Guneser v Aitken Partners Pty Ltd - [2020] VSC 329

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION

S CI 2018 01010

GENCO GUNESER	Appellant/Cross Respondent
v
AITKEN PARTNERS PTY LTD (ACN 128 769 602) (trading as ‘Aitken Partners’)	Respondent/Cross Appellant

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JUDGE:	Macaulay J
WHERE HELD:	Melbourne
DATE OF HEARING:	18 February 2020
DATE OF JUDGMENT:	5 June 2020
CASE MAY BE CITED AS:	Guneser v Aitken Partners (Cross appeal on costs)
MEDIUM NEUTRAL CITATION:	[2020] VSC 329

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COSTS – Incorporated legal practice acting for itself in proceeding – Whether entitled to costs order in respect of work done by employee solicitors and other staff after High Court abolished the Chorley exception as part of the common law of Australia – Whether recoverable under the ‘well-established understanding’ in relation to in-house lawyers employed by governments and others – Appeal from a Costs Judge who denied the cross-appellant, an incorporated legal practice, its professional costs for acting for itself in litigation and only awarded reasonable disbursement costs – Costs Judge’s decision confirmed – Bell Lawyers Pty Ltd v Pentelow (2019) 93 ALJR 1007; [2019] HCA 29 - United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2020] VSCA 15.

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APPEARANCES:	Counsel	Solicitors
For the Cross Appellant	Ms C Harris QC with Ms L Dawson	Aitken Partners Pty Ltd
For the Cross Respondent	Appeared for himself

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Background......................................................................................................................................... 2

Bell Lawyers decision........................................................................................................................ 4

United Petroleum decision................................................................................................................ 8

Costs Judge’s reasons for decision................................................................................................ 12

Principles of law on appeal............................................................................................................ 13

Did the Costs Judge make an error?............................................................................................. 14

Should some other decision have been made, and if so what?.............................................. 17

Does an incorporated practice fit within the general exclusionary rule?........................... 17
Does Aitken Partners’ claim fall within the ‘well-established understanding’?............... 19

Conclusion......................................................................................................................................... 22

HIS HONOUR:

Introduction

In Bell Lawyers Pty Ltd v Pentelow[1] (Bell Lawyers) the High Court decided that what was known as the Chorley exception to the rule that self-represented litigants could not recover the value of their time spent in litigation did not form part of the common law of Australia. The effect of that decision was that neither barristers nor solicitors who successfully acted for themselves in litigation could recover their professional costs for doing so.
[1]Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; (2019) 93 ALJR 1007.

In United Petroleum Australia Pty Ltd v Herbert Smith Freehills[2] (United Petroleum), the Victorian Court of Appeal, applying Bell Lawyers, held that a law firm (trading as a partnership) was precluded from recovering professional costs for the work of its employee solicitors after it had acted for itself in litigation. The firm conceded that it could not recover any professional costs for the work of its partners.
[2]United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2020] VSCA 15.

Both decisions acknowledged that the abolition of the Chorley exception did not affect the continued entitlement of in-house lawyers employed by government departments or corporations…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] VSC 329
Decision Date: 5 June 2020

CaseChat Overview and Summary

Guneser v Aitken Partners Pty Ltd involved a dispute between the cross-appellant, an incorporated legal practice, and the respondent. The cross-appellant sought an order for professional costs incurred by employee solicitors and other staff during litigation, after the High Court abolished the Chorley exception. The Costs Judge denied the application for professional costs, awarding only reasonable disbursement costs. The cross-appellant appealed against this decision, arguing that it should be entitled to costs under the 'well-established understanding' regarding in-house lawyers employed by governments and others.

The legal issue before the court was whether an incorporated legal practice, acting for itself in litigation, could recover professional costs from the opposing party. The cross-appellant contended that the abolition of the Chorley exception by the High Court did not preclude it from recovering such costs, as there was a well-established understanding that in-house lawyers employed by governments and others could recover costs. The respondent argued that the cross-appellant's status as an incorporated legal practice meant that it was not entitled to professional costs, as it was not analogous to in-house lawyers employed by governments or other entities.

The court considered the decision of the High Court in Bell Lawyers Pty Ltd v Pentelow, which abolished the Chorley exception, and the subsequent decision of the Victorian Court of Appeal in United Petroleum Australia Pty Ltd v Herbert Smith Freehills, which applied the principle in Bell Lawyers to a similar situation. The court held that the abolition of the Chorley exception did not automatically entitle an incorporated legal practice to recover professional costs. Instead, the court found that the well-established understanding regarding in-house lawyers employed by governments and others did not extend to incorporated legal practices acting for themselves in litigation. The court confirmed the Costs Judge's decision, denying the cross-appellant's application for professional costs.

The court further noted that, while the cross-appellant might have been entitled to recover costs if it had acted as an agent for a client, it was not doing so in this case. Instead, the cross-appellant was acting for itself, and as such, it was not entitled to professional costs. The court found that the cross-appellant was only entitled to reasonable disbursement costs, as awarded by the Costs Judge. The cross-appellant's appeal was dismissed, and the decision of the Costs Judge was upheld.

Orders