Bashour v Australia and New Zealand Banking Group Ltd (No 2)
[2020] VSC 551
•31 August 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2019 05378
| KATHERINE BASHOUR | Applicant |
| v | |
| AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD | First Respondent |
| - and - | |
| SUSIE BABANI | Second Respondent |
| - and - | |
| JENNIFER EVANS | Third Respondent |
| - and - | |
| PHILIP CHRONICAN | Fourth Respondent |
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JUDGE: | Moore J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 31 August 2020 |
CASE MAY BE CITED AS: | Bashour v Australia and New Zealand Banking Group Ltd (No 2) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 551 |
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COSTS – Costs of appeal from Victorian Civil and Administrative Tribunal – Whether costs should follow the event – Where applicant successful in appeal – Where Court declined to grant leave to appeal for majority of appeal grounds – Where successful appeal ground was separate and distinct from unsuccessful appeal grounds – Where unsuccessful appeal grounds lacked merit – Applicant awarded a proportion of her costs – Supreme Court Act 1986, s 24 – Chen v Chan [2009] VSCA 233, applied – Lifestyle Investments 1 Pty Ltd v Commissioner of State Revenue (No 2) [2020] VSC 431, distinguished.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Harmers Workplace Lawyers | |
| For the Respondents | Seyfarth Shaw |
HIS HONOUR:
The applicant sought leave to appeal under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (the VCAT Act) against orders made by the Tribunal in relation to discovery on 25 September 2019. On 5 August 2020, I delivered judgment for the applicant.[1] This judgment concerns the costs of the appeal.
[1]Bashour v Australia and New Zealand Banking Group Ltd [2020] VSC 478 (‘the primary reasons’).
The applicant sought leave to appeal on five grounds. I granted leave to appeal on the first ground and allowed the appeal on that ground. I declined to grant leave to appeal on the remaining four grounds. I set aside one of the orders made by the Tribunal and remitted the matter to the Member who made the original decision.
The parties filed written submissions and submissions in reply in relation to costs on 12 and 19 August 2020 respectively.
The parties’ positions
The applicant sought an order that the respondents pay her costs on a standard basis as agreed or assessed.
The respondents primarily sought that the Court make no order as to costs. In the alternative, if the Court awarded costs to the applicant, the respondents sought that this be limited to a proportion of her costs on a standard basis, to be taxed in default of agreement. The respondents submitted that this proportion should not exceed 20%.
The applicant submitted that, in the event that only a proportion of her costs is awarded, it should be more than 20%.
Relevant statutory provisions
Section 24 of the Supreme Court Act 1986 provides the Court with the power to award costs. Section 65C(1) of the Civil Procedure Act 2010 is also relevant. It relevantly provides:
65C Other costs orders
(1)In addition to any other power a court may have in relation to costs, a court may make any order as to costs it considers appropriate to further the overarching purpose.
(2) Without limiting subsection (1), the order may—
…
(b)order that parties bear costs as specified proportions of costs;
The power in s 65C of the Civil Procedure Act 2010 is reflected in r 63.04 of the Supreme Court (General Civil Procedure) Rules 2015 which provides:
63.04 Costs of question or part of proceeding
(1) The Court may make an order for costs in relation to a particular question in or a particular part of a proceeding.
(2) Where the Court makes an order under paragraph (1), the Court shall by order fix the proportion of the total costs of the proceeding which is attributable to the particular question in or the particular part of the proceeding.
The parties’ submissions
It is convenient to separate the issues which the parties identified as bearing on the exercise of my discretion as to costs.
Should costs follow the event?
The applicant submitted that, generally, a successful litigant should receive their costs in the absence of a good reason to the contrary.[2] She submitted that the circumstances of this case do not warrant any departure from the ordinary rule.
[2] Towercom Pty Ltd v Fahour (No 4) [2013] VSC 585, [6]–[8].
Mixed success does not always warrant departure from the ordinary rule
The applicant referred to Lifestyle Investments 1 Pty Ltd v Commissioner of State Revenue (No 2) (Lifestyle Investments (No 2)),[3] where Nichols J also had to decide a controversy as to costs in an appeal from the Tribunal under s 148 of the VCAT Act, in circumstances where the successful party had been successful on only some of its appeal grounds. Her Honour stated:[4]
The fact that not all of the successful party’s arguments were accepted by the Court does not of itself require a departure from the ordinary rule or justify the adoption of an “issue-based” approach to the award of costs. The existence of clearly distinct and severable issues on which the successful party has failed might well justify a departure from the ordinary rule. In such a case it would be necessary to weigh the significance of the contested issues in proportion to the proceeding as a whole and, where relevant, the conduct of the successful litigant, in the context of case management principles.[5] However, a court should not too readily disallow costs simply because a party has failed on an issue, unless the issue is quite separate and distinct or unless there is “some element of unreasonableness or inappropriate conduct in relation to that issue”.[6] As Refshauge J said in Lewis v Chief Commissioner –
[i]t is not appropriate for the court to comb through the proceedings to separate out issues on which the successful party has not been successful so as, in some way, to moderate the usual order for costs.[7]
The fact that a party has failed on an issue does not of itself mean that the party has acted inappropriately or unreasonably.[8] Hence, while there is a discretion to apportion costs, other than in the clearest of cases, the successful party should not be deprived of its costs.[9]
[3][2020] VSC 431.
[4][2020] VSC 431, [6].
[5]See Zentai v Honourable Brendan O’Connor (No 4) [2010] FCA 1385, [72].
[6]See Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602, [54].
[7]Lewis v Chief Executive Department of Justice and Community Safety (No 2) [2014] ACTSC 196 (Lewis), [26].
[8]BHP Billiton Iron Ore Pty Ltd v National Competition Council (No 2) [2007] FCA 557, [21].
[9]Lewis, [21]; Orrong Strategies Pty Ltd v Village Roadshow Ltd (No 2) [2007] VSC 205, [14].
Her Honour continued:[10]
Although the Applicants have not been wholly successful, they have succeeded in establishing that the Tribunal erred in failing to complete its statutory task, and in obtaining an order that the Tribunal’s orders be set aside and the matter be remitted for rehearing. That is the relevant “event”. As the Applicants put it, it was necessary in order for the Applicants to have the opportunity to have the proceeding determined in accordance with the law, to bring this appeal. Had the Applicants not brought their appeal they would not have incurred the costs they did. Prima facie, fairness dictates that they should have their costs.
[10][2020] VSC 431, [13].
The applicant submitted by reference to these observations that her primary appeal ground was successful and that she succeeded in her objective of setting aside the order of the Tribunal. It was said that I should therefore exercise my discretion by awarding her costs on a standard basis.
The applicant’s emphasis on the primary appeal ground at trial
The applicant submitted that the fact that I declined to grant leave to appeal for her other four grounds did not detract from this conclusion. She submitted that I allowed her primary appeal ground, and that I was not required to consider the others. Whether I considered those appeal grounds or not would not have made a difference to the outcome of the appeal.
The applicant argued that the respondent was on notice that the successful appeal ground was her primary one and that the others were ‘effectively submitted in the alternative’. The applicant noted that six of her 16 pages of written submissions focused on the primary appeal ground, and her legal representative did not spend a materially substantial proportion of his time on her alternative appeal grounds at the hearing. The Court should therefore not make a ‘special order’ to deprive the applicant of these costs.
The respondents submitted that the applicant had ‘[recast] the manner in which she conducted her case on appeal.’ They submitted that the applicant had raised five questions of law and five appeal grounds, and made detailed oral and written submissions in relation to each. The respondents submitted that, despite apparent deficiencies in some of the grounds, the applicant continued to press all five. The respondents said that the applicant’s approach was better characterised as a ‘scattergun claim’.
An issues-based approach to costs
The respondents submitted that, although the applicant was successful on one ground, she also failed on four others. She also failed to obtain all of the relief that she had sought. They submitted that in cases where a party has enjoyed mixed success, the Court has exercised its discretion to make no order as to costs[11] or award a party a proportion of their costs.[12] The respondents submitted that each question of law constituted a separate issue in the proceeding, in that they were discrete disputed issues, despite some of the questions having a common factual substratum.[13] The respondents submitted that the applicant’s reliance on Lifestyle Investments (No 2) ignored Nichols J’s acknowledgment, in the passage set out earlier, that ‘[t]he existence of clearly distinct and severable issues on which the successful party has failed might well justify a departure from the ordinary rule.’ The respondents submitted that the facts of Lifestyle Investments (No 2) were not analogous to the present case, in that the issues in that case were not severable in the sense required for an issues-based costs order. In this case, the issues were severable.
[11]National Australia Bank Ltd v Horne (No 2) [2011] VSCA 414; Apostolidis v Kalenik (No 2) (2011) 35 VR 563; Diakou v Rouse [2019] VSCA 199.
[12]Spotless Group Ltd v Premier Building and Consulting Pty Ltd [2008] VSCA 115; Rozenblit v Vainer (No 2) [2019] VSC 366.
[13]Spotless Group Ltd v Premier Building and Consulting Pty Ltd [2008] VSCA 115, [15].
The respondents referred to the following passages from the decision of the Court of Appeal in Chen v Chan regarding costs orders on appeal:[14]
Where there is a multiplicity of issues and mixed success has been enjoyed by the parties, a Court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis. Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount.
...
Where a Court determines to make an order apportioning costs, then it does so primarily as ‘a matter of impression and evaluation’, rather than with arithmetical precision, having considered the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter.
[14][2009] VSCA 233.
The respondents submitted that each ground relied upon by the applicant was separate, distinct and required them to undertake substantial work in order to respond. The respondents noted that 10 paragraphs of their written submissions were directed to the successful appeal ground, while 92 paragraphs were directed to the other appeal grounds. Overlap between the questions did not preclude an issues approach.
The applicant submitted that there was no basis for the respondents’ submission that there be no order as to costs. She submitted that the cases cited by the respondents in support of their position were distinguishable from the present case, as they were cases in which cross-claims were made. No cross-claims were made in the present case, and it was clear that the applicant had been successful. The applicant also submitted that it was irrelevant that orders 1 and 2 had not been set aside despite her asking for that relief, and they had only been ‘included on the basis that the whole decision of the Tribunal was infected by jurisdictional error (which was not required to be established for the [a]pplicant to be successful).’
The respondents also submitted that some of the applicant’s grounds of appeal lacked a proper basis in law and should not have been pressed. They specifically referred to ground 5 regarding the sufficiency of the reasons of the Tribunal, in which the applicant made a submission directly contrary to three previous decisions of this Court, her submission that those decisions were plainly wrong, and her failure to articulate why those decisions were plainly wrong. The respondents also submitted that ‘significant aspects of the legal research underpinning the submissions made [by the applicant] was [sic] seriously wanting.’ The respondents also submitted that they were required to respond to the ‘[a]pplicant’s lengthy and ultimately misconceived submissions concerning the test for grant of leave to appeal’. The respondents said that I should consider not only the time that it took to put the correct authorities before the Court, but also the strength of the arguments put and whether they should have been pressed at all.
The applicant submitted that it was open to the Court to accept her argument regarding ground 5. The Court considered it unnecessary to consider the submission in relation to one of the cases cited by the applicant. The applicant submitted that this ‘does not equate to there being no proper basis to press appeal ground 5’.
The respondents’ conduct at the Tribunal and on the appeal
The respondents submitted that the appeal was successful because of an error of the Tribunal. The error was not attributable to the respondents or the manner in which they conducted the matter. It was said that they have incurred costs in responding to the application, and they should not be responsible for any proportion of the applicant’s costs in the circumstances.
The applicant submitted that this submission was misconceived because the purpose of costs is to compensate the successful party for the incurring of expenses in defended litigation to overturn an erroneous decision. She also submitted that, to the extent that the respondents believe that they lack responsibility for the error, they are able to seek an indemnity certificate under s 4 of the Appeal Costs Act 1998. It was said that culpability for the error is otherwise not relevant to the discretion as to costs.
The applicant also submitted that the respondents strongly resisted her application and resulted in her incurring substantial costs. She submitted that the respondents should not have disputed the successful appeal ground, and that their conduct increased costs and lengthened the hearing. She submitted that the respondents’ counsel failed to direct the Court to the relevant passages of the transcript of the Tribunal hearing, and ‘continued to contest the primary appeal ground on a misleading basis, needlessly confusing and prolonging the dispute as to that ground of appeal’.
The respondents rejected the applicant’s assessment of their conduct on appeal. The respondents submitted that their counsel addressed the Court on the transcript of the Tribunal hearing, encouraged the Court to read it, and answered the Court’s questions.
Consideration
The applicant succeeded in setting aside the order of the Tribunal. Absent a good reason to the contrary, she should accordingly receive her costs.
In the circumstances, there is good reason to warrant a departure from the ordinary rule. Unlike in Lifestyle Investments (No 2), in this matter the issues upon which the applicant failed were both numerous and separate and distinct from the ground upon which she succeeded. Further, I consider the applicant’s conduct in prosecuting the grounds upon which she was unsuccessful to be both unreasonable and inappropriate. The features of this proceeding and its conduct by the applicant which lead me to these conclusions are as follows.
First, the applicant has succeeded in only one of the five separate questions of law which she advanced in her application for leave to appeal.
Secondly, it is of particular significance that the sole ground upon which the applicant succeeded, namely, that she was denied procedural fairness by the Tribunal, was entirely separate and distinct from the four unsuccessful grounds.
Thirdly, the applicant advanced substantial written submissions in relation to all four unsuccessful grounds. None of those grounds were abandoned before or at the hearing. A voluminous court book comprised of four lever arch folders was filed. The respondents were called upon to answer the very wide case advanced by the applicant. As a result and as noted by the respondents, some 10 paragraphs of their written submissions were directed to the successful ground of appeal, whereas 92 paragraphs were directed to the unsuccessful appeal grounds.
Fourthly, as is apparent from the primary reasons, all of the four unsuccessful grounds lacked merit. The applicant also unnecessarily complicated and added to the costs of the proceeding by advancing lengthy and misconceived submissions about the test for the grant of leave to appeal. And, as explained in the primary reasons, ground 5 dealing with the sufficiency of the reasons of the Tribunal, was singularly devoid of any merit.
Fifthly, by reason of the above matters, the applicant’s conduct of the appeal had the effect of unnecessarily expanding what should have properly been a confined and focused challenge to the manner in which the Tribunal denied the applicant procedural fairness. The proceeding would have been radically more confined and the associated costs commensurately less if the applicant had not adopted what I consider is fairly described as a scattergun approach in challenging the orders of the Tribunal.
For these reasons, I consider that the applicant is only entitled to a proportion of her costs in this proceeding. However, fixing this proportion on a strict pro rata basis by reference to the fact that the applicant succeeded on only one of five grounds of appeal (ie; at 20%) would not fairly take into account the relative significance of the successful ground for the overall conduct of the appeal, in relation to both the parties’ written and oral submissions. Having regard to that matter, I consider that, in all of the circumstances of the case, the applicant is entitled to 40% of her costs on a standard basis, to be taxed in default of agreement.
The Court will so order.
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