Gray v Kuek

[2024] VCC 1740

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised

Not Restricted

Suitable for Publication

GENERAL LIST

Case No. CI-14-04136

JAMES GRAY

Plaintiff

v

GABRIEL KUEK

and

ANJA TURNER

First Defendant

Second Defendant

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JUDGE:	His Honour Judge Trapnell
WHERE HELD:	Melbourne
DATE OF HEARING:	19 August 2022
DATE OF RULING:	1 November 2024
CASE MAY BE CITED AS:	Gray v Kuek
MEDIUM NEUTRAL CITATION:	[2024] VCC 1740

REASONS FOR JUDGMENT
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Subject:Practice and procedure  

Catchwords:              Review of orders made by judicial registrar – Costs of original proceeding – Original proceeding settled without determination on the merits – No order for costs – Application made by first defendant for indemnity costs refused by judicial registrar – Whether claim lacked a proper basis – Whether claim statute-barred – Whether parties conduct in the proceeding unreasonable – Offer of compromise – Whether reasonable offer – Whether plaintiff effectively capitulated

Legislation Cited:      County Court Act 1958  – County Court Civil Procedure Rules 2018  – Civil Procedure Act 2010 – Limitations of Actions Act 1958.

Cases Cited:Re Minister for Immigration & Ethnic Affairs (Cth); Ex parte Lai Qin [1997] 186 CLR 622 – Yue’e Zhao v Suzhou Haishun Investment Management Co Ltd [2020] VSCA 34 – Berrigan Shire Council v Ballerini & Anor (No 2) [2006] VSCA 65 – Bell Lawyers Pty Ltd v Pentelow [2019] 269 CLR 333 – Ganesh & Anor v National Australia Bank Ltd [2020] VSCA 39 – Zaric v City of GreaterDandenong [2022] VSC 680 – Sun Alliance Insurance Ltd v Massoud  [1989] VR 8 – Sloan v Arnold Thomas & Becker (No 2) [2019] VSC 682 – Gago v Attorney General (Cth) [2022] FCA 70

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	In person
For the Defendant	Mr D Langmead	Rigby & Bear

HIS HONOUR:

Nature of Application

1This is an application by notice dated 13 August 2022 by the first defendant, seeking a review of the orders made by a judicial registrar on 11 August 2022. The application is made pursuant to Rule 84.03 of the County Court Civil Procedure Rules 2018.

2On 11 August 2022, the judicial registrar made orders dismissing the proceeding, along with orders as to the costs of the proceeding as follows:

2.  There is no order as to costs as between the plaintiff and the first defendant.

4. The money held in Court be released as follows:

(a) the sum of $9,500 to Foley’s List on account of Luisa Alampi, the barrister for the second defendant; and

(b) the balance to the plaintiff.

3The first defendant, Mr Kuek, seeks a review of paragraphs 2 and 4(b) of the orders made on 11 August 2022.

4In lieu of those orders, Mr Kuek seeks the following:

a)   Paragraphs 2 and 4(b) of the order made on 11 August 2022 be set aside.

b)   In lieu of paragraph 2 of the order made on 11 August 2022, the plaintiff pay the first defendant’s costs of and incidental to the proceeding on an indemnity basis, such costs to be taxed in default of agreement.

5The review came before me on 19 August 2022. In accordance with rule 84.03(5) it proceeded as a de novo hearing.

6Pursuant to rule 84.03(6)(b), in conducting the review I may:

confirm, set aside or vary the order of the Court constituted by the judicial registrar or make such further or other order as may be necessary or as the case requires. 

7I consider the order of the Court constituted by the judicial registrar was correct and I confirm the order. These are my reasons for doing so.

Background

8The background to this proceeding is sufficiently set out by the judicial registrar in his ruling as follows:   

On 27 August 2014, James Gray, a barrister, commenced proceedings in the County Court claiming unpaid legal fees from his instructor (the first defendant) and his client (the second defendant) (“County Court Proceeding” or “CPP”). The obligation to pay legal fees is said to have arisen from Mr Gray’s agreement to provide legal services to the defendants in respect of a discrimination claim brought in VCAT by the second defendant as litigation guardian on behalf of her daughter against the State of Victoria.

The agreement giving rise to the CCP is said to have been made in or about December 2004 and/or February 2005 and/or between July and September 2005. The retainer was pleaded as being ‘no win – no fee’, being a conditional fee agreement pursuant to the Legal Practice Act 1996 (Vic) (“LP Act”).

In or about November 2009, the second defendant obtained an order that the State of Victoria pay her costs of the proceeding. Mr Gray says that as a result, the defendants are liable to pay his legal fees, either pursuant to a costs agreement or on the applicable scale in the sum of $197,562.

Mr Gray says that in or about August 2011, the defendants acknowledged their indebtedness to him in the sum of $102,985.50 in a bill of costs drawn for the second defendant’s costs with respect of the VCAT claim.

The first defendant said in defence, in short, that:

(a)by reason of an agreement between him and Mr Gray, he was not responsible for Mr Gray’s fees;

(b)Mr Gray has been able to recover an amount of his fees on a party and party basis since about 11 November 2011 but elected not to do so and instead filed a summons in the Costs Court of the Supreme Court of Victoria seeking to be added as an applicant to the taxation of party and party costs and because of that application, Mr Gray’s fees remained unpaid;

(c)Mr Gray is statute barred from bringing these proceedings; and

(d)Mr Gray is in breach of his statutory and professional ethics.

The second defendant said in defence, in short, that:

(a)work was done by Mr Gray in respect of the VCAT claim;

(b)Mr Gray never provided her with a disclosure statement or costs agreement or explained the terms on which he would act for the second defendant;

(c)there was no written or other costs agreement as required under the LP Act;

(d)alternatively, if there was a costs agreement, it was a conditional costs agreement and Mr Gray never set out the circumstances that would constitute a successful outcome as required under s 97 of the LP Act. As a result, any costs agreement was void pursuant to s 102 of the LP Act;

(e)alternatively, the second defendant assumed that the plaintiff would only charge fees if and to the extent of any costs recovered from the respondent in the VCAT claim and that Mr Gray induced the second defendant to adopt that assumption;

(f)the claims are statute barred by reason of s 5 of the Limitation of Actions Act 1958 (Vic).

On or about 10 May 2016, the parties settled the County Court Proceeding by way of an “interim settlement agreement”.

That agreement resolved the substantive issues on terms that:

(a)Mr Kuek reactivate and finalise the taxation of Mr Gray’s fees in the proceeding before the Costs Court (“Costs Court Proceeding”);

(b)a costs consultant, Blackstones (“Costs Consultant”) was to be appointed and the parties agreed to abide by any amount determined by the Costs Court or, by agreement between the Costs Consultant and the State of Victoria (being the respondent to the VCAT claim);

(c)Mr Gray would release Mr Kuek and Ms Turner from any claim for additional fees save for those fees to be determined by the Costs Court and the issue of costs in the County Court Proceeding;

(d)Mr Gray would pay the costs of the resumed taxation in the Costs Court.

The issue of the costs of the County Court Proceeding was expressed to remain outstanding and any amount recovered from the Costs Court Proceeding was to be ‘held in trust by [the Costs Consultant] or alternatively, be paid into court or any other place by written agreement.

Multiple adjournments were granted in this Court while the Costs Court Proceeding was finalised. On 24 April 2020, Wood AsJ delivered reasons in the Costs Court Proceeding and ordered the State of Victoria pay $37,948.68 to Mr Gray. The Associate Justice directed that sum be paid into the County Court pending the finalisation of the County Court Proceeding.

9To the judicial registrar’s summary I should add that on 5 September 2014, Mr Kuek made an offer of compromise to settle the proceeding on the basis the claim against him be dismissed with the parties to bear their own costs.

10After handing down his ruling on 1 August 2022, and inviting the parties to make submissions as to costs, the judicial registrar made the orders set out above. As the orders sought to be reviewed by the first defendant do not disturb the orders made in relation to the second defendant, the second defendant played no part in the review hearing.

Relevant principles

11The Court has general discretion as to costs pursuant to s 78A of the County Court Act 1958 (Vic).

12Ordinarily, the guiding principle is that costs will follow the event. That is, after a hearing on the merits the successful party, absent any disqualifying conduct, is prima facie entitled to his or her costs.[1]  

13In the current review, I am required to determine the costs order that should be made in the proceeding where there has been no adjudication on the merits.

14The parties agree the principles stated by McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin[2] (‘Lai Qin’) apply. In Lai Qin, his Honour said:

It will be necessary to return in a little more detail to the facts of the case, but it is first necessary to state the principles which govern an application for costs when a party elects not to pursue an action because he or she has achieved the relief sought in the action either by settlement or by extra-curial means.

In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. …

Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. … But such cases are likely to be rare.

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.[3]

15In Yue’e Zhao v Suzhou Haishun Investment Management Co Ltd (‘Zhao’),[4] the Victorian Court of Appeal considered there is a distinction between cases where one party has effectively capitulated to the other from cases where a settlement agreement has been reached. The Court said:

[10] In Nichols v NFS Agribusiness Pty Ltd, the New South Wales Court of Appeal applied the principles stated in Lai Qin, as explained in later cases, and allowed an appeal against a trial judge’s decision to award costs. In the course of reviewing the authorities following Lai Qin, Payne JA (Basten and Meagher JJA agreeing) accepted that, absent any consideration of the merits of the proceeding, costs may be ordered where there is a capitulation by one party — in the sense that it ‘effectively surrenders to the other’. In his Honour’s view, this approach is consistent with the judgment of McHugh J in Lai Qin. Payne JA referred to the dissenting judgment of Sackville AJA in Muhibbah Engineering (M) BHD v Trust Co Ltd, and to the reference by Sackville AJA in that decision to the following statement by Burchett J in ONE.TEL Ltd v Deputy Commissioner of Taxation:

It is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court’s discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs.

[11] In Nichols, Payne JA considered that, in Muhibbah Engineering:

Sackville AJA was explaining that when in Lai Qin McHugh J described a case where the party seeking costs “in effect, has succeeded in obtaining the relief sought in the proceedings”, his Honour was referring to a case where one party, after litigating for some time, effectively surrenders to the other.

[12]In fact, the quoted words which Payne JA attributes to McHugh J in Lai Qin do not appear in McHugh J’s judgment. They are a quote from Sackville AJA’s judgment in Muhibbah Engineering. However, the principles stated by McHugh J in Lai Qin were, in his words, intended to ‘govern an application for costs when a party elects not to pursue an action because he or she has achieved the relief sought in the action either by settlement or by extra-curial means’. We accept as a general principle that where a party litigates for some time and then acts so as to effectively surrender or capitulate to the other, that will usually be a strong ground to award costs against the party who has surrendered or capitulated. But each case will depend on its own facts.[5]

16Moreover, the principles which apply to offers of compromise by way of a Calderbank letter are also well established. As Nettle JA explained in Berrigan Shire Council v Ballerini & Anor (No 2):[6]

The rejection of a Calderbank offer not later bettered by judgment does not lead automatically to an indemnity costs order in favour of the offeror. The question in each case is whether the offer was a reasonable offer of compromise, and whether the rejection of the offer was unreasonable, and the answer to that question turns in each case on all the circumstances of the case.[7]

17In determining whether the rejection of a Calderbank offer was unreasonable, the  Court should consider:

(1)  the stage of the proceeding at which the offer was received;

(2)  the time allowed to consider the offer;

(3)  the extent of the compromise offered;

(4)  the offeree’s prospects of success, assessed at the date of the offer;

(5)  the clarity with which the terms of the offer were expressed; and

(6)  whether the offeror forewarned the offeree that rejection of the offer would result in an application for indemnity costs.[8]

18Finally, in Bell Lawyers Pty Ltd v Pentelow[9] the High Court of Australia abolished ‘the Chorley exception’ to the well-established rule that a self-represented litigant is not entitled to obtain any recompense for the value of his or her time spent in litigation.[10] The Chorley exception, authoritatively established as a ‘rule of practice’ by the Court of Appeal of England and Wales in London Scottish Benefit Society v Chorley,[11] provided that a self-represented litigant who is a solicitor is entitled to recover professional costs for work they have undertaken in legal proceedings.

19The High Court ruled the exception should not extend to the benefit of barristers, stating the Chorley exception is ‘not only anomalous, it is an affront to the fundamental value of equality of all persons before the law’ and ‘it should not be recognised as part of the common law of Australia’.[12] Bell Lawyers is not definitive on whether a barrister or solicitor is entitled to recover costs of disbursements. The Victorian Court of Appeal has held that while a firm of solicitors were not entitled to recover costs for time spent by its own employees, it was entitled to recover costs in respect of disbursements incurred by it.[13]

Submissions on review

20As earlier noted, a review under r 84.03 is conducted by way of a hearing de novo. As John Dixon J observed in Zaric v City of Greater Dandenong:[14]

The matter is heard afresh and a decision given on the evidence presented at that hearing. The appeal is determined based on the evidence before the judge and not the evidence before the judicial registrar. The judge determines the appeal unfettered by the decision of the judicial registrar, giving such weight to that decision as appears proper.[15]

21In this case the parties have relied upon the evidence presented before the judicial registrar pursuant to r 84.03(7) and have not presented any additional or different affidavit or oral evidence in the hearing before me.

22Mr Kuek relies upon a voluminous judicial review PDF bundle provided to the Court on 18 August 2022 and written submissions prepared for the present hearing dated 18 August 2022 and 23 August 2022.

23Mr Gray relies on his three affidavits dated 9 December 2020, 23 December 2020 and 4 February 2021 and two written submissions on costs dated 12 January 2021 and 11 February 2021, all of which were contained within the first defendants judicial review bundle. Mr Gray further relies upon his written submissions prepared for the hearing before me dated 19 August 2022 and 31 January 2023.

First defendant’s primary written submissions

24In written submissions dated 18 August 2022, Mr Kuek relies on a number of grounds to support his argument for the costs of and incidental to the proceeding on an indemnity basis.

25In substance he argues Mr Gray acted unreasonably in commencing and continuing the proceedings, as it was apparent the claim would inevitably fail. Moreover, Mr Kuek submits Mr Gray’s failure to accept the offer of compromise made on 5 September 2014 was unreasonable and the Court can be confident that, had the matter proceeded to trial, Mr Kuek would have almost certainly succeeded.

26Mr Kuek submits Mr Gray was statute barred under the Limitations of Actions Act 1958 (Vic) because his writ was filed more than six years after the work his claims were based on had been performed. This demonstrates that Mr Gray’s claim was hopeless and would have failed if continued.

27Mr Kuek argues the terms of settlement are equivalent to the dismissal of Mr Gray’s claims by a Judge, as he released Mr Kuek from any claim for his fees save for those to be determined by the Costs Court and the issue of costs in the County Court proceeding. Mr Kuek submits he has effectively achieved the substantial outcome he had sought and ordinarily costs follow the event. He relies on Kheir v Secretary of the Department of Justice and Regulation[16] in support of this submission.

28Mr Kuek further submits Mr Gray’s claims were ill-conceived because he assumed no obligation in respect of Mr Gray’s fees. Rather, Mr Gray was engaged as a barrister by Mr Kuek’s client Ms Turner.

Plaintiff’s primary written submissions

29In written submissions, dated 19 August 2022, Mr Gray refers to Lai Qin and submits neither party behaved unreasonably and there was no certainty regarding the outcome of the County Court proceedings had the matter not settled. Accordingly, he submits that there should be no order as to costs.

30Mr Gray submits having regard to Clause 12 of the Cost Disclosure provided to the second defendant by Mr Kuek, Mr Gray’s retainer with Mr Kuek was a conventional solicitor-barrister retainer, with the inclusion of a no-win no-fee condition. Mr Gray relies on Dimos v Hanos[17] and submits it was the convention in 2004 to 2005 and the years preceding, that a barrister was engaged by a solicitor and so owed the barrister their fees as a debt.

31Mr Gray relies on his sworn affidavit dated 23 December 2020, wherein he deposes that in November 2012 Mr Kuek’s then solicitor, Shan Tong, told him the Costs Court ruled there was a retainer agreement between Mr Gray and Mr Kuek. He also refers to a conversation he alleges to have had with the Law Institute of Victoria where they told Mr Gray there was a retainer agreement between himself and Mr Kuek.

32Mr Gray submits he could not revive the Costs Court Proceeding on his own initiative, as the Costs Court rejected his application to do so in September 2012.

33In response to Mr Kuek’s submission that Mr Gray is statute barred, Mr Gray submits his cause of action only arose in November 2012 once it became clear his fee’s would not be pursued as against the Victorian Government. Mr Gray argues this occurred at the Costs Court adjournment by consent which completed the taxation but excluded the taxation of the Mr Gray’s fees. He submits the convention at taxation is for the solicitor to have either paid the barristers fees or have undertaken to do so.

34Mr Gray submits that the government’s obligation to pay legal fees only arose in 2009, after it agreed to pay 80% of the second defendant’s fees on the County Court scale. Mr Gray argues, at worst, the time limitation period restarted when his fee slip was generated in 2009 and when Mr Kuek implicitly conceded liability for Mr Gray’s fees in submitting the bill of costs to the Costs Court for taxation in 2012.

35Mr Gray relies on the fact Mr Kuek did not make any interlocutory application during the County Court proceeding regarding time limitations despite numerous directions hearing having been listed prior to the settlement of the matter.

36In response to Mr Kuek’s submission regarding the offer to settle the County Court proceeding, Mr Gray submits this was simply a demand for him to surrender and, therefore, only tends to show Mr Kuek acted unreasonably. Mr Gray further submits the settlement agreement enabled him to obtain a portion of his fees which were otherwise unavailable and accordingly this was a win for Mr Gray in the conventional sense.

First defendant’s written submissions in reply  

37In further written submissions dated 23 August 2022, Mr Kuek submits no weight should not be given to the decision of the judicial registrar as it contains a number of errors.

38In summary, Mr Kuek submits:

a)     The judicial registrar’s decision in relation to whether the parties acted reasonably in commencing the CCP claim, specifically in relation to Mr Gray being statute barred, overlooks significant submissions as to the facts advanced by Mr Kuek and that Mr Kuek had actually pleaded the limitation defence.

b)     The judicial registrar’s conclusion that there is no basis to make a special costs order because of Mr Grey’s non-acceptance of Mr Kuek’s 5 September 2014 offer is wrong.

c)     It is inexplicable that the judicial registrar acceded to the second defendant’s costs application but rejected Mr Kuek’s, given the bases for awarding costs in the second defendants favour applied equally to justify awarding costs in Mr Kuek’s favour.

39In relation to Mr Gray’s submissions, Mr Kuek argues his reference to Dimos v Hanos is selective and out of context because it excludes Gillard J’s statement that the rules in the paragraph quoted by Mr Gray are subject to exceptions.

40Mr Kuek refutes Mr Gray’s submission regarding Clause 12 of the Disclosure Statement, arguing instead that this is in standard form. Mr Kuek submits this states what would occur if a barrister is engaged by the solicitors on the client’s behalf and refers to the client being provided with a statement setting out the barrister’s fees. Mr Kuek argues there is no evidence terms, fees, or any engagement occurred, rather, the evidence suggests Mr Gray was engaged/retained by the second defendant.

41Mr Kuek submits Mr Gray’s affidavit, alleging Shan Tong advised him of the Costs Court ruling, is hearsay and is contradicted by Shan Tong’s affidavit, and that Shan Tong’s evidence must be preferred. Mr Kuek argues that as no ruling or citation for such a ruling has been produced, no such ruling exists. Mr Kuek further submits he was not a party to the taxation proceeding and that consequently if the ruling does exist it cannot apply to him.

42In relation to Mr Gray’s reference to advice he received from the Law Institute of Victoria, Mr Kuek submits any statement attributed to the Law Institute of Victoria is hearsay and cannot be relied upon. Mr Kuek denies Mr Gray’s assertion he could not revive the taxation on his own initiative and submits this is not substantiated by any order of the Costs Court. Mr Kuek argues:

Even if that assertion is true, the predicament Mr. Gray had was of his own making. It was a consequence of him filing and serving a Summons to pursue his own agenda in place of the proper conduct of a costs dispute according to the Supreme Court Rules. Having discovered his Summons did not advance his cause, he should have reverted to the proper procedure and let Mr. Kuek resume the conduct of the taxation. Instead, he embarked on the unmeritorious County Court proceeding against Mr. Kuek and Ms. Turner.

43Mr Kuek submits it is well settled law that a cause of action founded on legal fees accrues from when the work was done, referring to Cockburn v Shehadie,[18] Batrouney v Forster[19] and Bannon v Nauru Phosphate Royalties Trust (No 3).[20] Mr Kuek submits it is irrelevant he could have made an interlocutory application, as he was entitled to conduct the proceeding as he considered best.

44In relation to the offer, Mr Kuek relies on the alleged lack of retainer to argue Mr Gray’s rejection of the offer was unreasonable.  The reasonableness of his offer, Mr Kuek submits, was made evident when Mr Gray made the settlement offer to Mr Kuek. Mr Kuek submits the settlement offer was identical in its substantial outcome to the offer Mr Kuek made to Mr Gray.

45Mr Kuek argues the substantial legal costs and disbursements incurred by the time the settlement took place are the fault of Mr Gray. He submits the taxation of Mr Gray’s costs was always available to be revived and that the resumption of Mr Gray’s costs was not a matter for Mr Kuek, rather, it was a matter for the second defendant as she was the beneficiary of the costs order VCAT made.

46Finally, Mr Kuek submits Mr Gray had no prospects of success and therefore acted unreasonably in commencing and maintaining the County Court proceeding. Mr Kuek relies on the following factors:

a)     The pleadings and evidence before the Court.

b)     The fact Mr Gray had approached Mr Kuek to assist him in representing the second defendant’s daughter.

c)     The alleged endorsement on the backsheet provided by Mr Kuek to Mr Gray.

d)     Mr Gray’s alleged breaches of his statutory obligations and professional ethics.  

e)     The alleged inconsistencies between the hours Mr Gray states he put into the VCAT case and the total amount he claimed for.

f)     Mr Gray instituting legal proceedings after the time for commencing proceedings had expired.

Plaintiff’s written submissions in reply

47In response Mr Gray provided further written submissions as follows.

48He submits the judicial registrar addressed the circumstance of a limitations defence pleaded and not pleaded, so there is no relevant error. He further submits it is relevant that Mr Kuek made no application for summary judgment during the principal proceedings.

49Mr Gray argues the settlement of the County Court proceeding can be seen to be in part due to Mr Kuek’s lack of confidence in the time limitation argument.

50Mr Gray refutes Mr Kuek’s submission the judicial registrar’s conclusions regarding the Calderbank offer are wrong. He relies on Mr Kuek having agreed to adjourn the taxation once his fees had been determined and reserving the taxation of Mr Gray’s fees. He submits this occurred prior to the commencement of the County Court proceeding.

51Mr Gray argues the County Court proceeding settlement enabled him to have his fees assessed. Mr Kuek’s walkaway offer would have left him with nothing. Accordingly, the settlement can be viewed as a win for Mr Gray.

52Mr Gray submits the judicial registrar specifically addressed the reasons for the costs order in the second defendant’s favour. This was because the second defendant’s circumstances, when they made an offer to Mr Gray, were vastly different from Mr Kuek’s circumstances at the time he made his offer.

53In relation to the backsheet, Mr Gray argues Mr Kuek does not depose that he sent the backsheet he produced or how he sent it and that his evidence on this matter is vague. Mr Gray submits at the time the backsheet was allegedly sent he was not in chambers and he never received it.

54Finally, Mr Gray submits the taxation was not adjourned because of Mr Gray’s interference; it was adjourned by consent between the defendants and the government in what Mr Gray submits was an ‘obvious attempt to thwart’ his efforts to get his fees.

Analysis

55As I observed earlier, it is not necessary for me to find error in the original decision in order to arrive at a different conclusion. I am to consider the matter afresh on the evidence before me.[21] Nevertheless, it is appropriate for the Court to give such weight to the judicial registrar’s decision as appears proper in the circumstances.[22] I note both parties’ submissions in reply considerably focus on whether the decision of the judicial registrar was correct.

56As the authorities make clear, in circumstances where a matter has been discontinued, the court does not proceed to consider the merits of the matter with a view to attempt to predict a hypothetical outcome had the matter continued to finality. Nonetheless, costs may be awarded in circumstances where it is determined a party has acted unreasonably or the court can feel confident one party would almost certainly have succeeded.

57Ultimately, the issues to be determined on this review are: (1) whether either party engaged in unreasonable conduct which would give rise to a costs order being made against them; (2) whether I can be confident that one party would almost certainly have succeeded had the matter proceeded to trial; (3) whether Mr Gray effectively capitulated or surrendered to Mr Kuek; and (4) whether Mr Gray is entitled to payment of his professional costs and disbursements given the decision in Bell Lawyers.

Did either party act unreasonably?

58Much was sought to be made by Mr Kuek that the judicial registrar failed to consider every submission regarding whether Mr Gray’s conduct was unreasonable. As I outlined earlier, this review comes before me as a de novo hearing, it is not necessary for me to find error in the ruling of the judicial registrar. I am to consider the evidence before me and reach a conclusion based on that evidence. I am in no way fettered by the conclusion of the original decision-maker.

59Moreover, no error of law arises merely because a decision-maker fails to address every submission made to it. Reasons may be brief but nonetheless adequate if they reveal the steps in the reasoning process of the court by which it reached its decision.[23] As was observed by Gray J in Sun Alliance Insurance Ltd v Massoud:[24]

The simplicity of the context of the case or the state of the evidence may be such that a mere statement of the judge’s conclusion will sufficiently indicate the basis of a decision. … In such cases, the foundation for the judge’s conclusion will be indicated as a matter of necessary inference. [25]

60I do not accept Mr Kuek’s submission Mr Gray’s claim had no prospects of success because it was statute barred. It is well established that a defendant must specifically plead a limitation defence.[26] While I accept Mr Kuek had pleaded the limitation defence, this does not result in Mr Gray’s claim being automatically barred. As was observed by the judicial registrar, the statute barring of a claim is almost exclusively determined at trial, although in limited circumstances it might be determined on a summary judgment application. No application to strike out the statement of claim or application for summary judgment was made in the present case.

61I adopt the observations of Daly AsJ in Sloan v Arnold Thomas & Becker (No 2)[27] where, in relation to when it is appropriate to grant summary judgment on the basis the defendant has a limitations defence which was bound to succeed, her Honour said:

[22] Traditionally, the Courts have been reluctant to grant summary judgment where the sole issue is whether a plaintiff’s claims are time barred, save in the clearest of cases.

[23]In D’Aquino v Trovatello, the Court referred to the difficulties faced by the defendant seeking summary judgment on limitations grounds. In response to a defendant’s contention that, on the plaintiff’s case as pleaded, and on the plaintiff’s own material, the case would be unable to succeed, McLeish JA stated as follows:

In taking this course, the respondents assumed a heavy burden. In order to show that the claim had no real prospect of success, it was necessary for the respondents to establish that the applicants had no real prospect of overcoming the limitations defence. That in turn meant, either that the pleaded claims fell wholly outside the limitation period, or that, although there were claims that arose within the limitation period, there was no real prospect of sustaining them at trial.

[24]However, in Bodycorp Repairs Pty Ltd v Holding Redlich, the Court of Appeal stated that granting summary judgment upon limitation grounds may be appropriate ‘where there was no relevant issue of fact which required resolution, and nothing to suggest that there is any prospect further evidence could materially alter [the date upon which the cause of action accrued]’.[28]

62There are legal and factual complexities in Mr Kuek’s limitation defence as submitted by Mr Gray which, in my opinion, did not make the outcome of that pleading a forgone conclusion. Accordingly, I find Mr Gray did not act unreasonably in commencing the Count Court proceedings. I also do not find that Mr Kuek’s defence to the claim made against him was unreasonable.

63Moreover, I do not find anything in the material before me to suggest either party engaged in unreasonable conduct throughout the County Court proceedings which would warrant a departure from the usual position identified in Lai Qin. There was a considerable amount of correspondence between Mr Gray and Mr Kuek. Unfortunately, as was recognised by the judicial registrar, there was no attempt by either party to expedite the proceedings by narrowing the issues in dispute. Instead, much of this correspondence was focused on each party apportioning blame to the other. Again, as was recognised by the judicial registrar, it was only at the point of a judicial resolution conference and through the guidance of a judicial registrar that the parties negotiated a settlement of the issues in dispute.

Offer of compromise dated 5 September 2014

64Mr Kuek relies on the offer of compromise made on 5 September 2014, to settle the proceeding on the basis that the claim against him be dismissed with the parties bearing their own costs. Mr Gray contends this offer was not a genuine compromise but was merely a demand that he surrender.

65The question of whether rejection of an offer was unreasonable is to be considered without the benefit of hindsight and without adducing additional evidence.[29] The offer was a ‘walk away’ offer, an invitation to walk away before Mr Kuek had pleaded his defence, which was filed on 23 September 2014.

66I am of the opinion the offer did not contain any real element of compromise, the compromise if any, was that each party bear their own costs.  The costs incurred at the time of the offer would have been relatively low, such that had Mr Gray accepted the offer he would not have received much of a benefit by avoiding having to pay Mr Kuek’s legal costs.  

67For these reasons, I also do not accept Mr Kuek’s submission that Mr Gray breached his statutory and professional ethics by refusing to accept Mr Kuek’s offer of compromise.

68In my opinion, Mr Kuek’s submission that Mr Gray did not ‘better’ the offer of compromise should be rejected. Mr Kuek argues Mr Gray’s assertion that he could not revive the taxation on his own initiative is not substantiated and regardless, was a consequence of his conduct. Mr Gray submits Mr Kuek agreed with the other side to halt the taxation prior to Mr Gray’s fees having been dealt with.

69I do not accept Mr Kuek’s characterisation of the Costs Court proceeding. Ultimately, Mr Gray obtained taxation of his costs in the Cost Court when the substantive part of the claim was resolved. The interim settlement agreement provided that Mr Kuek reactivate and finalise the taxation of Mr Gray’s fees in the proceeding before the Costs Court. The inclusion of this term confirms that Mr Kuek’s agreement was necessary in order for the taxation of Mr Gray’s fees to progress further.

70Moreover, regardless of whether the Mr Kuek’s agreement was necessary, by way of the terms of settlement an obligation was imposed on Mr Kuek to assist in the reactivation and finalisation of the taxation of Mr Gray’s fees. This was a benefit gained by Mr Gray as a result of the settlement agreement.

71Overall, I am not persuaded that Mr Gray acted unreasonably in rejecting the offer of compromise.

Can I feel confident that, although both parties have acted reasonably, one party would almost certainly have succeeded?

72Mr Kuek submits no reasonable judge would have decided the case in Mr Gray’s favour following a contested hearing. In my opinion it is not possible to conclude, without conducting a hypothetical trial on the papers, or otherwise, addressing the merits of the case in a substantive way, that either party would almost certainly have succeeded had the matter gone to trial.

73Mr Kuek must be able to demonstrate he would have almost certainly succeeded without requiring the Court “to review large swathes of evidence, resolve disputed facts ‘on the papers’, or address the merits of the [proceedings]’.[30]

74The judicial review bundle filed by Mr Kuek in support of his application is 584 pages long and contains hundreds of pages of affidavit and documentary evidence. Mr Kuek’s written submissions in support of his application for judicial review made numerous and detailed references to the evidence. Mr Gray’s written submissions in opposition also relied on the voluminous evidence filed in defence and made reference to that evidence in his submissions.

75It is clear the evidence filed by the parties raised both factually and legally complex issues which would need to be resolved prior to any finding regarding Mr Kuek’s likelihood of success. Those legal issues include whether or not Mr Gray is statute barred, the complexity of which is illustrated by the submissions made by both parties. The questions surrounding the existence and nature of the backsheet provided by Mr Kuek to Mr Gray remains a contested factual issue. These matters cannot be resolved in the absence of closely analysing the hundreds of pages of evidence relied on by the parties with a potential need to cross-examination witnesses. This is simply not a case where the likelihood of success was ‘manifest on the face of the record’.[31]

Did Mr Gray effectively capitulate or surrender to Mr Kuek?

76Mr Kuek submits that the result of the interim terms of settlement are equivalent to a dismissal of Mr Gray’s claims had the matter proceeded to trial and judgment. Accordingly, Mr Kuek does not submit directly that Mr Gray capitulated or surrendered in the County Court proceeding.

77Nonetheless, I do not find that the dismissal of the County Court proceeding has effectively been occasioned by capitulation on Mr Gray’s part and success on the part of Mr Kuek. As I outlined earlier, the interim terms of settlement allowed Mr Gray to pursue the taxation of his fees in the Costs Court with an obligation imposed on Mr Kuek to assist him.

Is Mr Gray entitled to claim professional costs and disbursements

78The abolition of the Chorley exception by the decision in Bell Lawyers undoubtedly removes the right for a party who is also a solicitor or barrister to recover their professional costs for the time spent in litigation. Mr Gray would however be entitled to recovery of costs in respect of any disbursements he incurred, but it appears he makes no claim in this regard.[32]

Conclusion and orders

79The Order of the Court is that the orders of the Court constituted by the judicial registrar are confirmed. I have heard no argument on the question of costs of this proceeding, and so I will reserve them.

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Certificate

80I certify that these 20 pages are a true copy of the reasons for judgment of his Honour Judge Trapnell, delivered on 1 November 2024.

81Dated: 1 November 2024

Madeleine Stevens

Associate to his Honour Judge Trapnell

[1]     Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622, 624 (McHugh J) (‘Lai Qin’).

[2] (1997) 186 CLR 622.

[3] Ibid 624–625 (citations omitted). See also Yue’e Zhao v Suzhou Haishun Investment Management Co Ltd [2020] VSCA 34 [9] (Tate, McLeish and Hargrave JJA).

[4] [2020] VSCA 34.

[5] Ibid [9]–[12] (Tate, McLeish and Hargrave JJA) (citations omitted).

[6] [2006] VSCA 65.

[7] Ibid [33].

[8] Ibid, quoting Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (2005) 13 VR 435, 442 [25] (Warren CJ, Maxwell P and Harper AJA).  

[9] (2019) 269 CLR 333 (‘Bell Lawyers’).

[10] Ibid 340 [3] (Kiefel CJ, Bell, Keane and Gordon JJ).

[11] (1884) 13 QBD 872, 877.

[12]    Bell Lawyers 339–340 [3].

[13]    Ganesh & Anor v National Australia Bank Ltd [2021] VSCA 45 [89] (McLeish, Sifris and Kennedy JJA).

[14] [2022] VSC 680.

[15] Ibid [12] citing Southern Motors Pty Ltd v Australian Guarantee Corporation Ltd [1980] VR 187, 190 (Starke, Murphy and Brooking JJ); Cole and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194, 202–203 [11], [13] (Gleeson CJ, Gaudron and Hayne JJ); Bendigo and Adelaide Bank Ltd v Grahame [2020] VSC 86 [15]­–[18] (Sloss J).

[16] [2019] VSC 76 (Richards J).

[17] [2001] VSC 173 [100].

[18] [2013] NSWSC 758.

[19] [2015] VSC 230.

[20] [2017] VSC 214.

[21]    Southern Motors Pty Ltd v Australian Guarantee Corporation Ltd [1980] VR 187, 190 (Starke, Murphy and Brooking JJ).

[22]    Bendigo and Adelaide Bank Limited v Grahame [2020] VSC 86 [15]–[18].

[23]    Kiama Constructions Pty Ltd v Davey (1996) 40 NSWLR 639, 647-8 (Meagher JA).

[24] [1989] VR 8.

[25] Ibid 19 (Gray J, Fullager and Tadgell JJ agreeing).

[26]    Australian Iron & Steel Ltd v Hoogland (1962) 108 CLR 471; Ganzis v Ganzis [1963] SASR 194; Ronex Properties Ltd v John Laing Construction Ltd [1983] QB 398; Ketteman v Hansel Properties Ltd [1987] AC 189; Pullen v Gutteridge, Haskins & Davey Pty Ltd [1993] 1 VR 27.

[27] [2019] VSC 682.

[28] Ibid [22]–[24] (citations omitted).

[29]   Thomson Reuters, Quick on Costs [340.180].

[30]    Gago v Attorney General (Cth) [2022] FCA 70 [60] (Wigney J).

[31] Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681, 682 [3] (Basten JA).

[32] Ganesh & Anor v National Australia Bank Ltd [2020] VSCA 39 [55] (McLeish JA).