Champions Lawyers v Rohrt
[2018] VSC 400
•23 July 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COSTS COURT
S CI 2014 06822
| MICHAEL JOHN CHAMPION trading as CHAMPIONS LAWYERS (A FIRM) | Applicant |
| v | |
| RICHARD TRYGVE ROHRT (in his capacity as liquidator of AUSTRALIA'S RESIDENTIAL BUILDER PTY LTD (in liquidation) AND OTHERS (according to the schedule attached to the Amended Summons for Taxation of Costs) | Respondents |
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JUDICIAL REGISTRAR: | GOURLAY |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 5 July 2018 |
DATE OF JUDGMENT: | 23 July 2018 |
CASE MAY BE CITED AS: | Champions Lawyers v Rohrt and ors |
MEDIUM NEUTRAL CITATION: | [2018] VSC 400 |
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COSTS COURT – Practice and Procedure - Failure to comply with order to serve a costs estimate - Orders 63.56.2(2), 63.01, 63.07(2).
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr M Champion | Champions Lawyers |
| For the Respondent | Mr M Lapirow | Thomas Egan |
JUDICIAL REGISTRAR
This long running costs dispute was commenced by a Summons for Taxation on 3 August 2015. The applicant sought to review a number of accounts for legal services provided to Australia's Residential Builder Pty Ltd (then in liquidation) pursuant to Section 3.4.40 of the Legal Profession Act 2004 (the Act). Itemised bills of cost totalled $17,708.85 for work undertaken on four different files. On completion of the costs review by a Costs Registrar the assessed sum was $8,956.26. This outcome represents a 49.5% reduction of the total amount claimed in the itemised bills and only 40% of the total sum claimed in the lump sum bills.[1]
[1]Ruling of Costs Registrar Conidi delivered on 17 March 2017.
The parties then made submissions about the application of section 3.4.17 of the Act and each sought costs orders in their favour pursuant to section 3.4.45 of the Act. The Costs Registrar ordered a further 7.5% reduction to the taxed sum to reflect failures of the applicant to make the required costs disclosures. On 10 April 2017 the orders made, by consent, in relation to the costs of the taxation were:
7.The Applicant pay the Respondent’s costs of the taxation with respect to the seriatum taxation, the issue pertaining to the validity of the costs agreement and disclosures statements and any additional costs incurred by virtue of the Applicant’s refusal to admit matters in the Respondent’s Notice to Admit.
8.The Respondents pay the Applicant’s costs associated with the issues culminating in the Court’s ruling of 30 June 2016, namely whether there existed a retainer between the Applicant and the Third Respondent at all times when the legal costs were said to have been incurred.
9.By 19 May 2017, the applicant and the Respondents file and serve written submissions with respect to:
(i)the appropriate reduction, if any, to the amounts provided by the Supreme Court Scale in assessing the costs of the taxation for each party having regard to the fact that the bills in question were drawn pursuant to the Practitioner Remuneration Order, the Magistrates Court Scale and the Fair Work Regulations 2009, Schedule 3.1 and also having regard to section 24 of the Civil Procedure Act.
(ii)whether the Applicant should file and serve a settled cash account.
10The Applicant and Respondents file and serve estimates of their respective costs on Supreme Court Scale (subject to paragraph 2(i) above[2]) by 19 May 2017. Estimates are to have sufficient particularity with respect to the category of items being claimed, that is, they are not to be in a single lump sum form.
11.Each party is to file and serve a response to the other parties submissions by 13 June 2017.
[2]Order 2(1) is not relevant for the purposes of these reasons.
It is clear that neither party complied with the time frames in these orders to file and serve submissions and their costs estimates. However, both parties did eventually file and serve submissions in relation to the remaining issues requiring settling of a cash account and the question of which scale of costs should be applied to the costs of the costs review. The applicant filed and served his costs estimate. The respondents filed a costs estimate, but did not serve it on the applicant. On 10 November 2017[3] the Costs Registrar fixed the parties’ costs and stated in Other Matters:
Pursuant to the Order of the Costs Court made 10 April 2017, both parties are entitled to costs arising from the taxation. Both parties have submitted assessments based on the Supreme Court scale.
The issue is whether I should moderate the scale (ie. apply a percentage reduction) having regard to the fact that the bills were drawn pursuant Practitioners Remuneration Order, Fair Work Regulations and the Magistrates Court Scale and in particular, having regard to section 24 of the Civil Procedure Act 2010.
I note that prior to the summons for taxation being filed, the respondents as liquidators of the company, commenced a proceeding in the Magistrates Court with respect to the fees claimed by the applicant. That proceeding was vacated with the order of the learned Magistrate being silent as to costs.
I have considered the written submissions of both parties on this issue and in particular, I have considered the issues in the context of section 24 of the Civil Procedure Act. I have determined that the appropriate basis for taxing the costs arising for the taxation hearing is 65% of the Supreme Court scale.
With respect to the respondents claim for costs (pursuant to paragraph 7 of the Order made 10 April 2017) as detailed in the Estimate filed 20 July 2017, I have fixed costs in the sum of $32,500.00.
With respect to the applicants claim for costs (pursuant to paragraph 8 of the order made 10 April 2017) as detailed in the Certificate of Assessment, filed 31 July 2017, I have fixed costs in the sum of $6,900.00.
[3]These orders were later amended to correct an error in relation to the parties names for the purpose of settling the cash account.
The orders made were as follows:
1.The costs of both parties be assessed at 65% of the applicable Supreme Court Scale in the years when the work was undertaken.
2.Pursuant to paragraph 7 of the Order of Costs Registrar Conidi, made 10 April 2017 the respondents’ costs are fixed in the sum of $32,500.00.
3.Pursuant to paragraph 8 of the Order of Costs Registrar Conidi made 10 April 2017, the applicant’s costs are fixed in the sum of $6,900.00.
The balance of the orders relating to filing and serving documents and for a hearing to settle the cash account between the parties are not relevant for the purpose of this reconsideration. At the time of these reasons the cash account has yet to be settled.
The applicant seeks reconsideration of the order made fixing the amount of the respondents’ costs which are payable by the applicant as the respondents failed to serve to serve their costs estimate, as ordered to do so. This order is order 2, above. On 8 December 2017, the applicant filed and served his Request for a Review or Reconsideration.[4] The Notice also seeks an extension of time for making the reconsideration application, if required. The applicant’s objection to order 2 is that he was denied natural justice by the respondents’ solicitor failing to serve him with the estimate of costs after filing it as ordered. This failure, he submits, deprived him of an opportunity to consider the estimate prior to the Costs Registrar fixing the amount, and, if he thought it necessary, to apply for leave to file and serve a response to the costs estimate.
[4]Pursuant to Order 63.56.2 of the Rules.
The respondents do not deny that the costs estimate was not served on the applicant prior to the Costs Registrar fixing the amount of costs payable by the applicant. The respondents’ excuse for the failure to do so was that the respondents’ solicitor had offered to exchange the costs estimates with the applicant on 13 June 2017 and 28 June 2017,[5] however the applicant failed to take up this offer as the applicant by not responding to those emails. On 19 July 2017 at 3.33pm the respondents’ costs lawyer emailed the Costs Registrar and the applicant as follows:
The Applicant issued the Costs Court proceeding on 19 December 2014 and more than 2 ½ years later it is still not concluded. Mr Champion has now had more than 3 months in which to prepare his Submissions and Estimate and to arrange an exchange of Submissions and Estimates with the Respondents’ solicitor. He has not only failed to prepare and file his Submissions and Estimate but has failed to respond to any correspondence in this respect or in respect of exchange of Submissions and Estimates, save for his email to the Court of 25 May 2017.
In all the circumstances the Respondents now respectfully request that the Court make determinations of the remaining issued based on the material of the Court file.
[5] Affidavit of Richard Trygve Rohrt sworn on 3 May 2018 paragraph 5.
As stated the respondents’ costs lawyer had emailed the estimate to the Costs Registrar only in an earlier separate email that day and on a later date he filed an amended hard copy.[6] The applicant e-filed and served his costs estimate and submissions on 30 July 2017, after receipt of an email from the Costs Registrar sent to both parties on 25 July 2017 stating:
To the Parties
Please be advised that I intend to make my determination with respect to this matter on Monday 31 August 2017 (or as soon as practicable thereafter) based on material on the Court file at that time.
[6]The emailed estimate referred to the wrong paragraph of the order made on 10 April 2017 which was subsequently corrected and a hard copy was filed on 20 July 2017.
The respondents did not serve their costs estimate on the applicant at any time after this date.[7] The respondents did file (and may have served) an additional submission in response to the applicant’s submission dealing with the issue of scale reduction and cash account. Only after the respondents were ordered to do so on 10 March 2018, as part of this costs reconsideration, did the applicant receive a copy of the costs estimate.
[7]Affidavit of Richard Trygve Rohrt sworn on 3 May 2018.
On 23 November 2017,[8] after receiving the 10 November 2017 order[9] the applicant emailed both the Costs Registrar and the respondents’ solicitor and the respondents’ costs lawyer to complain that he had not been served with the costs estimate and had not been able to consider the same and respond if necessary. On 24 November 2017 the Costs Registrar replied that:
On 10 April 2017 I made an order that the Applicant and Respondents file and serve estimates of their respective costs on Supreme Court Scale (see order 10). The estimate to which you refer in your email relates to the respondents’ estimate of costs upon which I assessed their costs. I am assuming that the respondents complied with their obligation to serve as well as file that estimate.
[8]Affidavit of Michael John Champion sworn on 19 March 2018 exhibit MCJ 1.
[9]This order was amended on 14 November 2017 to correct a slip in reference to the parties.
In response the applicant emailed the respondents’ solicitor and the respondents’ costs lawyer that day asking for evidence that the costs estimate had been served, but neither the respondents’ solicitor nor the respondents’ costs lawyer chose to reply. A further email from the applicant was sent on 27 November 2017[10] that stated:
I note that I have not received any response to the email below. I take it then there is no dispute the estimate was never served as required.
I suggest the order as to costs is vacated by consent, you provide me with a copy of the estimate, and that no further decision is made as to quantum until the time for me to review and respond has expired.
[10]Affidavit of Michael John Champion sworn on 19 March 2018 exhibit MCJ 1.
The respondents’ solicitor and the respondents’ costs lawyer failed to respond to this email. The applicant filed and served the Request for Review or Reconsideration on 8 December 2017.
The applicant submits that this is a reconsideration of an order by the Costs Registrar allowing some amount is respect of any item pursuant to order 63.56.2(2)(b) of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) and any failure to file and serve the notice seeking the reconsideration within 14 days of the 10 November 2017 order[11] is a technicality only and does not render the proceeding a nullity. The applicant relies on order 2.01. The commentary in Williams Civil Procedure Victoria at 2.01.0 states:
The subject of O 2 is non-compliance with the rules. The order regulates what is to happen when a party, being required or permitted by the rules to take some step, takes the step other than in the manner prescribed. Non-compliance of this kind must be distinguished from non-compliance constituted by the failure to take a step within a time specified by the rules or order of the court in consequence of which the other party has obtained judgment. Examples are judgment entered in default of appearance or defence or pursuant to a self-executing order.
[11]Order 63.56.2(5) provides that the notice must be filed within 14 days after the making of the order.
This submission cannot be upheld as Order 2 relates to procedural matters which are different to failing to take a step in a proceeding within the time specified by the Rules. However, Order 3.02 enables the Court to extend any time fixed by the Rules.[12] Section 17D(2) of the Supreme Court Act 1986 gives the Costs Court ‘such powers of the Court as are necessary to enable it to exercise its jurisdiction’. Time can be extended if the applicant can demonstrate the other party affected by the application is not prejudiced by allowing it to proceed out of time.
[12] 3.02 Extension and abridgement
The order the applicant seeks is that the costs assessment be set aside and that the Costs Registrar re-consider his assessment due to the failure of the respondents to comply with the order to serve the costs estimate. The applicant submitted that the proceeding has not been completed as the cash account remains to be settled. Accordingly, there would not be any prejudice to the respondents in having the Costs Registrar re-consider his costs estimate. In conducting the re-consideration the Costs Registrar can refer to the applicant’s Response to the Respondents’ Costs Estimate (filed and served on 7 May 2018) and the respondents’ detailed reply submission which was received by the Court on 7 June 2018. The respondents’ submission includes responses to each general objection contained in the applicant’s Response as well as to the specific objections to the various categories of costs in the respondents’ costs estimate.
The respondents argue that the costs reconsideration should be dismissed as technically final orders have not been made. It was submitted that the 10 November 2017 orders do not amount to a determination for the purposes of section 17H of the Supreme Court Act 1986. The respondents further submitted that the fixing of costs as a lump sum pursuant to Order 63.07(2)(c) and (d) does not amount to an allowance or disallowance of an item in a bill or an allowance of some part of an item[13] as no bill of costs was filed and no taxation of a bill of costs was undertaken by the Costs Registrar. Order 63.07(2) states that:
[13]Order 63.56.2(2)(a) and (b).
(2)Where the Court orders that costs be paid to a party, the Court may then or thereafter order that as to the whole or any part of the costs specified in the order, instead of taxed costs, that party shall be entitled to—
(a) a portion specified in the order of taxed costs;
(b)taxed costs from or up to a stage of the proceeding specified in the order;
(c) a gross sum specified in the order instead of taxed costs;
(d)a sum in respect of costs to be determined in such manner as the Court directs.
The Costs Registrar fixed each party’s costs as lump sums based on costs estimates to be filed and served by them, by consent, due to the time ready taken in the proceeding and the difficult conduct of each of the parties in the conduct of the proceeding. Paragraph 10 of the order made on 10 April 2017 specifies both the manner for preparation of the costs estimate and the necessity for the costs estimates to be filed and served. Order 63.01 defines a bill, taxation and taxed costs as follows, unless the context or subject matter otherwise requires:
A bill means bill of costs, account, or statement of charges;
A taxation or taxation of costs means the assessment, settling, taxation or review of costs; and
Taxed costs means costs taxed in accordance with this Order;
The costs estimate is, no doubt, a statement of charges (a bill) for the purpose of Order 63 including Order 63.56.2. The Cost Registrar made an assessment of a sum based on the costs estimate and therefore the taxed costs (the allowed sum) is able to be reconsidered under Order 63.56.2.
Although the applicant has not filed and served any affidavit material in relation to his delay in filing the Request for Review[14] the respondents do not submit that they have suffered any prejudice due to the delay.
[14]As noted in the respondents’ submission filed on 7 June 2018 at paragraph 23.
On 19 July 2017 the respondents urged the Costs Registrar to make findings that were detrimental to the applicant referring to a document that had not been served on the applicant due the respondents’ legal advisers’ failure to comply with the orders to serve the costs estimate. The Costs Registrar was not aware of the failure to serve the costs estimate at any time prior to his assessing the respondents’ costs. The respondents’ 19 July 2017 email, in itself, is sufficient to justify granting of an extension of time and ordering a re-consideration of the respondents’ costs. The applicant does not seek any order other than that the Cost Registrar reconsider his assessment of costs having regard to the applicant’s submission in reply and to respondents’ reply.
Any application for reconsideration of the order would not have been necessary if the respondents and their legal advisers had complied with the Court’s orders to serve the costs estimate. There were at least four occasions when the respondent could have complied with the order to serve the costs estimate prior to the assessment being conducted on 31 August 2017 by the Costs Registrar. These were:
(a) when the costs lawyer unilaterally emailed[15] the costs estimate to the Costs Registrar on 19 July 2017;
[15]This was a failure to comply with Paragraphs 6.3 and 6.5 of Practice Note SC Gen 4 of 2017 which states that any correspondence with the Court must be sent simultaneously to all other parties and must be confined to uncontroversial matters.
(b) after receipt of the Costs Registrar’s email of 25 July 2017;
(c) after the respondents’ costs estimate was formally filed with the Court on 20 July 2017; and
(d) in response to the applicant’s email filing and serving his submission on 30 July 2017.
In relation to the issue of sending unilateral email correspondence to the Court I observe that each of the respondents’ legal practitioners are very experienced and should be aware that the Court requires any email correspondence to the Court to include all parties to a proceeding. Both legal practitioners have an obligation to comply with the Court’s orders and the failure to do so has resulted in further delay and additional costs as well as a waste of the Court’s time.
In relation to the costs of the costs reconsideration my reasons make it plain that had the respondents’ legal practitioners complied with their obligation to serve the costs estimate this reconsideration would not have been necessary. However, I will not make an order for costs until I am able to consider the parties’ submissions in relation to the costs of the reconsideration. I will therefore order that:
1. Order No 2. of the orders made on 10 November 2017 (as amended) is set aside.
2. The assessment of the amount of the respondents’ costs payable by the applicant be remitted to Costs Registrar Conidi to be conducted having regard to the respondents’ costs estimate filed on 20 July 2017, the applicant’s response to the respondents’ costs estimate filed on 7 May 2018 and the respondents’ submissions in response filed on 7 June 2018.
3. Each party is to file and serve brief written submissions in relation to the costs of the reconsideration by 30 July 2018.
SCHEDULE
MICHAEL JOHN CHAMPION TRADING AS CHAMPIONS LAWYERS
of Level 40, 140 William Street, Melbourne, Victoria 3000
Applicant
and
RICHARD TRYGVE ROHRT (in his capacity as liquidator of AUSTRALIA’S RESIDENTIAL BUILDER PTY LTD (IN LIQUIDATION)) (ACN 136 733 732)
of Hamilton Murphy, Insolvency Practitioners and Accountants, Level 1,
269 Swan Street, Richmond, Victoria 3121
First Respondent
and
LEIGH WILLIAM DUDMAN (in his capacity as liquidator of AUSTRALIA’S RESIDENTIAL BUILDER PTY LTD (IN LIQUIDATION)) (ACN 136 733 732)
of Hamilton Murphy, Insolvency Practitioners and Accountants, Level 1,
269 Swan Street, Richmond, Victoria 3121
Second Respondent
and
AUSTRALIA’S RESIDENTIAL BUILDER PTY LTD (IN LIQUIDATION))
(ACN 136 733 732) of Hamilton Murphy, Insolvency Practitioners and
Accountants, Level 1, 269 Swan Street, Richmond, Victoria 3121
Third Respondent
(1)The Court may extend or abridge any time fixed by these Rules or by any order fixing, extending or abridging time.
(2)The Court may extend time under paragraph (1) before or after the time expires whether or not an application for the extension is made before the time expires.
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