Ilievski v Zhou
[2014] VSC 442
•15 September 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2011 06256
| ROBERT ILIEVSKI | Plaintiff |
| v | |
| YINGZHI ZHOU | Defendant |
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JUDGE: | J FORREST J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 8 August 2014 |
DATE OF RULING: | 15 September 2014 |
CASE MAY BE CITED AS: | Ilievski v Zhou |
MEDIUM NEUTRAL CITATION: | [2014] VSC 442 |
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COSTS – Costs liability of solicitors – Plaintiff requested to put solicitors in funds – whether solicitors should pay costs thrown away by reason of trial adjournment – Supreme Court (General Civil Procedure) Rules 2005 (Vic), r 63.23.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms D Romagnano | Arnold Thomas & Becker |
| For the Defendant | Mr P Bourke | Solicitor for the Transport Accident Commission |
HIS HONOUR:
Introduction
Mr Ilievski’s claim for damages against Ms Zhou, in respect of injuries sustained in a transport accident, was set down for trial on 26 August 2014. Three weeks prior to the trial, Mr Ilievski’s solicitors, Arnold Thomas & Becker, sought leave of the Court to cease to act.[1] I granted leave and adjourned the trial because of Mr Ilievski’s lack of representation.
[1]Supreme Court (General Civil Procedure) Rules 2005 (Vic) (the Rules), r 20.03(3).
There is no issue that Ms Zhou should have her costs thrown away by reason of the adjournment. However, I need to determine whether these are to be paid by the solicitors or by Mr Ilievski himself.
The situation is unusual as Arnold Thomas & Becker only took over the file in June of this year and then dropped Mr Ilievski in late July when he could not put the firm in funds to conduct his trial.
Ultimately, I am satisfied that by leaving the question of funding until the last moment, the solicitors derailed the trial. Therefore, it is appropriate that they pay the costs of the adjournment.
Factual background
In précis, the relevant facts are as follows.
For several years, Mr Ilievski was represented by Victorian Compensation Lawyers of which Mr Sammy Bektas was the director. In or around January 2014, Mr Bektas’ practicing certificate was cancelled and Victorian Compensation Lawyers ceased to operate.[2]
[2]Legal Services Commissioner v Bektas (Legal Practice) [2013] VCAT 2142.
In late May, Arnold Thomas & Becker came to an arrangement with Mr Bektas to take over Mr Ilievski’s file, which was sent to them on or about 12 June.
The solicitors did not contact Mr Ilievski until about a month later in mid-July, when they requested that he attend their office to sign a conditional costs agreement. The issue of the funding of Mr Ilievski’s claim was not discussed when he attended on 14 July nor when he hand delivered the signed agreement the next day.[3]
[3]I note that while the costs agreement allowed the solicitors to request funding, no such request was made at that time.
On 17 July, a Notice of Change of Solicitor was filed by Arnold Thomas & Becker.
On or around 24 July, the solicitors raised the issue of funding (but not the amount) with Mr Ilievski in a telephone conversation.
On 29 July, Mr Flanagan, a principal of Arnold Thomas & Becker, and a junior lawyer of the firm, conferred with Mr Ilievski and his mother to discuss the funding of the proceeding. On the same day, the solicitors sent Mr Ilievski a letter setting out the likely costs of running the case to verdict and the amount Mr Ilievski was required to pay. Suffice to say, it was a substantial sum.
On the following day, 30 July, a directions hearing was held and I was told by the junior lawyer from Arnold Thomas & Becker that there was an outstanding issue as to the future funding of the proceeding. Nevertheless, the trial date of 26 August 2014 was confirmed as per Mr Ilievski’s instructions.
Unsurprisingly, Mr Ilievski was unable to raise the funds at short notice.
Seven days after the directions hearing, Arnold Thomas & Becker filed a summons seeking that it be granted leave to cease to act for Mr Ilievski.
At the hearing of the application on 8 August 2014, I made orders:
(a) permitting Arnold Thomas & Becker to file a Notice of Ceasing to Act for Mr Ilievski; and
(b) requiring Arnold Thomas & Becker to file an affidavit as to why the solicitors should not pay the costs thrown away by reason of the adjournment.
In response, Mr Flanagan filed an affidavit sworn 22 August 2014.[4]
[4]An order as to costs against solicitors should not be made without giving those solicitors a reasonable opportunity to be heard on the issue: see r 63.23(3).
Principles
The Court may award costs against the solicitor of a party pursuant to its inherent jurisdiction or rule 63.23(1) of the Rules which reads as follows:
Where a solicitor for a party, whether personally or through a servant or agent, has caused costs to be incurred improperly or without reasonable cause or to be wasted by a failure to act with reasonable competence and expedition, the Court may make an order that –
(a)all or any of the costs between the solicitor and the client be disallowed or that the solicitor repay to the client the whole or part of any money paid on account of costs;
(b)the solicitor pay to the solicitor’s client all or any of the costs which the client has been ordered to pay to any party;
(c)the solicitor pay all or any of the costs payable by any party other than the client.
The principles governing the Court’s discretion to award costs against legal representatives were recently set out by McMillan J in Re Fanning [No 2][5] and need not be repeated in detail here. For present purposes, it suffices to restate the following from the decision of the Court of Appeal in Yarra Australia Pty Ltd & Ors v Oswal:
Rule 63.23(1) enables the Court to make orders for costs against a legal practitioner who has caused costs to be incurred improperly by a failure to act with reasonable competence and expedition. However, the primary object of r 63.23(1) is not punitive or disciplinary but compensatory, enabling reimbursement of a party’s costs incurred because of the default of the solicitor. The primary object of the Rule is not to punish the solicitor, but to protect the client who has suffered and to indemnify the party who has been injured.[6]
[5][2014] VSC 370, [7].
[6][2013] VSCA 337, [18] (citations omitted).
The words ‘failure to act with reasonable competence and expedition’ in rule 63.23(1) do not mean that there needs to be serious professional impropriety, or serious or gross negligence.[7] The scope of the rule encompasses ‘mere’ negligence on the part of the solicitor. I should also add that in considering whether to award costs against a solicitor:
(a) care and discretion should be exercised as such orders are exceptional; and
(b) it is necessary to identify the breach of duty owed by the solicitor to the Court.
[7]See Guss v Geelong Building Society (In Liq) – Costs [2001] VSC 288, [9]—[17]; Re Fanning [No 2] [2014] VSC 370, [7].
Analysis
In substance, the root cause of the trial being vacated was Arnold Thomas & Becker taking on the case in mid-June knowing it was to be heard in late August and not discussing with Mr Ilievski until late July the need for him to raise a substantial sum to go to trial.
Leaving the question of funding until one day prior to the final directions hearing was inappropriate; it gave Mr Ilievski virtually no time to organise the money before the trial date. The solicitors must have known within a short time of receiving the file that the hearing date was imminent. One month was ample time to determine what amount, if any, Mr Ilievski would need to pay if he wanted to take his case to trial. The appropriate time to discuss the funding of the case was when Mr Ilievski signed the solicitors’ retainer.
I accept that the solicitors’ job was not necessarily easy given the size of the file. Having said that, Arnold Thomas & Becker are an experienced, specialist personal injury litigation firm of many years’ standing. They should have been able to determine and advise Mr Ilievski expeditiously as to what was needed to get the case to trial and what funding, if any, was required.
It is not to the point, as Mr Flanagan suggests in his affidavit, that Mr Ilievski gave instructions to maintain the hearing date. There is a real prospect that the costs Ms Zhou expended in preparation for trial would not have been incurred had Arnold Thomas & Becker acted with reasonable competence and expedition in assessing Mr Ilievski’s claim and raised the issue of funding with him at the time he signed the retainer. Admittedly, only two weeks elapsed between the retainer and the conference – but those were critical days. Mr Ilievski was denied the opportunity to either chase up the funds or to look for other solicitors who may not have required as large a sum to take the case to trial.
Moreover, once the solicitors agreed to act as Mr Ilievski’s legal representatives, they assumed, as they must have known, a number of obligations under the Civil Procedure Act 2010 (Vic), including that of managing delay,[8] and cooperating with the Court in the prosecution of the proceeding.[9] It was the duty to the Court in these respects that the solicitors breached. I accept that awards of costs against practitioners are exceptional; however, it is not, in my view, fair to shoulder Mr Ilievski with the costs of the adjournment when those costs could reasonably have been avoided by the solicitors acting with expedition.
[8]Civil Procedure Act 2010 (Vic), s 25.
[9]Civil Procedure Act 2010 (Vic), s 19.
The solicitors should pay the Defendant’s costs thrown away as a result of the adjournment.
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