Davey v Elvin & Silverstein

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2022 0061

JOHN PATRICK DAVEY	Applicant
v
MATTHEW POMEROY ELVIN AND RONALD DAVID SILVERSTEIN	Respondents

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JUDGES:	BEACH, WALKER and OSBORN JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	28 April 2023
DATE OF JUDGMENT:	20 June 2023
MEDIUM NEUTRAL CITATION:	[2023] VSCA 147
JUDGMENT APPEALED FROM:	[2022] VSC 214 (Keogh J)

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CIVIL PROCEDURE – Application for leave to appeal decision of trial judge on questions of law in respect of appeal from Magistrates’ Court of compensation orders made under s 29(1)(c) of the Civil Procedure Act 2010 (‘CPA’) in favour of applicant – Applicant self-represented legal practitioner plaintiff in Magistrates’ Court proceeding – Conduct of respondents as legal practitioners acting for defendants in Magistrates’ Court proceeding – Overarching obligation to act honestly – Requirement for proper basis – Proper basis certification – Overarching obligation not to mislead or deceive – Whether trial judge erred in stating test for proper basis under CPA – Whether trial judge erred making findings of fact concerning conduct of respondent – Whether trial judge erred in conclusions concerning alleged breaches of ss 17, 18(d) and 21 of the CPA by respondents – Whether trial judge erred in relation to applicant’s contribution to costs and delay in the Magistrates’ Court – Whether trial judge erred in allowing respondents to raise new points on appeal – Whether trial judge misapprehended basis on which compensation was sought by applicant – Whether trial judge erred in concluding evidence did not establish applicant had suffered loss – Professional fees not equated to financial loss when applicant is self-represented solicitor – Whether trial judge erred in discounting costs of one respondent in Magistrates’ Court – Whether trial judge erred in rejecting proposition that the filing of three separate appeals was relevant to costs – Application for leave to appeal refused.

Civil Procedure Act 2010, ss 17, 18(d), 21, 29, 42.

Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333, Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 5) [2014] VSC 400, Bolitho v Banksia Securities Ltd (No 18) (remitter) [2021] VSC 666, considered.

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Counsel
Applicant:		In person
First Respondent:		Mr CM Archibald KC with Ms E Poole
Second Respondent:		Ms L Hannon KC with Mr TK Jeffrie
Solicitors
Applicant:	—
First Respondent:	Colin Biggers & Paisley
Second Respondent:	K&L Gates

TABLE OF CONTENTS

Introduction

Proposed grounds of appeal

Statutory provisions

The trial judge’s Reasons

Did the trial judge err in stating the test for a proper basis (part of proposed ground 1)?

Consideration

Did the trial judge err in making findings of fact relevant to Elvin’s conduct (proposed ground 5)?

Consideration

Did the trial judge err in his findings with respect to Elvin’s alleged breach of the proper basis obligation under s 18(d) (part of proposed ground 1)?

Consideration

Did the trial judge err in his conclusions with respect to the alleged breach of Elvin’s obligation with respect to misleading and deceptive conduct pursuant to s 21 (proposed ground 3)?

Consideration

Did the trial judge err in his conclusions with respect to the breach by Silverstein of s 17 (proposed ground 2)?

Consideration

Did the trial judge err in making a finding with respect to the relevance of Davey’s contribution to costs and delay in the Magistrates’ Court (proposed ground 4)?

Did the trial judge err in allowing Elvin and Silverstein to raise new points on appeal (proposed ground 6)?

Did the trial judge misapprehend the basis on which compensation was sought by Davey (proposed ground 7)?

Consideration

Did the trial judge err in concluding that the evidence did not establish that Davey had suffered loss (proposed ground 8)?

Consideration

Did the trial judge err in discounting Silverstein’s costs in the Magistrates’ Court by 25 per cent (part of proposed ground 1)?

Consideration

Did the trial judge err in rejecting the proposition that the filing of three separate appeals was relevant to costs (proposed ground 9)?

Conclusion

APPENDIX A

BEACH JA
WALKER JA
OSBORN JA:

Introduction

Mr John Davey is qualified as a legal practitioner and at the time in issue was a solicitor carrying on a sole practice known as Herm Legal.
As part of his practice, Davey undertook work for Mr Peter Dessmann, and Dessmann’s company, Dessco Pty Ltd (‘the defendants’) between 2013 and 2016.
During the same period, the defendants erected signage for Davey, purchased a commercial property as a superannuation investment that was rented to Davey’s firm, allegedly gave Davey money to pay rent on these premises and assisted him in other ways.
Davey had rendered invoices to the defendants for legal work which remained unpaid. As a consequence he brought two proceedings in the Magistrates’ Court against the defendants for the recovery of outstanding fees.
The defendants did not deny Davey had performed the services for which he claimed, but denied liability on a number of grounds. Those grounds centred upon the proposition that the work was performed in a close personal relationship characterised by mutual gift giving in which there was no intention to create a contractual relationship.
Mr Matthew Elvin, the first respondent, is a legal practitioner who was retained to act for the defendants at the outset of the Magistrates’ Court proceedings. He filed defences pleading the mutual gift giving defence. Upon request he then filed further and better particulars of the defence relating to payments made by the defendants to Davey.
Mr Ronald Silverstein, the second respondent, is also a legal practitioner. He replaced Elvin as the defendants’ solicitor in the course of the Magistrates’ Court proceedings. We shall refer to Elvin and Silverstein jointly as ‘the respondents’. Silverstein filed amended defences that repeated the mutual gift giving defence and elaborated other matters. Silverstein failed to file a proper basis certificate in respect of the amended defence as required by the overarching obligation contained in s 42 of the Civil Procedure Act 2010 (‘CPA’).
At about the same time that Silverstein filed the amended defence, he also filed points of claim in the Victorian Civil and Administrative Tribunal. In that claim, Dessco claimed arrears of rent in respect of the commercial tenancy arrangement it had with Davey for Davey’s firm. This claim was inconsistent with the terms of the defences upon which the defendants relied in the Magistrates’ Court.
The claims in the Magistrates’ Court proceedings were determined after substantial contested hearings. Davey succeeded in his claim for legal fees in March 2019 and successfully defeated a set-off claim made by the defendants in September 2019.
In April 2019, Davey applied for orders for costs against the defendants and orders for costs and compensation against the respondents pursuant to ss 29(1)(a) and (c) of the CPA on the basis that they had breached a series of overarching obligations imposed by the CPA (‘the s 29 application’).
More particularly, Davey alleged:
(a)Elvin had:
•filed a defence without a proper basis for doing so in breach of his overarching obligation under s 18; and
•breached his overarching obligation not to mislead or deceive under s 21;
(b)Silverstein had:
•breached his overarching obligation to act honestly under s 17; and
•filed an amended defence without a proper basis for doing so in breach of his overarching obligation under s 18.
In the course of hearing of the s 29 application it became clear that, as a result of the decision of the High Court in Bell Lawyers Pty Ltd v Pentelow,[1] Davey was not entitled to claim professional fees for work done as a self-represented legal practitioner. In consequence, Davey was given the opportunity to formulate an alternative claim and to adduce evidence of financial loss supplementing the bill of costs which formed the initial basis of his application.
[1](2019) 269 CLR 333 (Kiefel CJ, Bell, Gageler, Keane, Nettle, Gordon and Edelman JJ) (‘Bell’).
The hearing of the s 29 application extended over a total of eight days between October 2019 and February 2020 but no further material as to loss was filed.
In June 2020, the magistrate ultimately found each of the alleged breaches of the overarching obligations upon which Davey relied to be proven and made orders including orders with respect to compensation as follows:
(C) THAT THE PLAINTIFFS DISBURSEMENTS BE PAID BY THE DEFENDANTS TO BE AGREED IN THE DEFAULT OF ANY AGREEMENT TO BE TAXED BY THE COST COURT.
(D) THE DEFENDANTS ARE LIABLE TO COMPENSATE THE PLAINTIFF DAVEY BASED ON THE PRACTITIONERS REMUNERATION ORDER (PRO) IN RESPECT TO THE WHOLE OF THESE PRCEEDINGS [sic] AS IT RELATES TO EACH OF THEM JOINTLY AND SEVERALLY.
(E) THAT ELVIN THE SECOND RESPONDENT BE JOINTLY AND SEVERALLY LIABLE WITH DEFENDANTS FOR COMPENSATION BASED ON THE PRO FROM 10 JUNE 2016 TO 6 FEB 2017.
(F) THAT SILVERSTIEN [sic] THE FIRST RESPONDENT BE JOINTLY AND SEVERALLY LIABLE WITH THE DEFENDANTS FROM 6 FEB 2017 TO TODAY.
(G) I FURTHER MAKE THESE ORDERS UNDER PART 4.5 OF THE CIVIL PROCEDURE ACT 2010 AND IF THERE IS NO AGREEMENT AS TO THE AMOUNTS TO BE PAID BY THE DEFENDANTS AND RESPONDENTS ELVIN AND SILVERSTIEN [sic] FOR THE AMOUNT OF COMPENSATION TO BE PAID BY THEM UNDER THE RELEVANT PRO SHALL BE ASSESSED BY THE COST COURT.[2]
[2]Order of Magistrate Radford made 5 June 2020.
It can be seen that the order distinguished between disbursements and professional fees. Only the defendants and not the respondents were ordered to pay Davey’s disbursements. Both the defendants and the respondents were made jointly and severally liable for compensation comprising Davey’s professional costs fixed by reference to the Practitioners’ Remuneration Order (‘PRO’).
In July 2020, the respondents’ appealed the orders relating to compensation pursuant to s 109 of the Magistrates’ Court Act 1989 to the Trial Division of this Court, alleging that the magistrate’s final order was vitiated by a series of errors of law. More particularly:
(a)Elvin appealed:
•the finding of breach of the overarching obligations under ss 18 and 21 of the CPA with respect both to proper basis and misleading or deceptive conduct; and
•the award of compensation pursuant to s 29.
(b)Silverstein did not appeal the no proper basis finding of breach of s 18, but did appeal:
•the finding of dishonesty in breach of s 17; and
•the award of compensation pursuant to s 29.
In May 2022, Keogh J delivered a detailed and comprehensive judgment[3] and found that the magistrates’ final order was vitiated by a series of errors of law.
[3]Elvin v Davey [2022] VSC 214 (Keogh J) (‘Reasons’).
In respect of Elvin, his Honour found first that the magistrate erred in law in his reasoning with respect to the finding that Elvin breached the proper basis requirement contained in s 18(d) of the CPA. This conclusion was supported by three separate findings.
(a)The magistrate erred by failing to identify the proper test for determining a contravention of s 18(d) of the CPA.[4]
(b)The magistrate did not properly apply the facts of the case to the principles applicable under s 18(d) of the CPA in concluding that Elvin did not have factual or legal material available to him enabling him to be satisfied there was a proper basis for the defence.[5]
(c)The magistrate erred by failing to apply s 140 of the Evidence Act 2008 and the ratio of Briginshaw v Briginshaw[6] when considering whether Elvin contravened s 18(d) of the CPA.[7]
[4]Reasons, [84].
[5]Ibid [85]–[89].
[6](1938) 60 CLR 336 (‘Briginshaw’).
[7]Reasons, [90]–[91].
Secondly, his Honour found that the magistrate erred in law in his reasoning with respect to the finding that Elvin engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of s 21 of the CPA for the following separate reasons:
(a)The magistrate failed to identify and apply the proper test for assessing this question.[8]
(b)It was not open on the facts to find, and the magistrate erred in his application of s 21 of the CPA to the facts by finding, that by filing further and better particulars of the defendant’s defences, Elvin had engaged in misleading conduct.[9]
(c)The magistrate erred by failing to apply s 140 of the Evidence Act 2008 and the Briginshaw principle when considering whether Elvin contravened s 21 of the CPA.[10]
[8]Ibid [96]–[97].
[9]Ibid [98].
[10]Ibid [99].
In respect of Silverstein, the trial judge found that the magistrate erred in law in respect of his findings that Silverstein acted dishonestly in breach of s 17 of the CPA for the following separate reasons.
(a)The magistrate failed to apply the correct legal test for establishing dishonesty articulated in Peters v The Queen.[11]
(b)The magistrate did not have regard to the Briginshaw principle in satisfying himself Silverstein acted dishonestly.[12]
(c)On the totality of the evidence, it was not open to the magistrate to find Silverstein acted dishonestly in breach of s 17 of the CPA.[13]
[11](1998) 192 CLR 493 (‘Peters’). See Reasons, [114]–[115].
[12]Reasons, [124].
[13]Ibid [125]–[126].
Nonetheless, the question whether it was open on the facts to find that Elvin filed a defence without proper basis in breach of s 18 was not resolved by the trial judge and remained a live issue. Moreover, Silverstein’s breach of the proper basis obligation imposed by s 18 was not contested. Because these issues remained live, the trial judge’s findings as to compensation became dispositive of the appeal.
The trial judge found that the magistrate erred in law in making a compensation order under s 29(1) of the CPA:
(a)by failing to have regard to a relevant consideration, namely the relative importance of the impugned conduct of the respondents, and of Davey’s own conduct as it affected the proceeding and thus caused any loss suffered by Davey;[14]
(b)by conflating legal fees with financial or other loss and thereby misconstruing the test to be applied under s 29(1)(c) with respect to the basis of any compensation;[15]
(c)by awarding compensation when there was no evidence of loss on the part of Davey;[16]
(d)by fixing compensation by reference to the PRO without giving reasons for doing so, and without indicating to the respondents that he intended to do so and giving them an opportunity to be heard on the matter;[17] and
(e)by ordering that compensation be assessed by the Costs Court.[18]
[14]Ibid [164].
[15]Ibid [176].
[16]Ibid [181]–[182].
[17]Ibid [186]–[187].
[18]Ibid [190]–[195].
The finding that there was no evidence substantiating loss was dispositive of the claims for compensation.
Accordingly, the trial judge set aside the Magistrates’ Court orders with respect to the respondents. He further ordered that Davey pay the costs of the appeal and the costs of the respondents in respect of the Magistrates’ Court proceedings, reduced by 25 per cent in the case of Silverstein, reflecting the breach by Silverstein of the CPA.[19]
[19]See Elvin v Davey (Costs Ruling) [2022] VSC 324 (Keogh J) (‘Costs Ruling’).

Proposed grounds of appeal

Davey now seeks leave to appeal the trial judge’s decision on a series of proposed grounds which are, in a number of respects, confused and confusing. We attach the wording of the proposed grounds as Appendix A, however for ease of comprehension we will deal with the proposed grounds thematically.
The proposed grounds of appeal raise the following issues.
(a)Whether the trial judge erred in stating the test for a proper basis
Proposed ground 1 includes the proposition that the trial judge erred in the test which he applied to determining whether Elvin had a proper basis for the defences filed by him.
(b)Whether the trial judge erred in a finding of background fact relating to Elvin’s conduct
His Honour allegedly erred in finding that Elvin did not have knowledge of a summary of payments prior to filing a defence (proposed ground 5).
(c)Whether the trial judge erred in his findings with respect to Elvin’s alleged breach of s 18(d)
Proposed ground 1 asserts in part that the trial judge failed to properly take into account relevant material and the absence of material in determining whether Elvin had a proper basis for the defence filed by him. Further, the trial judge erred in finding that Elvin had a proper basis for the defence.
(d)Whether the trial judge erred in his conclusion with respect to the alleged breach of Elvin’s obligation pursuant to s 21
Proposed ground 3 asserts the trial judge erred in determining:
•Elvin had not misled or sought to mislead;
•the magistrate had not reached a sufficient level of satisfaction in accordance with the Briginshaw standard;
•Elvin’s conduct did not constitute deceptive or misleading conduct; and
•the magistrate’s reasons were deficient.
(e)Whether the trial judge erred in his conclusion with respect to the breach by Silverstein of s 17
Proposed ground 2 rolls up a challenge to the judge’s decision concerning the failure of the magistrate to apply the correct test and the relevant standard of proof and challenges his Honour’s determinations with respect to the issue of dishonesty and the adequacy of magistrate’s reasons in respect of Silverstein.
(f)Whether the trial judge erred in expressing the requirement that Davey establish causation of loss
Proposed ground 4 asserts that the trial judge was in error by mistaking the facts when he found that the magistrate was required to evaluate the relative impact of the impugned conduct of the respondents and Davey’s own conduct, on the proceedings and loss suffered by Davey.
(g)Whether the trial judge erred in allowing the respondents to raise points on appeal not raised in the court below
Proposed ground 6 asserts the trial judge wrongly permitted the respondents to raise points on appeal which were not raised at first instance.
(h)Whether the trial judge misapprehended the basis on which compensation was sought
Proposed ground 7 asserts that the trial judge erroneously found that Davey had not made a submission for orders on a disciplinary basis.
(i)Whether the trial judge erred in finding the evidence did not prove loss
Proposed ground 8 asserts the trial judge erred in finding that compensation pursuant to s 29(1)(c) could not be assessed against the financial and time records kept within Davey’s firm’s accounting software and wrongly conflated Davey’s lost income associated with same as being unable to be awarded as compensation.
(j)Whether the trial judge erred in the exercise of his discretion with respect to the proportion of costs payable by Davey to Silverstein in respect of the Magistrates’ Court claim for compensation
Part of proposed ground 1 asserts that the trial judge erred in determining that Silverstein should receive a 25 per cent discount to his costs in the Magistrates’ Court summons after his concession in the Supreme Court appeal that he did not have a proper basis for the defences (and the set-off) in the Magistrates’ Court.
(k)Whether the judge erred in rejecting the maintenance of separate appeal proceedings by the respondents as an issue relevant to the costs of the appeals
Proposed ground 9 asserts that the institution of separate appeal proceedings on behalf of the respondents was unnecessary and should have been taken into account in the trial judge’s exercise of his discretion as to costs.

For the reasons which follow, we are not persuaded that any of these proposed grounds are reasonably arguable.

Statutory provisions

Before turning to the proposed grounds, it is necessary to say something more about the statutory provisions which are in issue and about the trial judge’s Reasons.
Section 1(1)(a) of the CPA provides that one of the main purposes of the CPA is:
to reform and modernise the laws, practice, procedure and processes relating to civil proceedings in the Supreme Court, the County Court and the Magistrates' Court and provide for uniformity;
Section 1(2) states that, amongst other things, the CPA provides for:
(a)overarching obligations for participants in civil proceedings to improve standards of conduct in litigation;
(b)expanding the powers of the courts in relation to costs in relation to civil proceedings;
…
Section 10(1)(b) of the CPA provides that the overarching obligations apply to ‘any legal practitioner or other representative acting for or on behalf of a party’.
Section 17 imposes an overarching obligation to act honestly:
A person to whom the overarching obligations apply must act honestly at all times in relation to a civil proceeding.
Section 18 provides an overarching obligation requiring a proper basis for substantive steps taken in litigation.
A person to whom the overarching obligations apply must not make any claim or make a response to any claim in a civil proceeding that—
(a)      is frivolous; or
(b)      is vexatious; or
(c)      is an abuse of process; or
(d)does not, on the factual and legal material available to the person at the time of making the claim or responding to the claim, as the case requires, have a proper basis.
Section 21 creates an overarching obligation not to mislead or deceive.
A person to whom the overarching obligations apply must not, in respect of a civil proceeding, engage in conduct which is—
(a) misleading or deceptive; or
(b) likely to mislead or deceive.
Section 26 creates an overarching obligation to disclose the existence of documents. Section 26(1) provides:
Subject to subsection (3), a person to whom the overarching obligations apply must disclose to each party the existence of all documents that are, or have been, in that person's possession, custody or control—
(a) of which the person is aware; and
(b)which the person considers, or ought reasonably consider, are critical to the resolution of the dispute.
Section 28 provides that the court may take contravention of overarching obligations into account in exercising its procedural powers.
(1)In exercising any power in relation to a civil proceeding, a court may take into account any contravention of the overarching obligations.
(2)Without limiting subsection (1), in exercising its discretion as to costs, a court may take into account any contravention of the overarching obligations.
Section 29 provides that the court may make orders for costs or expenses, or for compensation for loss consequential upon the contravention of any overarching obligation.
(1) If a court is satisfied that, on the balance of probabilities, a person has contravened any overarching obligation, the court may make any order it considers appropriate in the interests of justice including, but not limited to—
(a)an order that the person pay some or all of the legal costs or other costs or expenses of any person arising from the contravention of the overarching obligation;
…
(c)an order that the person compensate any person for any financial loss or other loss which was materially contributed to by the contravention of the overarching obligation, including—
(i)an order for penalty interest in accordance with the penalty interest rate in respect of any delay in the payment of an amount claimed in the civil proceeding; or
(ii)an order for no interest or reduced interest;
Section 42 provides for proper basis certification. Section 42(1)(b)(iii) requires a legal practitioner to file a proper basis certificate on the filing of any substantive document in a civil proceeding which:
makes, adds or substitutes a substantive defence or substantive matter by way of response or reply; …
Part 4.5 of the CPA provides the court with powers as to costs. Paragraph G of the magistrate’s order recited that the orders made in respect of compensation were made under this part.

The trial judge’s Reasons

The trial judge first summarised the procedural history of the matters before him and then set out the relevant provisions of the CPA.
His Honour then dealt with the factual background to the proceeding. Because Davey sought to re-agitate some detailed aspects of the facts on the application for leave to appeal, it is necessary to set out his Honour’s relevant findings in full.
17Davey filed the Magistrates' Court complaints in May and June 2016 in which he claimed that the defendants had failed to pay invoices for legal work performed pursuant to client agreements between the parties. Attached to each complaint was a client statement from Davey’s firm setting out the dates, description and amounts of invoices for legal fees in various matters.
18Elvin was first contacted by Dessmann on 10 June 2016, and was formally retained to act for the defendants on 24 June.
19Defences were due to be filed on 30 June 2016. Elvin’s request for an extension was refused by Davey.
20Between 24 June and 3 July 2016 Dessmann provided further instructions and numerous documents in frequent communications to Elvin. One of the documents provided was an email from Davey to Dessmann marked ‘without prejudice save as to costs’. In an affidavit filed in the Magistrates’ Court s 29 application Elvin said:
I do not disclose the contents of the email from Davey to Dessmann in case it contains information that is subject to without prejudice privilege, which I cannot waive. However, the email from Davey to Dessmann dated 29 April 2016 reinforced my view that the defence I ultimately drafted had a proper basis and was reasonably arguable.
21Another document provided to Elvin by Dessmann was an email exchange in September 2015 relating to cost estimates provided by Davey. Dessmann’s response included:
If you need me to pay them all then I better shut the doors mate, stop everything, and call it a day …
Davey responded:
Oh calm down. We have to provide them in case we are audited and I’ve been slack with you. Also if we claim costs against the other side you have to incur them first. We also need to pay for the signs and stuff you are doing for the firm.
22On Saturday 2 July 2016, Elvin wrote to Dessmann saying he intended to file the defences the following afternoon, and seeking further instructions and documents, including copies of cost agreements and disclosure statements. Later that day Elvin emailed a draft defence which he requested Dessmann check carefully. The draft included the mutual gift giving defence.
23On the same day Dessmann sent Elvin copies of emails and correspondence dated in July 2015 in which Davey confirmed details of a conversation during which Dessmann agreed to garage a Holden Captiva motor vehicle (the ‘vehicle’) at his business premises for one of Davey’s clients at a charge of $50 per week for storage, and indicated his preparedness for his business address to be the VicRoads registration address for the vehicle.
24Later that night Dessmann emailed Elvin with further instructions, which included:
All along he continued to bill me and said it was just for legal purposes again not wanting money from me.
In further emails sent early on the Sunday morning, Dessmann responded in detail to the paragraphs of the draft defence, in which he repeated similar assertions, such as that Davey made it quite clear to him ‘… over and over again that he wasn’t after my money …’. In response to an allegation pleaded by Davey that in breach of client agreements Dessmann had failed to make payments for legal services, Dessmann said:
Breeching [sic] client agreements were never discussed. I had made many payments, all under Johns strict instructions. He mainly asked for all payments made to be put towards his rent of the premises which I own. We had many meetings which were recorded when john called me in, not to pay any outstanding invoices but to pay his rent & outgoings. He provided banking details & i did so, even tho [sic] money was extremely tight.
25On 3 July Elvin emailed Dessmann. Part of that email, and of Dessmann’s response (in bold text) are as follows:
… in the last week or so you’ve forwarded me an enormous number of emails and documents. Your file is enormous. In the timeframe given and the budget we are trying to work to, it’s impossible for me to thoroughly read and consider every email and document and draft an excellent defence. This means that there will be weaknesses in your case/defence. You need to know this ...
There are other weaknesses too. In particular, the legal services he provided to you from the date when your relationship started breaking down (March?) could well be found to be legitimate, because he does start saying that you will need to start paying for his services in some correspondences from around that date. (it’s the only time he’s asked for payment ever) Also, it looks to me that you admit that you owe him a lot of the money (you seem to agree with a figure in the $50,000 - $70,000 range in some communications) in some of those emails. Yes I agree that I may have said this, as john pressured me to pay him, but he always said I don’t want your money (as mentioned on numerous times in the recordings) in an invoiced manner, just help me pay my rent & outgoings, Build me my office walls, do more signage for my side wall (Chanka Bandara over heard John say this on many occasions and can testify to this, he is my employee) & I will continue to help represent you, John Stated.
In the same email exchange Dessmann repeated assertions that he had not been paid for signage and other services provided to Davey, and that most of Davey’s legal work was created by him, and not done at Dessmann’s request.
26Later that day Dessmann emailed Elvin a copy of a text message exchange between he and Davey that occurred on 2 May 2015, in which the latter said that in 2015, 65% of all of his work was done on the Dessco and Peter Dessmann files. Davey texted:
The staff have recorded in excess of $18k in legal work and I understand we will be offsetting signage etc… But I have an immediate crisis in cashflow
Dessmann responded:
Mate with all due respect why did we buy this building for. Im cash strapped atm. When mums property sells I will pay you.
Davey sent a number of texts in response, including:
I don’t need you to pay me or is [sic] send you an invoice. I just need some assistance now
27Elvin provided a final draft of the defences to Dessmann on the Sunday afternoon, and filed the settled defences electronically with the Magistrates’ Court that evening. In the pleadings the defendants admitted the client agreements between the parties, but alleged they were not binding contracts, and that the legal services were given by Davey to the defendants as part of the relationship of mutual gift giving between he and Dessmann. The defendants alleged gifts given by them to Davey included:
(a) Cash, as requested from time to time by the plaintiff;
(b) Meals and drinks for the plaintiff;
(c) Payment of the plaintiff’s rent from time to time;
(d) Provision of signage worth approximately $12,500;
(e) Assistance with aspects of the plaintiff’s legal cases;
(f)Signed documents, created invoices issued from the defendant’s business and performed other tasks at the request of the plaintiff to assist with the plaintiff’s legal practice business.
In the alternative to the mutual gift giving defence, the defendants pleaded Davey’s claim failed because of his misleading and deceptive conduct, or misrepresentation. In a further alternative, the defendants pleaded the client agreements were part of broader contractual arrangements between the parties, and that they had completed their obligations to the plaintiff and accordingly he had no cause of action against them.
28On 4 July 2016, Davey wrote to Elvin seeking further and better particulars of the defences, including particulars of gifts asserted to have been given by Dessmann and Dessco to Davey, rent paid for Davey, and assistance given with aspects of his legal cases.
29Dessmann provided to Elvin as part of his instructions a document titled:
Summary of payments made to Davey by Dessmann on Davey’s request
The summary of payments had three columns, giving the date, description and amount of each payment. The description for some of the payments was ‘legal fees’ or ‘Herm legal fees’.
30At the hearing before me Davey asserted the summary of payments was provided to Elvin on 3 July 2016, before the defences were filed. There was no finding to that effect by the Magistrate. Davey’s assertion is not established on the face of documents tendered as exhibits to affidavits filed in this proceeding. Elvin submitted the chain of documents in which the summary of payments appears commences with an email dated 18 July 2016. In an affidavit filed in this proceeding Elvin said he received the summary of payments around that time.
31On 18 July 2016 Elvin emailed Dessmann seeking further instructions in order to finalise the further and better particulars, including whether Dessmann ever sent invoices to Davey’s client in relation to the vehicle he was asked to garage. On the same day Dessmann responded, in relation to the vehicle:
Never had an opportunity to send anything to [Davey’s client]. I was unsure & felt uncomfortable about putting fake invoices thru [sic] my business to hide this asset, from a divorce in NSW which John was representing the Husband in the proceedings. John had told me that the husband had given John the car to hide of [sic] from the marital asset pool. John informed me that he was taking the car as payment to offset John informed me to do the invoices and gave me the back story in regards to where the car came from so as if any questions were ever asked, for whatever reason he would have the invoices so as to offset legal costs.
32Later on the same day Elvin filed further and better particulars in response to Davey’s request. The gifts asserted by Dessmann were set out in paragraph 1 of the particulars. Paragraph 1(e) recorded the date and dollar amount, but not the description, of each payment from the summary of payments. The particularised gifts also included provision of office stationery and furniture, and business signage. In response to a request for further and better particulars in relation to payment of Davey’s rent, the particulars record:
(a)the defendant deposited funds into the plaintiff’s bank account, the amounts and dates of which are set out at 1(e) hereof; and
(b)some of these deposited funds were used to pay the plaintiff’s rent, but the defendant has no knowledge of which amounts of the deposited funds the plaintiff used to make rental payments and on which dates, as this information is peculiarly within the knowledge of the plaintiff.
In relation to the vehicle, the particulars state Davey:
requested the defendants to assist him with the legal case by:
(a)Agreeing to enter into a written agreement to store a vehicle which belonged to [Davey’s client] in the defendant’s garage;
(b)Agreeing to allow that vehicle to be registered at the defendant’s business address; and
(c)Agreeing to issue weekly storage invoices to [Davey’s client] in the sum of $50.
33In submissions Davey said at the time he checked his own records which showed the payments made by Dessmann were part-payments of his legal fees, and that Davey had issued transaction receipts for those payments.
34Despite knowing what the payments were for, on 19 July 2016 Davey made a broad further request for particulars of the alleged gifts, and whether the arrangement in relation to the vehicle was ever put into place. On 14 August 2016 Elvin responded by saying that further particulars would be provided after discovery. Davey made yet a further request for particulars asking to who and by what means some of the payments were made. In response, on behalf of the defendants, Elvin provided the bank BSB and account number of the payee corresponding to each payment, and stated:
In response to paragraph number 2, the defendant says that all payments the defendant made to the Plaintiff listed at l(e) of the defendant’s Further and Better Particulars dated 18 July 2016, with the exception of the payments in the amounts of $50, were for the plaintiff to put toward the rent that the plaintiff was liable to pay for its office at 5/198 Waterloo Road OAK PARK VIC 3046.
35On 19 August 2016 Dessmann emailed to Davey an invoice for $3,850 said to be for storage of the vehicle on terms set out in the July 2015 correspondence between them. The following day Davey wrote to Elvin, stating in part:
Can you please advise which of the present three proceedings this invoice purports to relate to? It was sent with no explanation.
For the abundance of clarity, the description in said invoice 5854 are not for any services or storage ever rendered by your client. There is a real danger, we submit, that your client is presently engaging in a process of manufacturing evidence and we call upon you to clarify the meaning and relevance of said invoice. Can you please advise whether your client intends to rely on said invoice 5854 and in what context?
On 24 August 2016 Davey again wrote to Elvin, stating in part:
We have today received confirmation from [Davey’s client], that the negotiated agreement regarding the vehicle described into your client’s invoice was never put into place. That is to say, the nominated vehicle in invoice 5854 was never stored as particularised in invoice 5854. [Davey’s client] has indicated that he is prepared to provide affidavit evidence and in person testimony should the need arise to that effect.
On the same day Davey sent a further letter to Elvin in part enquiring about the vehicle invoice and three other invoices rendered to him by Dessmann for a self-inking stamp, repair of motor vehicle signage, provision and delivery of office furniture and stationery, and business signage.
36On 29 August 2016 Elvin wrote to Dessmann seeking further instructions about, amongst other things, whether he had ever stored the vehicle for Davey’s client, and if not why he sent the invoice for doing so. Dessmann responded the following day, saying he had not stored the vehicle, and explaining why he rendered the invoice as follows:
Reasons well he’s been quiet [sic] blunt in forwarding invoices so i returned or forwarded all invoices as well on things he asked to do.
37On 31 August 2016, Elvin wrote to Davey responding to a threatened application to strike out the defendants’ defences, stating in part:
If our clients have issued you with invoices in respect of services which they claim were gifts in their defences; this does not invalidate their defences. Their defences put forward alternative pleadings, some of which would be consistent with our clients issuing you invoices. We are confident that one of our clients’ primary or alternative pleadings will succeed.
The following day Davey responded by stating the mutual gift giving defence was untenable. On 2 September 2016, Elvin again wrote to Davey about the threatened strike out application and the invoices, stating in part:
Our clients instruct that they issued the invoices out of abundance of caution, in the event that one of their alternative pleadings succeeds. If, for instance, the court finds that you and either of our clients were in a contractual relationship, then our clients will need to quantify the value of the services that he/they provided you. Our clients believed that by issuing you with invoices would help achieve this end.
To clarify matters, we hereby advise you, on behalf of our clients, that you are not required to pay any invoices issued to you by our clients for which our clients have pleaded in these proceedings were gifts to you, until a judicial determination of the legal status of the goods and services has been made.
The findings of the Magistrate at the final hearing will determine whether or not the invoices were validly issued. In the event that a Magistrate finds that they were not validly issued, because, for instance, they were gifts, you will not be required to pay the invoices. If our clients have committed an offence by issuing the invoices in such circumstances, that will be a matter for them.
On the same day Elvin sent to Davey by way of discovery copies of transaction receipts which he said appeared to relate to payments made by the defendants to Davey. Each transaction receipt described the payment made as being for legal fees.
38Elvin ceased to act for the defendants on 6 February 2017, when Silverstein took over as their legal representative.
39Elvin provided copies of relevant court documents, correspondence and other material to Silverstein. Silverstein said at the time he believed his clients’ instructions were consistent with the matters pleaded in the defences prepared by Elvin. He said Dessmann told him in February 2017 that he had not garaged the vehicle, and that he issued the invoice for doing so to Davey through anger and retaliation. He said Dessmann showed him documents which recorded the registered address of the vehicle as his premises, which was done by Davey pursuant to a deal with Dessmann.
40In February 2018, Silverstein filed documents in VCAT commencing a claim on behalf of Dessco against Davey for rent and outgoings on the premises. The total past and future claim was for over $68,000, including $4,468.83 arrears for the period 17 June 2015 to 30 April 2016. Rent was alleged to be payable at a rate of $400 per week. In a supporting affidavit Dessmann alleged the amounts payable by Davey under the lease were, by arrangement between them, to be paid direct to the mortgage loan account of the mortgagee of the premises. Dessmann said that on 8 January 2016 he made a direct payment of $1,500 to the mortgagee because he was advised his mortgage account was in arrears. Dessmann said:
My solicitor informed me in January 2018 that from his analysis, he formed a view that from 17 June 2015 to 30 April 2016, the Respondent failed to make regular payments of rent to the mortgagee or the Applicant. When the Respondent did pay the rent, he paid the rent to the mortgagee, but in various sums and at inconsistent durations. Furthermore, the rental payments that the applicant did pay to the mortgagee were substantially less than what was due under the terms of the lease.
41Silverstein filed an amended defence for the defendants in the Magistrates’ Court proceeding in March 2018 (the two proceedings having been consolidated) in which the mutual gift giving defence was maintained unaltered. When he filed the amended defences, Silverstein did not file a proper basis certification in compliance with s 42(1) of the CPA.
42On 28 March 2019, the Magistrate found in favour of Davey on the principal claim in the Magistrates’ Court proceeding. The Magistrate found Dessmann’s assertion that payments he made to Davey were to assist him to pay rent, and were not part-payment of accounts for legal services rendered by Davey to him, was at odds with documents recording the payments, and was not credible. In relation to the vehicle and the invoice for storage issued by Dessmann, the reasons record:
It is also noted that the Second Defendant, while giving evidence, withdrew the invoice by the First Defendant about the storage of a vehicle from one of the Plaintiff’s clients. Clearly, on the evidence of [Davey’s client] and the Plaintiff, the vehicle was never stored by the First Defendant. This raises serious credibility issues for the Second Defendant.
43The defendants’ claim for set off against the judgment sum, which was pleaded in a further amended defence filed after judgment on the principal claim, was dismissed on 19 September 2019.[20]
[20]Reasons, [17]–[43] (emphasis in original).

After stating the outcome of the s 29 application before the magistrate, the trial judge then summarised the magistrate’s reasoning with respect to Elvin.[21]
[21]Ibid [49]–[61].
49The Magistrate referred to documents provided by Davey, titled ‘Plaintiff Aide Memoire: Statistics of the proceedings’ and ‘Plaintiff’s Procedural Chronology Aide Memoir to the Court’ (together, the ‘aide memoirs’), that the Magistrate said set out a summary of the statistics and key data of the Magistrates’ Court proceedings:
As at 10 February there have been some 38 court appearances and approximately 135 court orders. On any interpretation, the amount ordered in favour of the plaintiff on 28 March 2019 in the sum $81,748.29 is clearly disproportionate to the time spent in this litigation and the costs incurred by all of the parties in this proceeding. I also refer to the plaintiff’s aide memoire of the 4 February 2020 that sets out a plotted history of the proceeding and I incorporate both of those documents into this judgment.
50The Magistrate noted that as a consequence of the High Court decision in Bell, Davey was not entitled to recover professional fees when he acted for himself in the Magistrates’ Court proceedings. For the same reason, the Magistrate did not allow Davey’s contractual claim for professional fees based on the terms of his fee agreements with the defendants.
51The Magistrate noted that if he was satisfied on the balance of probabilities that a person had contravened any overarching obligation in the CPA he had the discretion to make any order he considered appropriate in the interests of justice under ss 29(1)(a) and (c). His Honour referred to the judgment of John Dixon J in Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 5) (‘Dura’) as setting out many of the relevant factors to be considered in exercising the court’s discretion.
52The Magistrate found that it would be inconsistent with the decision in Bell to award costs under s 29(1)(a) in favour of a plaintiff where he is a solicitor who works for himself and seeks to recover professional costs. The Magistrate said:
In the circumstances, in properly exercising my discretion, I should not allow legal costs either under a fee agreement or at Common Law to be recovered where a solicitor acts for himself in recovery proceedings, seeking professional fees. Does it then follow that s.29.l(c) should fail for the same reasons. There is a significant distinction between the two sub-sections and there is no precedent and very little material to assist me on what compensation is meant to mean in circumstances such as these.
53Referring to the concept of compensation, the Magistrate said that for a plumber this may involve a calculation of an amount for the lost opportunity for time spent in litigation when the person could otherwise have been working as a plumber, or for a nurse, the days they were not paid by their employer due to their attendances in court. The Magistrate said:
So what if the litigant is a lawyer acting for themselves in recovery proceedings? Considering Bell v Pentelow, in my view, just because Davey is a lawyer, should he be disqualified from the fundamental value of equality of all persons before the law? I also have to consider, in making any order and exercising my discretion, that it is appropriate in the interests of justice as the overriding consideration and I do see no reason per se why a lawyer should not be entitled to compensation, like anybody else who comes before the law, where there has been breach of an overarching obligation. Given I have determined that point in favour of the plaintiff I now need to consider if there has been such a breach of an overarching obligation by (a) the defendants, (b) Elvin and (c) Silverstein.
54The Magistrate made findings that Dessmann contravened the obligation to act honestly in s 17 of the CPA, the proper basis obligation in s 18(d), and the obligation not to engage in misleading conduct in s 21 of the CPA.
Magistrate’s reasons – Contravention by Elvin
55The Magistrate said:
I am very mindful of exercising my discretion in the context of lawyers acting for clients where cases may be unmeritorious. However I think the days of a lawyer blindly following their client’s instructions over a legal cliff are long gone. I specifically refer to Dixon J’s statement of the relevant principles at paragraphs 97 to 101 of the judgment in Dura v Hue Boutique 2004 that I referred to earlier.
56The Magistrate found that the email set out in paragraph 25 above was an acknowledgement by Elvin that at the time he filed the defences his instructions were incomplete.
57Referring to the same email exchange between Elvin and Dessmann, and the mutual gift giving defence the Magistrate said:
Then, from paragraph 19 onwards the mutual gift giving defence is pleaded out. This is despite Elvin forming a view that appears to be a concession by Dessmann that acknowledges owing the money.
58The Magistrate made the following findings in relation to the client agreements and invoices issued by Davey:
Given what Elvin knew at the time, that Elvin was in possession of at least six of the client agreements and seven invoices, paragraph 5 of the defence appears to be inconsistent where it asserts they do not have copies of the alleged agreements in their possession. Paragraphs 6, 7 and 8 also appear to be inconsistent with Elvin’s knowledge of the case at the time, as instructed by Dessmann.
59The Magistrate noted there was no reference in the defences to the text exchange set out in paragraph 26 above. The Magistrate concluded the text from Dessmann which stated ‘when my mum’s property sells I will pay you’ was a clear statement of the commercial relationship between he and Davey, and completely at odds with the defence of mutual gift giving.
60On the basis of these findings the Magistrate concluded:
Elvin, in his cross-examination, at the bottom of p.18 of the transcript, acknowledges that there was strengths and weaknesses in both cases. It appears to me at this point at the filing of the defences that Elvin did not have the sufficient factual legal material available to make the claim for mutual gift giving when, on its face, Dessmann had made the above concessions which pointed to a commercial arrangement.
This appears to be the finding by the Magistrate that Elvin contravened the proper basis obligation in s 18 of the CPA.
61The Magistrate then turned to the further and better particulars of the gifts alleged in the defences, which he noted did not include information from the summary of payments that disclosed the description of each payment. The Magistrate said that Elvin’s answers during cross-examination on this point had been ‘less than satisfactory’, and that:
To have disclosed the reason for the payments at that point were inconsistent with the defence filed. There was, at that point, clear evidence that Dessmann had made the payments for Davey’s legal work.
The Magistrate determined:
At this point of the time of Elvin’s instructions and by Elvin filing the further and better particulars omitting the middle column, in my view, amounts to a breach of s.21 of the Civil Procedure Act by seeking to mislead what the true nature of the payments were by omitting the middle column. By not disclosing the true description of the payments in the further and better particulars either as rent or indeed Herm legal fees was, in my view, was a matter hotly contested to the end.
His Honour then set out the first eight grounds of appeal relied on by Elvin.[22] He then summarised the submissions made on Elvin’s behalf,[23] together with Davey’s answering submissions.[24]
[22]Ibid [62].
[23]Ibid [63]–[71].
[24]Ibid [72]–[78].
His Honour then made the following observations concerning Davey’s submissions:
79Davey’s written and oral submissions were difficult to follow. Most often they were not directed to any specific question of law identified by the grounds of appeal. The submissions also conflated findings against Elvin and Silverstein. Davey often sought to raise and re-litigate grievances about the conduct of the proceedings that were ventilated before the Magistrate, but did not form part of the findings, and have limited, if any, relevance to the grounds of appeal.
80In both appeals Davey made serious allegations of misconduct and criminality against the appellants that were not the subject of any finding by the Magistrate, had no foundation in established facts, and were irrelevant to the grounds of appeal. There was no cross-appeal by Davey. The irrelevant allegations ought not to have been made.
81Davey submitted that many of the appellants’ grounds of appeal were not raised at first instance, and for that reason the appellants should be prevented from relying on those aspects of their case on appeal. In fact the material demonstrates that in most cases the subject matter of the appellants’ grounds were raised during the Magistrates’ Court proceeding. In any event, the s 29 application was to be determined in accordance with law, and the appellants should not be precluded from arguing there was a failure by the Magistrate to do so.[25]
[25]Ibid [79]–[81]
The trial judge then analysed the case with respect to the alleged breach by Elvin of s 18(d) of the CPA. In summary, he concluded:
(a)The relevant principles of law were those summarised by John Dixon J in Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 5).[26]
[26][2014] VSC 400 (‘Dura’). See Reasons, [82]–[83].
(b)The magistrate failed to refer to the relevant test in formulating his reasons.[27]
[27]Reasons, [84].
(c)The magistrate’s conclusion that Elvin did not have a proper basis for the mutual gift giving defence was based on the email exchange between Elvin and Dessmann set out at [25] of the trial judge’s Reasons (quoted above at [41]) and the text exchange between Dessmann and Davey set out at [26] of the trial judge’s Reasons (also quoted above at [41]).[28]
[28]Ibid [85].
(d)There was no attempt by the magistrate to test the content of the email and text exchanges against all of the documents and instructions Elvin had received at that time, the evidence of what Dessmann said about his instructions to Elvin at that time, and what Elvin said he understood and believed on the basis of those instructions.[29]
[29]Ibid [86].
(e)The documents and instructions available to Elvin at the time he filed the defences demonstrated complexity in the relationship between Davey and the respondents. By the time of the email exchange set out in [25] of the trial judge’s Reasons, Elvin was aware that there were weaknesses in the defendants’ case and sought further instructions in relation to the defendants’ position. In particular, he sought instructions with respect to what appeared to be an admission or agreement by Dessmann in some emails that he owed Davey money in the range of $50,000 to $70,000. Dessmann provided Elvin with an explanation which was consistent with the mutual gift giving defence. The magistrate’s reasons did not evaluate this explanation.[30]
[30]Ibid [87].
(f)While the magistrate expressed the view that the text exchange summarised in [26] of the trial judge’s Reasons was a clear statement by Dessmann of a commercial relationship with Davey and was completely at odds with the mutual gift giving defence, the trial judge found that there was ‘some ambiguity’ in the text exchange. In particular, his Honour noted:
In the first text, Davey acknowledges an understanding that there will be a set-off for signage work. In his response, Dessmann queries why they bought the building, which I infer was the premises rented by him to Davey’s firm. In response to Dessmann suggesting he should stop all work, Davey replies that he does not need to be paid, but just needs some assistance. In the final text, Davey says, ‘We need to work together’. The text messages clearly refer to a number of related arrangements between Davey and Dessmann, with each providing some benefit to the other. The basis of the mutual arrangement cannot be ascertained simply by reference to the exchanged texts, and required analysis against the evidence of Dessmann and Elvin. By themselves, the texts are not necessarily inconsistent with the mutual gift giving defence.[31]
(g)The findings of the magistrate as to the possession of client agreements and invoices by Elvin (set out at [58] of the trial judge’s Reasons quoted above at [42]) are difficult to follow. His Honour found:
As I have already stated, there were two Magistrates’ Court proceedings. Dessmann was the sole defendant in the first proceeding, in which the amount claimed exceeded $66,000. Dessco and Dessmann were defendants in the second proceeding, in which the amount claimed was just over $17,500. The Magistrate is correct to observe that when he filed the defences Elvin had received copies of at least six client agreements from Dessmann, though it appears at least one was unsigned. It is not clear whether the client agreements relate to the amount claimed in the first proceeding, or to both proceedings. The defence in the first proceeding admitted the client agreements, but alleged they were not binding because of the mutual gift giving and alternative defences pleaded. In the second defence the defendants did not admit the client agreements ‘as they do not have copies of the alleged agreements in their possession’, and denied indebtedness pursuant to the client agreements on the basis of the defences. The Magistrate’s reasons do not distinguish between the two defences, analyse whether the client agreements in Elvin’s possession related only to the first or to both proceedings, and do not further analyse how identified paragraphs of the defence were inconsistent with Elvin’s instructions.[32]
(h)While the magistrate referred to a number of paragraphs in Dura, including [108] where John Dixon J confirms the application of the Briginshaw principle, and despite having been addressed on it, the magistrate did not specifically address the application of the Briginshaw principle in his reasons.[33]
(i)The magistrate did not consider the gravity or repercussions of a finding that Elvin had contravened s 18(d) of the CPA nor test the cogency of all the relevant evidence in order to determine whether he was reasonably satisfied the contravention had occurred. His Honour further found:
Application of s 140 of the Evidence Act and the Briginshaw principle required more in these circumstances than an inference drawn from the selected emails and text exchange to which the Magistrate referred.[34]
[31]Ibid [88].
[32]Ibid [89].
[33]Ibid [90].
[34]Ibid [91].
It followed that the magistrate’s decision with respect to Elvin’s breach of s 18(d) was vitiated by errors of law.[35]
[35]Ibid [92].
His Honour then turned to the allegation that Elvin breached s 21 of the CPA and held as follows.
(a)The issue was whether, looked at objectively, Elvin’s conduct was misleading or deceptive or likely to mislead or deceive, in the sense that it induced or was capable of inducing error.[36]
(b)The magistrate did not find that Elvin’s conduct in filing the defences which pleaded material facts to make out the mutual gift giving defence, including the allegation the defendants had given gifts to Davey, contravened s 21.[37]
(c)The magistrate concluded that the further and better particulars of payments pleaded in the defences breached s 21 because they did not disclose the full description of such payments.[38]
(d)The magistrate further found that the description of such payments as legal fees in the summary document produced to Elvin by Dessmann was inconsistent with the mutual gift giving defence.[39]
[36]Ibid [93].
[37]Ibid [94].
[38]Ibid [95].
[39]Ibid.
His Honour made the following findings concerning the magistrate’s conclusions:
96There are a number of difficulties with the approach taken by the Magistrate. First, there was no attempt to set out the principles that apply to the operation of s 21 of the CPA.
97Second, the breach found by the Magistrate was that Elvin sought to mislead what the true nature of the particularised payments were by omitting the description in the middle column of the summary of payments. However, s 21 is not concerned with the mental state of the person who engaged in the impugned conduct. The Magistrate did not expressly consider whether, tested objectively, Elvin’s conduct in filing and serving the further particulars of the gifts induced or was capable of inducing error.
98Third, the particulars were not a pleading of material facts, or evidence to be relied on in the Magistrates’ Court proceedings. The particulars simply gave the dates, times and amounts of payments which were alleged in the defences to be gifts. Elvin was not seeking to prove any fact or matter for the defendants by providing the particulars. In fact the particulars that were provided gave Davey notice of the case he had to meet, and limited the generality of the gift allegation in the defences. This enabled Davey to take appropriate steps in preparation of his claim, including checking the payments against his own records, and obtaining discovery of relevant documents from the defendants.
99Fourth, the Magistrate did not apply the Briginshaw principle to the question of proof of breach of s 21 of the CPA by Elvin. Application of the Briginshaw principle required the Magistrate to test the cogency of all relevant evidence in order to determine whether he was reasonably satisfied the contravention had occurred, including that the information not included in the particulars was available to Davey on his own records, and was produced on discovery to Davey.[40]
[40]Ibid [96]–[99].
It followed that the magistrate’s decision with respect to breach by Elvin of the overarching obligation pursuant to s 21 was vitiated by error of law.[41]
[41]Ibid [100].
The trial judge then summarised the magistrate’s reasons with respect to breach of s 17 of the CPA by Silverstein:[42]
[42]Ibid [102]–[104] (citations omitted).
102After concluding that Silverstein did not comply with his obligation to file a proper basis certification when he filed amended defences in the Magistrates’ Court proceedings, the Magistrate said:
In [cross-examination] Silverstein can give no plausible explanation why, on his client’s instructions, he had signed and filed defences in this court and a claim at VCAT that were inconsistent bearing in mind that the points of claim at VCAT were made in February of 2018 and the amendment to the defences in this court were in March of 2018.
In this court the payment was directly asserted as part of mutual gift giving between Dessmann and Davey, but at VCAT the same sum was claimed as a debt. Further, there are also concerns I have about the [vehicle] invoice which Silverstein considered had not been stored by Davey and yet was only withdrawn at the contest.
103The Magistrate observed that the issue of rent being paid by Dessmann for Davey was critical to the mutual gift giving defence.
104The Magistrate referred again to the text exchange set out in paragraph 26 , which he said was on the file provided by Elvin to Silverstein, and to Silverstein’s apparent view that the defendants had an excellent defence to the claim by Davey. The Magistrate concluded:
Even if the email exchanges had not been seen by Silverstein as between Elvin and Dessmann I find it very hard to accept that under s.18D how Silverstein could have a proper basis. Even if I'm wrong on that point, I am of the view that Silverstein acted dishonestly in breach of s.17 when he prepared contrary arguments on the same facts in two different forums, being this court and VCAT.
I add to the findings also the issue on the [vehicle] invoice, that Silverstein must have known it to be wrong and was maintained still at the contest.

His Honour then summarised the parties’ submissions before analysing the case with respect to the allegation of dishonesty as follows:
(a)It was appropriate for the magistrate to apply the test stated in Peters.[43] This required the magistrate to:
[43](1998) 192 CLR 493. Reasons, [114].
(i)identify the knowledge, belief or intent which was said to render the act dishonest;
(ii)decide whether that knowledge, belief or intent was subjectively held; and
(iii)decide whether the act was dishonest ‘by the standards of ordinary, decent people’.[44]
[44]Peters (1998) 192 CLR 493, 504 [18] (Toohey and Gaudron JJ). Reasons, [106].
(b)The magistrate did not refer to Peters, state the relevant test nor analyse the question of dishonesty in accordance with the relevant test.[45]
[45]Reasons, [115].
(c)The magistrate identified the act of filing the amended defences and the inconsistent claim made in the Victorian Civil and Administrative Tribunal (‘VCAT’) as relevant to for the conclusion of dishonesty. His Honour found as follows:
The reasons do not identify the knowledge, belief or intent which rendered the act of filing pleadings in the two proceedings dishonest, or determine whether Silverstein subjectively had that knowledge, belief or intent. The Magistrate did not grapple with Silverstein’s explanation that any error by him in filing documents in February and March 2018 was a mistake which he sought to remedy by filing a further amended Magistrates’ Court defence.[46]
[46]Ibid [116].
(d)Further the magistrate’s reasons do not analyse the facts to establish the relevant inconsistency or grapple with the issue of what was objectively dishonest.[47]
[47]Ibid [117].
(e)The evidence did not establish a necessary inconsistency between the amended defences and the VCAT claim:
118     According to Dessmann’s evidence filed in support of the VCAT claim, rent on the premises was $400 per week commencing from 17 June 2015 when Dessco became registered proprietor of the premises. On that basis, rent payable to 30 April 2016 was approximately $18,000. In the VCAT proceeding Dessmann acknowledged payments of rent had been made, and claimed arrears for that period of $4,468.83.
119     Paragraph 1(e) of the further and better particulars filed by Elvin in the Magistrates’ Court proceedings record payments of approximately $7,800 said to have been made by Dessmann to Davey as gifts. The particulars record that Davey used some of the funds gifted to him to make rent payments for amounts and on dates that were peculiarly within his knowledge.
120     It is evident from the above that in the Magistrates’ Court proceedings the defendants alleged that in the period to early 2016 they made payments as gifts to Davey, some of which were applied by him towards rent of the premises he leased from Dessco. In the VCAT proceeding the defendants alleged that in the period from 17 June 2015 to 30 April 2016 Davey paid some amounts of rent for the premises, but was in arrears of rent and outgoings in the sum of $4,468.83. Those allegations are not necessarily inconsistent.
121     When cross-examined about these matters in the Magistrates’ Court Silverstein said that while he initially understood there was a proper basis for Dessmann’s claim that he had paid money to Davey to assist in payment of the rent, he subsequently looked more closely at the transactions and came to the view that Dessmann was either confused about the nature of the payments, or that he had misunderstood Dessmann’s instructions, and then took steps to advance a claim in VCAT that certain rents had not actually been paid. The evidence given by Silverstein is somewhat confusing, and not entirely consistent with the above analysis of the pleadings and relevant documents. Whatever the explanation for his evidence Silverstein was consistent in maintaining that any error he made was unintentional, and that he attempted to remedy the situation by filing a further amended defence in the Magistrates’ Court proceeding in January 2019.[48]
(f)The magistrate’s reasons do not show that he turned his mind to the third aspect of Peters, namely whether dishonesty was established according to the standards of ordinary and decent people.[49] The trial judge stated:
In complex proceedings spanning a number of years that involved a range of claims and defences, satisfaction of the third aspect of the test in Peters required more than simply identifying that, at a point in time, a practitioner was responsible for filing what were found to be inconsistent documents in different proceedings. It was necessary that the Magistrate analyse and make findings about the nature of any inconsistency, consider the stage each proceeding had reached, whether the inconsistency in pleadings were taken to trial in each proceeding or remedied beforehand, and whether filing inconsistent pleadings reflected an attempt to obtain advantage in one or both proceedings or was more likely consistent with error.[50]
(g)The magistrate’s finding in relation to the vehicle invoice was insufficient to support the dishonesty conclusion.[51]
(h)The allegations of dishonesty were of a serious nature and required application of the Briginshaw principle.[52]
(i)Silverstein gave consistent evidence to the effect that any error made by him was unintentional.[53]
(j)There was no probative evidence upon which the finding of dishonesty could be made.[54]
[48]Ibid [118]–[121].
[49]Ibid [122].
[50]Ibid.
[51]Ibid [123].
[52]Ibid [124].
[53]Ibid [125].
[54]Ibid.
The trial judge concluded that the challenges to the magistrate’s decision with respect to dishonesty were made out.[55]
[55]Ibid [127].
His Honour then summarised the magistrate’s reasons with respect to the question of causation of compensable loss.
128The Magistrate dealt with causation of loss resulting from contraventions of the overarching obligations by Elvin as follows:
Looking at Elvin’s affidavits sworn on 19 August 2019 together with exhibits, his cross-examination, his examination-in-chief and taking into account the caution to be applied, as noted by Dixon J in Dura and based on the submissions by Davey and Mr Mueller at the time of the filing of the defences Elvin did not have, in my view, factual or legal material available to him to have a proper basis. I also note that save for a number of amendments made by Silverstein for his client adding matters the defence filed by Elvin in large part were taken to contest unaltered. For this reason the contravention by Elvin materially contributed to any financial loss to be suffered by Davey.
129 In relation to causation by Silverstein, the Magistrate found:
I am also of the view that the matters outlined above materially contributed to the length and the complexity of this case. I have come to this conclusion after considering all of the evidence, the submissions by Silverstein, his lawyers and Davey.
130 The Magistrate addressed the question of compensation as follows:
Now that I have made findings on the breaches by the defendants and Elvin and Silverstein, how do I make an order for compensation? It appears, as I have ruled earlier, that Davey should be compensated for his time and efforts that he has taken to prove his claim and to defeat the defendant’s set-off. I have also ruled that he should not be entitled to claim his legal fees under his client agreements. In the interests of justice it appears that an appropriate method and a reasonable way of calculating Mr Davey’s time and effort in this proceeding is to apply the practitioner’s remuneration order as a reasonable way of compensating Davey for his time and efforts and in the interests of justice.[56]
[56]Ibid [128]–[130].
The magistrate expressed his conclusion as to the liability of Elvin and Silverstein as follows:
As to Elvin, that he jointly and severally be liable with the defendants for compensation based on the practitioner’s remuneration order from 10 June 2016 to 6 February 2017. And further that Silverstein be jointly and severally liable for compensation with the defendants from 6 February 2017 to today. I further make these orders under part 4.5 of the Civil Procedure Act. And if there is no agreement as to the amounts being paid by the defendants and the respondents, Elvin and Silverstein, then the amount of the compensation to be paid by them under the relevant practitioner’s remuneration order shall be assessed by the Costs Court.[57]
[57]Ibid [131].
The trial judge then summarised both the respondents grounds of appeal with respect to the s 29 decision.[58]
[58]Ibid [132]–[133].
After summarising the parties’ submissions,[59] his Honour held:
(a)It could not be said that there was a complete failure by the magistrate to exercise his discretion.[60]
(b)The magistrate did not consider the course that the litigation would have taken if the contraventions by Elvin and Silverstein of the CPA had not occurred.[61]
(c)The magistrate did not consider whether and how Davey’s conduct exacerbated the time taken in the proceeding.[62]
(d)The exercise of the s 29(1)(c) discretion required the magistrate to evaluate the relative impact of the conduct of the parties upon the proceedings and loss suffered by Davey.[63]
(e)The magistrate had failed to have regard to relevant considerations in exercising his discretion.[64]
[59]Ibid [134]–[156].
[60]Ibid [160].
[61]Ibid [161]–[162].
[62]Ibid [163].
[63]Ibid [164].
[64]Ibid [165].
His Honour then turned to the evidence of loss forming the basis of Davey’s claim for compensation. Davey’s claim was made on the basis of an affidavit in which he said:
(a)he was at all material times a sole practitioner, and with the exception of some contract work, his legal practice had been the sole source of his income since 2012;
(b)two documents that he produced itemised and particularised his compensation claim, which he relied on for his claim under s 29 of the CPA;
(c)the quantum of his claim was $364,286.45, of which $13,334.30 comprised disbursements;
(d)the documents relied on by Davey were itemised invoices addressed to Dessmann comprising bills of costs for legal fees for work performed by Davey and other persons in his firm, and disbursements incurred by Davey in the Magistrates’ Court proceeding.[65]
[65]Ibid [167]–[168].
His Honour then described the course of the Magistrates’ Court hearing with respect to compensation. During that hearing, the respondents submitted that the invoices were defective in particulars and that they did not establish Davey had suffered a financial loss.[66]
[66]Ibid [169]–[172].
After noting the terms of the compensation order which adopted the PRO as the basis for the calculation of quantum, the trial judge observed:
The PRO is an order which may be made by the Legal Costs Committee under s 94 of the LPULAA[67] with respect to the costs that may be charged by law practices for providing legal services other than in relation to litigious matters. Section 94 is found within Part 6 of the LPULAA, which deals with legal costs.[68]
[67]Legal Profession Uniform Law Application Act 2014.
[68]Reasons, [173] (footnote not in original).
His Honour then went on to hold as follows:
174The effect of the compensation order was to compensate Davey for his time and effort spent as a lawyer representing himself in the Magistrates’ Court proceedings, in other words his legal costs, without identifying any financial or other loss suffered by him.
175A self-represented litigant is not entitled to be recompensed for the value of their time spent in litigation. The exception to the rule that a self-represented litigant who happens to be a solicitor may recover their professional costs of acting in litigation was removed by the decision in Bell. The effect of the order made by the Magistrate was to award Davey recompense for the value of his time spent in the Magistrates’ Court proceedings, contrary to the authority of Cachia v Hanes and Bell.
176The Magistrate correctly concluded that, because of the principle established in Bell, an award under s 29(1)(a) could not be made to Davey for the legal costs of representing himself in the proceeding. Yet that was the effect of the compensation order. By conflating legal costs with financial or other loss the Magistrate misconstrued the test to be applied under s 29(1)(c).[69]
[69]Ibid [174]–[176] (citations omitted).
The trial judge then discussed the nature of the power to award compensation under s 29(1)(c) by reference to the decision of John Dixon J in Bolitho v Banksia Securities Ltd (No 18) (remitter)[70] and the decision of this Court in GM & AM Pearce & Co Pty Ltd v Australian Tallow Producers.[71]
[70][2021] VSC 666 (‘Bolitho’).
[71][2005] VSCA 113, [65] (Warren CJ). See Reasons, [177]–[179].
His Honour then concluded:
180The assessment of loss requires consideration of a hypothetical counterfactual, namely what position would the person have been in but for the impugned act or omission. Compensation is to be assessed at trial with the full benefit of hindsight and with speculation against the interests of the person compensated. The CPA provides for compensation for loss that was ‘materially contributed’ to by a contravention affecting the proper administration of justice and is not restricted to loss of which the contravention was the sole cause.
181The evidence did not identify the position Davey would have been in had the contraventions found against Elvin and Silverstein not occurred. No counterfactual analysis was undertaken by the Magistrate. Such an analysis required consideration of the likely course of the litigation but for the impugned conduct of the appellants, and what that led to in terms of compensable loss. The Magistrate erred in failing to undertake an analysis of loss in these terms. Had the analysis been performed the inevitable conclusion would have been that Davey’s evidence did not establish compensable loss.
182If an applicant for orders under s 29(1)(c) leads evidence supporting findings of causation and loss an evidentiary onus may shift to the respondent to demonstrate that part or all of the loss would have been suffered in any event. The evidence relied on by Davey was simply an assessment of the legal costs of acting for himself in the Magistrates’ Court proceedings. There was no evidence upon which it could be concluded that the assessment of costs represented a loss to Davey for which justice required that he be compensated by Elvin and Silverstein on the basis they materially contributed to it. In the circumstances, the onus did not shift to Elvin and Silverstein to disprove loss.[72]
[72]Reasons, [180]–[182] (emphasis added) (citations omitted).
The trial judge went on to hold:
(a)The magistrate adopted the PRO as the measure of compensation without giving the respondents any or proper notice of his intention to do so.[73]
(b)There was no power to refer the question of compensation to the Costs Court.[74]
[73]Ibid [184]–[187].
[74]Ibid [189]–[195].
We interpolate that on the hearing of the application for leave to appeal Davey accepted that the trial judge was correct with respect to these findings relating to the PRO and the Costs Court.
It followed from his Honour’s conclusions that the compensation orders made against Elvin and Silverstein should be quashed. Further, his Honour’s conclusions with respect to the absence of evidence of compensable loss rendered futile the remittal of the remaining live issues for redetermination.
We turn then to the issues raised by the proposed grounds of appeal.

Did the trial judge err in stating the test for a proper basis (part of proposed ground 1)?

Proposed ground 1 asserts in part:
… His Honour erred in finding that the relevant test was one of ‘reasonable belief’.
The trial judge commenced his analysis of the magistrate’s reasons with respect to the alleged breach by Elvin of s 18(d) by summarising principles taken from the judgment of John Dixon J in Dura:[75]
(a)The overarching obligations prevail where there is an inconsistency between them and a legal practitioner’s duty to a client. When determining whether an overarching obligation has been contravened it is not relevant to consider that a solicitor was following the client’s instructions.
(b)The time when it is necessary to assess whether there was a proper basis is when a claim is made in a proceeding, for instance by filing a pleading. The statutory obligation is not continuous or ongoing, and material which only becomes known at a later time is not relevant.
(c)A person can discharge the overarching obligation by demonstrating a reasonable belief based on the available factual and legal material.
(d)Dismissal of a claim by a trial court does not create a rebuttable presumption that the claim lacked a proper basis when it was made.[76]
[75](2014) 48 VR 1 (John Dixon J).
[76]Reasons, [82] (citations omitted).
Davey submitted that there is no reference in terms to ‘reasonable belief’ in s 18(d) and that the trial judge erred in treating this concept as relevant.
The respondents submitted that the trial judge was correct in adopting proposition (c) above.

Consideration

Neither s 18(d) nor the further provisions of the CPA define what constitutes the making of a response to a claim in a civil proceeding that:
does not, on the factual and legal material available to the person at the time of … responding to the claim … have a proper basis.
The words ‘proper basis’ are ordinary English words which must be applied to an infinite number of circumstances. Their meaning in a particular case is essentially a question of fact.
Section 18(d) imposes an obligation by reference to the material ‘available to the person at the time of making the claim or responding to the claim’ and is necessarily directed to that person’s state of mind.
As a matter of ordinary language, a person will have a proper basis for responding to a claim if that person on the basis of the material available to them has a reasonable belief as to matters which would constitute the basis for an answer to the claim. As the trial judge held, the magistrate in the present case did not evaluate Elvin’s evidence as to his state of mind at the relevant time in accordance with the Briginshaw principle or at all.
The trial judge was correct to identify the evidence bearing on the reasonableness of Elvin’s belief as to the basis of the defences he filed as a critical consideration.
This part of proposed ground 1 must fail. Leave to appeal will be refused with respect to this part of proposed ground 1.

Did the trial judge err in making findings of fact relevant to Elvin’s conduct (proposed ground 5)?

We have already set out the trial judge’s summary of the evidence as to Elvin’s instructions at the time he filed the defence for which Davey asserted Elvin had no proper basis (see [41] above, Reasons [20]–[27]). Proposed ground 5 asserts that the trial judge’s account of Elvin’s instruction is materially incorrect.
Proposed ground 5 is as follows:
At Par [30] His Honour found that Mr Elvin did not have knowledge of summary payments before the filing of the Defences. His Honour mistook the facts and accordingly was in error.
The summary of payments related to payments which the defendants asserted demonstrated mutual gift giving. Successive iterations of the defence alleged unparticularised gifts of cash by the defendants to Davey. The amended defence of 6 March 2018 ultimately put the allegation this way:
During the relevant period, the defendant also gave the plaintiff valuable gifts, including:
(a)      Cash, as requested from time to time by the plaintiff;
(b)      Meals and drinks for the plaintiff;
(c)      Payment of the plaintiff’s rent from time to time;
(d)     Provision of signage worth approximately $12,500;
(e)      Assistance with aspects of the plaintiffs [sic] legal cases;
(f)Signed documents, created invoices issued from the defendant’s business and performed other tasks at the request of the plaintiff to assist with the plaintiffs [sic] legal practice business.
Sometimes the gifts were given upon request by the plaintiff, sometimes they were not requested. No reference was generally made by the plaintiff to outstanding invoices or unpaid legal fees when the plaintiff made a request for cash or any other good [sic] or service from the defendant. The requests were generally made on the basis that the plaintiff needed the financial or other assistance, not because the defendant was indebted to the plaintiff.

In relation to Davey’s written submissions, we make the following observations:
(a)It is not correct that no party alleged that Davey had contributed to costs and delay. This was an express aspect of Elvin’s ground 13 and Silverstein’s ground G before the judge and was dealt with in their written and oral submissions below, and Silverstein had raised this issue before the magistrate.
(b)Neither the fact that Davey’s claim in the Magistrates’ Court was unamended from filing to trial, nor the assertion that his request for further and better particulars was timely and necessary, requires the conclusion that his conduct in other respects made no contribution to the delay and costs in that court.
(c)The submission that his conduct of the proceeding in the Magistrates’ Court was ‘in no way unreasonable’ is mere assertion.
(d)Davey’s position as a self-representing solicitor raised the issue which the plurality identified in Bell as follows:
A self-representing solicitor, lacking impartial and independent advice that the court expects its officers to provide to the litigants they represent, may also lack objectivity due to self-interest. That may, in turn, result in higher legal costs to be passed on to the other party in the event that the self-representing solicitor obtains an order for his or her costs.[87]
[87]Bell (1999) 269 CLR 333, 343 [18] (Kiefel CJ, Bell, Keane and Gordon JJ).
In relation to the proposition that there was no reasonable basis for finding that Davey had contributed to the delays and disproportionate costs in the Magistrates’ Court, this submission appears to us to misunderstand the judge’s conclusion. The judge did not find that Davey’s conduct had contributed to the delays and costs in the Magistrates’ Court. Rather, the judge found that the magistrate ought to have considered ‘whether and how’ Davey’s conduct exacerbated the time taken by the proceedings, by reference to various steps taken by Davey. In that regard, and contrary to Davey’s submissions, the judge was plainly correct. The contribution of one party to delays in a proceeding would generally need to be considered in a relative sense, by reference to the conduct of other parties. Certainly that was the case in the present proceeding. Mr Davey did not seek to argue that the magistrate had undertaken that relative analysis.
To the extent that this proposed ground is to be understood as directed to the proposition that, in this case, it would not have been open to the magistrate to have concluded that Davey’s conduct contributed to the costs and delay, we reject that proposition. As the judge pointed out, Davey had filed five requests for further and better particulars, four notices to admit facts, three notices to produce and a summons for strike out and summary determination.[88] Even putting to one side the requests for further and better particulars, those steps were matters that the magistrate ought to have considered in determining the parties’ relative contribution to the delay and costs in that court. And, we would add, given that the proceeding in the Magistrates’ Court had involved ‘some 38 court appearances and approximately 135 court orders’,[89] it would more generally have been appropriate for the magistrate to consider the relative contributions of the parties to those appearances and orders.
[88]Reasons, [163].
[89]Ibid [49], quoting the magistrate’s reasons for decision.
Finally, as Elvin and Silverstein submitted, the magistrate’s exercise of the discretion to make a compensation order under s 29(1)(c) was successfully impugned by them on other grounds.[90] Thus, even if the judge erred in the manner asserted by Davey, that error would not require the conclusion that the judge’s decision to set aside the magistrate’s decision was erroneous.
[90]Namely, that Davey had failed to establish a relevant financial loss, or that such loss had been ‘materially contributed to’ by a relevant contravention of the CPA.
Proposed ground 4 lacks any merit, and leave to appeal on this ground is refused.

Did the trial judge err in allowing Elvin and Silverstein to raise new points on appeal (proposed ground 6)?

Proposed ground 6 is as follows:
At Par [80] His Honour permitted the Appellants to raise points on Appeal (which were objected to by Mr Davey) without Application from the Appellants. In so doing, his Honour erred occasioning Jurisdictional Error.
The relevant passage from the judge’s Reasons is [81], rather than [80]. It is as follows:
Davey submitted that many of the appellants’ grounds of appeal were not raised at first instance, and for that reason the appellants should be prevented from relying on those aspects of their case on appeal. In fact the material demonstrates that in most cases the subject matter of the appellants’ grounds were raised during the Magistrates’ Court proceeding. In any event, the s 29 application was to be determined in accordance with law, and the appellants should not be precluded from arguing there was a failure by the Magistrate to do so.
Davey’s written submissions on proposed ground 6 were as follows:
In so finding, his Honour fell into jurisdictional error because:
a. He failed to identify which matters in their appeals were being raised anew. The Appellants bore the onus to identify to the Court the matters they were seeking to raise anew on appeal.
b. There was no application from the Appellant [sic] legal practitioner’s to reconsider matters which were conceded in the Magistrates’ Court or abandoned by election.
Davey did not add to these written submissions in his oral argument.
Davey did not clearly identify any point that formed the basis of the judge’s decision that had not been raised before the magistrate. We note that Davey had made submissions before the trial judge in relation to certain of Elvin’s grounds, which he said Elvin had not raised before the magistrate, and which the judge recorded as follows:
(a) Ground 1: The correct or proper test for determining whether there had been a contravention of s 18(d) of the CPA.
(b) Ground 5: The correct or proper test to be applied in determining whether a party had contravened s 21 of the CPA by engaging in misleading or deceptive conduct.
(c) Ground 6: Elvin conceded in cross-examination that the false and misleading details and omissions in the further and better particulars were never removed from the Magistrates’ Court file. No submissions were made by Elvin in the Magistrates’ Court in relation to this concession.
(d) Grounds 3 and 7: The applicability of s 140 of the Evidence Act and the Briginshaw test.[91]
[91]Reasons, [72]. On the application for leave to appeal, Mr Davey took no issue with the summary of his submissions found in [72] of the judge’s Reasons. Further, that summary was expressly referred to by junior counsel for Elvin (Ms Poole), who said that her ‘understanding is that these are the grounds Mr Davey was concerned had not been raised before’. Mr Davey made no response to that proposition in his reply.
The judge observed that the magistrate was addressed on the basis that the Briginshaw principle applied.[92] Thus, in that sense, proposed grounds 3 and 7 were raised before the magistrate. As for proposed ground 6, the issue of misleading or deceptive conduct was plainly in issue before the magistrate, and any concession by Elvin that certain matters were not removed from the Magistrates’ Court file does not alter that.
[92]Reasons, [90].
We reject Davey’s submission that the respondents had an onus, before the trial judge, to identify any matters that were not raised before the magistrate. Nor was there any requirement that, in order to argue a new point on appeal, a formal application was required.
Further, even assuming that the question of the correct test for determining whether there had been a contravention of s 18(d) of the CPA, or the correct test for determining whether a party had contravened s 21 of the CPA, were not argued before the magistrate, those were pure questions of law. The judge had a discretion as to whether to permit a new ground to be taken on the appeal, and he exercised it in favour of permitting these new grounds to be argued. No error has been identified in his Honour’s exercise of the discretion. To the contrary, his Honour was, in our opinion, correct to conclude that, because Davey’s application under s 29 of the CPA was to be determined in accordance with law, the appellants ought not be precluded from arguing that the magistrate had failed to do so.
Proposed ground 6 has no merit and leave to appeal on this ground is refused.

Did the trial judge misapprehend the basis on which compensation was sought by Davey (proposed ground 7)?

Proposed ground 7 is:
At Par [63] Costs Ruling [2022] VSC 324, His Honour found that Mr Davey had not made a submission for orders on [sic] disciplinary basis. In so finding his Honour mistook the facts occasioning Jurisdictional Error.
Following the trial judge’s decision to set aside the Magistrates’ Court orders, Davey submitted that the matter should be remitted to the Magistrates’ Court. The trial judge rejected this submission.
60Davey sought compensation for financial or other loss under s 29(1)(c) of the CPA. However, there was no evidence before this Court or the Court below upon which it could be concluded that Davey suffered a compensable loss which was materially contributed to by Silverstein’s contravention of s 18(d) of the CPA. Despite having the opportunities to do so Davey led no evidence of loss in the Magistrates’ Court. It was a matter for Davey to decide what evidence to lead on the summons against Silverstein. He was put on notice by the respondents to the summons that he could not be awarded his legal costs, and had led no evidence of financial or other loss. Having elected to proceed as he did, Davey should not now be afforded a further opportunity, after a successful appeal against him, to reopen his case with a view to leading evidence to establish loss.
61I reject Davey’s submission that there should now be consideration, either by this Court or on remitter, of an order in his favour against Silverstein other than for compensation, and of a disciplinary nature. I understood Davey to be submitting that such an order could be made under s 29(1)(c) of the CPA. In Bolitho v Banksia Securities Ltd (No 18) (remitter), John Dixon J held the following in respect s 29 of the CPA:
Questions of whether to grant further orders of a punitive nature do not arise where the compensatory order has a sufficiently appropriate impact. Exemplary damages should only be considered after assessment of the finalised compensatory damages if the court takes the view that the quantum of compensatory damages is inadequate for the court to express its condemnation of the conduct. In this case, I was not persuaded that exemplary damages should be awarded.
62In the absence of an order for compensatory damages, it is not open to this Court or the Court below to make disciplinary or punitive orders in the nature of exemplary damages under s 29(1)(c) of the CPA.
63Further, Davey did not articulate, either in the Magistrates’ Court on the hearing of the summons or in this appeal, what order he now seeks of a disciplinary or punitive nature against Silverstein, where precisely the power to make such an order resides, or what evidence was led on the summons that justified making such an order. There is no basis for further consideration of this issue.[93]
[93]Costs Ruling, [60]–[63] (citation omitted).
Davey now challenges the terms in which his Honour expressed himself in [63] of the Costs Ruling. Davey submitted that the trial judge misstated the position because written submissions which he filed in the Magistrates’ Court included the following:
The Plaintiff’s Application should uphold (sic) with costs payable pursuant to the statutory powers bestowed to the court as an expression of its ‘compensatory and disciplinary powers pursuant to the Civil Procedure Act 2010 (Vic) and the principles articulated by the Victorian Court of Appeal in Yara.
As Silverstein submitted:
•The passage impugned does not affect the logic of the preceding paragraphs [61]–[62]. If it contains an error it is not a vitiating error.
•The submission upon which Davey now seeks to rely was made with respect to costs and not to compensation under s 29(c) of the CPA.
•The authority relied on in the submission also related to the bases on which costs might be awarded.

Consideration

The threshold requirement of a claim under s 29 is proof of loss. In the circumstances analysed by the trial judge, his Honour was correct to refuse remitter to the Magistrates’ Court. Further, the passage relied on by Davey does not establish that Davey sought compensation (as distinct from costs) on a punitive basis.
There is nothing in this point. Leave to appeal on proposed ground 7 will be refused.

Did the trial judge err in concluding that the evidence did not establish that Davey had suffered loss (proposed ground 8)?

Proposed ground 8 is:
His Honour erred in finding that compensation pursuant to section 29(1)(c) CPA could not be assessed against the financial and time records kept within Mr Davey's firms [sic] accounting software and wrongly conflated Mr Davey's lost income associated with same as being unable to be awarded as compensation in accordance with the High Court's decision in Bell v Pentelow. In so doing, His Honour erred.
Davey relies on an affidavit filed in the Magistrates’ Court and sworn by him on 28 October 2019 as establishing compensable loss. The affidavit exhibited accounting records ‘manifest as invoices’ which particularised the attendances made by him during the course of the litigation. Davey submitted the invoices:
… records [sic] specific dates, description of every piece of work undertaken, the time spent and the charge that Mr Davey as a practitioner could make based on his hourly rates.
Davey further submitted:
•the decision of the High Court in Bell[94] did not prevent the trial judge from making an order based on these invoices; and
•such an order should have been made having regard to principles of equitable compensation.[95]
[94](2019) 269 CLR 333.
[95]Citing Bolitho [2021] VSC 666, [565]. More relevantly, in oral submissions the applicant identified [1728].
The respondents rely upon the trial judge’s careful reasoning with respect to this aspect of the case. In particular, they rely upon the conclusions which we have set out at [62] above.

Consideration

No error has been demonstrated in the trial judge’s conclusions that there was no evidence from which it could be concluded that the bills of costs upon which Davey relied represented a loss to Davey for which justice required that he be compensated.
It will be recalled that the basis on which the magistrate awarded compensation was that Davey was entitled to be compensated for loss of opportunity in the same way that a plumber or a nurse in similar circumstances could claim for loss of opportunity to earn income. Presumably this was the reason that the magistrate adopted the PRO as a measure of damages. The magistrate took this course in circumstances where, despite having been given the opportunity to adduce evidence of consequential loss, Davey had not done so.
As the trial judge held, Davey’s bills of costs did not establish loss. His case simply conflated professional charges with loss.[96] Professional fees involve a material element of profit.[97] The subject matter of an order under s 29(c) is ‘any financial loss or other loss which was materially contributed to by the contravention of the overarching obligation …’.
[96]In oral submissions in this Court, Davey confirmed that he did not have any evidence of loss.
[97]Bell (1999) 269 CLR 333, 344 [23], 347 [32] (Kiefel CJ, Bell, Keane and Gordon JJ).
Davey had the benefit of avoiding costs by acting for himself for the purpose of obtaining judgments against the defendants. He did not establish that he had suffered economic loss (by way of loss of opportunity or otherwise) save for his disbursements.
The disbursements were the subject of separate order against the defendants and did not comprise part of the compensation order.
No claim was made for compensable loss other than economic loss and no evidence was adduced to establish that Mr Davey in fact suffered an economic loss.
While Davey appeared to submit in oral argument that the onus on causation shifted to the respondents in this case (relying on Bolitho), to the extent that submission was made, it must be rejected. A critical difference between the present case and Bolitho is that, unlike the relationship between group members and the parties who purported to act in their interests in that litigation, there was no fiduciary relationship between Davey and either of the respondents in the present case. Moreover, the critical passage on which Davey focused in submission is concerned with circumstances in which the plaintiff establishes a prima facie case of loss.
With causation in equitable compensation, the onus readily shifts to the fiduciary. For example, if a fiduciary asserted that a breach of fiduciary duty caused no damage for the reason that the principal would, if asked, have authorised the variation which constituted the breach of duty, then there is at least an evidentiary onus on the fiduciary to make good that proposition. The onus will shift to the fiduciary once the claimant establishes a causal link between the conduct and the claimed loss.[98]
[98]Bolitho [2021] VSC 666, [1728] (John Dixon J).
In the present case Davey has not established ‘a causal link between the conduct and the claimed loss’. This proposed ground must also fail and leave to appeal with respect to it will be refused.

Did the trial judge err in discounting Silverstein’s costs in the Magistrates’ Court by 25 per cent (part of proposed ground 1)?

The first part of proposed ground 1 is:
His Honour erred in determining that Mr Silverstein should receive a 25% discount to his costs in the Magistrates’ Court Summons after his concession in the Supreme Court Appeal that he did not have a proper basis for the Defences (and the Set Off) in the Magistrates’ Court.
Davey submitted that the 25 per cent discount does not adequately reflect the contribution Silverstein made to the costs of the Magistrates’ Court proceeding by serving amended defences which it is submitted had no proper basis.
More particularly, Davey submitted that he was required to rebut extrinsic evidence including, in particular, text messages, which should not have been put in issue in circumstances where he sued on written costs agreements.
Davey further relies on the fact that aspects of the defence were withdrawn by Silverstein in the course of final addresses at trial.
Silverstein submitted that the 25 per cent reduction reflects an exercise of a discretion as to costs pursuant to s 29(1)(f) of the CPA and is therefore governed by House v The King,[99] and that as it is an appeal from an order as to costs, this Court should exercise particular restraint before interfering with it.[100]
[99](1936) 55 CLR 499, 504–5.
[100]Citing United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2020] VSCA 15, [124] (and the cases cited therein).
Silverstein emphasised that the trial judge took into account the following matters:
•the undisturbed finding of breach of overarching obligation was a measure of success for Davey against Silverstein;
•the magistrate had found that Silverstein’s breach had materially contributed to the length and complexity of the proceeding;
•Silverstein had made an offer in September 2019 to settle the Summons for $32,500 and Davey unreasonably rejected that offer.

Silverstein submitted that in fixing the 25 per cent reduction, the trial judge weighed up competing considerations as the basis for exercising his discretion.

Consideration

The trial judge determined not only that Silverstein should succeed in the Magistrates’ Court but also specifically that the allegation of dishonesty made by Davey against Silverstein should be rejected.
In these circumstances, Silverstein would normally recover the full costs of the Magistrates’ Court proceedings.
The matter was complicated by two further matters:
(a)on the one hand, the serving of defences without a proper basis had complicated and extended the proceedings; and
(b)on the other hand, Davey had rejected a reasonable offer of compromise served after the decision in Bell.[101]
[101](2019) 269 CLR 333.
In respect of the first of these considerations, the trial judge expressly found:
41The magistrate found that Silverstein’s breach of s 18(d) of the CPA materially contributed to the length and complexity of the proceedings. That finding is relevant to Silverstein’s costs of the summons in the Magistrates’ Court in the following ways.
42First, it is a measure of success by Davey on the summons against Silverstein.
43Second, it is a finding that contravention by Silverstein of CPA obligations contributed to the length and complexity of the proceeding.
44Contravention by Silverstein of s 18(d) of the CPA is relevant to the discretion in relation to the costs of the summons in the Magistrates’ Court. Further, it is a matter that can be taken into account under s 29(1)(f) of the CPA.[102]
[102]Costs Ruling, [41]–[44].
It is apparent that the trial judge squarely recognised the matters which Davey relies on in support of this proposed ground of appeal.
On the other hand, his Honour made the following findings with respect to a Calderbank offer:
53The first offer was made only days after the High Court delivered its judgment in Bell. However, the offer was open for 14 days, which was more than adequate time for Davey to understand the decision and the implications it had for his application. The offer was made a little over a month before the hearing of the application commenced. Further, no evidence was tendered by Davey in response to the High Court’s decision and the need for him to prove loss in accordance with s 29(1)(c) of the CPA.
54The amount offered was not insubstantial, particularly having regard to the lack of evidence of loss.
55I conclude Davey’s non-acceptance of the first offer was unreasonable in the circumstances.
56Davey’s application was heard over eight sitting days between 14 October 2019 and 19 February 2020. The real reason the application proceeded, and substantial costs were incurred by Silverstein, was Davey’s non-acceptance of the first offer.[103]
[103]Ibid [53]–[56].
His Honour weighed up these matters as follows:
I conclude that despite Silverstein’s ultimate success in having Davey’s summons against him dismissed, and consideration of the first offer as discussed above, it is appropriate that some account be taken on the issue of costs of the finding of Silverstein’s breach of the CPA. I will order that Davey pay Silverstein's costs of the summons in the Magistrates’ Court reduced by 25%.[104]
[104]Ibid [57].
The trial judge’s reasons as a whole (both with respect to the appeal before him and with respect to the specific issue of costs) demonstrate that he immersed himself in the history of the proceeding and carefully evaluated the consequences of Silverstein’s actions with respect to the defences he filed.
No error has been demonstrated in the exercise of his discretion as to the costs of the Magistrates’ Court proceedings, which necessarily reflected the balancing of competing considerations in circumstances where prima facie Silverstein was entitled to his costs.
More particularly, the trial judge had regard to the relevant considerations upon which Davey relied and it cannot be said that the conclusion which he reached on this aspect of the matter was not reasonably open to him.[105]
[105]House v The King (1936) 55 CLR 499, 504–5 (Dixon, Evatt and McTiernan JJ).
The challenge to the exercise of the judge’s discretion must fail. Leave to appeal on this proposed ground will be refused.

Did the trial judge err in rejecting the proposition that the filing of three separate appeals was relevant to costs (proposed ground 9)?

Proposed ground 9 is formulated as follows:
In the Costs Ruling [[2022] VSC 324] His Honour rejected Mr Davey’s submissions that the Triplication of the Appeals in matters S ECI 2020 02844, 02841 and 02840 was inconsistent with the Overarching Obligations and/or constituted disentitling conduct in the discretion awarding costs. In rejecting Mr Davey’s submissions, His Honour erred occasioning Jurisdictional error in the Court’s Costs discretion.
His Honour further erred in his discretion as to costs in not finding that Mr Silverstein had engaged in disentitling conduct.
In his written submissions on proposed ground 9, Davey submitted as follows:
As His Honour's decision shows, there was a significant amount of duplication in Points of Appeal. Mr Davey contends that the ‘potential of a conflict’ of interest did not justify the separate representation of the Respondents when each solicitor acted at different times. The filing of three separate appeals breached the Overarching Obligations to narrow the matters in dispute (s.23 CPA) and to only take steps to resolve or determine disputes (s.19 CPA ) and to ensure that costs are reasonable and proportionate (s.24 CPA).
Davey did not add to that submission in oral argument.
We note that Davey did not develop the second paragraph of proposed ground 9, which we understand to be that Silverstein had engaged in other disentitling conduct, beyond the fact that he had filed a separate appeal from both Elvin and the defendants.
The issue of duplication by multiple appeals was raised before the judge on the question of costs. His Honour observed that Davey had sought consolidation of the three appeals, but that application had been rejected by Keith JR, who had observed as follows:
I am satisfied there should be a direction for the three proceedings to be heard together, in order to promote efficiency and to avoid duplication. I do not consider consolidation is appropriate. There are common issues but there are also issues on which the separate appellants may have different positions and possibly conflicting positions. It is appropriate the three proceedings remain separate, but they be heard and determined together, subject to any further directions of the judge who may hear the appeals.[106]
[106]Dessco Pty Ltd v Davey [2020] VSC 696, [102] (Keith JR).
Ultimately, Silverstein’s appeal and Elvin’s appeal were heard together (the appeal by the defendants was, as we have mentioned, dismissed.)
The trial judge then said this:
33Given Elvin and Silverstein’s different positions and the real potential for those positions to come into conflict, separate representation was entirely appropriate.
34The parties clearly took steps to avoid duplication of material where that was possible. A common appeal book was provided to the Court which contained minimal duplication. The parties were also clear about which sections of the court book were to be disregarded as they related to discontinued proceedings or proceedings effectively overtaken by the hearing of these appeals.
35There is no basis for a proportionate reduction in the appellants’ costs of appeal on the basis that they were separately legally represented.
36Any remaining questions as to the reasonableness of costs, including with respect to unnecessary duplication or counsels’ involvement, can be determined by the Costs Court on assessment. However, I note the appeal was factually complex, concerned serious breaches of the CPA found against the appellants, and involved a claim for significant compensation by Davey.[107]
[107]Costs Ruling, [33]–[36].
After setting out a passage from the judgment of this Court in R v Silverstein,[108] the trial judge went on:
The magistrate’s findings that the defendants and Silverstein had contravened obligations in the CPA were distinct, and they had different interests on appeal. It may be those differing interests gave rise to the possibility of conflict, and that in those circumstances it was not appropriate that Silverstein acted for the defendants on appeal. However, there was no prejudice to Davey from him doing so, and no reason why Silverstein should be disentitled to his costs on appeal as a consequence.[109]
[108]R v Silverstein [No 2] [2020] VSCA 251, [10]–[11] (Kyrou, Kaye and McLeish JJA).
[109]Costs Ruling, [38].
As discussed earlier, in relation to proposed ground 1, a decision in relation to costs is a discretionary decision to which the principles in House v The King apply. We do not consider that any error of the kind necessary to impugn the trial judge’s decision on costs can be discerned. To the contrary, we consider the trial judge was correct to conclude that separate representation of Elvin, Silverstein and their former clients, the defendants, was entirely appropriate, given the unchallenged fact that there was a real potential for their interests to come into conflict. Further, as the trial judge observed, steps were taken by the parties to minimise duplication (and there was no challenge to this finding).
In relation to the second paragraph of proposed ground 9, as we noted above Davey did not specify what other disentitling conduct, if any, on which he sought to rely. Given that, it is not possible for us to deal with that part of proposed ground 9.
Proposed ground 9 has no merit; leave to appeal on this ground is refused.

Conclusion

None of the proposed grounds of appeal have any prospect of success. Leave to appeal will be refused.
---

APPENDIX A

GROUND 1 - Mr Silverstein & Mr Elvin – Section 18(d) CPA No Proper Basis - (common ground)

His Honour erred in determining that Mr Silverstein should receive a 25% discount to his costs in the Magistrates’ Court Summons after his concession in the Supreme Court Appeal that he did not have a proper basis for the Defences (and the Set Off) in the Magistrates’ Court.

His Honour erred in failing to properly take into account the material and the absence of material before Mr Elvin when he settled, filed and served the Defences as having legal and factual material that would support the allegations and contentions in the Defences. In so doing His Honour fell into jurisdictional error in finding that Mr Elvin had a proper basis for the Defences. Further His Honour erred in finding that the relevant test was “reasonable belief”.

GROUND 2 – Mr Silverstein – Section 17 CPA – Breach of obligation to act honestly

His Honour erred in determining that Mr Silverstein had not acted dishonestly and/or that the learned Magistrate had not reached the sufficient standard of satisfaction in accordance with the Briginshaw Standard and Peter’s Case and the Magistrate’s reasons were deficient occasioning jurisdictional error.

GROUND 3 - Mr Elvin – Section 21 CPA – Obligation not to mislead or deceive

His Honour erred in determining that that Mr Elvin had not mislead or sought to mislead when he altered a document to remove a reference to payments that was inconsistent with the pleaded defence. And / or that the Magistrate had not reached a sufficient level of satisfaction in accordance with the Briginshaw Standard, that the conduct did not constitute deception or misleading conduct and His Honour, the learned Magistrate’s reasons were deficient occasioning jurisdictional error.

COMMON GROUNDS TO BOTH APPEALS

GROUND 4 – MAGISTRATE FAILED TO TAKE INTO ACCOUNT DAVEY’S CONTRIBUTION TO COSTS AND DELAY

At Par [164] Supreme Court decision. His Honour found that the Magistrate was required to evaluate the relative impact of the impugned conduct of the Defendants Elvin and Silverstein, and Davey’s own conduct, on the proceedings and loss suffered by Davey. In so finding His Honour was in error by mistaking the facts.

GROUND 5 – PAR. [30] - SUPREME COURT DECISION [2022] VSC 214

At Par [30] His Honour found that Mr Elvin did not have knowledge of summary payments before the filing of the Defences. His Honour mistook the facts and accordingly was in error.

GROUND 6 – ALLOWING THE APPELLANTS TO RAISE POINTS ON APPEAL AND OR CONCEDED IN THE COURT BELOW

At Par [80] His Honour permitted the Appellants to raise points on Appeal (which were objected to by Mr Davey) without Application from the Appellants. In so doing, his Honour erred occasioning Jurisdictional Error.

GROUND 7 - SUBMISSIONS ON A DISCIPLINARY BASIS (COSTS DECISION)

At Par [63] Costs Ruling [2022] VSC 324, His Honour found that Mr Davey had not made a submission for orders on disciplinary basis. In so finding his Honour mistook the facts occasioning Jurisdictional Error.

GROUND 8 – PROPER BASIS FOR COMPENSATION & DAVEYS EVIDENCE

His Honour erred in finding that compensation pursuant to section 29(1)(c) CPA could not be assessed against the financial and time records kept within Mr Davey’s firms accounting software and wrongly conflated Mr Davey’s lost income associated with same as being unable to be awarded as compensation in accordance with the High Court’s decision in Bell v Pentelow. In so doing, His Honour erred.

GROUND 9 - SEPARATE REPRESENTATION & TRIPLICATION OF APPEALS FROM THE SAME MAGISTRATES COURT PROCEEDINGS & DISENTITLING CONDUCT OF MR SILVERSTEIN

In the Costs Ruling [2022] VSC 214 His Honour rejected Mr Davey’s submissions that the Triplication of the Appeals in matters S ECI 2020 02844, 02841 and 02840 was inconsistent with the Overarching Obligations and/or constituted disentitling conduct in the discretion awarding costs. In rejecting Mr Davey’s submissions, His Honour erred occasioning Jurisdictional error in the Court’s Costs discretion.

His Honour further erred in his discretion as to costs in not finding that Mr Silverstein had engaged in disentitling conduct.[110]

[110]Amended application for leave to appeal, 24 August 2022, 8–10 (emphasis in original).

[2023] VSCA 147

20 June 2023