Foudoulis v O'Donnell (No 2)
[2020] VSC 343
•12 June 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S CI 2017 00193
IN THE MATTER of an application pursuant to s 84 of the Property Law Act 1958 for the modification of a restrictive covenant
– and –
IN THE MATTER of an application for the modification of the restriction arising under a covenant in a transfer of land registered No. 1073692 affecting the land at 6 Wilson Boulevard, Reservoir being the land in folio of the Register volume 4651 folio 188
BETWEEN:
| PETER FOUDOULIS | Plaintiff |
| – and – | |
| KEVIN HUGH O’DONNELL and DIMMITY JANE PUSPA O’DONNELL | Defendants |
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JUDGE: | Mukhtar AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | Application determined on written submissions | |
DATE OF JUDGMENT: | 12 June 2020 | |
CASE MAY BE CITED AS: | Foudoulis v O’Donnell (No 2) | |
MEDIUM NEUTRAL CITATION: | [2020] VSC 343 | First revision: 17 June 2020 |
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REAL PROPERTY ― Application for modification of restrictive covenant on land ― Property Law Act 1958 (Vic) s 84(1) ― Objection by beneficiaries of covenant ― Trial by adversarial proceeding ― Application refused by Court ― Approach to judicial exercise of discretion for costs in restrictive covenant cases
COSTS ― Alleged breach by successful party of paramount statutory duty to the Court to further the administration of justice ― No such breach or basis for depriving successful objectors of costs ― Powers of trial Court to fix costs of proceeding ― Civil Procedure Act 2010 (Vic) ss 16, 28(2), 65(2)(c) ― Supreme Court (General Civil Procedure Rules) 2015 r 63.07(2)(c)
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APPEARANCES: | ||
| Not required. The Court made this costs determination according to the parties’ written submissions. | ||
HIS HONOUR:
After the trial of this proceeding, on 8 May 2020 the Court published its judgment.[1] The result was a refusal of the plaintiff’s application made under s 84(1)(c) of the Property Law Act 1958 (Vic) to modify a single dwelling covenant that burdened his residential land at 6 Wilson Boulevard in Reservoir. The covenant was created in 1922. The plaintiff had sought the modification to enable him to construct two semi-detached double story dwellings and garages in what is presently the backyard of a single dwelling on the land.
[1]Foudoulis v O’Donnell [2020] VSC 248.
The defendants, Kevin and Dimmity O’Donnell, own and live in a home in Broadhurst Avenue which is not far away from the plaintiff’s place. They were one of numerous owners of land in the neighbourhood having the benefit of the covenant, and therefore had legal standing to object to the plaintiff’s application. They and four other beneficiaries objected to the application. The O’Donnells took the responsibility of being the defendants to the application.
Under s 84(1)(c) of the Property Law Act, the legal onus was squarely on the plaintiff to establish that the modification to the restrictive covenant as sought would not cause ‘substantial injury’ to beneficiaries of the covenant. The plaintiff’s case was predicated on a contention that the benefits of a single dwelling covenant had been eroded over time as a result of changes in this neighbourhood to an extent that this neighbourhood within Reservoir could no longer be characterised as a single dwelling neighbourhood. Therefore, so the plaintiff contended, the proposed construction of multi dwellings on his land would not cause ‘substantial injury’ to the beneficiaries because the neighbourhood had already been altered in character and housing density in a way that took away the benefits of a single dwelling covenant.
The defendants accepted there had been some changes in the neighbourhood. To that extent the application could not be said to be lacking any merit. Nevertheless the defendants succeeded in showing the Court that, on a refined analysis of the re-subdivisions of land and the instances of multi dwelling on land within this neighbourhood, and on a real life inspection or view of conditions in the whole of the neighbourhood, the degree or location of the changes were such that it could not truly be said that the neighbourhood had lost its predominant quality of being a single dwelling area, and the benefits of a single dwelling covenant were real and should be enforced. In other words, they were saying: ‘Don’t let the changes go any further otherwise the character of the neighbourhood truly will change’.
The defendants succeeded in rebutting the plaintiff’s case that the benefit of the covenant had diminished. They also succeeded in rebutting the plaintiff’s case that building two double story dwellings in his back yard would not cause substantial tangible injury to the beneficiaries of the covenant that were closest to the plaintiff’s backyard boundaries.
There was a two-day trial with affidavit and spoken evidence, and cross examination. It was factually complex with an analysis of the subdivision in depth. In support of the application, the plaintiff adduced expert evidence from a renowned town planning consultant. In my experience in these cases ― which are noticeably increasing in frequency in this Court as the only Court having the statutory jurisdiction ― ‘ordinary’ citizens with families and working lives are daunted by the prospect of being embroiled in Supreme Court litigation and having to match the application with lawyers and expert town planners of their own. Thus, in my experience, beneficiaries become discouraged because of the fear, expense, labours and inconvenience of litigation and the application proceeds as unopposed, which practically speaking, makes the application easier to make out. Or, in my experience, citizens conduct the litigation in person at a disadvantage in not being able to engage on the facts and on the law of property. Despite that, when beneficiaries are moved to oppose an application — out of a genuine attachment to the existing conditions and quality of life in their neighbourhood — they urge judges to hold an applicant to the covenant as voluntarily made and as shown on title, and to not to let their neighbourhood become altered by an increasing housing density and the concomitant increase in congestion, traffic, noise and activity as resembles inner suburban conditions.
In this case, the defendants did their own assiduous researches and ‘spade work’ into the re-subdivision and changes to titles and land usage in this neighbourhood, and did it all from proper and attributed sources. Then, with the legal assistance of lawyers experienced in the field, they adduced a substantial body of countervailing documented evidence and presented an illustrated analysis of a very high and reliable standard. This enabled a real and direct engagement with the factual basis of the plaintiff’s expert opinion evidence. The aggregate evidence from both sides enabled the Court to obtain a complete and balanced understanding of the features of the neighbourhood and more pertinently, the location and extent of re‑subdivisions of land over the whole neighbourhood and the location of multi-dwelling developments in a certain area of the neighbourhood ― all the better to make a judgment about the character of the neighbourhood and the ultimate question whether the plaintiff’s proposed modification would not cause ‘substantial injury’.
The defendants have won a testing case. There is now a tense question of the costs of the proceeding, on behalf of the plaintiff. It calls for another considered judgment, and, an unavoidable digression into an extrinsic controversy in another restrictive covenant case in the same neighbourhood.
The usual order for costs
The ordinary discretionary ‘rule’ of adversarial litigation is that costs orders are made in favour of the successful party, as compensation for the costs of bringing or defending a lawsuit to vindicate rights and claims. So, it is rare for a successful party to be deprived of costs.
In these restrictive covenant cases under s 84 of the Property Law Act, there is a special discretionary consideration. It has been recognised on the legal authorities in Victoria that in exercising the costs discretion, unless the objection to a modification is shown to be frivolous or untenable, it would not be a miscarriage of the discretion if a plaintiff is made to pay a defendant’s costs of a modification application even if the plaintiff was successful.[2] This is based on the thinking that a defendant objector, who did not put up a frivolous or untenable objection, should not have to pay any costs, including its own, in seeking the preservation of the benefit of a covenant which by law belongs to an objector. As I see it, a costs order is the just price to be paid by a covenantor to be relieved from a solemn covenant that gives to those to whom the covenant is made a proprietary interest in equity over the covenantor’s land. It is a proprietary right that only the Supreme Court or County Court can modify.[3]
[2]See Wong v McConville & Others (No 2) [2014] VSC 282, and Jiang v Monaygon Pty Ltd (Costs) [2017] VSC 655, [6]-[7].
[3]See definition of ‘Court’ in s 3, Property Law Act 1958 (Vic).
Thus, a successful objector has a dual basis for a favourable exercise of the Court’s discretion on costs. Likewise, an applicant embarks on this lawsuit knowing that if there are objectors, then unless the objection appears to be frivolous or untenable, there is a definite risk that the applicant will have to incur its own legal costs as well as pay the legal costs of any objectors even if the applicant succeeds in obtaining a modification of the covenant. I hasten to add that costs orders are always discretionary, and these are not ossified legal rules. There may be circumstances in a particular case to justify a departure.
The plaintiff’s primary and rather sensational submission is that the successful defendants here should be deprived of their costs because they have engaged in conduct that breached their paramount duty under section 16 of the Civil Procedure Act ‘to further the administration of justice in relation to any civil proceeding in which that person is involved’. Counsel for the plaintiff has submitted that ‘The Court ought to indicate its opprobrium of the defendants’ behaviour in breaching their duty under s 16 of the Civil Procedure Act by not awarding them a costs order in their favour. In other words, the submission is that there should be no orders as to costs in this proceeding.’
In circumstances I shall explain in detail later, this charge is based on the defendants having sent a letter to another Associate Judge after the conclusion of this trial. That Judge had, in the week before this trial commenced, decided to allow a modification of a restrictive covenant over another property further up the same street. That case was one of many on which the plaintiff had relied in the present case.
The defendants’ letter, written with decorum I think, drew that Judge’s attention to a possible material non-disclosure in that other case. As I shall explain later, the letter was received without exception by the Judge, who was concerned enough to re-list that decided case and conduct an enquiry in Court about the non-disclosure. The upshot was that, in essence, there had been a non-disclosure to the Court but on the specific facts it came to be not material, and, the legal practitioners concerned were not responsible or blameworthy for misleading the Court. That meant the Judge’s decision stood, and it remained as one of numerous cases relied on by the plaintiff (as identified in my judgment), but in the result was distinguished as were other cases that were relied on by the plaintiff.
Despite all that, as I understand the plaintiff’s submission, the letter was said to be a wrongful attempt by the defendants to influence the course of justice. For that, the plaintiff is not saying it taints my decision. Nor is he seeking compensation under the Civil Procedure Act. As I see it, he is asking the Court to punish the O’Donnell’s by depriving them of their costs even though as objectors they have succeeded on the merits.
As against that, the O’Donnells say in essence that rather than being accused of attempting to interfere with the administration of justice, they ought be seen as acting faithful to it. They say their letter to the Judge openly revealed their interest in the matter and did no more than raise for the Judge’s attention a possible material non-disclosure of an objective, verifiable and uncontroversial fact concerning the carriage of that case. Having succeeded on the merits in this case, and there being no suggestion that my decision was somehow tainted, they seek their costs and ask the trial Court to fix the costs of the proceeding on the standard basis, in the interests of avoiding further expense and delay and more disputation. To that end they have equipped the Court with a costs assessment and certification by a professional costs lawyer to enable a quantification of a costs order. The defendants’ costs are substantial. That is not unexpected given the complexity of the case. On the standard basis of assessment under the Rules of Court, in May 2018 the defendants’ costs were assessed independently by a firm of cost lawyers at $52,902 of which $36,000 was counsel’s fees. That total figure has since increased to $60,896 because of the simmering costs dispute.
Ordinarily the quantification or assessment of costs is a matter for the Costs Court as the specialist court, and trial Judges readily defer to that Court. But, a trial Court has the power under s 65(2)(c) of the Civil Procedure Act ‘to award a party costs in a specified sum or amount’ if to do so would further the overarching purpose of facilitating ‘the just, efficient, timely and cost effective resolution of real issues in dispute’. In addition, rule 63.07(2)(c) empowers the trial Court to order that a party in whose favour a costs order is made shall be entitled to ‘a gross sum specified in the order instead of taxed costs’. The purpose of that rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation. Although that makes it especially suitable for complex and large scale litigation, it is not to be so confined. It gives the Court the ability to apply a much broader brush than is entailed in a taxation process. It is based on costs on the standard basis on an estimate that is logical, fair and reasonable, for which the Scale of Costs can provide assistance.[4]
[4]See the explanation of the rule by Wood AsJ in ACN 074 970 109 (as trustee for the Argo Unit Trust) & Anor v National Mutual Life Association of Australasia Ltd [2013] VSC 137.
As this is a lengthy judgment, I shall state my conclusions at the outset.
Conclusions
First, I do not think there has been any conduct by the defendants in breach of any duty to the Court to further the administration of justice whether it be under the Civil Procedure Act or otherwise. I see no occasion for the Court to express its ‘opprobrium’.
Secondly, there is no reason why the plaintiff should not pay the defendants’ costs on the standard basis. They have successfully resisted the application on the merits.
Thirdly, there are no grounds for the Court to order an apportionment of the costs by making a fractional order as sought by the plaintiff in the alternative. The defendants were wholly successful. I reject the submission that they spent time and effort at trial in opposing grounds of modification that were not advanced by the plaintiff. Theirs was a comprehensive case, and all that was argued was within its purview.
Fourthly I will accede to the defendants’ application to take the exceptional step of fixing the costs of the proceeding as the trial judge. There is sufficient and reliable independent evidence before me to do so. Moreover, the plaintiff’s written submissions on costs do not seek a taxation of costs by the Costs Court in the usual way. Nor does the plaintiff say anything definite to challenge the defendants’ expert costs assessment. I think an order for a specified sum under the Civil Procedure Act or an order for a gross amount under the Rules of Court can be made in the interests of preventing any more delay and expense. Above all, it will give much needed finality in this case.
The opening subject in this judgment has to be an explanation of the alleged breach of duty to the administration of justice. It concerns land at 33 Wilson Boulevard and eventually a substantial judgment of Lansdowne AsJ in Re Castlerea Carpenters Pty Ltd.[5]The plaintiff’s solicitors in this case had acted for the plaintiff in that case.
[5]Castelrea [2019] VSC 303.
33 Wilson Boulevard
One of the properties along Wilson Boulevard (north of the plaintiff’s house) is 33 Wilson Boulevard. Reference to Annexure B of my trial judgment will locate the property as Lots 1529 and 1530.[6] Those two lots came to be re-subdivided into three residential lots.
[6]Foudoulis v O’Donnell, 32.
On 28 November 2107 Castlerea Carpenters Pty Ltd applied to this Court for the modification of a single dwelling covenant at 33 Wilson Boulevard. At that time Castlerea Carpenters Pty Ltd had standing to make the application as the purchaser of the land from the registered proprietors, namely Katherine Scerri and three others as legal personal representatives of the former registered proprietor. The application in Castlerea was to modify the covenant under s 84(1)(c) of the Property Law Act to permit up to five dwellings to be built on the land. The application was, like this one, supported by an expert town planning report which also identified the beneficiaries of the covenant and, like this case, commented on previous modification of covenants and changes in the neighbourhood.
The application in Castlerea proceeded in the usual way before Lansdowne AsJ by requiring, as a first procedural step, direct service of the application and other materials on the identified beneficiaries of the covenant. Then, on the second return of the application, her Honour received affidavit evidence that proved service of legal process on the beneficiaries, and evidence that proved the absence of any notification of objection to the applicant’s solicitors. Certainly, no beneficiary actually attended Court on that occasion to state an objection.
In the absence of a objections, her Honour proceeded to hear the Castlerea case as an unopposed trial on 12 February 2018. That was a week before the commencement of this trial. Her Honour granted the unopposed application for the modification of a single dwelling covenant as sought, so as to allow up to five dwellings. The application was granted by her Honour not knowing that on 21 June 2017 an earlier application had been made to another Associate Judge by the predecessors in title of 33 Wilson Boulevard for a modification of the covenant to allow three additional dwellings. That was the matter of Scerri.[7] But, the application in Scerri was refused on the ground that the applicant had failed to present to the Court sufficiently detailed plans to enable an assessment to be made of ‘substantial injury’ if the modification were to be allowed. The unsuccessful applicants in Scerri then sold the property to Castlerea Carpenters Pty Ltd who then made the application to Lansdowne AsJ to modify the covenant to permit five dwellings on 33 Wilson Boulevard. That application was not opposed by any beneficiaries, and it was granted.
[7]Re Katherine Scerri & Others (as Legal Personal Representatives of Giovanna Scicluna, deceased) [2017] VSC 368 (Ierodiaconou AsJ).
The decision in Castlerea to allow five multi dwellings was relied on by the plaintiff in this application for its precedential value, particularly as it was on the same street. It was one of a number of instances, on Wilson Boulevard and elsewhere, where the plaintiff was looking to identify changes in the neighbourhood to try and make the case that the single dwelling covenant had been eroded in the neighbourhood to the point where the benefit was no longer really there. Castlerea was considered and is referred to in my judgment.[8]
[8]Foudoulis v O’Donnell, Annexure C [132].
The alleged wrongdoing or misconduct said to have polluted the proper administration of justice is that soon after the closing submissions in this case on 20 February 2018 the O’Donnells sent this letter to the chambers of Lansdowne AsJ:
Your Honour,
We are writing to you with regard to orders made last week on 12 February 2018 in the matter of Castlerea Carpenters Pty Ltd (S Cl 2017 4818). We wish to ensure that the decision of Re Katherine Scerri & Ors (as Legal Personal Representatives of Giovanna Scicluna, Deceased) [2017] VSC 368, regarding the same land, was brought to the Court’s attention in this matter.
The orders for Castlerea Carpenters Pty Ltd concerned the covenant affecting the land known as Lot 3 on plan of subdivision 52219, being the land at 33 Wilson Boulevard, Reservoir and modified a single dwelling restrictive covenant to allow for the erection of five dwelling houses.
In Re Katherine Scerri & Ors Her Honour Ierodiaconou AsJ handed down a decision on 21 June 2017 in respect of the same land at 33 Wilson Boulevard dismissing the plaintiff’s application for modification of the covenant to allow three dwellings. Her Honour noted in that judgement that “those with the benefit of the restrictive covenant may be injured, in the future, by the precedent created by the modification.”
We have a two-fold interest in this matter. First, we have been defendants for the last two days (19 and 20 February 2018) in a single-dwelling covenant modification application before His Honour Mukhtar AsJ in the Supreme Court (Foudoulis v O’Donnell S Cl 2017 00193). Our matter concerns 6 Wilson Boulevard, Reservoir which is on the same street as 33 Wilson Boulevard, Reservoir. The Plaintiff in our matter argued that the orders in Castlerea Carpenters Pty Ltd constituted a precedent for the area.
Second, we had some involvement in Re Katherine Scerri & Ors. After seeing the display of the public notice regarding the modification on the land, we attended a hearing on 1 June 2017 in this matter before Her Honour Ierodiaconou AsJ. We advised the Court that we were seeking to establish whether we were beneficiaries of that covenant. We were given leave by the Court to file an affidavit in relation to our potential joinder as defendants. We ultimately established that we were not beneficiaries.
We noticed that the orders on return of the originating motion for Castlerea Carpenters Pty Ltd did not require the plaintiff to display publicly a copy of the notice of those proceedings. Therefore, we were unaware of these latest proceedings until last Friday 16 February 2018.
We would like to thank Your Honour for taking time to read this correspondence and would be glad to provide any further clarification or information required.
Sincerely,
Kevin and Dimmity O’Donnell
It is not said there is anything factually incorrect in that letter.
The letter prompted the following step being taken by the Judge which is best expressed by her Honour:[9]
The Court requested a response from the Solicitor [i.e., the solicitor acting for the applicant in Castlerea] to the O’Donnells’ letter, noting that I did not recall that ‘the making and refusal of this earlier application over the same land, for a less extensive modification, was drawn to [my] attention in this application’. The request for a response further noted that:
Her Honour is concerned that the order for modification made by her in the purchaser’s proceeding may have been made without reference to the earlier unsuccessful application by the vendors. This may raise an issue as to whether the order was made on the basis of a material mistake or non‑disclosure, and for that or other reason is liable to be vacated, and the merits of the application for modification reconsidered.
[9]Castlerea, [10].
The plaintiff submits that the defendants, to whom the Civil Procedure Act applies,[10] have breached s 16 of the Act. That section provides (with my underlining):
Each person to whom the overarching obligations apply has a paramount duty to the Court to further the administration of justice in relation to any civil proceeding in which that person is involved …
[10]See s 10.
The submission then refers to s 29 of the Civil Procedure Act, intended I think to mean a reference to s 28(2) which states (with my underlining):
(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 sub-s(1), in exercising its discretion as to costs, a court may take into account any contravention of the overarching obligations.
Counsel for the plaintiff submitted:
In the plaintiff’s submission, the writing of the 20 February 2018 letter was an attempt on the part of the defendants to influence the outcome of this proceeding. Inferentially, the purpose of the defendants raising the issue of the prior decision in Re Scerri was to invite the Court as constituted by Lansdowne AsJ to revisit or reconsider the judgment in Castlerea which had been handed down on 12 February 2018 if the Re Scerri decision had not been taken into account. In any event, that was the result of the 20 February 2018 letter, as it transpired that Re Scerri had neither been referred to nor taken into account in the Castlerea decision.
Put another way, in writing the 20 February 2018 letter the defendants in this proceeding have attempted to collaterally attack a ‘precedent’ covenant modification in another proceeding which they presumably perceived might have presented an obstacle to their success in this proceeding.
By virtue of sending the 20 February 2018 letter to the Court the defendants have at least attempted to interfere with the administration of justice in this proceeding by seeking to influence its outcome. Relevantly for present purposes, this would constitute a breach of s 16 of the CPA.
In the plaintiff’s submission, the Court ought to indicate its opprobrium of the defendant’s behaviour in breaching s 16 of the CPA by not awarding them a costs order in their favour. In other words, the submission is that there should be no order as to costs in this proceeding.
The submission does not say there was a contravention by the O’Donnell’s of any overarching obligations under the Civil Procedure Act. Section 16 does not state any overarching obligations. It declares the paramount duty to the Court to further the administration of justice. Sections 17 to 26 then stipulate the overarching obligations. The plaintiff here does not, and I think cannot, point to any contravention of any of the overarching obligations in sections 17 to 26. They do not concern or appositely describe what has occurred here in the sending of the letter.
This links with Part 2.4 of the Civil Procedure Act which concerns the sanctions ‘for contravening the overarching obligations’. That Part includes the Court’s power when it comes to exercising its costs discretion to ‘take into account any contravention of the overarching obligation’. That is attending to the situation where a party has, by wasteful or counterproductive or irresponsible conduct of the litigation, added to costs or caused some other detriment remediable by costs. The power under the Civil Procedure Act is then exercised remedially to compensate the adversely affected other party.
In this case, as I see it, the plaintiff’s submission is to be understood as saying that despite the defendants’ success in this case and despite the presence of the judicial practice of not denying an objector its costs of an objection regardless of a result, as a matter of the Court’s unfettered discretion on costs the O’Donnells should be deprived of their costs because they stirred a controversy concerning the order made for 33 Wilson Boulevard with the collateral purpose of removing it or weakening it as a precedential case to be used against them in this case, and that pursuit was a breach of the paramount duty under s 16 of the Civil Procedure Act to further the administration of justice.
The fact is that her Honour took no exception at all to the sending of the letter. The O’Donnell’s were not parties in Castlerea. They were not ‘involved in’ that proceeding for the purposes of s 16 of the Civil Procedure Act. What the O’Donnells’ letter did, not at all inimical to the administration of justice but in furtherance of it, was, as acknowledged by the Judge, to raise a ‘… concern related to the proper administration of justice’ in Castlerea.[11]
[11]Castlerea, [1], [8] – [10].
Acting on that concern, her Honour re-listed the case and involved the parties in it to an inquiry by the Court into the questions whether: (i) the Court had the jurisdiction under the Civil Procedure Act to re‑open what was a final order for modification as made in the Castlerea case; (ii) the solicitor and counsel for the applicant in Castlerea were aware of the previous decision in Scerri; (iii) the Court could conduct an inquiry of its own motion into the conduct of a legal practitioner for the purpose of ascertaining whether a practitioner may have breached the Civil Procedure Act by non‑disclosure; (iv) the Court also had the inherent jurisdiction or the disciplinary jurisdiction to make orders concerning a legal practitioner; (v) it was open for the Court to find that the solicitor or barrister acting in Castlerea had engaged in misleading and deceptive conduct in not informing the Court about the previous unsuccessful application for modification of the covenant in Scerri.
It is unnecessary to give an account of the evidence and the submissions made in Castlerea as revisited. Her Honour published a substantial judgment that made a number of determinations.[12] I will select the determinations that matter for present purposes and only in a summary fashion.
[12]See above n 4, Castlerea.
First, as there were final orders pronounced, the Court was precluded from conducting an inquiry of its own motion under the Civil Procedure Act into the conduct of legal practitioners in possibly breaching the overarching obligation not to mislead and deceive the Court.
Secondly, the Court had inherent jurisdiction (or more precisely disciplinary jurisdiction) to look into the conduct of legal practitioners, but in this case the jurisdiction was not enlivened. That was because on the specific facts of the matter, the application in Scerri was not material to the first ex parte step in Castlerea which was unconcerned with the merits of the application and concerned only with ascertaining the identity of beneficiaries.
Thirdly, once the beneficiaries had been identified and notified to enable Castlerea to then proceed to a determination on the merits, the obligation on the applicant for modification is not one of full and frank disclosure but an obligation not to mislead the Court. In this case, her Honour on the specific evidence held that the legal practitioner who knew about the Scerri had a rational basis for regarding that decision as irrelevant to Castlerea because the application in Scerri had been refused not on any facts applicable to Castlerea, but on the distinct threshold basis that the applicants in Scerri did not produce adequate plans of the development.
Therefore her Honour’s original decision in Castlerea to allow five dwellings on the land at 33 Wilson Boulevard (on which the plaintiff had relied on in the present case) remained undisturbed. No findings were made against any of the legal practitioners and nothing adverse was said or suggested against the O’Donnells for raising the matter of non-disclosure. Indeed, as her Honour stated, the lesson to be taken from Castlerea in order to avoid what transpired on that case, is for legal practitioners to act prudentially in these restrictive covenant cases and make proper enquiry of their clients and carefully consider if there have been any earlier applications concerning the land in question.
Thus, as was submitted here by counsel for the defendants, what the O’Donnell’s did by sending their letter was to do that which her Honour said was prudentially required in these cases and which the practitioners in Castlerea had not observed because those practitioners believed the Court’s grounds for dismissing the earlier application in Scerri made it irrelevant for the subsequent application. The O’Donnells were drawing to the Judge’s attention, and no more, that there had been an earlier application concerning the land at 33 Wilson Boulevard which had been refused by this Court for fewer additional dwellings. I presume to think any judge would want to see the earlier decision even if it was to be distinguished or had become superseded, as came to happen.
I would describe the O’Donnells letter as eager, and certainly not to be assessed as attracting opprobrium or censure. I view the letter as having been sent by defendants who before me at trial demonstrated an earnest protectiveness about the quality and conditions of their neighbourhood, and without being fanatical about it. They went about preparing with exactitude their documented historical evidence about all past modifications on a Lot by Lot basis. Their evidence ‘drilled down’ to showing whether a particular application on another Lot was opposed or unopposed, or what powers were being exercised, and for what reason or on what considerations the previous application had been allowed or refused by a Court or Tribunal or municipal authority. It was all relevant and persuasive. To me, these labours were undertaken to meet the case put against them to show that the source, nature and effect of precedent had to be analysed carefully before reaching conclusions about the character of the neighbourhood.
I think the letter to the Judge and the motivation for it has to be seen in that fair and proper context. I do not think their letter had the purpose or the effect of interfering with or attempting to interfere with the administration of justice in this proceeding or in Castlerea. I think it is far-fetched to say that the O’Donnell’s were surreptitiously looking to undo a legal precedent that was against them. Their letter properly revealed their interest in the Castlerea case. Their inquiry was accepted by the Judge as legitimate. The matter required an ad hoc judicial enquiry to see if there had been a possible miscarriage of justice in Castlerea by the non-disclosure. In the events that occurred, the plaintiff’s submission goes nowhere for present purposes. The decision in Castlerea remained untouched and came to be considered in my judgment along with all the other instances put forward by the plaintiff of changes in the neighbourhood.
It is for those reasons that I reject the plaintiff’s primary submission based on a breach of the paramount duty to further the administration of justice under s 16 of the Civil Procedure Act.
Apportionment of costs
The plaintiff makes an alternative submission. Counsel submits: ‘If there is to be a costs order in favour of the defendants their costs should be apportioned or discounted as appropriate’. The submission does not quantify what is said to be ‘appropriate’ as if to leave it to the Court to determine. If the submission was designed to obtain a fractional order for costs then it was incumbent on the plaintiff to put forward the quantitative measure by which such an apportionment should be made.
The basis for seeking the apportionment was, I think, weak. The submission made was this:
Alternatively, if a costs order is to be made in the defendants’ favour the plaintiff says that much of the defendants’ submissions (both written and oral) concerned paragraph (a) of section 84(1) of the Property Law Act 1958, whereas it was made clear enough in the third paragraph of Aughtersons’ letter to the defendants of 23 May 2017 that the plaintiff was relying solely upon 84(1)(c) of the Act.
I do not think it correct to say that much of the defendants’ submissions (both written and oral) concerned paragraph (a) of s 84(1). As I said in my judgment, the plaintiff’s original motion did not stipulate on which of the grounds in s 84(1) he relied.[13] Originating process should do so, unless an applicant is ‘waiting and seeing’ or looking for room to move.
[13]Foudoulis v O’Donnell, [13].
I accept that the written and spoken submissions as made by the plaintiff’s counsel to propound the case came to be confined to the ground in s 84(1)(c). But, as I remarked in judgment, the plaintiff’s expert planning report also looked to the ‘reasonable user’ grounds in s 84(1)(a), albeit to a lesser extent, but to an extent that I saw fit to consider. There can be overlap between sub paragraphs (a) and (c) of s 84(1).
The thesis by which the opposition to the application was propounded was based on a statutory construction of s 84(1)(c) and its relationship to the obsolescence ground in s 84(1)(a). That was to my mind an important analytical consideration because the obsolescence ground explicitly looks to ‘changes in the neighbourhood’ whereas the substantial injury ground in s 84(1)(c) does not. But as is common in these applications the notion of ‘change in the neighbourhood’ is instilled in s 84(1)(c). Part of the construction exercise as put on behalf of the defendants, and as undertaken by the Court, was to grapple with this and analyse the operation of the ‘substantial injury’ ground in sub-paragraph (c) by reference to the other sub-paragraphs in s 84(1). That was the purpose of the references to the other parts of s 84(1).
I simply cannot accept the contention that time and submissions directed to the content of the other sub‑paragraphs were irrelevant to the application. Nor would it be possible, for a two day trial, to now measure by time and motion the extent to which other parts of s 84(1) came into play in the aggregate for the purposes of a costs allocation. I would take this occasion and say, for my part, legal practitioners simply must in the originating process stipulate the particular statutory ground on which the application is being made.
Accordingly, I reject the plaintiff’s second submission. I will order, without qualification, that the plaintiff shall pay the defendants’ costs of the proceeding on the standard basis.
Costs assessment without a taxation
The plaintiff did not favour the Court with any submission on this part of the costs question, yet the plaintiff’s solicitors have been on the receiving end of letters and submissions since May 2018 to try and reach agreement on costs on the faith of the legal authorities to which I have referred and on the assumption that whatever the result of the case, the defendants’ objections could not be viewed as frivolous and untenable. The plaintiff’s position was to abstain from dealing with costs until invited by the Court to do so. I shall recount the attempts.
In April 2018 the defendants engaged Messrs Britton + Mullen Cost Lawyers (‘the Cost Lawyers’) to assess the professional costs and disbursements of the proceeding on the ‘standard basis’ for the taxation of costs in this Court and give certification of the outcome. For their task, the Cost Lawyers were given the two volume Court book, all correspondence between the parties, and an itemised time ledger of all work done for the defendants since January 2018 when instructions were first taken.
The standard basis of costs allows all costs reasonably incurred and of reasonable amount.[14] That assessment is made according to the Scale of Costs of the Supreme Court to be found in Appendix A of the Rules of Court (‘the Scale’). The Rules also say that ‘The Court may, on special grounds arising out of the nature and importance or the difficulty or urgency of the case, allow an increase not exceeding 30 per cent of the legal practitioner’s charges allowed on the taxation of costs…’.[15]
[14]See rule 63.30. The allowance for charges is made according to a scale of costs in Appendix A of the Rules.
[15]See rule 63.34(3).
The Cost Lawyers conducted their assessment and gave a certificate (‘the costs certificate’) that:
… the file of documentation, court documents and correspondence relating to this matter have been examined and considered by this consultancy and confirm inter-partes costs are assessed in accordance with the Supreme Court Scale and assessed as follows …
The Cost Lawyers assessed and certified the defendants’ inter partes costs at $14,902.85 and counsel’s fees of $36,000 giving a total of $50,902.85. I take it that inter partes costs are what has in the past been conventionally known as party/party costs. They are recoverable costs, and not a complete indemnity for the actual costs incurred by the defendants.
In their advice, the Cost Lawyers remarked about the complexity of the proceeding ‘including the difficult factual and legal matrix’. They acknowledged the expertise of the defendants’ counsel in restrictive covenant cases and the necessity for ‘counsel undertaking tasks such as research, reading and drafting documents’. I think all that has to be accepted, for both counsel in the case. Therefore, the advice was that certification for counsel’s fees in excess of allowable costs on the Scale ought to be obtained from the trial Judge otherwise the question of inter partes costs would have to be re-litigated in the Costs Court solely on the question of counsels fees which would add to the cost and delay. If the object was to try and reach agreement on costs before judgment, the advice was to obtain certification of counsel’s fees from the trial Court for categories of work and hourly rates.[16]
[16]Counsels fees are a separate item (n 19) on the Scale and the idea of certifying Counsel’s fees by the trial Judge is for the purposes of an eventual taxation to enable the Costs Court to allow fees in excess of the Scale, although the Costs Court has the discretion to allow fees in excess of scale.
What follows is an account of the written attempts by the defendants’ solicitors to settle the question of costs whilst judgment was reserved. It should be kept in mind that the offers of settlement of costs were made after the O’Donnells sent their letter to the Judge in Castlerea (20 February 2018) and after the Judge had conducted the subsequent enquiry and then reserved judgment (7 and 16 March, 7 May 2018).
The first offer to settle costs
By a ‘without prejudice’ letter dated 21 May 2018, the defendants’ solicitors sent the certification of the Cost Lawyers to the plaintiff’s lawyers and invited them to agree to a certification by the trial judge of the defendants’ costs fixed at $50,902.00. That was put on the basis of the legal authorities that award costs to objectors irrespective of the outcome of the case. The certification showed ‘Total Professional Costs‘ of $14,902.85 and counsels fees of $36,000. The letter added the incentive that a refusal of the offer could lead to: a taxation process in which the defendants could seek a higher proportion of their costs; the costs of a taxation; and the costs of having to argue costs before the trial judge.
The plaintiff’s counsel has objected to that letter being adduced into evidence on the grounds of a joint privilege. There is no foundation for that objection. The letter is receivable into evidence under s 131(2)(h) of the Evidence Act as a ‘communication or document relevant to determining liability for costs’.
By letter dated 22 May 2018 the plaintiff’s solicitors refused that first offer. The letter made this cryptic (at that time) comment:
We note that you state that your clients are likely to be awarded costs on a standard basis irrespective of the outcome of the proceeding. It is our view that the circumstances of this matter are somewhat different given the conduct of your clients late on the second date of the hearing.
As a result of this we advise that we will be making submissions to the Court with respect to the question of costs. Whilst we have referred your correspondence to our client, agreement cannot be reached for the above reason. We also deem your disbursements excessive and clearly not on a standard basis.
It is not explained, but the reference to excessive disbursements must be to counsel’s fees of $36,000.
The second offer to agree costs
A week later, the defendants made a second offer to settle the question of costs, this time in the form of a Calderbank letter. This letter also asked for particulars of the earlier reference to ‘the defendants’ conduct on the second day of the hearing’. The letter put an offer to settle the defendants’ costs at $44,999.00 payable within 28 days. That was a ten percent discount of $5,903.00 from the first offer.
That second offer was refused by the plaintiff’s lawyers by letter dated 4 July 2018 which said:
We submit that a matter has arisen which may result in the Court not making the usual order in relation to costs in your clients’ favour. The issue of the Defendants directly contacting another Associate Justice of the Supreme Court of Victoria in relation to a decision which had been made by that Associate Justice, such decision having been relied upon by the Plaintiff in the Foudoulis proceeding constitutes, in our submission, conduct which the Court in its discretion, may take into consideration when determining the question of costs.
The third offer to agree costs 10 Sept 2018
A third offer was made by the defendants to settle the costs amount by means of an open letter dated 10 September 2018. This letter offered to settle the costs question by the plaintiff paying the defendants’ legal costs fixed at $48,000.00 all in, payable within 28 days. The letter repeated the ‘default position in Victoria’ that a plaintiff in an application under s 84 of the Property Law Act will ordinarily bear a defendant’s costs irrespective of the success or otherwise of the outcome. The letter also ended:
Finally, if there are any reasons why your client believes the ordinary rule of costs in restrictive covenants proceedings should not apply in this case (separate to any arising out of the judgment and reasoning itself, which neither party has yet seen), we ask you to provide particulars of those reasons within 14 days of the date of this letter. Such disclosure is consistent with our respective overarching obligations to narrow the issues in dispute, and failure to do so will be advanced as a separate basis upon which your client should be required to pay any further costs of my client on an indemnity basis.
There was no response to that letter.
At this stage, the judgment on the non-disclosure question in the revived Castlerea case was still reserved, as was my decision in this case. I can only suppose that in the suspense of those circumstances, then for as long as there were two significant reserved judgments, the plaintiff’s lawyers were unwilling to engage on the question of costs. If so, I can well understand that attitude. For their part, the defendants had not yet been accused of interfering with the administration of justice, and were keen as genuine objectors to settle the question of costs with the plaintiff, so as to clear the way for only a judgment to be given without further costs being incurred on the question of costs.
In the peculiar circumstances, and in order to dispel any Calderbank type questions, I should state my view that it was not unreasonable for the plaintiff’s lawyers to await both decisions from the Court before dealing with costs questions.
The fourth measure – the defendants’ submission on costs before judgment
The non-disclosure judgment in Castlerea was published on 7 May 2019.
On 2 October 2019, whilst my judgment was still reserved, the defendants by their lawyers delivered to the plaintiff and to the Court a ‘Submission on Costs’. A copy was sent to the plaintiff’s counsel. These submissions were not sought or ordered by the Court. The submissions opened by saying:
These costs submissions have been prepared and circulated prior to the decision in the matter being handed down, to facilitate the just, efficient, timely and cost‑effective resolution of the real issues in dispute, in particular, to help avoid the need for the Defendants or their lawyers appearing at the hearing of this matter when judgment is handed down.
The submission posited ‘three alternative scenarios for the plaintiff and the Court to consider’:
(a) the third open offer that had been made on 10 September 2018 to settle for $48,000 (to which there was no response) remain open until two business days before judgment is handed down;
(b) if that offer of $48,000 is not accepted, the defendants would invite the Court to fix the defendants’ costs at $50,902.85 (which was the amount of the first offer as certified by the Cost Lawyers); and
(c) if the offer of $48,000 is not accepted and if the Court would not fix the costs at $50,902.85 then the defendants would agitate the question of their costs before the Court.
For the defendants to have made a pre-decision costs submission to the Court was unorthodox. I am not sure, but it seems the Court was being asked to fix the costs before making the decision or possibly as part of the judgment. The idea behind the submission, as I see it, was for the defendants by means of a submission to the Court to persevere and try and settle the question of costs before judgment on the basis that whether it be ultimately a win, a loss or a draw, the plaintiff would be, on the authorities, likely to be bound to pay the defendants’ costs. The defendants were, as I see it, looking for a way to get costs ‘out of the way’ so that the only remaining legal event would be the publication of the Court’s decision.
The plaintiff refused to engage in finding a pre decision settlement on the question of costs, saying that submissions would be made when the Court invited them. That was a short, but I think reasonable response. The defendants’ submissions were therefore left as not having been entertained by the Court.
Judgment in this matter was given on 8 May 2020.[17] On delivery of judgment, I gave the defendants as the successful parties an opportunity to file an updated submission on costs. I also invited the plaintiff to file a responding submission to enable the Court to decide the question of costs ‘on the papers’ because of the practical constraints of the coronavirus pandemic.
[17]See above n 1, Foudoulis v O’Donnell.
Events post judgment
On 13 May 2020 the defendants filed ‘Post-Decision Costs Submissions’. They are comprehensive and follow the form of their earlier submission. I need not recite the contents in detail. They proceed on the basis, according to authority, that as successful parties and irrespective of outcome, the defendants ought be awarded costs on the standard basis.
The defendants’ ask the Court to fix the costs in the amount of $50,902.85 (as previously assessed and certified by the Cost Lawyers) plus additional costs of $9,993.20 incurred in the meantime to give a total of $60,896.05. Those additional costs were: $6,480 for fees rendered by the defendants’ counsel from 15 January 2019 to 9 May 2020; $860 for additional professional costs of the solicitors; and $2653.20 for the costs of certification by the Cost Lawyers. In support of the first additional costs item, the submission produce counsel’s tax invoices as verification. I have no proof of the other two costs items.
Up to this point all that had been said by the plaintiff’s lawyers about the quantum of costs or their assessment was in a letter in May 2018 which said (with my underlining):
We note that you state that your clients are likely to be awarded costs on a standard basis irrespective of the outcome of the proceeding. It is our view that the circumstances of this matter are somewhat different given the conduct of your clients late on the second date of the hearing.
As a result of this we advise that we will be making submissions to the Court with respect to the question of costs. Whilst we have referred your correspondence to our client, agreement cannot be reached for the above reason. We also deem your disbursements excessive and clearly not on a standard basis.
The plaintiff’s post judgment costs submissions confined themselves to the issue of liability for costs (not quantum) as referable to the O’Donnells’ letter to the Judge, and the alternative and unquantified submission seeking an apportionment of costs. Those submissions have been rejected in this judgment. The plaintiff’s costs submissions saw fit to say nothing about the certification by the Cost Lawyers, the quantum, or the facility of taxation in the Costs Court. They do not say anything about the prospect of the trial judge fixing the costs. I cannot believe any of this was an oversight. These were certainly live issues raised and propelled by defendants in their offers of settlement of costs, and in their ultimate submissions to the Court.
In the unopposed situation as presented, all that remains to determine is first, whether I as the trial judge should fix the costs according to the certification given by the Cost Lawyers or should leave the quantification of costs to the Costs Court; and secondly for either purpose whether to allow or certify counsel’s fees above the Scale.
Ordinarily, the assessment and fixing of costs ought to be the responsibility of the Costs Court constituted by judicial officers with special knowledge and experience in what can be a highly esoteric field and fastidious examination of documents. However, given the history of this case, I think it is in the interests of minimising more costs and delay and disputation, and above all, in the interests of finality, that I take the exceptional course of acceding to the defendants’ request to fix the costs of the trial. I have the advantage of the certification of the Cost Lawyers that is based on the standard basis of taxation and made according to the Supreme Court Scale of Costs. Thus, I am not so much doing a taxation de novo as looking to see if there is any reason why the Cost Lawyers ought not be accepted.
The plaintiff’s lawyers have had this assessment from the Costs Lawyers for a long time. Yet, they have chosen in their submissions to say nothing to question or impeach it beyond a vague comment in the past about ‘excessiveness’. That seems directed at counsel’s fees, which the Cost Lawyers identified as being above the Scale and as therefore requiring a Court to certify them as allowable. It will be said by the defendants that the trial judge is in an informed position to know the complexities of the case and to understand the care and attention that was required for the conduct of the defendants case to justify above Scale costs being allowed. I think that is so.
There are two sources of power to award a party costs in a specified sum or amount. Section 65C of the Civil Procedure Act states [with my underlining] that:
(1)In addition to any other power a court may have in relation to costs, a court may make any order as to costs it considers appropriate to further the overarching purpose.
(2)Without limiting sub-section (1), the order may –
(a)make different awards of costs in relation to different parts of a proceeding or up to or from a specified stage of the proceeding;
(b)order that parties bear costs as specified proportions of costs;
(c)award a party costs in a specified sum or amount;
(d)fix or cap recoverable costs in advance.
In addition, rule 63.07 of the Rules of Court states:
…
(2)Where the Court orders that costs be paid to a party, the Court may then or thereafter order that as to the whole or part of the costs specified in the order, instead of taxed costs, that party shall be entitled to —
(a)a portion specified in the order of taxed costs;
(b)taxed costs from or up to a stage of the proceeding specified in the order;
(c)a gross sum specified in the order instead of taxed costs;
(d)a sum in respect of costs to be determined in such manner as the Court directs.
Authorities on this rule state that the ‘gross sum’ is based on costs on the standard basis on an estimate that is logical, fair and reasonable and for which the Supreme Court Scale of Costs can provide assistance.[18] I would think that sort of approach would also inform the award of a specified amount of costs under s 65C of the Civil Procedure Act. In both cases the desideratum is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation by giving the Court the ability to apply a broader brush than is entailed in the taxation process. Although that makes the power especially suitable for large scale litigation, it is not to be so confined.
[18]See above n 3, ACN 074 970 109 v National Mutual Life Association of Australasia Ltd.
In this case, I will proceed by receiving into to evidence the assessment made by the Costs lawyers, Messrs Britton + Mullen as made on 11 May 2018. That was expressly done according to the Supreme Court Scale of Costs and according to an itemised time ledger of all work undertaken from the time the defendants’ solicitor took instructions. I see no unfairness in receiving and acting on that assessment in circumstances where the plaintiff’s solicitors have always known about it. It was the basis of the four definite attempts to try and settle the quantum of costs.
I have no reason not to accept the assessment of the inter partes assessment of costs of $14,902.85 on the standard basis. The Cost Lawyers have made that assessment after reviewing the solicitor’s file and applying the Scale. This was Supreme Court litigation. It was seriously advanced and energetically opposed at trial. There was much detailed material concerning land titles and re-subdivisions and usage. I daresay, any application in the future in this neighbourhood within Reservoir will involve consideration of the judgment and moreover the factual exposition from the Annexures to the judgment.
What attracts attention, as it did for the Cost Lawyers, is the disbursements of $36,000 for counsel’s fees. The letter of advice for the Cost Lawyers dated 23 April 2018 says this:
In relation to the assessment of counsel’s fees, I note the important role of counsel Mr Matthew Townsend in these proceedings.
The hourly rate charged by counsel is charged at $600 (inclusive of GST). The maximum hourly rate allowed at scale in 2018 (junior counsel) is $569.00 (exclusive of GST).
The expertise of Mr Townsend in matters involving the modification and removal of restrictive covenants in established. The complexities of such proceedings including the difficult factual and legal matrix to the background of such claims, results in substantial involvement of counsel undertaking tasks such as research, reading and drafting documents. It is these issues which, in my opinion requires the certification of counsel’s fees for categories of tasks undertaken.
It is likely that if certification is not granted in this matter, the issue of inter‑partes costs will be re‑litigated within the Costs Court solely on the question of counsel’s fees. This will be at a significant further costs and delay to the party entitled to their costs.
Importantly, the Civil Procedure Act 2010 (Vic) sets out the overarching purpose in civil proceedings, requiring the Court and the parties to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute. It is my view, that seeking the certification of counsel’s fees, positively discharges this obligation to narrow the issues in dispute.
Accordingly, my instructor should apply for the certification of counsel’s fees in the proposed categories and hourly rates:
·Appearance at trial on 19 & 20 February 2018 - $6,000 per day (including preparation) - $12,000
·Conferences – 5 hours at $600 per hour - $3,000
·Drafting submissions – 30 hours at $600 per hour equals $18,000
·Reading materials – ½ day at $3,000
The reference to ‘certification’ of counsel’s fees is not, by description at least, a step or a judicial act specifically referred to in the Rules of Court or elsewhere. The practice of certifying is, as I understand it, the means by which a judicial officer usually on request at the end of a proceeding recognises and orders that for the purposes of an eventual taxation, counsel’s fees in excess of scale are to be allowed to the extent as ordered. The Costs Court too has the discretion to allow fees in excess of Scale[19] but it may be thought that the trial judge is in a good position to see if fees in excess of Scale are justified.
[19]See ‘Counsels Fees’ in item 19(4) of the Supreme Court Scale of Costs.
In this case the assessment given by the Cost lawyers allowed above Scale costs for counsel, but their advice stated that to obtain such an increased allowance, certification from the Court would be required. If, outside a taxation, I am to fix the defendants’ costs that are attributable to counsel’s fees then I ought in fairness to the liable party, certify the fees if they exceed Scale.
According to the Scale of Costs as were in operation at the time of trial, Junior Counsel’s fees were stated as $5,693 as a daily appearance fee on trial and $569 each hour for: ‘other matters’, ‘preparation’; ‘conferences’; ‘views’; ‘drawing or settling documents’ and ‘any other work, not otherwise provided for’. [20]
[20]See Supreme Court (General Civil Procedure) Rules 2015, S.R. No. 103/2015, Appendix A – Supreme Court Scale of Costs (effective 20 Jan 2018).
In this case, the Costs lawyers made their assessment of counsel’s fees applying a daily appearance fee (including preparation) of $6,000; five hours of conferences at $600 per hour; 30 hours of drafting submissions at $600 per hour; and half a day of reading and preparation at $3,000. Thus, counsel’s appearance fee at trial was $307 per day above the Scale and $31 above the Scale on the tasks charged by the hour.
Of course, I do not have on this exercise the underlying materials because I am not conducting a taxation. But having been requested to fix the costs without opposition from the liable party I can only rely on a knowledge of the nature and demands of the case as evident at trial and on experience in the conduct of litigation in this Court, including the niche area of restrictive covenant cases.
The appearance fee and hourly fee do not strike me as an excessive amount above the allowable Scale fee. Recognition has to be given to the experience and expertise of the defendants’ counsel ― as well as the plaintiff’s counsel ― in property law and applications for the modification and removal of restrictive covenants. Furthermore, I can accept as stated by the Cost lawyers that the factual complexity of this case resulted in substantial involvement of counsel in research, reading and drafting documents. This was a details case that had been energised. The plaintiff’s solicitor had written to the O’Donnells before they were joined as defendants to state some facts supporting the application and in effect telling them that they did not have a case and ought withdraw their objection.[21]
[21]See letter dated 23 May 2017 in Court Book Vol 2, p 495.
As I said in my judgment, to properly rebut the plaintiff’s case the O’Donnells prepared an extensive, meticulous and dispassionate research paper, all based on proper sources, in support of their objection by which they were able to respond directly to the facts and the opinion of the plaintiff’s expert town planner. Counsel for the defendants states by way of submission —
This material was at least as accurate and as informative as the Court might have expected from an independent third party consultant – and yet as counsel, my job was to walk the streets with the Defendants, and to properly understand and check the information before it was advanced to the Court as reliable evidence.
Ultimately this approach may have increased the quantum of Counsel’s costs but avoided the costs of a planning or other witness to review the findings of Mr Easton (the plaintiff’s expert). Had the Defendants instead engaged a planner at a cost of $10,000-$13,000, it is difficult to see those costs being successfully resisted by the plaintiff.
I accept what is said there. The defendants did not have to concern themselves with the important and skilled preliminary procedural task of title searching and collation of the transfers of land as performed by the plaintiff’s expert town planner Mr Robert Easton. But I regard the material prepared by the defendants on the substantive question as achieving a standard to properly engage with an expert town planner, at least for a restrictive covenant case of this type. I too had to walk the streets of this neighbourhood in Reservoir to properly understand the evidence of both the plaintiff’s town planning consultant and the O’Donnell’s presentation. I would accept readily that counsel had to spend much time comprehending and checking personally the detailed evidence prepared by the O’Donnells to ensure it could with confidence be advanced to the Court as reliable evidence.
Therefore, I think allowance has to be made for the defendants’ counsel’s fees to take into account the skill, specialised knowledge and responsibility involved in the conduct of the case. I would certify as allowable the appearance fees and preparation fees and other fees as rendered by the defendants’ counsel to the extent that they exceed the Scale. I do not see anything extravagant in the duration of conferences, the drafting of submissions, or the time spent in reading and preparation. Therefore, as a base amount I approve or fix the defendants’ costs of this proceeding up to the end of the trial at $50,902.85. That is the figure as certified by the Cost Lawyers as at 11 May 2018 which was before the first offer to settle costs.
The defendants also seek additional costs since trial. Their submissions produce four tax invoices rendered by their counsel on 23 and 30 September 2019; 31 October 2019; and 11 May 2020. Their total amount is $6,480. Those invoices are based on counsel’s hourly fee of $600 including GST. The invoices cover work done from 15 January 2019 (after the third open offer to settle costs and before delivery of the non‑disclosure judgment in Castlerea) up to the delivery of judgment in this case in May 2020. Counsel’s tasks were particularised in the invoices as reviewing materials, consultations with instructing solicitor and the Cost Lawyers, and drafting the various submissions on costs.
I have in this judgment narrated the history of the attempts made on behalf of the defendants to reach settlement on costs. I think the attempts to settle the question of costs by the first three offers to the plaintiff’s lawyers in correspondence up to 10 September 2018 were reasonable actions with a desirable end in mind. But I can also see there were reasons borne of the brooding and serious controversy in Castlerea that might explain the plaintiff’s unwillingness to respond to settlement offers on costs. And I can also see as reasonable that the plaintiff’s lawyers would wish in their client’s interests to await my decision, and the reasons, before carefully considering whether to settle the question of substantial costs.
Judging by the dates within the invoices, the first three invoices (for $2160 and $1500 and $420) all concern work done for the ‘Pre Decision Costs Submission’ dated 2 October 2019, before my judgment. As I have already stated, the Court, sitting on a reserved judgment, did not entertain those submissions. I think it would be unreasonable to make the plaintiff liable for those costs. Therefore I would disallow them.
The fourth invoice was for $2400. It is dated 11 May 2020 which is after my judgment. Counsel’s fee of $2400 for four hours work of the kind one would expect after publication of a judgment is, I think, reasonable. Thus when added to the base claim of $50,902.85 there may be added the sum of $2400 to give a subtotal of $53,302.85
That leaves the claim for ‘further professional costs’ of $860 of MPW Lawyers (solicitors for the defendants) and the costs of preparing the certificate by the Cost Lawyers for the amount of $2,653.20. Whilst the description of those costs is clear enough, and strike me as reasonable, I think they ought be properly proved. Subject to a verifying affidavit, I would allow them as being reasonably incurred and add them to the amount of fixed costs. If that occurs, then the costs shall be fixed in the amount of $56,816.05. Assuming this is done, I have in mind making these orders —
1. The plaintiff’s application is refused.
2. The originating motion is dismissed.
3. The plaintiff shall pay the defendants’ costs of the proceeding on the standard basis fixed in the sum of $56,816.05.
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