Erdevicki v Amaca Pty Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COSTS COURT

S ECI 2021 03120

BETWEEN:

MILORAD ERDEVICKI	Applicant
v
AMACA PTY LTD (FORMERLY JAMES HARDIE AND CO PTY LTD)	Respondent

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JUDICIAL REGISTRAR:	Conidi JR
WHERE HELD:	Melbourne
DATE OF HEARING:	16 August 2022
DATE OF RULING:	13 February 2023
CASE MAY BE CITED AS:	Erdevicki v Amaca Pty Ltd
MEDIUM NEUTRAL CITATION:	[2023] VSC 81

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COSTS – Review of Costs Registrar’s decision, r 63.91 of the Supreme Court (General Civil Procedure) Rules 2015 (the Rules) – Part 8 assessment procedure, r 63.88 – Pre-litigation settlement offers pursuant to r 26.08.1 of the rules and Calderbank offer – Discretion to “otherwise order”, r 63.85 of the Rules.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr D Williams KC	Zaparas Lawyers
For the Respondent	Ms S Cherry	Mills Oakley

Contents

A.. Issues for Consideration

B... Background

C.. The Taxation before the Costs Registrar

D.. The Applicant’s submissions before the Costs Registrar

E... Respondent’s submissions before the Costs Registrar

F... Applicant’s Reply Submissions before the Costs Registrar

G.. The Costs Registrar’s Ruling

H.. The Review Proceeding

I.... Legal principles in relation to reviews

J.... Discussion

K.. Orders

JUDICIAL REGISTRAR:

A Issues for Consideration

On 3 May 2022, the Applicant filed a Notice of Application for Review pursuant to s 17H(1) of the Supreme Court Act 1986 and r 63.91 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) for a review of the determination of a Costs Registrar which was supported by reasons dated 14 April 2022 (‘the Costs Registrar’s ruling’) and constituted by orders made on 20 April 2022. The matter was heard on

16 August 2022 (‘the review hearing’).
The amended grounds of review are:
(i)The Costs Registrar erred in not finding that the Applicant had beaten his pre-litigation offer.[1]
(ii)As a result, the Applicant ought to have been allowed the fee for drawing and engrossing the bill of costs, such fee totalling $38,878.40 (alternatively such lesser sum than $38,878.40 as the Court shall allow for drawing and engrossing the Bill), in addition to the said sum of $221,350.00.
[1]The original review Ground 1 – “The Costs Registrar erred in finding that the Applicant had not beaten his pre-litigation offer” was amended at the hearing for the review proceeding.
Although stated to be a ground of review, the second ground on its current wording asserts that the Costs Court should exercise its discretion in allowing the fee for drawing and engrossing the bill of costs pursuant to r 63.85 of the Rules. It is not a ground of review as such, but the relief sought by the Applicant if I find that the Costs Registrar erred in not finding that the Applicant’s pre-litigation settlement offers had been beaten. A finding in the Applicant’s favour in relation to Ground 1 does not necessarily mean that the Court will ‘otherwise order’ under r 63.85 and allow the fee for drawing and engrossing the bill of costs. That is a separate consideration.
I note that having found that the Applicant was unable to establish that he had beaten the pre-litigation settlement offer, the Costs Registrar declined to deal with the arguments relating to the exercise of his discretion pursuant to r 63.85 of the Rules. At the review hearing before me, arguments in relation to the exercise of the discretion were canvassed in detail. The parties left it for me to either make a determination or remit the question back to the Costs Registrar should the Applicant be successful in his application for review.
In this judgment, I have confined myself to submissions on Ground 1 of the Review. As will become apparent from my decision, it is not necessary for me to consider the arguments in relation to the exercise of the discretion under r 63.85, that is, whether the Costs Court should ‘otherwise order’ and allow the costs sought in the second part of the Notice of Application for Review.

B Background

The summons for taxation pursuant to the order of the Honourable Justice Keogh made 12 November 2020 in Supreme Court Proceeding No. S ECI 2015 05207, together with a bill of costs was filed in this matter on 27 August 2021. The Respondent’s summary notice of objections was filed on 8 October 2021. Following the cancellation of a mediation scheduled on 13 October 2021, the matter proceeded pursuant to Part 8 of the Rules and was referred to an assessment in accordance with r 63.88, not before 3 December 2021 (‘the Part 8 assessment’).
A further and detailed notice of objections was filed by the Respondent on 3 December 2021. The claim in the bill of costs was in the amount of $300,159.01, comprising $181,303.95 for professional costs and $118,855.06 for disbursements. A Notice of Estimate in the amount of $221,350.00 was sent to the parties on 8 December 2021 (‘the estimate’), constituting a reduction in the Applicant’s claim for costs of approximately 26%. The Applicant filed a Notice of Objection to the Estimate on 21 December 2021.
The matter was mentioned on 27 January 2022 before the Costs Registrar. The Applicant advised the Costs Registrar that the objection to the estimate was limited to the “costs of the taxation”. The Costs Registrar noted in his ruling that:
the Applicant was said to otherwise accept the Estimate of $221,350.00 but wanted to bring a settlement offer to the attention of the Court as a basis for claiming the ‘costs of the taxation’, in particular the amount claimed at item 2,169 for drawing and engrossing the bill of costs, an amount the Applicant assumed had been disallowed in accordance with rule 63.85.[2]
[2]Ruling of Costs Registrar Walton made 14 April 2022 , para [3], Review Book p 354 (“Costs Registrar’s ruling”)
The Respondent indicated to the Costs Registrar its preparedness to proceed on the basis of the Applicant’s proposal.
The mention and subsequent correspondence was summarised in the Costs Registrar’s ruling which I reproduce here as there was no dispute as to its accuracy.
5. As I made clear to the parties in the course of the mention, there is no provision in rule 63.88(3) for an objection to an estimate being limited to the ‘costs of the taxation’. The parties were advised that they should not assume that any particular item in the bill of costs was allowed or disallowed and it was emphasized that the Estimate included the Applicant’s costs of the summons for taxation.
6.However, at the request of the Applicant and with the consent of the Respondent, I advised the parties that in arriving at the Estimate, I had provisionally disallowed, on the basis of rule 63.85, the amount of $38,878.40 claimed at item 2,169 of the bill for drawing and engrossing the bill of costs but had otherwise allowed the Applicant’s ‘standard’ costs of the summons.
7.I indicated to the parties that I would only consider limiting the scope of the objection as proposed by the Applicant if it was done with the consent of the Respondent. The Applicant’s summons was listed for further mention and the parties were invited to submit proposed consent orders as to the scope and conduct of the taxation.
8.I subsequently wrote to the parties by email on 31 January 2022 to clarify the basis on which I was prepared to accede to the Applicant’s request to limit his objection and the ambit of the taxation to the ‘costs of the taxation’. I confirmed that the estimate of $221,350.00 included the Applicant’s ‘standard’ costs of the summons for taxation, save for the $38,878.40 claimed for drawing and engrossing the bill of costs that had been provisionally disallowed on the basis of rule 63.85.[3]
[3]Costs Registrar’s ruling, para [5] – [8], Review Book p 355
In the consent orders of 4 February 2022, the Costs Registrar confirmed:
“ ... that the estimate of $221,350.00 included the Applicant’s ‘standard’ costs of the taxation, save for the $38,878.40 claimed for drawing and engrossing the bill of costs that had been provisionally disallowed on the basis of rule 63.85. The parties were advised that [he] would only be prepared to proceed if the parties agreed to limit the ambit of the taxation to:
(a)whether the Court should ‘otherwise order’ under 63.85; and
(b)additional costs of the taxation, if any, incurred by the Applicant but not claimed in the bill of costs (the ‘costs of the taxation’)”[4].
[4]Orders made by Costs Registrar Walton on 4 February 2022, Para F, “Other Matters”.
In the same order, the Costs Registrar expressed misgivings about the Applicant’s proposal for a limited taxation, correctly in my view, noting that r 63.88(1) of the Rules provides an alternative procedure to taxation where the Costs Court is required to provide an estimate of the amount that would likely be recovered by the Applicant, in the absence of the parties and, without making any determination on the individual items in the bill. In such circumstances “the parties cannot assume that any particular item in the bill of costs had been allowed or disallowed”[5]. Despite these misgivings he agreed to limit the scope of the taxation as it was done with consent of the Respondent.[6]
[5]Ibid, confirmed in Para D and E.
[6]Ibid, paragraph E.

C The Taxation before the Costs Registrar

The limited taxation was completed on the papers and a written ruling was published on 14 April 2022. The Costs Registrar had the following written submissions before him.
(i)Applicant’s Submissions on Costs, filed 25 February 2022 (‘applicant’s submissions’);[7]
(ii)Respondent’s Submissions on Costs, filed 18 March 2022 (‘respondent’s submissions’);[8]
(iii)Applicant’s Reply submissions on Costs, filed 23 March 2022 (‘applicant’s reply submissions’);[9]
[7]Review Book, p 310.
[8]Review Book, p 331.
[9]Review Book, p 342.
The Applicant’s contention before the Costs Registrar was that:
“by reason of settlement offers which it made prior to the Estimate being given, which offers if accepted would have resulted in a better outcome for the Respondent than the Estimate but which were not accepted by the Respondent, the Court should “otherwise order” (with respect to rule 63.85) so as to allow the Applicant its costs of drawing and engrossing the Bill”[10].
[10]Applicant’s submissions, para [3], Review Book, p 310.
The Applicant sought an order for the amount of the estimate plus a sum for drawing and engrossing the bill of costs, either $38,878.40 or such lesser sum, at the discretion of the Costs Court.In addition, he sought an order for costs of the “proceeding since 21 December 2021 (when this issue arose), including its costs of drawing these submissions”[11].
[11]Applicant’s submissions, para [4] & [5] Review Book, 310-311.
The Applicant provided a helpful chronology to the offers exchanged by the parties which was not in dispute[12].
(i)The original Supreme Court proceeding concerned the Applicant’s claim for compensation arising from his exposure to asbestos dust. The matter resolved on 11 November 2020, the Respondent having agreed to pay damages plus costs;
(ii)On 14 December 2020, the Applicant wrote to the Respondent’s solicitor seeking party/party costs in the sum of $282,524.36. On 8 June 2021, the Respondent offered to pay the sum of $185,000.00 to the Applicant by way of response;
(iii)On 10 June 2021 the Applicant served a “pre-litigation offer of compromise” pursuant to rule 26.08.1 of the Rules in the sum of $210,000.00. That offer was accompanied by a Calderbank letter stating that if there were any formal deficiencies with the pre-litigation offer, it relied upon an offer in the same amount on Calderbank principles (collectively ‘the settlement offers’);
(iv)The Respondent rejected the settlement offers and on 17 June 2021, made its own pre-litigation offer of $197,000.00. That offer was rejected by the Applicant;
(v)An offer by the Applicant on 25 June 2021 to ‘split the difference’, in the sum of $203,500.00, was also rejected by the Respondent.
(vi)The Applicant subsequently prepared a bill in taxable form, claiming costs in the amount of $300,159.01, which was filed with the summons for taxation on 27 August 2021; and
(vii)In a further attempt to resolve the dispute, on 21 October 2021, the Respondent made a further offer in the sum of $210,000.00 which was rejected on the same day by the Applicant.
[12]Applicant’s submissions, para [9] to [16] Review Book pp 311 – 312.

D The Applicant’s submissions before the Costs Registrar

The Applicant equated the assessment procedure before the Costs Registrar as being equivalent to the ‘substantive determination’ stage in a typical taxation, that is, when the amount of the bill has been calculated (i.e. taxed and allowed ) ‘save for the costs associated with the taxation process itself’. (my emphasis)[13]
[13]Applicant’s submissions, para [18] Review Book p. 313.
The Applicant sought to rely on the pre-litigation settlement offers made on 10 June 2021 as a basis for entitling him to recover the expense of preparing the bill, that is, providing the Costs Court a basis to “otherwise order” pursuant to r 63.85 of the Rules. He argued that it was open for him do so in the alternative assessment procedure, otherwise that procedure would be seriously flawed if it did not allow a party to benefit from a favourable settlement offer[14].
[14]Applicant’s submissions, para [20] Review Book, p 313.
The Applicant discussed the legal principles applicable to pre-litigation offers pursuant to r 26.08.1 of the Rules and Calderbank offers. He submitted that the pre-litigation settlement offers were genuine settlement offers which ought to have been accepted by the Respondent. He argued that if for some presently unrecognisable technical reason, the offer pursuant to the Rules was ineffective, there was a sound offer made pursuant to Calderbank principles.
The Applicant submitted that as he has obtained a result better than the pre-litigation settlement offers, the Costs Court should otherwise order pursuant to r63.85 of the Rules and allow the costs of the taxation.
I note that other than asserting that the Applicant’s offers have beaten the estimate, the Applicant did not at that stage (i.e. in the applicant’s submissions), endeavour to address how a global settlement offer made on 10 June 2021 can be said to have beaten an estimate of costs arrived at pursuant to a procedure that does not require a line by line assessment of the bill of costs and, an estimate that includes the assessment of all costs incurred after the date of the offer.

E Respondent’s submissions before the Costs Registrar

The Respondent challenged the Applicant’s assumption that he had in fact beaten the pre-litigation settlement offers, an assumption that Respondent said was ‘unsafe’[15]. The Respondent asserted that the Applicant cannot discharge his onus of proof that the offer had been beaten in the context of a Part 8 assessment: ‘This is because the parties have no way of knowing which items have been allowed, disallowed or allowed in part. There is no way for the Applicant to know if he is comparing apples with apples’.[16]
[15]Respondent’s submissions, para [25] Review Book, p 337.
[16]Ibid.
The Respondent relied on three factors in support of this assertion, the most relevant to this Review proceeding is found in paragraph 25(c):
It may well be that the Court has allowed less than $210,000 of the costs arising in the underlying proceeding culminating in the offer (item 2137) plus some part of the costs post-dating item 2137. That is, it is possible that the costs allowed to the date of the offer may be less than the amount of the offer. It may also be that the Court has formed a gross sum view, without allocating costs specifically to individual items. All the parties know is that item 2169 has been properly disallowed.[17]
[17]Respondent’s submissions, para [25(c)] Review Book, p 337.

F Applicant’s Reply Submissions before the Costs Registrar

The Applicant’s response to this assertion is found at paragraphs [16] and [17] of his reply submissions. It is necessary to set it out in full as it goes to the essence of Ground 1 of the application for review:
16.Rather curiously, the Respondent attempts to contest whether the Applicant’s pre-litigation offer was beaten (RS [25]). It is obvious that it was. The comparing of “apples with apples” does not require an appreciation of whether each and every item has been allowed on taxation, and if so in what amount. The offer was for a global amount, not including any amount on account of the costs of taxation. The Estimate is also a global amount, not including any amount on account of the costs of taxation (as the Costs Court has confirmed to the parties by its email of 31 January 2022). There is accordingly a direct comparability between the offer and the Estimate. The offer of $210,000 has comfortably been beaten by the Estimate of $221,350.
17.RS [25](c) is based in a misreading of the Bill. Item 2137 is indeed the last item of professional costs prior to the offer, however items 2138 to 2168 all also predate the costs of taxation. Most of those items (in number, and overwhelmingly in value) relate to the original litigation – item 2148 being the 15% loading claimed, and items 2149 – 2168 being medico-legal disbursements. Items 2138 – 2148 relate to the various offers themselves, and are also properly claimable – but in any event they are negligible, those 11 items totalling less than $200 and hence having no conceivable impact on whether the offer was beaten by the Estimate.[18]
[18]Applicant’s reply submissions, Review Book, p 345.
The Applicant did not rely on any other figures or “mathematical analysis” where he sought to demonstrate that his pre-litigation settlement offers had beaten the estimate.

G The Costs Registrar’s Ruling

The Costs Registrar ruled on the issues before him based on the written submissions referred to above. He did not hear oral argument. Having considered those written submissions, the Costs Registrar found that the Applicant’s assumption that the offer of $210,000 had comfortably beaten the estimate of $221,350.00 was not one that could be made[19] and one that the Applicant was unable to establish[20]. The Costs Registrar made the following observations[21]:
[19]Costs Registrar’s ruling, para[21] Review Book p 357.
[20]Costs Registrar’s ruling, para [37] Review Book p 360.
[21]Costs Registrar’s ruling, para [23] – [30] Review Book, p 358 – 359.
(i)the Applicant “mischaracterised” the estimate as a global amount not including an amount on account of costs of the taxation. The Applicant was incorrect in purporting to argue that this was confirmed by the Costs Court in an email of 31 January 2022.
(ii)he referred to paragraph F of Other Matters part of the Order of 4 February 2022 that states:
By email of 31 January 2022 … … . I confirmed that the estimate of $221,350.00 included the Applicant’s ‘standard’ costs of the taxation, save for the $38,878.40 claimed for drawing and engrossing the bill of costs that had been provisionally disallowed on the basis of rule 63.85. (my emphasis)
(iii)he outlined the assessment process as provided for in the Rules – it includes an assessment of the costs of taxation;
(iv)he cited with approval, the Respondent’s observation at paragraph 25(c) of its submission;
(v)he noted that it is “impossible” to determine whether the Applicant has beaten the offer as at the date when it was made. It is not just a matter of comparing the offer with the estimate; and
(vi)he found that in the absence of a seriatim taxation, the issue of whether the applicant has beaten his offer cannot be determined.

H The Review Proceeding

Both parties made submissions before me in the review proceeding as to the proper ground of review following which, the Applicant applied to amend Ground 1 as it was framed in the Notice of Application for Review – ‘Costs Registrar erred in finding that the Applicant had not beaten his pre-litigation offer’. The Respondent submitted that it incorrectly asserted that the Costs Registrar had made a finding of fact when clearly, he had not done so. I agreed with Mr Williams KC, Counsel for the Applicant, that an amendment would not cause prejudice to the Respondent given that it was clear to both parties what the issues really were. The ground of review was accordingly amended as per paragraph 2(i) above.
The parties filed the following written submissions:
(i)applicant’s submissions on review filed 12 July 2022 (“Applicant’s review submissions”);[22]
(ii)respondent’s submissions on review filed 29 July 2022 (“Respondent’s review submissions”);[23] and
(iii)applicant’s reply submissions on review filed 5 August 2022 (“Applicant’s review submissions in reply”).[24]
[22]Review Book, p 367.
[23]Review Book, p 371.
[24]Review Book, p 376.

Legal principles in relation to reviews

A review of a taxation of costs by a Costs Registrar pursuant to r 63.91 of the Rules is governed by the same principles and approach applying to an appeal from an exercise of discretion.[25] The Court of Appeal and Justice Beach in Kuek v Deflan Pty Ltd & Anor[26] approved the principles detailed in Australian Coal and Shale Employees’ Federation v The Commonwealth and said:
A review of a taxation of costs is not a second bite of the cherry. It is necessary to show that there has been an error by the taxing officer of a material fact or reliance on an irrelevant consideration by the taxing officer.
[25]Magna Alloys & Research Pty. Ltd v Coffee (No. 2) [1982] VR 97 at pp. 102-3; also Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 at 627-9.
[26][2011] VSCA 25 and [2009] VSC 91 respectively.
In House v R[27], Justices Dixon, Evatt and McTiernan considered that a review of an exercise of unfettered discretion can only succeed on the following basis:
It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
[27](1936) 55 CLR 499 at 504-5.
The onus lies on the person seeking to impeach the decision of the Costs Registrar to satisfy the Court that the decision, the subject of the review is wrong. In general, the Court will interfere with rulings only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong[28].
[28]Hill v Peel (1870) LR 5 CP 172 at 180-1; see also Schweppes Ltd v Archer (1934) SR (NSW) 178 at 183-4.

J Discussion

In his ruling, the Costs Registrar concluded that the Applicant’s submissions failed at the first hurdle, that is, he failed to establish that he had beaten his pre-litigation offer. In my view this conclusion was open to the Costs Registrar based on the material before him.
The Applicant’s approach to the issue was in my view erroneous. He argued that the Costs Registrar’s estimate was for the amount of the bill of costs save for the costs associated with the taxation process itself (items 1 to 2168 in the bill). It was on this basis that the Applicant argued that his settlement offers had beaten the estimate. At paragraph 19 of his submissions he argued that “the parties are in precisely the same substantive position as if an ordinary taxation had yielded a Substantive Determination in the sum”.^[29]
[29]Applicant’s Submissions, para [19] Review Book, p 313.
This assumption may have been based on the Costs Registrar assertion that:
“the estimate of $221,350.00 included the applicant’s standard costs of the summons for taxation save for the $38,878.40 claimed for drawing and engrossing the bill for costs that had been provisionally disallowed on the basis of rule 63.85”.[30]
[30]Email of 31 January 2021, Review Book, p 309.
If it was, it was a misreading of what the Costs Registrar said and an incorrect understanding of the assessment process. It is clear that the Costs Registrar considered the amount claimed for drawing and engrossing the bill of costs as part of his overall assessment of the bill and disallowed it. Rule 63.85 is triggered “if the amount of the professional charges and disbursements in any bill of costs is reduced by 15 per cent or more” (my emphasis). “Any bill of costs” means the whole bill, not the bill of costs up to the costs of the taxation.
The correct approach in determining whether r 63.85 is triggered is to tax the whole bill. If the amount claimed in the bill is reduced by 15% or more, no costs of the solicitor filing the bill for taxation, for preparing the bill and for attending the taxation shall be allowed unless the Costs Court otherwise orders. If the Costs Court declines to otherwise order, any amount provisionally allowed for drawing and engrossing the bill is then disallowed. A person cannot determine whether the bill has been reduced by 15% or more unless the entire bill has been taxed.I note that r63.36 (1) and (2) provide that:
(1)Costs to be taxed under these Rules shall include the costs of the taxation.
(2)Costs to be taxed under a judgment or order shall, unless the judgment or order otherwise provides, include the costs of the taxation.
The Costs Registrar confirmed this process in his ruling. He also stated the he “provisionally disallowed” the claim for drawing and engrossing the bill of costs, demonstrating that his estimate included a consideration of that item. The Costs Registrar’s assessment did not stop at item 2168, that is, immediately prior to the costs of taxation. It cannot be said therefore, that the estimate and the offers of settlement place the parties at a point which allows ‘a direct comparability between the offer and the estimate’, from which the Costs Court can assess whether the Applicant has beaten his offer of settlement. The Costs Registrar was correct in rejecting the Applicant’s submission on this point. Therefore, it was open for him to find that he was not comparing “apples with apples”[31].
[31]Costs Registrar’s ruling, para [29] Review Book, p 359.
In his reply submissions, the Applicant submitted to the Costs Registrar that the items post-dating the offer of settlement, eleven in all, totalling less than $200.00 were ‘negligible’ and would have ‘no conceivable impact on whether the offer was beaten by the Estimate’. Again that argument is limited to claims up to item 2168 in the bill, that is claims up to but not including the costs of the taxation.
In the review proceeding before me, the Applicant cast his submissions differently and more broadly. He put forward a mathematical analysis with respect to all items in the bill of costs – 1 to 2192, which on its face, purports to substantiate his claim that the he had beaten the estimate. I will set out those submissions in full[32]:
[32]Applicant’s submissions, Review Book, p 369.
15.Whilst there are some items in the Bill which post-date the relevant offer, and which may have been taken into account in the Estimate notwithstanding the disallowance of the drawing and engrossing claim, they are negligible in the context of the present dispute. They total less than $2,500, as detailed below. Given that the Estimate exceeded the relevant offer by $11,350, these items cannot provide any basis for doubting the conclusion urged by the Applicant that he plainly “beat” his offer.
16.The Bill claimed a total of $300,159.01, and the Estimate allowed $221,350.00. As advised by the Court’s email of 31 January 2022, the claim for drawing and engrossing the Bill was disallowed.
17.At item 2136 and 2137, there are claims for the preparation and service of the pre-litigation offer. This gives a “start point” for determining what costs were potentially allowed after service of the relevant offer, to determine whether the offer was beaten.
18.Items 2138 to 2147 are professional fees claimed prior to the preparation of the Bill, totalling $182.40
19.Item 2148 is a claim for a loading by way of skill, care, and attention, claimed at 15% of the professional fees [$27.36]
20.Items 2149 to 2168 are disbursements incurred, all which pre-date the Offers and therefore are not relevant to the costs claimed post the Offers.
21.Items 2169 to 2192 are the “costs of application to the costs court”. These total $41,158.90, however include the cost of preparing the Bill. As made clear by the Court, the preparation of the Bill (item 2169, in the sum of $38,878.40) was not allowed. Therefore, this figure cannot be considered as to whether the Applicant beat his Offers as it was not allowed.
22.Items 2170 to 2192 total $2,280.50, and no loading was claimed on these.
The Applicant concludes that the total costs claimed after the settlement offers, excluding preparation of the bill ($38,878.40), was in the amount of $2,490.26 – a figure arrived at by “a simple exercise to determine the total costs claimed by the applicant following the relevant offer”[33]. The Applicant argued that if all the items after the offer of settlement, save for the costs of drawing and engrossing the bill were allowed, the estimate would be reduced to $218,859.80. The Applicant’s settlement offer still comfortably beats the estimate.
[33]Applicant’s review submissions, para [23] Review Book, p 369.
I agree with the Respondent’s review submissions that the Applicant seeks to rely on calculations that were not put to the Costs Registrar and, are significantly different from the basis upon which the Applicant’s case was put to the Costs Registrar[34].
[34]Respondent’s submissions on review para [9] Review Book, pp 372 – 373.
The argument below was essentially based on a comparison of two global amounts which the Applicant submitted were “comparable”. They were not. That comparison having been categorised as unsafe by the Respondent in its reply submissions, the Applicant responded with a cursory analysis of the difference between the amount of the estimate and the amount of the offer at the point in time the offer was made. He stated that the amount of less than $200.00 was a negligible amount that could not affect the outcome. On review, the Applicant put forward a different, more detailed analysis where he took into account all items in the bill. This analysis, in my view, constitutes a departure from his original position.
In response to this difficulty, Mr Williams KC submitted before me that his position (the costs items in the bill post the offer did not affect the compatibility of offer and estimate) was addressed in written submissions before the Costs Registrar, found at paragraph 17 of the submissions. They did not as I have discussed.
Mr Williams did concede however, that the Applicant:
“should have gone further and dealt with the costs of the taxation because the point the Costs Registrar made, and properly so, is that he hadn’t said he was disallowing the whole of the costs of the taxation. He had only said he was disallowing the bill”[35].
[35]Oral submissions on review proceeding.
Whilst there is a difference, Mr Williams argued, the difference is not one of any substance because those items were relatively negligible as demonstrated by the mathematical analysis above and would not have made any difference. He said:
“whilst the Costs Registrar may have been annoyed that we had mischaracterised or not fully appreciated exactly what he had said about disallowing the costs of the taxation in their entirety as opposed to just disallowing the costs of the bill, the difference was not material”.[36]
[36]Ibid.
Mr Williams then proffered a question: “Do you have to do all the calculations for the Costs Registrar or is he capable of doing some of them on his own?”. He submitted that the Costs Registrar was perfectly capable of doing that calculation for himself.[37]
[37]Ibid.
With respect to Mr Williams, I disagree with this approach. It is not for the Costs Registrar to come up with a mathematical analysis, in this case one that is favourable to the Applicant, when that analysis was not put before him and importantly, one that the Respondent did have an opportunity to respond to. It is not the function of a Costs Registrar to come up with a an analysis to substantiate a party’s case. The Costs Registrar in this case determined the matter based on the material before him. On that material, it was open for him to find that the Applicant had not established that he had beaten the offers. Whether I find the mathematical analysis compelling, as Mr Williams urged me to do, is irrelevant for the purposes of this review.
Mr Williams also submitted the Costs Registrar’s view that in the absence of a seriatim taxation, the issue of whether the settlement offers have been beaten cannot be determined one way or the other was “manifestly wrong”[38]. Again I disagree with this submission. Even if the mathematical exercise had been put before the Costs Registrar, it would have been open to him to conclude that the applicant could not establish that the offer has been beaten, at the point in time the settlement offer was made, in the absence of a taxation.
[38]Oral submissions at the review hearing.
The mathematical analysis put by Mr Williams does not sit easily with the Costs Registrar’s function in a Part 8 assessment. That procedure does not require an item by item assessment of the bill. Rule 63.88 is a departure from a seriatim taxation where both parties make submissions on each of the objected items and a ruling is made by the Court. A Part 8 Assessment simply requires an estimate to be made in the absence of the parties and without making any determination on individual items in the bill. Generally speaking, the process that a Costs Registrar takes in arriving at an estimate can include a number of considerations. For example, in arriving at an estimate, he or she may approach and determine tranches of items globally. These may include:
·allowances for solicitor and clerical attendances on the client and others;
·the reading of documents and the interplay between perusals, scanning and examination;
·time allowed for review and consideration which may reduce the loading for care skill and attention; and
·the nature and extent of counsel’s involvement which may also reduce the loading for care skill and attention.
This is what is meant by the phrase “without making any determination on the individual items in the bill” in r 63.88 of the Rules. This makes it difficult, if not impossible, for a party to argue that at any particular point in time, a settlement offer is directly comparable to an estimate such that it can be said that one has beaten the other. The Costs Registrar was correct in finding that it was unsafe to do so because if the bill was to be taxed seriatim, a very different figure might emerge. If the Respondent is to be subject to order to pay the costs of drawing and engrossing the bill of costs on the basis of a successful offer of settlement, he is entitled to have each item objected to, taxed by the Costs Court so the question of whether the offer has been beaten can be determined with precision.
Mr Williams would no doubt criticise this approach. In his submissions on costs, he made the point that that the Applicant is entitled to rely on offers as a basis for the Costs Court to otherwise order and allow the costs of preparing a bill. He argues that:
“if it was otherwise, the Alternative Assessment Procedure would be seriously flawed, in that it would afford no mechanism to enable a party to obtain any benefit from an appropriate offer made by that party and not accepted by the opposing party.”[39]
[39]Applicant’s submissions, para [20] Review Book, p 313.
The alternative assessment procedure is not flawed. Ironically its “limitation” with respect to assessing offers of settlement as a basis to “otherwise order”, such as in this case, is found in its utility as a cost effective and timely process for resolving costs disputes, that is, the assessment is done in the absence of the parties and without the expensive and time consuming requirement in seriatim taxations of making determinations on the individual items in the bill[40]. If parties wish to rely on a settlement offer, then the matter should be taxed.
[40]In the Supreme Court Annual Report 2021 – 2022, of the 141 matters assessed in chambers (including matters that failed to resolve at mediation), only 19 estimates were objected to as at 30 June 2022. This constitutes a saving of at least 250 sitting days for the Costs Court and potentially more than $1.4 million in additional legal costs for litigants.
There were other difficulties with this matter which were not raised by the parties before the Costs Registrar but became apparent in my review of the matter. Although they do not effect this ruling, it is appropriate to raise them here:
(i)A summons for taxation is an interlocutory proceeding.[41] As such, does is it constitute a “proceeding” for the purposes of r26.08.1(1)(a) of the Rules? I note that “proceeding” is defined in r1.13 of the Rules as ‘any matter in the Court commenced by writ or originating motion or as otherwise provided by or under any Act or these Rules’.
(ii)The order of the Costs Court made on 20 April 2022, is an order made on taxation, not an order that arises from the Part 8 assessment procedure. That procedure was brought to an end when the notice of objection to the estimate was filed by the Applicant on 21 December 2021. In agreeing to a limit the scope of taxation, did the parties effectively agree on taxation to settle all claims in the bill of costs for $221,350.00 – the amount of the estimate – save for a ruling on whether the Costs Court should ‘otherwise order’ pursuant to r 63.85 of the Rules?
(iii)If the answer to the question posed above is “yes”, can the Costs Court have regard to what is effectively an agreed sum between the parties in determining whether a settlement offer, however made, has been beaten?
(iv)To rely on a pre-litigation offer, the offeror must obtain an order or judgment in respect of the claim no less favourable to the offeror than the terms of the offer (see r26.08.1(1)(c) of the Rules). The Applicant relied on what was (arguably) an agreed sum on taxation to support his contention that he had beaten his settlement offer. The Costs Registrar did not make any rulings in the taxation nor did he do so in the Part 8 assessment procedure. In these circumstances, has the offeror (i.e. the applicant) obtained an ‘order or judgment’ as referred to in r 26.0.8.1(1)(c)?
[41]Per Phillips JA in Kowal v Zoccoli [2002] VSCA 100.

K Orders

I confirm that I find no error in the Costs Registrar’s ruling of 14 April 2022. The Order made on 20 April 2022 is confirmed. The Applicant’s Notice of Application for Review is dismissed.
The Applicant is to pay the Respondent’s costs of the review proceeding on a standard basis, to be fixed by the Costs Court in default of agreement.

SCHEDULE OF PARTIES

S ECI 2021 03120
BETWEEN:
MILORAD ERDEVICKI	Applicant
- v -
AMACA PTY LTD (FORMERLY JAMES HARDIE AND CO PTY LTD)	Respondent

[2023] VSC 81

13 February 2023