Giurina v Greater Geelong City Council (No 2)

[2021] VSCA 341

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2021 0044

ERMANNO GIURINA AS EXECUTOR OF THE ESTATE OF C NACINOVICH	Applicant
v
GREATER GEELONG CITY COUNCIL	First Respondent
and
BUILDING APPEALS BOARD	Second Respondent

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JUDGES:	KENNEDY and WALKER JJA and MACAULAY AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	Determined on the papers
DATE OF RULING:	7 December 2021
MEDIUM NEUTRAL CITATION:	[2021] VSCA 341
JUDGMENT APPEALED FROM:	[2021] VSC 103 (Whelan JA)

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COSTS – Application for costs following the event – Whether first respondent engaged in misconduct inviting litigation – Whether Court should award costs on gross sum basis – Supreme Court (General Civil Procedure) Rules 2015 r 63.07.

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REPRESENTATION:	Counsel	Solicitors
For the Applicant	Self-represented
For the First Respondent	N/A	Harwood Andrews

KENNEDY JA
WALKER JA
MACAULAY AJA:

1. On 18 November 2021, reasons for judgment were handed down in this proceeding (‘the Reasons’) and we made orders refusing the applicant leave to appeal, and providing for the parties (in default of agreement) to file and serve written submissions as to the costs of the application for leave to appeal.

1. By written submissions dated 26 November 2021, the first respondent (‘the Council’) seeks costs on the basis that costs should follow the event.  It further seeks an order that costs be fixed in the sum of $40,000, having regard to the terms of a Calderbank letter dated 31 August 2021, which proposed that the applicant discontinue his application in return for the Council agreeing not to pursue a claim for its costs.

1. The applicant’s written submissions were dated 1 December 2021.  He accepts that he has the onus to demonstrate that there should be a departure from the usual rule that costs follow the event.  However, he submits that the Council has engaged in misconduct, or at least, lax conduct, which in turn invited the litigation.  He submits that this conduct means that the judge below also erred such that his Honour’s costs order of 11 March 2021, that ‘the [applicant] pay the [respondents’] costs of [the] proceeding’ should also be set aside.  He seeks that there should be no order as to costs in this application, as well as in respect of costs in the proceeding below.

1. There are therefore two questions to resolve:  first, is there disentitling conduct as alleged?  Secondly, (if the answer to the first question is ‘no’) should an order for costs on a gross sum basis, fixed at $40,000 (or some other amount), be made?

Alleged disentitling conduct

1. The applicant’s allegations of misconduct by the Council largely centre around the failure to serve the second Emergency Order.[1]  He submits that the litigation was ‘invited’ by the Council’s misconduct, such that there should be no order as to costs, in order to achieve a just result.  While the matters raised are more closely connected to the costs of the proceeding below, the applicant claims that he needed to make the application to this Court ‘in order to close down his exposure’ to criminal prosecution and cost recovery.

   [1]As defined in the Reasons.

1. By way of summary, the applicant relies upon:

·the Council’s failure to serve the second Emergency Order;

·the Council’s failure to contact the applicant on 10 September 2019 or thereabouts, to advise him that an inspection had occurred (under the first Emergency Order[2]) and that the second Emergency Order had been issued;

·the Council’s failure to reply to the applicant’s email on 10 September 2019, until 30 September 2019, by which time the demolition work pursuant to the second Emergency Order had already taken place;  and

·‘false information’ contained in an email from the Council’s solicitors of 30 September 2019.  In particular, the correspondence wrongly suggested that the applicant was already ‘aware’ of the second Emergency Order (stating ‘as you are aware … a further Emergency Order has been issued’), and also that the second Emergency Order ‘remains live’ (despite all the work having already been undertaken).

[2]As defined in the Reasons.

1. The Council’s failure to serve the second Emergency Order does not justify a departure from the usual rule as to costs.  First, a failure to serve the order does not explain the initiation of this litigation (on 10 September 2019) given the applicant chose to litigate on the basis of a challenge to the first Emergency Order, and without knowing that the second Emergency Order was made.  The applicant’s originating motion was only later amended to challenge the second Emergency Order.[3]  Further, and in any event, the failure to serve the order did not justify the form of the challenge made to the second Emergency Order.  Thus, as explained at [94] of the Reasons, the failure to serve does not constitute a basis for a challenge to the making of the order itself.  Rather, the failure to serve may have consequences in relation to compliance with the order, the lawfulness of the Council’s entry and the works on the Property,[4] or the Council’s ability to recover costs of the works under s 123 of the Building Act 1993 (which were not the subject of the applicant’s proceeding).[5]

   [3]See Reasons [26].

   [4]As defined in the Reasons.

   [5]Reasons [95]–[96].

1. The Council’s alleged ‘failure’ to contact the applicant on 10 September 2019 also does not justify a different costs order.  Although the service was not effective, there was evidence that the Council did take steps to serve the second Emergency Order on the applicant.[6]  The Council therefore had no reason to believe that the applicant had not been served with the second Emergency Order.  Given that order directed that the demolition be completed on the same day as the making of the order (‘immediately, on 9 September 2019’) there was no separate requirement for the Council to make any further contact.   

   [6]See Reasons [22].

1. For similar reasons, the Council’s alleged ‘failure’ to reply to the applicant’s email of 10 September 2019 does not assist the applicant.  That email concerned a challenge to the first Emergency Order, and sought an undertaking that the Council would not take any steps under that order.  The Council was not obliged to provide the undertaking, particularly given that the inspection, the subject of that order, had already occurred.  

1. Therefore, neither of these ‘failures’ to communicate rise to the level of misconduct disentitling the Council to costs.  In any event, as identified already, there is no reason to believe that the applicant would not have commenced this litigation in precisely the same manner.  The litigation was already on foot by 10 September 2019 such that there was no reasonable opportunity for the Council to communicate with the applicant, even if this was otherwise appropriate.

1. Insofar as the email of 30 September 2019 is concerned, the Council’s ‘as you are aware’ statement was entirely consistent with the fact that the Council thought that the second Emergency Order had been served.  The statement that the order ‘remains live’ may have been inaccurate, but it does not explain the initiation of the litigation (which was commenced by originating motion filed 10 September 2019, and served 25 September 2019).

1. We are therefore not satisfied that the applicant has demonstrated any disentitling conduct.  It follows that an order that costs follow the event is instead  required to achieve a just result.

1. For similar reasons there is no basis for overturning the order for costs, below, that ‘the [applicant] pay the [respondents’] costs of [the] proceeding’.  The proposed grounds of appeal also made no challenge to this order.

Costs on gross sum basis

1. Rule 63.07 of the Supreme Court (General Civil Procedure) Rules 2015 states:

63.07   Taxed or other costs provision

(1) Subject to this Order, where by or under these Rules or any order of the Court costs are to be paid to a party, that party shall be entitled to taxed costs.

(2) Where the Court orders that costs be paid to a party, the Court may then or thereafter order that as to the whole or any part of the costs specified in the order, instead of taxed costs, that party shall be entitled to—

…

(c)       a gross sum specified in the order instead of taxed costs;

…

1. Section 65C of the Civil Procedure Act 2010 states:

65C     Other costs orders

(1) In addition to any other power a court may have in relation to costs, a court may make any order as to costs it considers appropriate to further the overarching purpose.

(2) Without limiting subsection (1), the order may—

…

(c) award a party costs in a specified sum or amount;

…

1. The Court may award a gross sum of costs in order to avoid the expense, delay, and aggravation involved in protracted litigation arising out of taxation.[7]  This involves a broad brush approach, without the rigour and precision of the process of taxation, however, the Court should be confident that the approach taken to the estimate of costs is logical, fair and reasonable.[8]

   [7]Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd [No 3] [2012] VSC 399, [84]; Seven Network Ltd v News Ltd [2007] FCA 2059, [25].

   [8]Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd [No 3] [2012] VSC 399, [84]; Seven Network Ltd v News Ltd [2007] FCA 2059, [25].

1. We are satisfied that there is sufficient justification to make a costs order on a gross sum basis.  It is appropriate that any further expense and delay is avoided in the resolution of this case, which had no reasonable prospects of success.[9]  We also consider that it was unreasonable to reject the Council’s Calderbank offer (to walk away and have the parties bear their own costs), having regard to the low prospects of success.

   [9]See Bechara v Bates [No 2] [2018] FCA 583, [4].

1. As to quantum, the Council sought an order for costs in the sum of $40,000.  The applicant acknowledged this amount in written submissions, but did not object to the quantum.  We are satisfied that this amount is logical, fair and reasonable.  We have paid appropriate regard to the Council’s breakdown of fees and disbursements incurred by the Council in relation to the application for leave to appeal between 28 May 2021 and 24 November 2021, which totalled $56,803.36. 

Conclusion

1. The applicant will be ordered to pay the first respondent’s costs of the application for leave to appeal, fixed in the sum of $40,000.