Hopkins v Edwards (No 2)

[2020] VSC 698

Not Restricted

IN THE SUPREME COURT OF VICTORIA
AT MELBOURNE
COMMERCIAL COURT

COMMERCIAL LIST

S CI 2017 04443

FRASER CAMPBELL HOPKINS & ANOR	Plaintiffs
v
JAMES CAMPBELL EDWARDS & ORS	Defendants

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JUDGE:	LYONS J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF JUDGMENT:	22 October 2020
CASE MAY BE CITED AS:	Hopkins v Edwards (No 2)
MEDIUM NEUTRAL CITATION:	[2020] VSC 698

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COSTS – Assessment of costs in lieu of taxation – Costs to be paid from charitable trust – Assessment by special referee under Order 50 of Supreme Court (General Civil Procedure) Rules 2015 or private assessment – Assessment by special referee ordered.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Prolegis Lawyers
For the 1st to 4th , 6th, 8th and 9th Defendants	Mr P Solomon QC with Dr E Boros	Gadens Lawyers
For the 7th Defendant	Dr P Bender	Victorian Government Solicitor

HIS HONOUR:

1. In my reasons as to the costs of this proceeding dated 31 July 2020,[1] I determined that each of the plaintiffs and the active defendants were entitled to their standard costs of the proceeding to be paid from the Trust.  I requested that the legal representatives of the plaintiffs, the active defendants and the Attorney confer in an attempt to reach an agreement on the most efficient and cost effective way for those costs to be assessed.

   [1]Hopkins v Edwards [2020] VSC 456 (the ‘first Reasons’).  For convenience, in these reasons, I will use the terms defined in the first Reasons.

1. That process has now been completed.  However, agreement has not been reached.  As a result, I have received and read the following material:

(1)       the plaintiffs’ submissions dated 18 September 2020;

(2)       the active defendants’ submissions dated 18 September 2020 and the affidavit of Mr Patrick Walsh sworn the same date; and

(3)       the Attorney’s submissions dated 12 October 2020.

1. As no party has requested an oral hearing, I will decide this issue on the papers. 

1. In summary, the plaintiffs seek orders that the assessment of costs be referred  to a special referee pursuant to r 50.01(1)(a) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (the ‘Rules’). They originally proposed that Ms Elizabeth Harris of Harris Cost Lawyers Pty Ltd be appointed as special referee. They have recently proposed that Ms Cate Dealehr of the Australian Legal Costing Group be appointed as special referee instead. They also proposed a term of the order that the decision of the special referee will be final and binding upon the plaintiffs and the active defendants but not the Attorney.

1. By contrast, the active defendants propose determination of the costs by the certification of  those costs by an independent costs consultant (the ‘certification process’).  This would be a private process and not subject to court review.  They propose Mr John White, a costs lawyer and consultant, undertake this task.  The active defendants submit that this certification process would be more cost effective.  An exhibit to Mr Walsh’s affidavit is a letter from Mr John White, solicitor and costs consultant, who estimates that:

(1)       the certification process would cost $30,000 for an assessment of each of the plaintiffs’ costs and the active defendants’ costs; and

(2)       the special reference process would cost $55,500 for the plaintiffs’ costs and $40,000 for the active defendants’ costs. 

1. The Attorney generally agreed with the appointment of a special referee as proposed by the plaintiffs.  In particular, the Attorney agreed with the proposal that the trustees would be bound by the special referee’s decision but that the Attorney would not be so bound.  However, the Attorney submitted that a special reference order should not be made by the court without knowing what the costs estimates of the special referee might be.  The Attorney submitted that any special referee that might be appointed should provide an estimate of costs so that the court can properly scrutinise the likely costs prior to making a decision.

1. I have concluded that it is more appropriate that the costs of the plaintiffs and the active defendants to be paid from the Trust be assessed by a special referee appointed pursuant to r 50.01.  This is notwithstanding that, based on the material before me, that process is likely to be more expensive than the certification process.  This is because I consider that the special referee process, consistent with r 50,  would empower the special referee to control the process (having regard to my concerns about the costs incurred to date) and would be subject to the scrutiny of the court. 

1. I do not consider it necessary or desirable, before making a decision in this regard, to review other estimates of the costs that might be incurred in the special referee process.  I have an indication of the likely costs already from Mr White.  However, in my view the choice of the special referee may be influenced by the costs and experience of a particular costs consultant.  As a result, I shall direct that the parties obtain a cost estimate from each of Ms Dealehr, Mr White and an agreed third party costs consultant for the purposes of being appointed a special referee.   

1. Any estimates should then be provided to the Court together with a copy of the curriculum vitae of each costs consultant and an indication, if any, from the parties as to whether a particular costs consultant is preferred as special referee.  I will then nominate one of them as the special referee.

1. As to the form of order, in my view that should now be the subject of conferral between the parties.  In order to assist in this process I note my preliminary views as follows:

(1)       the plaintiffs’ form of order is premised on there being consent including that the plaintiffs and active defendants are bound by the process.  However the order to refer the assessment to a special referee is not agreed.  The recitals should be changed to reflect this;

(2)       the recitals should record that the special referee process is to enable the efficient, cost effective and timely determination of the costs ordered to be paid from the Trust, and the special referee should have regard to such matters in undertaking in the special reference and providing his or her report;

(3)       I generally agree with paragraphs 1 to 7 of the plaintiffs’ proposed order;

(4)       the form of any report is a matter for the special referee in light of the matters set out in the recitals;

(5)       I generally agree with Annexure A.  The parties will need to agree on the documents to be provided.

1. As to [10(1)] above, there is much sense in binding the plaintiffs and the active defendants to the determination by the special referee.  It seems an intrinsic component of the certification process proposed by the active defendants save that they submit that the Attorney should also be bound.  However, it seems that the recitals in the order in Deerbon v Deerbon[2],  a case relied upon by the plaintiffs, were included by consent.  Should agreement not be reached, I would need to be referred to authorities where the courts have imposed such a condition on the parties which deprive them of their rights under r 50.03(3). 

   [2][2010] VSC 87.

1. There is one other matter. The active defendants seek in effect an order under r 63.34(3) and (4) that the court certify that senior counsel’s brief be in excess of scale. The active defendants submit that the proceedings and the legal principles in it were of sufficient complexity to warrant certification of a rate in excess of scale. In this regard, the maximum daily fee for senior counsel under Appendix A to Chapter I of the Rules for work completed during the period relevant to this proceeding ranged between $8,421 and $8,770 per day (exclusive of GST). The active defendants seek an order that senior counsel’s brief be certified at $9,900 per day (inclusive of GST).

1. I had cause to consider the application of these rules in Milfoil Pty Ltd v Commonwealth Bank of Australia (No 2).[3]  While I accept that in an appropriate case the complexity of a proceeding and the legal principles in it may warrant the court to exercise its discretion to certify in excess of scale, I am not satisfied that this is such a case.  As noted in the first Reasons at [57] and [315], the active defendants did not challenge the factual material filed by the plaintiffs: rather they contended that that material did not justify a challenge to the exercise of their discretion to remove the plaintiffs as trustees in accordance with the relevant legal principles.

   [3][2019] VSC 734 (‘Milfoil (No 2)’).

1. In my view, there was nothing unusual about the factual substratum of this proceeding or the legal principles which applied that would warrant a certification of costs in excess of the maximum daily fee allowed under the Rules. While the effect of the request for certification in this case is modest, the request is inconsistent with my comments in the first Reasons, in particular at [274]. To the extent it is relevant, I made similar comments in Milfoil (No 2) at [48].

1. As a result, I will direct that as soon as reasonably practicable, and no later than 21 days after the date of this judgment, the parties take the following steps:

(1)to obtain a costs estimate from Ms Dealehr, Mr White and an agreed third party costs consultant for the purposes of being appointed a special referee; 

(2)       to provide to the court the estimate obtained from each consultant pursuant to [15(1)] hereof and a curriculum vitae of each consultant;

(3)to inform the court which consultant that party wishes to be appointed as special referee; and

(4)to confer and inform the court as the form of order pursuant to which the special referee is to be appointed. 

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