Hudspeth v Scholastic Cleaning and Consultancy Services Pty Ltd (No 9)
[2014] VSC 622
•16 DECEMBER 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2009 09222
| LINDA HUDSPETH | Plaintiff |
| v | |
| SCHOLASTIC CLEANING AND CONSULTANCY SERVICES PTY LTD & ORS | Defendants |
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JUDGE: | DIXON J | |
WHERE HELD: | MELBOURNE | |
DATES OF HEARING: | 1 DECEMBER 2014 | |
DATE OF RULING: | 16 DECEMBER 2014 | |
CASE MAY BE CITED AS: | HUDSPETH v SCHOLASTIC CLEANING AND CONSULTANCY SERVICES PTY LTD & ORS (No 9) | |
MEDIUM NEUTRAL CITATION: | [2014] VSC 622 | |
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ACCIDENT COMPENSATION – Industrial accident – Costs – Whether costs must be taxed on a party and party or a standard basis – s 134AB(28) Accident Compensation Act 1986 (Vic), s 24(1) Supreme Court Act 1986 (Vic), s 17 Interpretation of Legislation Act 1984 (Vic), r 63.28, 63.30, 63.31 Supreme Court (General Civil Procedure) Rules 2005.
EXPERT WITNESS – Breach of overarching obligations – Remedies under s 29 of the Civil Procedure Act 2010 (Vic) – Compensation for wasted costs – Whether and to what extent costs should be awarded on court’s own motion inquiry – Relevant consideration on apportining responsbility between multiple contraveners – s 29 Civil Procedure Act.
LEGAL PRACTITIONERS – Breach of overarching obligations – Remedies under s 29 of the Civil Procedure Act 2010 (Vic) – Compensation for wasted costs – Whether and to what extent costs should be awarded on court’s own motion inquiry – Relevant consideration on apportining responsbility between multiple contraveners – s 29 Civil Procedure Act.
PRACTICE AND PROCEDURE ‑ Breach of overarching obligations – Remedies under s 29 of the Civil Procedure Act 2010 (Vic) – Sanctions – Whether orders serve both a disciplinary and a compensatory function – Entitlement of innocent parties to compensation – Effect of appeal overturning jury verdict - Compensation for wasted costs – Causal relationship between contravention and loss - Whether and to what extent costs should be awarded on court’s own motion inquiry – Relevant consideration on apportining responsbility between multiple contraveners – s 29 Civil Procedure Act.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr G Uren QC and Mr A Ingram of counsel | Melbourne Injury Lawyers |
| For the First Defendant | Mr M Wheelahan QC and Mr S D Martin of counsel | Minter Ellison |
| For the Second Defendant | Mr D Masel QC | Wotton & Kearney Lawyers |
| For ISS Hygiene Services Pty Ltd formerly the Third Defendant | Mr C Madder of counsel | Lander & Rogers |
| For Clark, Toop & Taylor and Patricia F.Y. Toop | Ms A Ryan QC | Moray & Agnew |
| For Mark Francis Dohrmann | Mr D Williams QC and Mr S Wooley of counsel | Law 554 |
| For John B. Richards SC | Mr J W S Peters QC and Ms J M Frederico | DLA Piper |
HIS HONOUR:
Final orders in the proceeding on completing the remitted hearing
The Court of Appeal remitted the plaintiff’s claim for damages for personal injuries to me and, on 20 November 2014, I published my reasons for finding the first defendant liable to the plaintiff and assessing her damages in the sum of $610,400 (the remitted hearing).[1] The plaintiff and the first defendant have agreed that after due allowance for Fox v Wood payments, I should enter judgment for the plaintiff in the sum of $484,253, being $479,944 for damages and $4,309 for damages in the nature of interest. I will grant a stay of execution of 14 days.
[1]Hudspeth v Scholastic Cleaning and Consultancy Services Pty Ltd (No 7) [2014] VSC 542
In respect of the plaintiff’s costs of the proceeding, for reasons that I will shortly explain, I will make the following orders.
(a)The first defendant pay the plaintiff’s costs of the proceeding, including reserved costs, to be taxed, up to 1 April 2013 as between party and party and thereafter on a standard basis.
(b)The costs of Mr Mark Dohrmann or Mark Dohrmann & Partners Pty Ltd are disallowed as between Mr Dohrmann and the plaintiff.
(c)The costs of Clark Toop & Taylor and Mr J B Richards SC arising out of the retention of Mr Dohrmann, including the costs of and incidental to procuring reports and adducing evidence from Mr Dohrmann, are disallowed as between practitioner and client.
(d)Any counsel’s fees claimed by Mr ADB Ingram of counsel for preparation and conferences in respect of all liability issues between the plaintiff and the first defendant, and appearance fees of and incidental to adducing evidence from Mr Dohrmann are disallowed as between practitioner and client.
Before turning to the further orders that I will make pursuant to s 29 of the Civil Procedure Act 2010 (Vic), I will state my reasons for making these orders.
Costs of the jury trial
The first defendant submitted, correctly, that s 134AB(28) of the Accident Compensation Act 1985 (Vic) had no application in relation to the costs of the jury trial, because the Court of Appeal made orders in respect of those costs.[2] The Court of Appeal exercised its powers as to costs of the jury trial by ordering that those costs be determined by me.[3] It follows that s 134AB(28) does not fetter my discretion and the costs of the jury trial may be determined by me in accordance with ordinary principles.
[2]Baulch v Lyndoch Warrnambool Inc (No 2) [2010] VSCA 53, [5].
[3]Hudspeth v Scholastic Cleaning [2014] VSCA 78, [80]-[81].
The ordinary rule concerning the costs of the first trial when a new trial is ordered by the Court of Appeal is that the costs of the first trial abide by the result of the new trial.[4] I see no reason to depart from the ordinary rule where, rather than a new trial being ordered, the proceeding was remitted to the trial judge to complete the hearing of the proceeding as a cause. The plaintiff was successful in her claims against the first defendant based on the evidence adduced before the jury, as supplemented at the remitted hearing, and I will make the usual order for costs in her favour.
[4]Baulch v Lyndoch Warrnambool Inc (No 2) [2010] VSCA 53, [6].
Party and party or standard basis for taxation
The second issue that arises flows from recent amendments made to Order 63 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic). Those amendments came into force on 1 April 2013. However, the costs of the first trial had been incurred by that date and the issue only affects the costs incurred on the remitted hearing.
The first defendant submits that s 134AB(28)(b) applied, and mandated that the costs incurred since the proceeding was remitted must be awarded on a party and party basis notwithstanding that the Rules ceased to provide for taxation of costs on a party and party basis from 1 April 2013. The first defendant submitted that I should make an express order to give effect to a party and party basis of taxation as prescribed by the Accident Compensation Act 1985. Doing so would avoid inconsistency and possible confusion that might arise from the terms of r 63.31, which provides for costs to be assessed on a standard basis.
Section 134AB of the Accident Compensation Act governed the plaintiff’s entitlement to bring a proceeding for damages for a workplace injury. Such proceedings were commenced after a statutory offer was made or deemed to have been made. Unconstrained by statute, a discretion in respect of the basis for taxation of costs may, and commonly is, exercised by reference to whether a party has behaved unreasonably in rejecting a more favourable offer of compromise or offer to settle prior to judgment. In respect of costs, s 134AB relevantly provided:
(28)In proceedings for the recovery of damages commenced in accordance with this section after a statutory offer was made, or deemed to have been made, under subsection (12)—
…
(b)if judgment is obtained or a settlement or compromise is made in an amount not less than 90 per cent of the worker's statutory counter offer under subsection (12) and more than the statutory offer of the Authority or self-insurer, the Authority or self-insurer must pay the worker's party and party costs and its own costs;
…
and the court must not otherwise make an order as to costs.
(29)For the purpose of the taxing of costs in proceedings to which this section applies, any applicable scale of costs has effect as if amounts in the scale were reduced by 20 per cent.
To follow the first defendant’s contentions it is necessary to set out the statutory regime for the basis of taxation of costs.
Section 24(1) of the Supreme Court Act 1986 provides that costs are in the discretion of the court unless otherwise expressly provided by the Act or any other Act or by the Rules and the court has full power to determine by whom and to what extent the costs are to be paid. Schedules to the Rules provide for scales of costs that are relevant on a taxation of costs.
The legislature introduced s 134AB into the Accident Compensation Act by an amendment in 2000. At that time, the Supreme Court (General Civil Procedure) Rules, 1996, (1996 Rules) provided by r 63.28:
Subject to this Part, costs in a proceeding which are to be taxed shall be taxed on –
(a) a party and party basis;
(b) a solicitor and client basis; or
(c) such other basis as the court may direct.
Rule 63.28 was remade in 2005 when an additional basis of taxation, namely ‘an indemnity basis’, was added.
By statutory rule No 142 of 2012, r 63.28 was revoked and remade as follows:
Subject to this Part, costs in a proceeding which are to be taxed shall be taxed on –
(a) a standard basis;
(b) an indemnity basis; or
(c) such other basis as the court may direct.
The 1996 Rules, by r 63.29, defined the party and party basis of taxation, and provided that all costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed shall be allowed. Those Rules defined the solicitor and client basis of taxation as all costs reasonably incurred and of reasonable amount. Rule 63.31 provided that the general basis for taxation, except as provided by the Rules or any order of the court, was that costs shall be taxed on a party and party basis.
The 2012 amendments revoked the definition of the party and party basis of taxation and substituted a remade r 63.30, which provided that on a taxation on a standard basis, all costs reasonably incurred and of reasonable amount shall be allowed. Rule 63.31 now provides that, except as otherwise provided or ordered, costs shall be taxed on the standard basis. The standard basis of taxation correlates with the former solicitor and client basis for taxation.
The first defendant submitted that s 134AB(28) picks up a concept of taxation of costs that is distinctly different to that now reflected in the definition of standard costs under the current rules. The first defendant contended that sub-s 28 fettered the court’s general discretion under s 24 of the Supreme Court Act because the concluding words of the subsection required that the court direct that costs be taxed on a party and party basis, because the language of sub-s 28 mandated that basis for taxation. To do otherwise undermined the purpose of s 134AB(28).
I disagree.
It is unnecessary to trace the historical development of the bases for taxation of costs. When s 134AB was inserted into the Accident Compensation Act, the legislature was cognisant of the provisions of s 24(1) of the Supreme Court Act and r 63.28–63.31 of the 1996 Rules. Further, the legislature was cognisant of power of the judges of the Supreme Court to amend, revoke, and remake the rules of court. There is nothing in the language of s 134AB or the Act as a whole to suggest that the legislature, when adopting the language ‘party and party costs’ was referring to a basis of taxation other than that defined by r 63.29 of the 1996 Rules. The references in s 134AB(28) to ‘party and party costs’ were references to that concept as it was defined in r 63.29 of the 1996 Rules. Cognisant that r 63.28 empowered the court to order taxation on such other basis as it may direct, the legislature constrained the court’s discretion under s 24 of the Supreme Court Act by specifying in the concluding words of sub-s (28) that the court must not otherwise make an order as to costs, that is, that costs must be taxed on a party and party basis.
It must be borne in mind that the statutory context for exercise of the power to award costs was by comparison of the amount of any judgment or settlement or compromise and the statutory offer of the authority or a self-insurer and the worker’s statutory counter-offer. The court was constrained not to take into account when exercising its discretion under s 24(1) of the Supreme Court Act whether a judgment of the court was less favourable to the successful party than offers that it had refused. For the purposes of recovery of the costs of proceedings brought under s 134AB, costs were to be taxed on the lowest basis of cost recovery permitted under the Rules and not otherwise. The discretion to award costs on a more favourable basis of taxation was constrained by the Accident Compensation Act. In this sense, the reference to the concepts of taxation prescribed by the Rules was intended to be ambulatory, picking up the least favourable basis for taxation prescribed by the Rules.
In Wadley v Ron Finemore Bulk Haulage (No 3),[5] Beach J (as his Honour then was) observed in an obiter dictum, that notwithstanding the repeal of the Rules with respect to the party and party basis of taxation, no party had suggested in that application that the operation of s 134AB(28)(b) of the Act was affected. His Honour suggested that this was because the concept of party and party costs predated the relevant rules – the concept being well known as encompassing all costs ‘necessary and proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed’.[6]
[5][2013] VSC 181.
[6]Ibid, [9], citing Forsyth v Deputy Commissioner of Taxation [2007] HCA 8; (2007) 231 CLR 531.
I do not consider that the history of the party and party basis of taxation is determinative of the legislative intent. Section 134AB was enacted in the context of s 24 and Order 63 which defined the concept of taxation of costs relevant to the statutory purpose. For the reasons I have stated, I am satisfied that the legislature was referencing the concept of taxation defined by the Rules with the intent of constraining the court’s discretion under s 24(1) of the Supreme Court Act. That discretion must be exercised subject to and in accordance with Order 63. The legislative purpose was to constrain the court’s discretion to the least favourable basis for taxation adopted by the Rules of Court. Were its intention otherwise, the legislature would have used in s 134AB(28) the expression ‘necessary or proper costs’ in lieu of party and party costs.
In Gruma Oceania Pty Ltd v Bakar & Ors,[7] the issue was whether costs in respect of an application in the Trial Division to set aside a decision of a medical panel should be taxed on a party and party basis or the standard basis. Gruma submitted that s 134AB(28) ought to be applied by analogy. The Court of Appeal rejected that submission as inviting the court to adopt a policy that costs awarded in favour of a successful worker in a proceeding that arises out of a claim under the Act should be assessed on a party and party basis, which, it said, would run counter to s 24 of the Supreme Court Act 1986 and rr 63.02 and 63.31 of the Rules. The issue that is raised before me was not before the Court of Appeal. Nonetheless, I note that the court observed:[8]
The provisions of the Act upon which Gruma relied apply only to the proceedings to which they relate and do not reflect an underlying statutory purpose that all proceedings arising out of a claim under the Act should be governed by the party and party basis of taxation. Ms Bakar’s submission that the references to party and party costs in those provisions merely reflect the pre-1 April 2013 wording of rr 63.28 and 63.31 is incorrect insofar as it relates to s 50(2A) of the Act, as the cost provisions in that section have been re-enacted in s 278(3) of the Workplace Injury Rehabilitation and Compensation Act 2013 which took effect on 1 July 2014.
[7][2014] VSCA 259.
[8]Ibid, [15].
The concluding observation must be confined to its context and is not determinative of the issue before me. Section 278(3) of the Workplace Injury Rehabilitation and Compensation Act 2013, is not concerned with the Supreme Court’s jurisdiction to award costs but with that of the County Court; and the County Court’s rules in respect of bases for taxation of costs have not been remade to replace party and party costs with standard costs.[9] As neither Gruma, nor the Workplace Injury Rehabilitation and Compensation Act were addressed in argument before me, counsel put no argument that the references to party and party costs in the provisions of the Workplace Injury Rehabilitation and Compensation Act either reflect the pre-1 April 2013 wording of the relevant rules or evidence any specific legislative intention. I will say no more on this point.
[9]See s 344 of the Workplace Injury Rehabilitation and Compensation Act 2013 that re-enacts s 134AB(28)
As the plaintiff submitted, the legislature must be taken to know that judges can make such rules of court as they see fit at any time without reference to any Act and can, by those rules, qualify the manner of exercise of the costs discretion under s 24 of the Supreme Court Act. Thus, the basis of taxation of costs recoverable by one party against the other under the Accident Compensation Act should be interpreted by reference to the least favourable basis for taxation that is permitted by the Rules of Court then currently in operation.
I am fortified in this construction of the Accident Compensation Act by analogy with s 17 of the Interpretation of Legislation Act 1984, which provides that a reference in an Act to any provision of a subordinate instrument shall, unless the contrary intention appears, if the subordinate instrument or provision in question has been re-enacted or remade, be construed as a reference to the provision as re-enacted or remade and in force for the time being. It may be that the term ‘party and party costs’ can be construed as a provision of a subordinate instrument, which would strengthen the following argument, but the meaning of ‘provision’ was not argued, and my inclination is to regard a ‘provision’ as a clause or a sub-section providing for a particular matter or making a particular stipulation, which is something more than a phrase.
Although the reference in the Accident Compensation Act is not a direct reference to r 63.29 of the Rules, which is a provision of a subordinate instrument, there is no discernible intention on the part of the legislature to refer to ‘party and party costs’, to define the basis of taxation, as a concept other than that defined under r 63.29. Had the reference been to the specific provision in the Rules, the operation of s 17 would have been clear. That is because the court’s power to award costs and the basis for taxation of costs by the court are found in the Supreme Court Act and the Rules described above. A reference to a concept of taxation that was independent of the Rules could have been clearly achieved by the phrase ‘necessary or proper costs’ in lieu of party and party costs. Broadly speaking, the intention of s 17 is that references to a provision in a subordinate instrument will be read to include subsequent amendments of that provision, in the absence of a contrary intention. By analogy, the absence of any contrary intention in the Accident Compensation Act - that it not be read to include subsequent amendments to the rules of court in respect of costs – is evident from the legislative purpose to limit the costs discretion where it might otherwise be influenced by unreasonable conduct to the best favourable permitted basis for taxation.
In summary, the correct starting point is r 63.31, which provides that costs shall be taxed on the standard basis except where otherwise provided by the Rules or by any order of the Court. Section 24 of the Supreme Court Act provides that costs be in the discretion of the court unless otherwise expressly provided by any other Act. Rule 63.02 provides that the power and discretion of the court as to costs shall be exercised subject to and in accordance with Order 63. The ambulatory nature of the reference in the Accident Compensation Act to the basis of taxation as a reference to the least favourable basis for taxation of costs available to the court under the Rules requires that the identified basis for taxation be defined by the rules in force for the time being.
For these reasons, following the revocation of r 63.29 and the remaking of r 63.28 and r 63.30, the expression ‘party and party costs’ where it appears in s 134AB(28) must from 1 April 2013 be taken as a reference to ‘standard costs’.
It follows that the restriction in s 134AB(28) on the court otherwise making an order as to costs does not preclude the court from making an order that costs be taxed on a standard basis. Rather, it precludes the court from ordering that costs be taxed on an indemnity basis or on such other basis as the court may direct.
Finally, I have disallowed some costs as between Mr Ingram and the plaintiff. As I made clear in Ruling No 8,[10] I make no finding that Mr Ingram breached an overarching obligation. However, in his affidavit of explanation Mr Ingram stated that his preparation was focused on witnesses relevant to the issue of quantum and was in any event limited by other commitments. To avoid doubt and protect the plaintiff’s position, I disallow any counsel’s fees claimable by Mr Ingram for preparation and conferences in respect of liability issues between the plaintiff and the first defendant. In so doing, I do not assume that Mr Ingram would render fees for work that he had not performed. I accept Mr Uren QC’s submission that it was proper for Mr Ingram to appear each day for the whole trial and I do not propose to disallow any appearance fees at trial with one exception. I disallow Mr Ingram’s appearance fees in relation to the time at trial taken up by and in relation to Mr Dohrmann’s evidence, including objections. Mr Ingram was, at least unwittingly, an inside observer of the conduct of the contraveners and for the plaintiff, as for the court, in the events that unfolded before his eyes, such appearance fees must have been wasted.
[10]Hudspeth v Scholastic Cleaning and Consultancy Services Pty Ltd (No 8) [2014] VSC 567, [133] – [135].
Section 29 orders
In Ruling No 8, I stated that I was satisfied that Mr Richards SC, Ms Toop, and Mr Dohrmann had contravened overarching obligations. In that circumstance, I am empowered to make any order that I consider appropriate in the interests of justice. Prior to the determination of the appeal, I was satisfied that the only person or party in the proceeding who was prejudicially affected by the contravention of an overarching obligation was the plaintiff. The defendants benefitted from the conduct of the contraveners and cannot be described as having been prejudicially affected, in any sense, by the contraventions. The defendants gained a significant forensic advantage, which was translated at trial into a judgment in their favour.
Ultimately, the defendants were unable to capitalise on that advantage and hold the judgment on appeal because counsel made statements in final address that went beyond what was justified by the evidence The loss of the forensic advantage that the contraveners gave to the defendants was caused by conduct of the defendants. However, irrespective of counsel’s comments in final address, perceptions of the evidence that were open to the jury and unfavourable to the plaintiff followed from the conduct of each of the contraveners. I am satisfied that the conduct of each of the contraveners contributed to the jury’s verdict. It is open to me to conclude, and I do, that a verdict favourable to the defendants was open and probable in the absence of the comments of senior counsel for the school. The fact that the Court of Appeal concluded that the statements of senior counsel for the school during his final address resulted in the plaintiff being denied a fair trial does not mean that the jury may have returned a different verdict if those comments had not been made to the jury. That the defendants lost their significant forensic advantage through the conduct of senior counsel for the school (which was supported by counsel for the employer) is not a basis for an order under s 29 of the Act in favour of the defendants. I am also persuaded that the defendants would have pursued the forensic advantage presented by incompetence of the contraveners irrespective of their contravening conduct; that is to say their incompetence was not solely measured by their contravening conduct.
Had there been no successful appeal, the contraventions would have caused the plaintiff to forfeit the opportunity to have her claims fairly considered by the jury. But for the appeal, an order might have been made in the plaintiff’s favour under s 29(1)(c) that the contraveners compensate the plaintiff for the lost opportunity to have her claims put properly and fairly to the jury, following a hearing to assess the value of that opportunity in all of the circumstances.
However, the plaintiff did not suffer that form of loss because she succeeded in overturning the judgment entered on the jury’s verdict and she succeeded on the remitted hearing against the first defendant in establishing that she suffered loss and damage due to the negligence and breach of duty of the first defendant. Once that occurred, any loss that the plaintiff might have sustained due to the conduct of the contraveners was limited to wasted legal costs and delay costs. The plaintiff makes no claim for delay costs as she has been compensated by an award of damages in the nature of interest. The first defendant may have paid a greater sum in interest than was necessary in the circumstances, but it makes no claim of that sort.
Legal costs incurred because of the conduct of the contraveners were the costs of the appeal, wasted costs in the jury trial, and the costs of this application.
Costs of the appeal
The school was ordered to pay Mrs Hudspeth’s costs of the appeal on a party and party basis up to 1 April 2013 and thereafter on a standard basis. The employer was ordered to bear its own costs. Notice was given to Mr Richards SC and Clark Toop & Taylor of the prospect that the Court of Appeal might make adverse costs orders against them and they made submissions to the court. However, Mr Dohrmann was not brought before the court on that basis, a matter to which I shall return.
The Court of Appeal disallowed Mr Richards SC and Clark Toop & Taylor any costs and disbursements in relation to the appeal, and ordered that they each equally and severally indemnify the school for 80% of the appellant’s costs that it was ordered to pay. Further, Mr Richards and Clark Toop & Taylor were to pay equally any legal costs and disbursements incurred by Mrs Hudspeth in relation to the appeal that she did not recover from the school. The practical consequence of these orders was that the school paid 20% of Mrs Hudspeth’s party and party or standard costs of the appeal and Mr Richards and Clark Toop & Taylor shared liability for the remainder of her costs, on an indemnity basis. I will refer to the costs liability of Mr Richards and Clark Toop & Taylor under the Court of Appeal’s orders as the appeal costs pool.
Mrs Hudspeth’s costs of the appeal, represented by the appeal costs pool, were costs arising from the conduct of the contraveners and, for the reasons that follow, I consider it appropriate in the interests of justice that each of the contraveners contribute to those costs. Each of Mr Richards SC and Clark Toop & Taylor sought an order to that effect against Mr Dohrmann, who resisted their application, principally on the basis that to make such an order would interfere with the decision of the Court of Appeal. Mr Dohrmann contended that the Court of Appeal did not choose to require him to explain his conduct to it, as it could have done, and his counsel urged me to construe the Court of Appeal’s judgment on costs as a considered decision not to make any order affecting Mr Dohrmann’s interests.
I do not accept this submission.
The Court of Appeal was plainly aware that the inquiry that I was conducting included Mr Dohrmann’s role in the breach of overarching obligations that may have caused loss to Mrs Hudspeth and had not been completed. Secondly, it is clear that the Court of Appeal regarded Mr Dohrmann’s conduct as unsatisfactory, without making findings against him under the Civil Procedure Act. Third, Mr Dohrmann was absent from the hearing before the Court of Appeal because no order was made by the Judicial Registrar requiring him to attend. I also note that, knowing that this inquiry remained extant, Mr Dohrmann did not seek to intervene in the costs hearing before the Court of Appeal.
The leading judgment on costs in the Court of Appeal, that of Whelan JA, was confined to an assessment of the responsibility for the mistrial of the parties that were present before the court and, properly construed, does not exonerate Mr Dohrmann. It is unsurprising that no orders were made by the Court of Appeal against Mr Dohrmann personally, but nothing in the court’s reasons precludes me from making orders against Mr Dohrmann that do not interfere with the Court of Appeal’s orders, by requiring Mr Dohrmann to partially indemnify the contributors to the appeal costs pool. The order I propose is in the nature of a contribution order. In my view, it is just and equitable that Mr Dohrmann contributes to the indemnity ordered against Mr Richards SC and Clark Toop & Taylor to the extent commensurate with his responsibility for the indemnity for Mrs Hudspeth required from those parties.
Mr Dohrmann submitted that he was prejudiced because he made no submission to the Court of Appeal in respect of any aspect of the appeal costs pool. Mr Dohrmann submitted that he was obliged to accept the percentage of responsibility attributed to the school (20%) and to the first defendant (bear own costs) without having had any opportunity to put an alternative submission to the court.
It has never been suggested that Mr Dohrmann’s conduct was the sole cause of the mistrial. Plainly, that is not the case. Further, no party seeking an order against any contravener contended for joint liability, with contribution rights between contraveners, in case any one of them later became insolvent. Just as the Court of Appeal did, I propose to apportion responsibility and the parties accepted that approach to be appropriate as opposed to imposing joint and several liability with contribution. However, I should not be taken as construing any liability for pecuniary orders under s 29 as proportionate rather than solidary, because that is not my view.
Responsibility will be allocated in accordance with well-established principles. In Podrebersek v Australian Iron & Steel Pty Ltd,[11] the High Court said:
The making of an apportionment as between a plaintiff and a defendant of their respective shares in the responsibility for the damage involves a comparison both of culpability, i.e. of the degree of departure from the standard of care of the reasonable man and of the relative importance of the acts of the parties in causing the damage. It is the whole conduct of each negligent party in relation to the circumstances of the accident which must be subjected to comparative examination. The significance of the various elements involved in such an examination will vary from case to case; for example, the circumstances of some cases may be such that a comparison of the relative importance of the acts of the parties in causing the damage will be of little, if any, importance.
[11][1985] HCA 34; 59 ALJR 492, [10] (citations omitted), see also Liftronic Pty Ltd v Unver (2001) 75 ALJR 867, 868, Wynbergen v Hoyts Corporation Pty Ltd [1997] HCA 52; (1997) 149 ALR 25, 29, Moore v Scolaro's Concrete Constructions Pty Ltd (in liq)& Ors [2004] VSCA 152, [8]-[9], Alcoa Portland Aluminium Pty Ltd v Husson & Anor [2007] VSCA 209; (2007) 18 VR 112, 136-137 [86].
Subject to the caveat I have already expressed, the principles applicable on apportionment of responsibility for contributory fault in tort are the proper approach to take when apportioning responsibility for compensation or wasted costs arising from breach of overarching obligations between multiple contraveners. No party to this application submitted otherwise. I will shortly return to this question.
For these reasons, an order providing that Mr Dohrmann indemnify Mr Richards SC and Clark Toop & Taylor for part of the appeal costs pool may be made in the exercise of power under s 29 of the Act. Such an order does not interfere with the order of the Court of Appeal as the persons held liable to indemnify either the school or Mrs Hudspeth for her costs by the Court of Appeal’s orders are not released and the beneficiaries of those orders are otherwise unaffected.
I invited Mr Dohrmann to put any submission he considered appropriate in respect of the proportionate share of the appeal costs pool that he ought to bear. In argument, I proposed to apportion the appeal costs pool, leaving untouched liability for the 20% of the appellant’s party and party costs that were paid by the school. To the extent that Mr Dohrmann felt prejudiced by an inability to make submission to the Court of Appeal that the school, or the employer, ought to have borne a greater share of responsibility, he was invited to contend that the appeal costs pool should be notionally reduced before any proportion attributed as his responsibility was applied
In the absence of cross-examination of the contraveners, it is not easy to make a fine assessment of the causation and culpability matrix that determines the proper allocation of responsibility, but the discretion is in any event holistic. Mr Dohrmann submitted that the school was very fortunate to be required to meet only 20% of the plaintiff’s costs of the appeal in circumstances where the successful ground of appeal was its own conduct, and that the employer, who took the benefit of the jury’s verdict, was very fortunate. But Mr Dohrmann put no specific submission that the appeal costs pool should be reduced by any further particular percentage representing reconsideration of the responsibility for the costs of the appeal attributed to the school or the employer. Mr Dohrmann failed to persuade me that, for determining his responsibility for the plaintiff’s wasted costs, a split of 80% responsibility to those who engaged in conduct that contravened overarching obligation and 20% responsibility for those who overstepped the mark in seeking to exploit that conduct, was inappropriate.
Mr Dohrmann contended that he was not in control of the plaintiff’s forensic tactics in relation to his evidence and had little capacity to alter events. I do not accept this submission. By definition, an independent expert witness does have full control over his circumstances and has a very significant capacity to alter events occurring at a trial. The mistakes made by each of the contraveners in their failure to observe the overarching obligations and, in Mr Dohrmann’s case the expert code of conduct, materially contributed to the address that the jury heard from counsel for the school. Any one of the contraveners could have significantly altered the course of the trial by faithfully observing their obligations. I see no basis to attribute differences in the causal potency of their conduct. Likewise, in each case, the extent to which the contravener has departed from the expected standard was significant. Balancing all of the considerations that are particularly set out in Ruling No 8, the reasons of the Court of Appeal in respect of the costs of the appeal, and the matters referred to above, I will make orders that allocate the ultimate responsibility for the appeal costs pool, wasted costs, and the costs of this application equally between Mr Richards SC, Ms Toop and Mr Dohrmann.
Wasted costs in the jury trial
The first defendant submitted that the conduct of the contraveners tainted the trial and, in consequence, I ought to disallow the whole of the costs of Mr Richards SC, Clark Toop & Taylor, and Mr Dohrmann in respect of the trial as between practitioner and client. By application of the costs indemnity principle, disallowed costs could not be recovered from the first defendant, affording the first defendant a significant benefit. Recognising that the first defendant had failed, at the remitted hearing, to establish its defences to the plaintiff’s claim and that the significant benefit for which it contended could not be characterised as compensatory, the first defendant contended that those costs should be disallowed as a sanction against the contraveners in the exercise by the court of the disciplinary jurisdiction under s 29 of the Act.
I do not accept this submission.
Such an order would result in an inappropriate windfall for the first defendant and could hardly be said to be in the interests of justice. In my view, such an order is not a necessary or a proper exercise of a disciplinary jurisdiction. The defendants were significantly advantaged in executing their decision to contest the plaintiff’s claims before a jury by the conduct of the contraveners and both the Court of Appeal’s judgments and my Ruling No 8 reveal what that forensic advantage was and why it was lost. There were, broadly, three issues before the Court of Appeal. One issue, whether there had been inappropriate non-verbal communication with the jury, was dismissed. Another issue, whether the jury’s verdict in respect of the employer, was perverse or not open on the evidence was not considered. The remaining issue, on which the plaintiff succeeded, was confined to whether the plaintiff was denied the opportunity of a fair trial because of the statements made by the school’s counsel to the jury and my refusal to discharge the jury and proceed to determine the matter as a cause. That was a narrower issue than my s 29 inquiry although when it came to the costs of the appeal, the Court of Appeal recognised that the statements made by the school to the jury flowed from the conduct of the contraveners.
No support can be found in the Court of Appeal’s reasons for the proposition that the whole proceeding was tainted by the conduct of the contraveners. On the one hand, the plaintiff’s legal team rightly relied upon the work done before the jury by Mr Richards SC and Clark Toop & Taylor in the trial. The whole of the evidence adduced before the jury was relied on in the remitted hearing and assisted the plaintiff in proving her claims against the first defendant as explained in Ruling No 7.[12] On the other hand, the first defendant relied on Mr Dohrmann’s evidence at the remitted hearing in the sense that it submitted that I should find that the plaintiff was a poor historian undeserving of credit. Although primarily based in the cross-examination of the plaintiff before the jury, the submission depended, as I explained,[13] on the inference that Mr Dohrmann was a competent history taker and that inference depended on the evidence of Mr Dohrmann.
[12]Hudspeth v Scholastic Cleaning and Consultancy Services Pty Ltd (No 7) [2014] VSC 542.
[13]Ibid, [58]ff.
Thus, I cannot say that the costs of the trial were wasted. Mr Richards SC as counsel and Ms Toop as solicitor contributed to the evidence taken before the jury on which the plaintiff ultimately succeeded against the first defendant at the remitted hearing. The proceeding was resolved on the evidence of 27 witnesses. Overwhelmingly, this evidence was unaffected by the contravening conduct.
To disallow the costs of the contraveners beyond the costs associated with Mr Dohrmann’s evidence could be compensatory and the first defendant did not submit that it was. It offered no justification for its windfall claim beyond the change in its exposure to the plaintiff’s costs following the appeal. The first defendant, a tortfeasor, articulated no policy argument for taking a windfall from the disciplinary nature of the jurisdiction. It is both necessary and desirable that the court avoid a disproportionate response and exercise particular care to avoid unintended consequences from punitive sanctions when exercising the jurisdiction under s 29,[14] and in the present circumstances it is neither necessary, appropriate, nor proportionate that the contraveners’ costs of the proceeding, or the trial, be disallowed as a sanction disciplining the contraveners.
[14]See the discussion in Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 5) [2014] VSC 400, [94] – [108].
In any event, the orders that I will make will have a significant but proportionate disciplinary impact upon the contraveners. Each has already reported, or intends to report, my findings of their contraventions to their professional regulatory bodies and there is a prospect of direct sanctions affecting each of the contraveners following on any response from those regulators. Further, each of the contraveners faces public opprobrium from publication of adverse findings in respect of their conduct by both the Court of Appeal and by me. Further, there is the financial impact upon each of the contraveners through the time and expense of this inquiry and the likelihood of reputational damage into the future that may carry an adverse financial impact. I take these matters into account. I also take into account that Mr Richards SC volunteered a frank affidavit of explanation at the first opportunity. Subsequently, he apologised both to me and to the Court of Appeal and the other parties to the proceeding for his conduct. Each of the contraveners has undertaken not to claim the fees and costs that I have in any event disallowed.
Recognising the principle that Mrs Hudspeth should not be left out of pocket, the first defendant ‘s alternative submission in respect of wasted costs at trial was that the contraveners should be ordered under s 29 to pay the costs wasted in the jury trial by reason of the successful appeal and remittal of the proceeding for further hearing, identified as the costs of charging the jury and taking the verdict. The wasted days were identified as 3, 4, 6, 7, 10, 11, and 12 December 2012. The first defendant did not seek either its costs in respect of the application to exclude Mr Dohrmann’s evidence or its costs in respect of Mr Dohrmann’s evidence. No further comment is necessary about those apparently wasted costs.
On 3 December 2002, counsel for the school addressed the jury, completing his address immediately prior to lunch. Mr Richards SC immediately applied for an order that I discharge the jury based on the statements made to the jury that were considered by the Court of Appeal. Submissions had not been completed by 2:15 pm when I directed that Mr Middleton address the jury, adjourning the application to later in the afternoon, when argument was completed. I ruled on the application, refusing it, the following morning. Thereafter, Mr Richards took most of the balance of the day to address the jury. In the middle of the afternoon session, I commenced to charge the jury and continued to do so on 5 December. The court did not sit on 6 December and I continued to charge the jury on 7 and 10 December. The jury retired to consider its verdict during the latter part of the afternoon session on 10 December. During the charge, but outside of usual court hours, the plaintiff applied to discharge the jury on the inappropriate body language ground, which was an appeal ground dismissed by the Court of Appeal, and, related to that application, applied for security and other video footage taken inside the court. The jury returned its verdict at lunchtime on 11 December 2012 and on 12 December 2012, I heard submissions on costs and final orders, delivering an ex tempore ruling that day.
I am not persuaded that there were wasted costs in the jury trial for which the first defendant ought to be compensated for several reasons.
First, I have already noted that the defendant obtained a forensic advantage because of the contravening conduct. Irrespective of the contravening conduct, there was a sufficient basis to justify the forensic decisions taken by the defendants to contest the trial and it is likely that the course of the trial, particularly cross-examination, would have been substantially the same in the pursuit of that objective. Those costs would have been incurred in any event.
Second, the mode of trial by a jury was at the request of the defendants who resisted all applications that the jury be discharged. The defendants plainly expected that a jury trial favoured their interests. But for the overreaching statements made by counsel for the school, supported by counsel for the first defendant, the jury’s verdict may not have been challenged or may have withstood any challenge. In that sense, the proximate cause of wasted costs in addressing and charging the jury and taking its verdict was the conduct of the defendants. The defendants could have consented, but did not, to the plaintiff’s discharge application. Moreover, the school did not foreshadow to the court or to the other parties before final addresses the attack that was to be made on the plaintiff’s legal team and seek a ruling in respect of the propriety of the statements proposed to be made to the jury.
Third, the first defendant relied on Mr Dohrmann’s reports and his evidence at the remitted hearing as I have described above.
Fourth, I am not persuaded that the days of the trial from the commencement of addresses to the jury until the time of the verdict were wasted. The first defendant incorporated into its submissions at the remitted hearing submissions that were made to the jury, its submissions on the defence of contributory negligence being an example. Further, what is not readily apparent is that preparing and delivering a charge to the jury was a considerable advantage to the first defendant. The remitted proceeding took place almost two years after the jury trial. A judge conducting a jury trial does not necessarily expect the obligation to consider the evidence from the perspective of a decision maker. Had I not prepared and delivered a jury charge, I am unable to say that I would have been able, after two years, to fairly recall and assess the evidence at trial simply from re-reading the transcript. The benefit to me of that process permitted an expeditious completion of the remitted hearing. Had the remitted proceeding been a full retrial, the costs of the jury trial could have been substantially or wholly wasted.
Costs of the court’s own motion
Each of the other parties, including the contraveners, sought an order for payment of their costs by ISS whose summons was dismissed.
ISS submitted that the appropriate order on the dismissal of its summons was that there be no order as to costs. I agree. On the one hand, the usual order in exercise of costs discretion is that costs follow the event. On the other hand, the contraveners, as wrongdoers, cannot have their costs of the s 29 inquiry. Although there was some debate as to the extent to which the costs incurred on the court’s own inquiry and the ISS summons were common, on any view there was considerable overlap. The circumstances of the third version of the report and of Mr Dohrmann’s evidence at trial could not be properly understood without inquiring into the circumstances of the first and second versions of the report that were the focus of ISS’s summons. So much is particularly clear from the analysis of the Court of Appeal. The court’s own inquiry substantially drove the costs incurred by each party. I required affidavits of explanation, which commenced before the issue of ISS’s summons. ISS only pressed its application for relief at a later stage after reviewing the affidavits of explanation. Further, the issue of whether ISS might be precluded from seeking relief for the reasons that I dismissed its summons, stated in Ruling No 8, was raised by me at an early directions hearing. The point was barely identified or developed by any of the other parties during the course of the application.
Balancing these considerations, I am not satisfied that it is just and reasonable that the contraveners who are respondents to the ISS summons, save for Mr Richards, should be reimbursed for the costs incurred in defending that summons.
Neither ISS nor the first defendant pressed for costs incurred on the court’s motion, but the school sought its costs.
In October 2014, the plaintiff, the school, and the employer compromised the claims in the proceeding against and by the school. The settlement expressly preserved the school’s right to claim costs (other than against the plaintiff) in respect of the court’s s 29 inquiry and the school sought to recover those costs, on an indemnity basis from each of the contraveners. From the outset, the school did not seek any specific relief other than its costs on the application. It adopted a wait and see attitude. Without attempting to describe in any detail the costs incurred by the school, it is clear that the affidavits of explanation were read and an affidavit in response prepared. Likewise, a submission was filed to assist the court and Mr Masel QC appeared to speak to the school’s submission and responded to the submissions of other parties. Mr Masel continued throughout this proceeding to hold a brief that was first delivered to him before he took silk, and he appeared without a junior.[15]
[15]Mr Masel SC was junior counsel for the school in the jury trial.
Mr Masel rightly contended that the contraveners’ submission that the school’s cost of participating in the court’s s 29 motion was voluntary and not caused by the contraventions cannot be accepted. Because the court had grounds to investigate whether there had been contraventions of the Civil Procedure Act in the proceeding, the parties to the proceeding were entitled to participate in those investigations. As contraventions have been proved, it can hardly be asserted that those costs were not caused by the proved contraventions.
Mr Masel contended that the school’s costs should be paid on an indemnity basis because the application has successfully enlivened both a compensatory and a disciplinary jurisdiction. Misconduct was proved. Mr Masel referred me to Redline Towing & Salvage Pty Ltd v The Convenor of Medical Panels[16] in which Pagone J observed that the categories of special circumstances warranting costs being ordered to be taxed on an indemnity basis that were identified by Harper J (as his Honour then was) in Ugly Tribe Co Pty Ltd v Sikola[17] must now include the circumstance where costs are awarded against a contravener of overarching obligations under the Civil Procedure Act. As the applicants before him had not pressed for costs on a higher scale, Pagone J’s observations are obiter. That said, I do not think that his Honour was saying any more than that a failure to meet the obligations imposed by the Civil Procedure Act is a relevant matter when determining whether indemnity costs should be ordered. I see no reason to take issue with that dictum. However, his Honour was considering the basis for taxation of costs of the proceeding that had been occasioned by contravening conduct, not the costs of an investigation of that question.
[16][2012] VSC 483, Re Fanning (No 2) [2014] VSC 370.
[17][2001] VSC 189, [7]-[8].
I cannot say that the contraveners have behaved unreasonably or inappropriately on the court’s inquiry or that there has been any relevant misconduct in the course of the inquiry. Each of the contraveners has filed comprehensive affidavits of explanation and has put succinct and appropriate submissions both in defence of the allegations levelled at them and on the question of appropriate remedy. I am not persuaded that special circumstances exist to justify, when awarding the costs of this inquiry, directing that costs be taxed on an indemnity basis. Taxation on the less favourable basis is appropriate.
The school also contended that denying it its costs would set an unfortunate precedent that would discourage parties affected by breaches of overarching obligations from participating in an investigation of possible contravening conduct. However, I do not accept that the school is a party affected by breaches of overarching obligations. At its highest, the school, as a party to the proceeding had an interest in the inquiry. As I have noted, the school’s own conduct was the proximate cause of its loss of the forensic advantage that it obtained from the contravening conduct and when the application was argued, the appeal was extant. The school may have been motivated, in making submissions on this application, by the risk that the judgment and costs orders in its favour could be lost.
Each of the first defendant and ISS also put submissions that assisted in the resolution of the s 29 inquiry. Only the first defendant stated, from the outset, that it did so as an amicus who would not seek costs. ISS was motivated to prosecute its own application, but it does not seek its costs in connection with the s 29 inquiry. The possibility of the several interests of the school and ISS may explain why the joint interest of the defendants in assisting the court on the inquiry was never identified and in a practical cost saving way accommodated. It is only because of these several interests that the court received the assistance of three separate submissions.
I do not consider that three separate submissions were necessary or that it would have been in the interests of justice for three sets of costs to be awarded against the contraveners. Only one set of costs should be imposed on the contraveners and only one party seeks costs against them. Yet it is only because neither the first defendant nor ISS seek costs on the s 29 inquiry that multiple unnecessary costs are avoided. Nevertheless, I am not persuaded that the school is entitled to the whole of its costs as opposed to a one third share of the costs properly incurred in assisting the court. A windfall to the school by a full costs order is not in the interests of justice.
For these reasons, I will order that the contraveners each pay one ninth of the school’s costs of in connection with the s 29 inquiry (making a total of one third of those costs) to be taxed to 1 April 2013 on a party and party basis and thereafter on a standard basis. Further, the reasonable fee for counsel on that taxation shall not exceed $5000 per day for appearances, $2500 for appearances of a half day or less and $500 per hour for preparation, conferences, and other matters.
Conclusion
I will make the following further orders:
(a) Mr M Dohrmann shall indemnify each of Mr J B Richards SC and Clark Toop & Taylor (Ms P Toop) for 13.333% respectively, making a total of 26.67% in total, in respect of their liability to pay Mrs Linda Hudspeth’s costs under paragraph 8(c) of the order of the Court of Appeal made on 16 April 2014, and their liability under paragraph 8(a) of the said order of the Court of Appeal to indemnify the Roman Catholic Trust Corporation for the Archdiocese of Melbourne for its liability for costs under paragraph 6 of the said order of the Court of Appeal.
(b) Each of Mr M Dohrmann, Mr J B Richards SC, and Clark Toop & Taylor (Ms P Toop) shall pay a one-ninth part of the costs, including reserved costs, of the Roman Catholic Trust Corporation for the Archdiocese of Melbourne of and incidental to the inquiry commenced by order of the court made in the proceeding on 12 December 2012. Otherwise, there is no order for the costs of any other person who appeared in respect of the said inquiry.
(c) The summons filed on behalf of ISS Hygiene Services Pty Ltd on 22 February 2013 is dismissed with no order as to costs.
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