills were discretionary and that he would exercise his discretion not to apply Rule 63.85.
[13]It is usual practice in preparing bills of costs for expected, but not yet incurred, costs of taxation pursuant to rule 63.36 to be included in the bills.
[14] [2010] VSC 304.
The respondent submitted that if a reduction of 15% or more is achieved on taxation then the default position must apply. The Costs Court should not exercise its discretion without proper reasons and that the reasons given by the costs registrar were not sufficient to otherwise order as the errors in claiming items 90, 504 and 505 were not sufficient to deprive the respondent of its legal right and to benefit a wrongdoer who caused the errors. The respondent also submitted that the costs registrar took into account irrelevant consideration of the Applicant’s mistakes or omissions, which resulted in more favourable outcome for the Applicant.
In response the applicants submitted that there was no evidence before the Court of the submissions made by the parties prior to the ruling or of the ruling. No written reasons were given by the costs registrar and Mr Sizenko’s statements made from the Bar Table on behalf of the respondent do not amount to reliable evidence of the reasons given.
Addressing the individual matters relied on by the respondent, the applicants’ written submission in respect of items 90 states that in the absence of written reasons, there is nothing to suggest that the error was in fact taken into account or in any way influenced the learned Costs Registrar’s ultimate decision to allow costs[15] or that the disallowance of items 503 and 504 and other reductions are evidence of the costs registrar making errors in exercising of his discretion.
[15]The Applicant’s written submissions filed on 27 March 2019.
Without evidence of the ruling of the costs registrar on each item the only evidence available to me is the Court’s record of reductions to the bills of costs noted on an item by item basis by the costs registrar. This record does not contain a statement of reasons for the reductions. Therefore I am unable to conclude the reason given by the costs registrar in exercising his discretion not to further reduce the applicants’ bill of costs and allow the claims at items 472 and 69, albeit with a slight reduction to the folio count claimed. Therefore I conclude that the review must be dismissed.
If I am wrong in my conclusions item 90 claims fees of Charles Shaw of Counsel for drawing submissions and an appearance in the sum of $4,390.91, after deducting GST. That amount claimed was reduced by $1,890.91 to allow $2,500.00 for this work. The respondent states that the costs registrar was mistaken in thinking that this item was under-claimed. The respondent does not submit that the amount of $2,500.00 allowed was unreasonable. There is a strong presumption in favour of the correctness of the decision of a taxing officer and decisions must be affirmed unless I am satisfied that it is clearly wrong.[16] There is no evidence that the claimed amount in item 90 was wrong or that the amount allowed was unreasonable. Also there is no evidence that if a higher amount had been claimed a higher amount would have been allowed by the costs registrar. Therefore even if the costs registrar did consider that the amount could have been claimed in a higher amount the allowance made appears to be reasonable in amount and to have been reasonably incurred.
[16]Australian Coal and Shale Employees' Federation v Commonwealth 1953, 94 CLR 621 per Kitto at p 627
In respect of the submissions referred to in paragraph 12 (b) and (c) above, the Costs Court will not allow the costs of an unqualified costs consultant on their appearance. This practice is long-standing and well understood by the legal costing community appearing before the Costs Court. Practice Note GEN 11 states at paragraph 13.4.3:
Any legal practitioner who engages a person to appear before the Costs Court who requires the leave of Court to appear shall satisfy themselves that the person is suitable to appear on behalf of their client. They must also inform their client in circumstances where the costs of that appearance will not be able to be claimed on taxation states that where a persons without an entitlement to appear in the Costs Court that no costs of the appearance is claimable or will be allowed.[17]
[17]Paragraph 13.4.3 of PN Gen 11 and Mietto v G4S Custodial Services Pty Ltd [2010] VSC 304.
It appears that the respondent was advised by the costs registrar on 17 September 2018 of the likely appearance of Mr Pedler as the costs registrar who was to conduct the mediation emailed both the respondent’s solicitor and Mr Pedler. It is fanciful for the respondent to submit, in the light of Mr Sizenko’s knowledge and experience of Costs Court practice, that he did not give advice on the likely quantum of the taxed bills on the basis that items 503 and 504 would be taxed off the bills.
Referring to the submissions in paragraph 12(d) above, the costs registrar’s notes of items taxed off the bill of costs record that during the taxation both parties made appropriate concessions on items objected to in the Notice of Objections. In my view, other than the conceded items, the other rulings made by the costs registrar were reasonable and appropriate exercises of his discretion. However, without evidence of the reasoning of the cost registrar in not applying Rule 63.85, any conclusion I draw would be speculative. Even if I found that the costs registrar had stated that many of the rulings were discretionary that consideration does not amount to a failure by the costs registrar based on his knowledge of what occurred during the taxation.
In my view, no reasonable grounds were put by the respondent for me to find that the costs registrar misapplied his discretion not to further reduce the bill of costs pursuant to rule 63.85. The application to review the taxation of costs must be dismissed and the orders made on taxation are confirmed.
Subject to hearing from the parties on the question of the costs of this review the orders I propose to make are that:
1. Pursuant to order 63.56.2(6)(b) the order of the costs registrar made 5 December 2018 is confirmed and the costs of the applicant are taxed and allowed in the sum of $61,709.18.
2. The respondent pay the applicants costs of the cost review on a standard basis, to be taxed in default of agreement.
0