Hua Li v John Hong Ping So
[2021] VSCA 86
•6 April 2021
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S EAPCI 2019 0122
| HUA LI | Applicant |
| v | |
| JOHN HONG PING SO | Respondent |
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| JUDGES: | TATE, EMERTON and SIFRIS JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | Determined on the papers |
| DATE OF JUDGMENT: | 6 April 2021 |
| MEDIUM NEUTRAL CITATION: | [2021] VSCA 86 |
| JUDGMENT APPEALED FROM: | [2019] VSC 515 (Croft J); [2019] VSC 655 (Costs) (Croft J) |
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PRACTICE AND PROCEDURE – COSTS – Costs of appeal – Offer of compromise made by respondent under Order 26 of the Supreme Court (General Civil Procedure) Rules 2015 – Offer not accepted – Respondent successful – Costs order made on a standard basis up to and including date representing the conclusion of the period for which the offer remained open for acceptance and indemnity costs thereafter.
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| WRITTEN SUBMISSIONS: | Counsel | Solicitors |
| For the applicant For the respondent | In person Mr D McAloon | b2b Lawyers |
TATE JA
EMERTON JA
SIFRIS JA:
Background
On 26 February 2021, the Court dismissed the application for leave to appeal made by the applicant on the basis that none of her proposed grounds of appeal had been made out.[1] The Court also provided its reasons for dismissing an interlocutory application made by the applicant on 14 January 2021, seeking discovery of documents under r 64.03 of the Supreme Court (General Civil Procedure) Rules 2015.
[1]Li v So [2021] VSCA 32 (‘principal judgment’). The relevant background to the appeal is set out in the principal judgment.
Following judgment, the parties were ordered to notify the Court of any agreement reached on costs. The parties did not reach agreement and filed submissions on costs in accordance with the timetable provided in the Court’s orders.
Respondent’s submissions
The respondent’s submissions on costs were accompanied by an affidavit sworn by the respondent’s solicitor, Mr Reid Bettridge. Mr Bettridge’s affidavit exhibited an offer of compromise served on the applicant’s then solicitors on 23 July 2020. The offer of compromise relevantly stated:
The Respondent offers to compromise the entirety of the appeal proceeding on the following basis:
1. The proceeding be wholly dismissed.
2. There be no order as to costs.
This offer is inclusive of costs.
This offer is open for acceptance until 4:00pm on 7 August 2020.
Mr Bettridge has deposed that there was no response to the offer of compromise from the applicant’s solicitors before they sought leave from the Court to cease acting for the applicant on 4 August 2020. Nor has there been any response from the applicant herself.
Relying on the offer of compromise, the respondent submits that the Court should order the applicant to pay the respondent’s costs of and incidental to:
(a) the application for leave to appeal, and the appeal, up to and including 23 July 2020, on a standard basis; and
(b) the application for leave to appeal, the application filed on 14 January 2021 under r 64.03 and the appeal, from 23 July 2020, on an indemnity basis.
Applicant’s submissions
The applicant, who is self-represented and has a limited command of English, set out in her submissions a table of ‘judicial consequences’ that she says have flowed from the legal proceedings between her and the respondent. She submits that solicitors on ‘both sides’ had failed ‘in regards to the legal profession’. The table refers to no less than seven firms of solicitors who have acted for her in her disputes with the respondent over their shared property since 2015. While it is not immediately clear from her submissions, it appears that the substance of the applicant’s argument is that the adverse costs consequences she now faces are a product of misconduct by her former lawyers, and the lawyers for the respondent.
The applicant’s submissions are accompanied by an affidavit sworn by her, restating the contents of her submissions (including the table of ‘judicial consequences’) and exhibiting further documents. Among those documents is a complaint to the Victorian Legal Services Commissioner regarding a bill from one of her former firm’s solicitors — not the firm acting for her at the time the offer of compromise was made — and responses from the Commissioner closing her complaint.
On the basis of that material, the applicant seeks orders that:
No indemnity cost toward [the applicant] who is self represented not by choice
Each party bear their own cost.
In relation to legal misconduct, cost matters be referred to the Legal commission on the determination of how much cost each parties professional indemnity insurance has to wear prior to determination of [the applicant’s] share of cost should the court determines she has liable for cost in regards to the obvious reflected legal error that appear to be no fault of [the applicant’s]
Principles
In an application for leave to appeal or an appeal, this Court has a broad discretion to award costs as it thinks fit.[2] Ordinarily, however, the costs of an appeal, like the costs of a trial, follow the event.[3] This means that, where an application for leave to appeal is dismissed, the respondent will usually be awarded the costs of the application, such costs to be assessed on the standard basis.
[2]Rule 64.38 of the Supreme Court (General Civil Procedure) Rules 2015 provides that the Court of Appeal ‘may make any order for the whole or any part of the costs of an application or appeal as it thinks fit’.
[3]Nikolaou v Papasavas, Phillips & Co (1989) 166 CLR 394; [1989] HCA 11.
There are, however, circumstances in which the Court may decide that costs should be awarded on a basis other than the standard basis. One such circumstance is where the successful party has made an offer of compromise. In this respect, r 26.12 of the Supreme Court (General Civil Procedure) Rules 2015 relevantly provides:
(3)Where on an appeal—
(a) a party has made an offer in writing to the other party (whether or not expressed to be without prejudice) to compromise the appeal on the terms specified in the offer;
(b) the offer was open to be accepted for a reasonable time, but was not accepted; and
(c) the party making the offer obtains an order on the appeal no less favourable to that party than the terms of the offer—
the Court of Appeal shall take those matters, and also the stage of the appeal at which the offer was made, into account in determining what order for costs to make in respect of the appeal or in respect of the appeal and the proceeding more generally.
(4) The Court of Appeal, in exercising its discretion as to costs in accordance with paragraph (3), may order that the party on whom the offer to compromise the appeal was served pay the costs of the party who made the offer, taxed on a basis other than the ordinarily applicable basis—
(a) from the commencement of the appeal;
(b) from the day the offer was served; or
(c) from any other time that the Court thinks fit.
Order 26.12 does not constrain this Court’s general discretion to award costs as it thinks fit. Rather, it requires the Court to take into account the offer of compromise — at least if made in the manner contemplated by the Order — when deciding whether, and if so how, costs should be awarded.There is no general presumption that the offeree’s failure to accept an offer of compromise entitles the offeror to indemnity costs, if the offeree receives a less favourable result.[4] Rather, where the successful party has made an offer of compromise, the critical question is whether the failure to accept the offer was unreasonable in all the circumstances.[5]
[4]Fletcher Insulation (Vic) Pty Ltd v Renold Australia Pty Ltd (No 2) [2006] VSC 292, [13]–[17] (Byrne J). Cf Supreme Court (General Civil Procedure) Rules 2015, r 26.08.
[5]Hazeldene’s Chicken Farm Pty Ltd v WorkCover Authority (Vic) (No 2) (2005) 13 VR 435, 441 [23] (Warren CJ, Maxwell P and Harper AJA); [2005] VSCA 298; Settlement Group Pty Ltd v Purcell Partners (a firm) (No 2) [2014] VSCA 68, [9] (Maxwell P, Redlich JA and Dixon AJA).
It is neither possible nor desirable to give an exhaustive list of when a failure to accept such an offer will be unreasonable.[6] However, relevant factors include the time allowed to consider the offer of compromise, the extent of the offer, the offeree’s prospects of success assessed as at the date of the offer, and whether the offeree is legally represented.[7]
[6]Hazeldene’s Chicken Farm Pty Ltd v WorkCover Authority (Vic) (No 2) (2005) 13 VR 435, 442 [25] (Warren CJ, Maxwell P and Harper AJA); [2005] VSCA 298; Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 13) [2007] VSC 516, [13] (Byrne J).
[7]Slaveski v Victoria [2010] VSC 569.
Disposition
In our view, the applicant’s failure to accept the offer of compromise was unreasonable in the circumstances, for the following reasons:
(c) The offer was made after the written submissions had been filed but remained open after the hearing had been adjourned. The application for leave to appeal was initially listed for hearing on 11 August 2020. On 14 July 2020 Ms Li sought an adjournment as she was in China, suffering health problems and unable to return to Australia. On 5 August 2020 the Court vacated the hearing date and the matter was to be relisted on a date to be advised. The matter was ultimately listed for hearing on 4 February 2021. The offer was made on 23 July 2020 and, as mentioned, was open until 7 August 2020. This meant that the offer remained open after the hearing date was to be rescheduled and thus well before the hearing of the application for leave to appeal, and while there was the likelihood of significant further costs being incurred if the application proceeded to a hearing.
(d) The offer was expressed to be open for a reasonable period of time. The offer was served on 23 July 2020 and remained open until 7 August 2020, allowing sufficient time for acceptance.
(e) The applicant’s prospects of success on the appeal, assessed at the time the offer was made, were poor. The applicant had the benefit of detailed written submissions by the respondent explaining why that was so. Moreover, her application for discovery under r 64.03 also had very poor prospects of success, as the documents sought were irrelevant to the proposed grounds of appeal.[8]
(f) The terms of the offer were clear and, indeed, generous, given the applicant’s limited prospects of success.
[8]Principal judgment [32].
In reaching the conclusion that it was unreasonable to refuse the offer of compromise, we have taken into account the fact that the applicant has been self-represented since August 2020. However, she was legally represented at trial and in the appeal proceeding up until her solicitors sought leave to cease acting for her on 4 August 2020. By that point, the appellant had had many days in which to take advice on and consider the offer of compromise. More generally, she had had ample opportunity to take advice on and understand the strength of her case on appeal, particularly following receipt of the respondent’s written submissions.
We have read the applicant’s material relating to the alleged misconduct of her lawyers, and the lawyers for the respondent, on which she relies to resist an order for indemnity costs. The applicant has not deposed that she was not aware of the terms of the offer of compromise, or that she was misled by her legal advisers about the strength of her case, so as to show that her failure to accept the offer of compromise was reasonable in the circumstances. She ceased to be represented because, as she informed the Registry in an email on 1 August 2020, her solicitors did not agree to filing the affidavit on which she ultimately relied at the hearing of the application for leave to appeal. That affidavit was replete with irrelevant material, in that it focussed on issues that were not raised at trial or in the notice of appeal that had been filed.
It is apparent from the materials filed by the applicant in response to the respondent’s application for costs that the applicant is still seeking to agitate her complaints about the respondent’s management of the shared property. That was not in issue in the appeal, as we explained in the principal judgment. No amount of seeking to re-frame the appeal as ‘judicial review’ can change the fact that the pleadings at trial, the grounds of appeal, and the written case filed on the applicant’s behalf in the appeal concerned the alleged conduct of the respondent when he financed his share of the property, not his accounting for the income from or expenses for the property. The treatment of the $43,000 that formed part of the settlement of the separate and independent proceeding before the Victorian Civil and Administrative Tribunal, the accounting for the cost of the toilet renovations and other property management disputes between the applicant and the respondent were not in issue at trial or on appeal, as we explained in principal judgment.[9]
[9]Ibid [25].
The respondent is entitled to its costs on the indemnity basis from the conclusion of the period for which the offer of compromise remained open for acceptance.
Orders
The Court will order that the applicant pay the respondent’s costs of and incidental to the application for leave to appeal and the appeal (including in respect of the application filed on 14 January 2021 under r 64.03):
(g) up to and including 7 August 2020, on the standard basis; and
(h) thereafter, on the indemnity basis.
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