Jender Pty Ltd v Flood Emergency Services Pty Ltd (No 2)

[2021] VSC 505

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

JUDICIAL REVIEW AND APPEALS LIST

S ECI 2019 04873

JENDER PTY LTD (FORMERLY KNOWN AS DAVIS GLASS PTY LTD) (ACN 006 612 577)	Plaintiff
v
FLOOD EMERGENCY SERVICES GROUP PTY LTD (ACN 166 955 193)	First Defendant
MAGISTRATES’ COURT OF VICTORIA	Second Defendant

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JUDGE:	Daly AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	Written submissions filed by the Plaintiff and the First Defendant on 4 June 2021 and 29 June 2021
DATE OF JUDGMENT:	19 August 2021
CASE MAY BE CITED AS:	Jender Pty Ltd v Flood Emergency Services Pty Ltd (No 2) (Costs)
MEDIUM NEUTRAL CITATION:	[2021] VSC 505

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COSTS – Application by successful plaintiff for indemnity costs – Whether there should be departure from the usual rule that costs follow the event – Whether the plaintiff acted disproportionately in bringing its application for judicial review – Actrol Parts Pty Ltd v Coppi (No 3) [2015] VSC 758, distinguished – Whether there was unreasonable conduct on the part of the first defendant – Whether the first defendant, properly advised, ought to have known it had no chance of success – Denlay v Commissioner of Taxation (No 2) [2013] FCA 358, distinguished – Whether it was unreasonable for the first defendant to resile from an offer to compromise the proceeding - Application by plaintiff for indemnity costs granted in part - Application by the first defendant for indemnity certificate pursuant to s 4 of the Appeal Costs Act 1998 (Vic) – Kukulka v Floatcast Technology Pty Ltd [2021] VSC 198 referred to – Application for indemnity certificate granted.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M Clarke QC with Mr J Lipinski	Wisewould Mahony
For the First Defendant	Snowton Saje
No appearance for the Second Defendant

HER HONOUR:

1. On 29 April 2021, I delivered reasons in respect of an application for judicial review by the plaintiff (‘Jender’) for judicial review of a Magistrates’ Court order dismissing an application for a rehearing (‘rehearing application’) following the entry of default judgment against it by the defendant (‘FES’).[1]  I found that Jender had established that the decision was unreasonable or, in other words, lacked an intelligible justification.  Further, I held that the learned magistrate had failed to provide adequate reasons for his decision.  Accordingly, I will make orders quashing the decision to refuse the rehearing application, and will remit the rehearing application to the Magistrates’ Court to be determined according to law.

   [1][2021] VSC 212. References to the parties and defined terms in these reasons largely mirror those used in the primary reasons.

1. The issues in the proceeding, and my findings in relation to those issues, are set out in full in my reasons of 29 April 2021 (‘primary reasons’).  In summary, I held that, in circumstances where the evidence before the learned magistrate at the rehearing application was to the effect that FES had sued the wrong party, as Jender had sold its business to a third party well before the contract which FES sued upon was made, it was unreasonable for the learned magistrate to conclude, among other things, that Jender did not have a meritorious defence to FES’s claim, as stated by the learned magistrate in his reasons. 

1. FES had obtained a default judgment against Jender for the sum of $5,024.11 (‘default judgment’).  Prior to the rehearing application, Jender successfully applied to this Court[2] to set aside a statutory demand issued by FES in order to enforce the default judgment, with Gardiner AsJ ordering that FES pay Jender’s costs of the Supreme Court proceeding, on the condition that Jender pay the judgment sum into Court.  A later application by Jender issued on 9 April 2020 to stay the execution of the default judgment (‘stay application’) was unsuccessful. 

   [2]This proceeding is referred to in the primary reasons as the ‘Supreme Court proceeding’.

1. In the primary reasons, I prefaced my conclusions with the following remarks:

The issues in this application for judicial review are not without some complexity, but the parties’ comprehensive and excellent submissions cannot obscure the fact that this is one of the most unfortunate pieces of litigation I have been involved in throughout my legal and judicial career.  A case of mistaken identity which should have been resolved by a telephone call between solicitors in July 2019 at the latest has escalated into a number of contested applications in the Magistrates’ Court and this Court, with the parties having spent at least tens of thousands of dollars over an invoice of less than $4,000.00.  To the extent that my delay in delivering these reasons have caused the final resolution of this dispute to be further delayed, I apologise.[3] 

[3]Ibid [96].

1. Following the delivery of the primary reasons, I asked the parties to provide further submissions regarding the appropriate form of order and question of costs.  The former issue is uncontroversial.

1. In its written outline of submissions filed on 4 June 2021, Jender sought an order that FES pay its costs of the proceeding on an indemnity basis, and that its counsel’s fees be fixed in the sum of $18,000 for senior counsel and $21,084 for junior counsel inclusive of GST.

1. Alternatively, Jender put forward a range of dates from which it ought to be entitled to its costs of the proceeding on an indemnity basis, with costs to be payable on a standard basis beforehand, as discussed in more detail later in these reasons. 

1. In response, FES submitted that it should be paid its costs of the proceeding on a standard basis from 12 March 2020, save for the costs of the stay application, which should be paid by Jender on an indemnity basis, and that the parties otherwise bear their own costs.  Alternatively, FES submitted that each party should bear their own costs of the proceeding.

The Evidence

1. Jender relied upon the affidavit of its solicitor, Mr Hayden Bateman of Wisewould Mahony, filed on 9 April 2020.  Mr Bateman’s affidavit exhibited, among other things, the following documents relevant to the question of costs:

(a) the pleadings in a proceeding brought by FES in the Magistrates’ Court at Melbourne on 13 September 2019 against the purchaser of Jender’s business Davis Glass 1 Pty Ltd (‘Davis Glass 1’), which was said by Jender to be the proper defendant to FES’s claim (‘parallel proceeding’);[4]

(b)       correspondence in March 2020 between Wisewould Mahony and Snowton Saje (FES’s solicitors) regarding various proposals to resolve this proceeding and the Magistrates’ Court proceeding (‘March 2020 correspondence’);

(c)        a copy of the order made in the Magistrates’ Court on 12 March 2020 listing FES’s application for an oral examination of Jender (‘oral examination’).  

[4]In the parallel proceeding, FES pleaded, among other things, that the purchaser of Jender’s business, Davis Glass 1 Pty Ltd, represented that it was in fact Jender (under its previous name, Davis Glass Pty Ltd), when it engaged FES to perform flood restoration and remediation services at its business premises. FES alleged that Davis Glass 1 Pty Ltd, in holding itself out to be Jender, breached s 153 of the Corporations Act 2001 (Cth) and s 18 of the Australian Consumer Law, and that FES has suffered damage, namely “the legal costs it incurred and paid in connection with obtaining a judgment that it ought to have been able to rely upon and which it did rely upon in taking steps to enforce but which judgment remained subject to challenge and was challenged between 1 July and 28 August by way of an application to set aside a statutory demand based on the judgment and an application to set aside the judgment itself”.

The parallel proceeding is being defended by Davis Glass 1 Pty Ltd, but has been stayed pending the outcome of this proceeding.

1. The March 2020 correspondence is of particular relevance to the issue of costs, and therefore it is necessary to traverse the March 2020 correspondence in some detail. 

1. The March 2020 correspondence commenced with an open letter from Wisewould Mahony to Snowton Saje on 4 March 2020 which stated, in summary, as follows:

(a)   it referred to the parallel proceeding, and contended that by reason of the parallel proceeding, FES must accept that it wrongly entered the default judgment and, as such, cannot properly maintain and seek to enforce the default judgment; and

(b)  accordingly, FES should agree to proceed as follows:

1.Consent to the Jender Judgment being set aside with costs reserved;

2.Agree to seek to consolidate the Davis Glass 1 proceeding with the Magistrates’ court [sic] proceeding against our client to enable our client to submit a defence, or alternatively discontinue the Magistrates’ Court proceeding against our client with costs;

3.Agree to an order that the Judicial Review proceeding be discontinued and pay our client’s costs of the proceeding to be taxed in default of agreement; and

4.Agree to have the Summons for Examination filed 30 September 2019 discontinued and pay the reserved costs to our client.

1. On the same day, Wisewould Mahony sent a further letter to Snowton Saje which referred to the offer above, and suggested that if FES failed to accept the offer in the letter above, that the parties each refrain from enforcing its respective judgments, and to adjourn the oral examination scheduled for 12 March 2020.

1. On 11 March 2020, Snowton Saje wrote to Wisewould Mahony in response to the offer made on behalf of Jender on 4 March 2020.  After rejecting the assertions made regarding the propriety of FES maintaining the default judgment following the issue of the parallel proceeding, and criticising Jender for continuing to prosecute its application for judicial review, this letter (‘11 March offer’) went on to say as follows:

Out of ultimate concern for the resources of the Court and in compliance with its overarching obligation to ensure costs are proportional and that it makes every effort to resolve issues in dispute my client makes the following offer on a purely commercial no-admissions basis:

(a)It will consent to orders dismissing the judicial review application with no orders as to costs; and

(b)It will consent to orders setting aside the Magistrates’ Court judgment against your client and orders dismissing the Magistrates’ Court proceeding with no orders as to costs, which will have the effect of nullifying the summons for oral examination and any costs thereof.

The purpose of this offer is to fully and finally resolve the proceeding in which judgment was obtained and this judicial review proceeding in view of the disproportionality of costs to date and any further costs the parties may incur.

This offer is open for acceptance until 4pm on 12 March 2020 after which it is withdrawn.

1. Following the 11 March offer, the solicitors for the parties exchanged a number of emails over the course of 12 March 2020, as follows:

(a)   on 12 March 2020 at 10.07am Wisewould Mahony wrote to Snowton Saje in response to the 11 March offer, as follows (omitting formal parts):

Our client is prepared to settle within the terms of your client’s offer on the following conditions:

1.Summons for examination listed at 2 p.m today is adjourned by consent.

2.An order that the order Magistrate Smith made 28 August 2019 be set aside, the Magistrates Court judgement [sic] made 1 July 2019 is set aside and the Magistrates Court [sic] proceeding is dismissed with no orders as to costs is made as a pre-condition to the judicial review proceeding being dismissed with no orders as to costs.

3.The summons for examination will also be dismissed with no orders as to costs once the orders in paragraph 2 are made.

4.For the avoidance of doubt, once the orders in paragraph [sic] 2 and 3 are made, our client will consent to the judicial review proceeding being dismissed with no orders as to costs.

(b)  at 11.05am, Snowton Saje replied as follows (omitting formal parts):

I have given this matter some further thought.

The conditions below leave open the possibility that the judgment of the magistrates’ court [sic] is not set aside with the effect that the judicial review application will be maintained.

In the circumstances it is my view that what your client requires is an order of the Supreme Court directing the Magistrates’ Court to re‑hear the re-hearing application, which is one element of the relief sought in the originating process. This will overcome the concern that the Magistrates’ Court will not entertain a further re-hearing application.

Paragraph 8 of the practice note deals with a scenario such as this.

The memorandum to the Court could be couched in the following terms:

•The parties are concerned that the costs of proceeding to trial are disproportionate to the amount in issue and have between themselves reached a resolution of all matters, including the underlying proceeding in the Magistrates’ Court;

•There is a concern that the Magistrates’ Court will not without an order of the Supreme Court entertain a further re-hearing application that would facilitate the resolution the parties have reached between themselves.

•An order of this Court directing the Magistrates’ Court to re‑hear the matter would address and overcome the concern above and enable the parties to submit minutes of consent orders setting aside the order of Magistrate Smith and the default judgment and dismissing the proceeding with no orders as to costs.

•The parties and their practitioners are of the view that the orders they seek the Court to make further the administration of justice, discharge the parties’ overarching obligations under the Civil Procedure Act 2010 and would be an appropriate exercise or judicial discretion.

If your client is content to proceed this way I am proposing the following:

1.Adjournment of the SOE for the purposes or attending to the matters in 2 and 3 below;

2.Minutes of consent orders to be signed in the Judicial Review proceeding accompanied by a joint memorandum (attaching signed consent orders for the Magistrates’ Court); and

3.Await the orders in this proceed [sic] and once they are made, provide them to the magistrates’ court [sic] with the signed minutes.

(c)   at 11.47am, Wisewould Mahony replied as follows (omitting formal parts):

We are content to proceed on the basis you have set out below, subject to finessing the joint memorandum to the Supreme Court which in its form below we have no substantive objection.

Also for clarity, in relation to having the minute of consent to have Magistrates Court [sic] proceeding dismissed, an order dismissing the summons for oral examination with no orders as to costs is also to be included.

On the basis that we can proceed to finalise the matter, we enclose a consent order to adjourn the summons for oral examination for 6-8 weeks. This should give the parties sufficient time to finalize the matters. Can you please return signed orders to us so that we can submit them to the court.

(d)  at 12.48pm, Snowton Saje replied as follows:

I have sought instructions from my client.

They are as follows:

·An offer was put in express terms by letter dated 11 March 2020 with the view to achieving an immediate end to further legal costs and all matters between the parties.

·The effect of your 10:07 email below is that my client’s offer was not acceptable to your client because of the risk that the Magistrates’ Court would not give effect to consent orders submitted by the parties.

·My client is aggrieved that despite making an offer to limit future legal fees, the apprehensions your client has in essence has today [sic] and will involve future legal costs that he will have to bear (on top of the costs he has offered to forego) and ongoing uncertainty.

·My client was giving up numerous rights in an attempt to immediately resolve all issues between the parties and yet he continues to be asked to accommodate your client at his cost.

·He did not instruct me to put forward the proposal in my 11:05 email and to the extent I did it was merely me engaging with your client’s concerns rather than making a binding offer.

·If the offer as put to your client in the 11 March letter is not acceptable then my client will proceed as if the offer was rejected and the dispute between the parties remains unresolved.

As such, unless my client’s 11 March 2020 offer is unconditionally accepted:

a.        The 1 July 2019 judgment remains enforceable;

b.Your client’s attendance at today’s adjourned [oral examination] is required;

c.Your client is in default of the 13 November 2019 orders or needs to confirm that it does not intend to file any affidavit material.

(e)   at 1.00pm, Wisewould Mahony replied as follows (omitting formal parts):

This is an unacceptable way to conduct the matter when you advised 12.48 pm that your client has changed his mind and does not wish to settle the matter on the terms you set out in your open email of 11.05 am which we replied to at 11.47 am and now insist that the summons listed at 2 pm proceed.

Our client is not in a position to attend and we suggest that the summons nevertheless be adjourned. If you do not agree to adjournment within the next 5 minutes, we will make an application and seek costs.

(f)    at 1.20pm, Snowton Saje replied as follows (omitting formal parts):

My client has not changed its mind.

It made an offer that was not accepted.

If my 11:05am email was an offer, your 11:47am email does not constitute acceptance of that offer. If anything, it is a counter-offer in response to which I sought instructions and subsequently conveyed them.

The proposal in my 11:05am email was a solution to an issue your client had with our client’s offer. It has not yet been established what “finessing” meant, who would draft the memorandum and when. The practice note contemplates that parties could nevertheless be required to appear etc, which would involve more costs.

If attempting to find a solution between practitioners is going to be met with personal attacks then the only fruit of that is to discourage co‑operation.

Your client has been on notice of the summons time and date since December and absent confirmation of a settlement he should have been preparing himself to attend.

If your client does not attend, it is because it was always his preference not to attend rather than any cause attributable to my client’s conduct.

(g)  at 1.47pm, Wisewould Mahony replied as follows (omitting formal parts):

There is no utility in your client’s summons and that is the reason why it has been opposed.

Up until this morning, your client was indebted to our client for an amount exceeding your client’s judgment. The position now is that monies have been paid to our client into our trust account, so your client at least knows that there are more than sufficient funds for the judgment.

It is a re-construction to state that your email of 11.05 was, not an offer, or that finessing the memorandum to the court was somehow a departure from the offer. The note for the memorandum was not objected in substance but merely noted that it may need some refinement given that your proposal for the memorandum was suggestive rather than conclusive. You were clearly aware that our client would otherwise oppose the summons for examination and waited until 12.48 to inform us that your client changed his mind.

Your client’s new founded concern about costs appears to ignore that all the attempts made this morning to resolve the matter are now wasted, and on your own account, this is because you put a proposal without instructions. It is no answer now to revert to the offer made yesterday, given the practice of the court is to seek an order to have the matter remitted where the parties agree to set aside the underlying judgment. Your client’s offer which involved setting aside the Magistrates’ Court judgment cannot otherwise be implemented.

We reserve the right to draw these matters to the court in an application for special orders under the Civil Procedure Act.

1. Accordingly, an issue in the current application is whether an agreement was reached between the parties on 12 March 2020 to dispose of the proceeding (and the Magistrates’ Court proceeding) and, if so, whether FES, in resiling from that agreement acted unreasonably, thus justifying an award of indemnity costs against it.

1. Jender also relied on the affidavit of another solicitor with Wisewould Mahony, Mr Chris Stakis, dated 4 June 2021.  In his affidavit, Mr Stakis deposed that, following the delivery of the primary reasons, he caused a letter to be sent to Snowton Saje on 17 May 2021 (‘17 May letter’), which stated, in summary, as follows:

(a)   it is apparent from the primary reasons that FES had sued the wrong party, and that FES had been put on notice of that matter prior to entering default judgment against Jender;

(b)  accordingly, it would be manifestly unjust for the default judgment to stand;

(c)   as early as July 2019 FES unreasonably rejected a proposal that the default judgment be set aside, the statutory demand be withdrawn, and FES pay Jender’s reasonable legal costs, and went on to take further enforcement action;

(d)  in March 2020 Jender was prepared to settle the matter on a “walk away” basis, with the only issue to be finalised being to the preparation of a joint memorandum to this Court, but FES walked away from that proposal;

(e)   it was unreasonable for FES to walk away from the March 2020 agreement, and to fail to accept the offer made by Jender on 27 August 2020, just prior to trial; and

(f)    accordingly, FES should pay Jender’s costs of the proceeding as a whole on an indemnity basis.

1. The 17 May letter then went on to propose orders to give effect to the matters referred to above, and then made the following proposal with respect to the disposition of the Magistrates’ Court proceeding:

For the reasons stated above, it is in the interests of justice that the Magistrates’ Court proceeding also be finalised. The proposal below to bring that proceeding to an end by consent is without prejudice to our client’s rights to seek costs of the Magistrates’ Court proceeding if agreement is not reached.

1.        The Default Judgment made on 1 July 2019 be set aside.

2.        The Complaint filed on 27 May 2019 be dismissed.

3.        No order as to costs.

1. Mr Stakis deposed that as at the date of swearing his affidavit, FES had not responded to the 17 May letter. Mr Stakis also exhibited to his affidavit the invoices rendered by counsel for Jender in this proceeding in support of its application that the Court certify counsel’s fees in a fixed sum pursuant to rr 63.07 and/or 63.92(1) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’).

1. FES relied upon the affidavit of its solicitor, Mr Rawle Watson-Jones of Snowton Saje, dated 4 June 2021.  The documents exhibited to Mr Watson-Jones’ affidavit included:

(a)        a copy of the transcript of the hearing before Clayton JR on 13 November 2019 in which FES made an open offer to resolve the proceeding; and

(b)       correspondence between Snowton Saje and Wisewould Mahony in August 2020.

1. The correspondence between the parties in August 2020 is not of critical relevance to the question of costs, but for completeness, can be summarised as follows:

(a)   on 14 August 2020, Snowton Saje sent Wisewould Mahony a letter proposing as follows:

If your client was to immediately

(i)discontinue the judicial review proceeding in the Supreme Court and agree to pay my client’s costs thereof including reserved costs to be assessed in default of agreement; and

(ii)commence a fresh re-hearing application and exhibit to it a draft Notice of Defence that overcame the evidentiary deficiencies we have previously brought to your attention

then my client would consent to the default judgment being set aside on the following conditions:

(i) there being no order as to costs of the fresh re-hearing application;

(ii)the parties signing minutes of consent orders dismissing the Magistrates’ Court proceeding with no orders as to costs;

(iii)your client not seeking to recover the moneys paid to our client on 17 April 2020 in any circumstances.

The rationale of this proposal is to end all litigation between the parties, in both the Supreme Court (save for the quantification of costs, if necessary) and the Magistrates’ Court.

My client considers that your client should pay its costs because my client previously offered to forego the judgment, bear its own costs and give your client the ultimate relief it sought in the originating process (save for costs) and this was not taken up, unreasonably or in circumstances where it could have/should have been.

(b)  on 27 August 2020, in a letter headed “Open offer”, Wisewould Mahony stated that:

... the resolution of the Magistrates’ Court proceeding and setting aside its judgment ... is essential to the resolution of this dispute, particularly given that a judgment was entered against our client when it was not, and could not have been the proper defendant.

(c)   Wisewould Mahony’s letter went on to comment upon the March 2020 correspondence, and went on to make the following offer:

1.Your client return the judgment sum paid by our client on 17 April 2020 in the sum of $6,081.69, and pay the penalty interest accrued thereon;

2.The parties co-operate to submit to this Court by consent for an order that the decision made on 28 August 2020 be set aside and the matter be remitted to the Magistrates’ Court:

3.The parties file orders by consent in the Magistrates’ Court that the judgment entered into on 1 July 2019 be set aside with no orders as to costs;

4.Your client pay our client’s costs· of this proceeding, including reserved costs from and including 12 March 2020 up until this offer is accepted on a standard basis including any fees of counsel certified by this Court;

5.        The parties otherwise bear their own costs.

Jender’s submissions

1. Jender submitted that it would be perverse if Jender, having been found to have been incorrectly sued because of mistaken identity, was held to have acted inconsistently with the overarching objectives of the Civil Procedure Act 2010 (Vic) (‘CPA’) for seeking to set aside the Magistrates’ Court decision to dismiss the rehearing application. Jender submitted that FES’s unreasonable conduct pervaded the whole proceeding, such that an indemnity costs order should extend to the costs of the proceeding as a whole. Jender referred to the decision of this Court in Australian Guarantee Corp Ltd v De Jager,[5] as follows:

…the Court ought to do what it can to ensure that [Jender] is not out of pocket over it.[6]

[5][1984] VR 483 (‘De Jager’).

[6]Ibid 502.

1. Jender submitted that the Court should also award indemnity costs in favour of Jender on the basis that FES, properly advised, should have known that it had no chance of success in defending Jender’s application for judicial review: in particular, it had no prospects of resisting Jender’s submissions that the learned magistrate’s decision was legally unreasonable.

1. Jender referred to the decision of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd,[7] as follows (emphasis in submissions):

“…no doubt the expression “high-handed presumption” was appropriate in the case Tadgell J had to decide,[8] and he needed to go no further; but in order to establish a convenient principle in such cases it is necessary to be a little more prosaic. I believe that it is appropriate to consider awarding “solicitor and client” or “indemnity” costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law.

[7](1988) 81 ALR 397.

[8]Referring to De Jager.

1. Jender submitted that the proposition emphasised above has been relied upon to award indemnity costs against defendants, including defendants in judicial review applications where the defendant has unreasonably refused to concede the quashing of the decision under review.  In that regard, Jender relied upon the decision of Logan J of the Federal Court in Denlay v Commissioner of Taxation (No 2),[9] which is discussed in further detail later in these reasons.

   [9][2013] FCA 358 (‘Denlay’).

1. Jender referred to the evidence before the learned magistrate regarding the identity of the party which contracted with FES as evidencing the unreasonable conduct of FES in this proceeding, and in the Magistrates’ Court proceeding, and to the primary reasons, where I stated as follows:

…on the evidence available to the learned magistrate, Jender almost certainly had a complete defence to the claim.  FES has sued the wrong party.[10]

[10][2021] VSC 212 [116].

1. And further:

…had Jender in fact filed a defence, and subsequently made an application for summary judgment in its favour on the basis that the evidence before the learned magistrate, one would expect that its prospects of success would have been very strong.[11]

[11]Ibid.

1. Jender also relied upon the parallel proceeding, in which FES is claiming losses said to have been caused by Davis Glass 1’s alleged misrepresentation to the effect that Jender was the contracting party.  Jender submitted that, by bringing the parallel proceeding, FES in effect conceded as early as 13 September 2019 that it had sued the wrong party.

1. Further or alternatively, Jender submitted that FES’s conduct in resiling from an agreement said by Jender to have been reached between the parties in March 2020 to resolve the proceeding (‘March 2020 agreement’) was also unreasonable.  Further, it was also unreasonable for FES, having resiled from the March 2020 agreement, to insist that Jender’s attendance at the oral examination was required, noting that the oral examination was listed at the Moorabbin Magistrates’ Court at 2:00pm, only around an hour after the email in which FES resiled from the March 2020 agreement was sent to Wisewould Mahony.  Jender appeared at the oral examination, and as a result needlessly incurred costs.

1. Jender submitted that while in the primary reasons I determined that the Magistrates’ Court decision should be quashed, there is a real risk that FES will oppose the remitted rehearing application, thus causing Jender to incur further costs.  In that regard, Jender referred to the 17 May letter, which sought FES’s consent to orders to set aside the default judgment, with no orders as to costs.  Jender noted that FES had not provided a response to this letter, and submitted that, if FES does not agree to the default judgment being set aside, I should characterise that position as a continuation of FES’s unreasonable conduct.

1. In the event that this Court does not order indemnity costs against FES for the entirety of the proceeding, Jender seeks orders based upon two key events, being the issue of the parallel proceeding and the making of the March 2020 agreement, as follows:

(a)an order that Jender’s costs of the proceeding be paid by FES on a standard basis until 12 September 2019, and on an indemnity basis from 13 September 2019 (being the date on which FES commenced the parallel proceeding;

(b)in the event that the above order is not made, an order that Jender’s costs of the proceeding be paid by FES on a standard basis until 11 March 2020, and on an indemnity basis from 12 March 2020 (being the date on which the parties agreed to settle the proceeding);

(c)in the event that the above order is not made, an order that Jender’s costs of the proceeding be paid by FES on an indemnity basis, other than Jender’s costs of the Summons filed by Jender on 9 April 2020, which are to be paid on a standard basis;

(d)in the event that the above order is not made, an order that Jender’s costs of the preceding be paid by FES on a standard basis until 12 September 2019, and on an indemnity basis from 13 September 2019, other than Jender’s costs of the Summons filed on 9 April 2020, which are to be paid on a standard basis; and

(e)in the event that the above order is not made, an order that Jender’s costs of the proceeding be paid by FES on a standard basis until 11 March 2020, and on an indemnity basis from 12 March 2020, other than Jender’s costs of the Summons filed by Jender on 9 April 2020, which are to be paid on the standard basis.

1. The proposed orders outlined above could be seen as an implied concession on Jender’s part that it may not be entitled to part or all of its costs of the stay application, which was unsuccessful.  Judicial Registrar Keith ordered that these costs be reserved pending the final outcome of this proceeding.

1. Jender observed that, if, contrary to its submissions no order for indemnity costs is made in its favour, the usual rule is that costs follow the event, and there are no special circumstances which warrant a departure from the usual rule, such as to deprive Jender of part or all of its costs of the proceeding.

1. In regard to the proposed certification of counsel’s fees, Jender submitted that it is within the discretion of this Court to determine the amount that a party is entitled to recover with respect the fees of their counsel.  In this regard, Jender referred to the decision of Riordan J in Titcher v Marcelis,[12] as follows:

Disputes about the amount of the fees charged by counsel, which are recoverable from the other party, can constitute a substantial impediment to the resolution of the question of costs in total.  The taxation of costs can take a substantial amount of time before being heard, involve substantial additional costs and requires the application of significant court resources.  The court, by fixing counsel’s fees, can resolve a significant source of dispute and facilitate the resolution of the question of costs between the parties.  In my opinion, the Court’s favourable consideration of any action, which may avoid or reduce the (often inordinate) time and expense involved in the taxation of costs, is consistent with the furtherance of the overarching obligations under the Civil Procedure Act 2010.[13]

[12][2015] VSC 578.

[13]Ibid [12].

1. Jender observed that r 63.07 of the Rules permits the Court to fix costs, or any portion of a party’s costs, rather than order that costs be taxed in default of agreement. Jender submitted further that r 63.92(1) provides that the Costs Court may fix fees on the basis of daily fees, as a lump sum covering the whole of the hearing, or on such other basis the Costs Court considers appropriate. Jender’s submissions annexed a table detailing the counsel’s fees paid by it during the course of the Magistrates’ Court proceeding and this proceeding (including the stay application and the submissions with respect to costs) totalling $39,084.00.

1. Jender submitted that an order fixing counsel’s fees is appropriate for the following reasons:

(a)   the proceeding involved complex questions of administrative law, which is apparent from the primary reasons;

(b)  while the judgment sum was negligible, the Court should consider the following relevant matters when considering what allowance should be made for counsel’s fees, being the unfairness of Jender having a default judgment stand against it, the unreasonableness of FES’s conduct throughout the course of the proceeding, and the consequent unfairness of Jender being left out of pocket at the end of the proceeding.

FES’s submissions

1. FES submitted that the Court should depart from the usual rule that costs follow the event, such that Jender should pay FES’s costs incurred from 13 March 2020 on a standard basis, and the costs of the stay application on an indemnity basis.  Alternatively, FES submitted that each party should bear their own costs of the proceeding.

1. FES submitted that, given that the quantum of the default judgment was $5,024.11, this proceeding brings into sharp focus the obligation imposed upon participants in civil proceedings by s 24 of the CPA to use reasonable endeavours to ensure that legal costs incurred in civil proceedings are reasonable and proportionate to the amount in dispute. FES submitted that it should have been obvious to Jender and its lawyers that the costs of this proceeding would far exceed the quantum of the default judgment.

1. FES noted that at a directions hearing before Clayton JR on 13 November 2019, FES made an open offer, as shown by the following extract from the transcript of the directions hearing:

One of the first things I want to do, your Honour, is I want to make an open offer to the plaintiff and that offer is simply this.  That if the plaintiff either pays the amount of the judgment, the accrued interest, and the costs ordered by the Magistrate, the defendant will consent to an order setting aside the judgment and striking out the Magistrates’ Court proceeding.

And in relation to that offer, payment could be, in part, by way of release of funds that the plaintiff paid into the Supreme Court already, and this would obviate the need for this proceeding and nullify the current enforcement process that has been instigated by the defendant in relation to the original Magistrates’ Court order.  And I put that to my friend in open court for him to consider.  If it’s not accepted, I will continue my submissions.

1. FES submitted that, despite the obvious disproportionality of the costs incurred by the parties in this proceeding, Jender persisted in prosecuting the proceeding all the way to a final hearing. FES submitted that s 24 of the CPA requires parties and their lawyers to not simply focus on the merits of their respective positions, but to weigh those against broader considerations such as the administration of justice. In this regard, FES referred to the following passages of the reasons of Bell J in Actrol Parts Pty Ltd v Coppi (No 3):[14]

… the purpose of the obligation is not to place unrealistic burdens of responsibility upon participants in civil litigation but, in the interests of the administration of justice, to ensure that a reasonable and proportionate relationship is maintained between legal and other costs incurred in a proceeding and the nature of the issues and the amount in dispute.

…

Based as it is on the concept of proportionality, the obligation demands a balanced consideration of ends and means. It strongly discourages conducting litigation by reference to the old principle that the ends justifies the means. This kind of litigation too often meant that economically powerful parties could, to achieve even modest ends, spend virtually what they liked on legal costs, with potentially deleterious consequences for the conduct of the proceeding by all of the parties, as well as the administration of justice. The new principle aims to ensure that there is a reasonably proportionate relationship between ends and means.

…

But the legal system is not an infinite resource for the management and mitigation of business risks of whatever nature and degree. Modern case management principles and the provisions of the Civil Procedure Act insist upon reasonable proportionality between the achievement of litigious objectives (having regard to the issues raised in the proceeding) and the legal costs that are expended in the pursuit of those objectives. There must be reasonable proportionality between those ends and those means.[15]

[14][2015] VSC 758 (‘Actrol Parts’).

[15]Ibid [58], [60] and [116].

1. FES noted that in the primary reasons I observed that, as at 11 March 2020, the only issue upon which the parties were apart was who should bear the costs of the Magistrates’ Court proceeding and this proceeding.  FES submitted that it is important to note that the 11 March offer involved FES foregoing the judgment sum, and came after it had relinquished any right or claim to the funds paid into the Court pursuant to the orders of Gardiner AsJ in the Supreme Court proceeding.  FES went on to submit that the 11 March offer provided Jender with the very outcome it sought in this proceeding without the cost, expense and delay involved in litigating the proceeding until trial.

1. FES submitted that following the 11 March offer, Jender issued the stay application, which also included an application for leave to amend its originating motion (the latter application was ultimately withdrawn), and pressed on to trial to seek an outcome that FES had already offered to provide, at a cost manifestly disproportionate to the amount in dispute.

1. FES also submitted that the open offer made at the directions hearing on 13 November 2019 was reasonable, and this offer pre-empted what ultimately occurred in that, on 17 April 2020, Jender paid the judgment sum following its unsuccessful stay application.  FES submitted that, upon payment of the judgment sum in April 2020, Jender could have revisited whether FES’s offer made on 13 November 2019 and the 11 March offer still stood, but failed to do so.

1. FES submitted that Jender should not be compensated by an order for costs when the costs it has incurred could have been avoided.  In this regard, FES referred to the decision of Weinberg J (as his Honour then was) in P Aker Flowerbulbs Pty Ltd v Coulter,[16] as follows:

Where a party can achieve a desired outcome by the adoption of a simple and cheap expedient, but chooses instead to make a particular point “on a matter of principle”, that party will not necessarily be entitled to recover the costs of making that point from the other side.  In the particular circumstances of this case, I consider that there should be no order as to the costs of the appeal.[17]

[16][2004] FCA 1486.

[17]Ibid [65].

1. FES submitted that this proceeding is analogous with the proceeding before Bell J in Actrol Parts[18], where Bell J found that the plaintiff had breached s 24 of the CPA by pursuing its case to final judgment for nominal damages as a matter of principle, deliberately incurring costs which were not reasonably proportionate to the sum in dispute. FES referred to the following passage of his Honour’s reasons:

… when parties are determining whether, in their own interests, to pursue expensive civil litigation merely for the reasons of principle, the values enshrined in the Civil Procedure Act must also be taken into account. The choices that are made potentially affect important public interests including the interests of justice, the objects specified in s 9(1), the overarching purpose in s 7(1) and, centrally, the overarching obligation in s 24 of ensuring reasonable and proportionate costs. Taking these into account, a court might, in an appropriate case like the present, decide that the intended end did not justify the chosen means.[19]

[18][2015] VSC 758.

[19]Ibid [80].

1. FES denied that any agreement had been reached in March 2020 to dispose of this proceeding and the Magistrates’ Court proceeding.  FES contended that the 11 March offer was not accepted by Jender, noting that Jender’s concerns in regard to accepting the 11 March offer related to whether the Magistrates’ Court would accept a rehearing application and grant consent orders setting aside the default judgment.  FES submitted that such concerns were not reflected in the terms of the offer made by Jender on 4 March 2020.  FES went on to submit that the 11 March offer was capable of being accepted, but rather, was met with a counter offer by Jender.  FES submitted that there was nothing to preclude Jender from making a comprehensive offer on terms mirroring the 11 March offer, which also accommodated Jender’s concerns about the setting aside of the judgment, but that at no stage between 11 March 2020 and the final hearing in September 2020 did Jender make such an offer. 

1. FES observed that its offer of 14 August 2020 (see paragraph 20(a) above) contained an offer reflecting the progress of the proceeding after March 2020, and the rationale underpinning the offer in that letter was to end all litigation between the parties in both this Court and the Magistrates’ Court.

1. FES submitted further that Jender’s response on 27 August 2020 was unnecessarily preoccupied with the events of March 2020, and made controversial, if not inaccurate assertions regarding the March 2020 correspondence.  FES submitted that the offer contained within Wisewould Mahony’s letter of 27 August 2020 was deficient in that this offer:

(a)   lacked details as to the sequence and timing of events and the mechanism by which the terms of any agreement would be implemented;

(b)  failed to provide a draft memorandum for FES’s review that might enable the Court to dispose of the judicial review application by consent; and

(c)   sought costs against FES from 12 March 2020, when any costs incurred by the parties after 12 March were predominantly as a result of Jender’s stay application, which had been determined adversely to Jender.

1. FES submitted that Jender’s representation by both senior and junior counsel at the final hearing suggested that Jender, like the plaintiff in Actrol Parts[20], was an economically powerful party spending whatever it liked on legal costs to achieve a modest end. FES submitted that, given Jender’s willingness to spend inordinately more than the quantum of the default judgment in prosecuting this proceeding, it should be evident to the Court that Jender was driven by a principled objection to the default judgment, and as such had failed to comply with its obligation under s 24 of the CPA to only take steps which were proportionate to the nature and value of the issues in dispute.

   [20][2015] VSC 758.

1. As for the stay application, FES relied on its submissions dated 15 April 2020 and 8 May 2020, in which it submitted, in summary, as follows:

(a)   the evidence in support of the stay application was largely inadmissible, and failed to explain why a stay was necessary, or point to any particular prejudice to Jender if a stay were not granted;

(b)  the costs incurred by the parties in this proceeding were disproportionate to the issues at stake;

(c)   the application by Jender to amend its originating motion had been withdrawn, and thus the usual rules concerning the costs of a discontinued action should apply; and

(d) by reason of Jender’s misconduct during the course of its prosecution of the stay application, including its breach of s 24 of the CPA, FES should have its costs of the stay application on an indemnity basis.

1. FES submitted that, while it had been found by Gardiner AsJ in the Supreme Court proceeding to have been peremptory in applying for default judgment, the same could not be said of FES following the dismissal of the rehearing application by the learned magistrate following the conclusion of the Supreme Court proceeding.  FES submitted that it was entitled to consider the default judgment to be final and enforceable in the absence of any stay or successful application for judicial review.

1. FES submitted further that, in this proceeding, it was not defending its conduct in obtaining and seeking to enforce the default judgment. Rather, Jender was challenging the decision of the learned magistrate not to grant the rehearing application. FES has been forced to incur costs that it would not have otherwise incurred had the learned magistrate not made the errors articulated in the primary reasons. FES submitted that, accordingly, in the event the Court orders it to pay any part of Jender’s costs of this proceeding, FES ought to have the benefit of an indemnity certificate under s 4 of the Appeal Costs Act 1998 (Vic) (‘indemnity certificate’).

The parties’ reply submissions

1. On 29 June 2020, the parties filed their submissions in reply.  Jender’s written submissions canvassed, among other things, the following issues:

(a) FES’s submission that Jender had failed to comply with s 24 of the CPA (‘proportionality issue’); and

(b)  the March 2020 correspondence and the March 2020 agreement.

1. In relation to the proportionality issue, Jender submitted that accepting FES’s submissions would bring the administration of justice into disrepute, given that Jender had no legal relationship with FES, and should never have been sued by FES. The CPA is concerned with justice as well as proportionality: it is difficult to conceive of a greater injustice than being wrongly sued and then precluded from taking corrective action merely by reason of the quantum of the judgment wrongly obtained and set aside, being modest. Further, FES’s submissions ignored the unreasonable conduct of FES in opposing the application for a rehearing.

1. Jender submitted that the authorities relied upon by FES in its submissions can be distinguished from the current case: in particular, this was not a case where Jender had a quicker and/or cheaper option than applying to this Court for judicial review.  Further, the reasoning in Actrol Parts[21] can be distinguished on the basis that, in this proceeding, Jender was not seeking to establish that it had a cause of action for reasons of principle alone without seeking compensable loss and damage.  Rather, it was seeking to set aside a judgment debt which was wrongly obtained against it.

   [21][2015] VSC 758.

1. Finally, Jender submitted that focussing solely on the quantum at stake ignores the other deleterious effects to Jender of having a judgment recorded against it, such as the potential impact upon its credit rating.

1. As for FES’s submissions concerning the March 2020 correspondence, these submissions are factually incorrect, and should be disregarded accordingly.

1. As for the offer made by FES on 14 August 2020 (see paragraph 20(a) above), this offer did not represent a genuine compromise, as if it was accepted, Jender would have been required to forfeit the judgment sum and pay FES’s legal costs of this proceeding. 

1. As for as FES’s criticisms of the quantum of the legal costs incurred by Jender, Jender noted that the only difference between the legal representation of the parties at the final hearing was that Jender briefed senior counsel as well as junior counsel, and, in any event, Jender’s senior counsel charged a daily rate well short of that allowed by the Supreme Court scale for senior counsel.

1. FES submitted that Jender’s claim for costs was misconceived, in that Jender sought to be placed in the position it would have been had it never been sued by FES.  Jender’s submissions also ignore the fact that this proceeding is only concerned with whether any of Jender’s grounds of review had been made out, not the merits of the underlying decision.  In any event, Jender must accept some responsibility for its failure to file and serve a defence in the Magistrates’ Court proceeding, and the intemperate conduct of its director when warned by FES’s solicitors that Jender should file a defence in the Magistrates’ Court proceeding.

1. FES submitted that Jender’s contention that it should never have been sued by FES is irrelevant to the question of the costs of this proceeding. The CPA does not enshrine a party’s right to impugn a decision with which it disagrees without regard to the proportionality issue. FES was entitled to defend Jender’s application for judicial review, noting that Jender only succeeded on two of its four grounds of review.

1. FES also submitted that it should have its costs of the stay application, as it was a discrete application, and there is no reason why costs should not follow the event, given that FES had been forced to incur costs that it otherwise would not have incurred had the stay application not been made.

1. As for the March 2020 correspondence, FES submitted that it had not resiled from any agreement, as no agreement was reached between the parties in March 2020.  If such an agreement existed, Jender should have taken action to enforce the March 2020 agreement, rather than apply for a stay of the default judgment and proceed to trial, as it did.

1. FES submitted that the question of what may or may not happen once the rehearing application is remitted to the Magistrates’ Court is irrelevant to the question of the costs of this proceeding.

1. As for the application by Jender to certify counsel’s fees, FES submitted that the Court should not certify counsel’s fees, as it is difficult to assess the reasonableness of counsel’s fees without knowing what solicitors’ fees have been incurred by Jender.  Further, the sum claimed of $39,084.00 is grossly disproportionate to the amount in dispute in this proceeding.  In any event, the matters relied upon by Jender in its application for the certification of counsel’s fees are outweighed by the following matters (which I can infer are said by FES to be relevant to the issue of costs generally):

(a)   the opportunities proffered by FES to set the default judgment aside;

(b)  Jender continuing to prosecute the proceeding in the face of FES’s expressed concerns about the proportionality issue; and

(c)   the director of Jender, Mr Derek Clayton, was warned prior to the entry of the default judgment that Jender risked being out of pocket if he failed to adopt a more measured engagement with FES’s claims against Jender.

Discussion

1. The starting point of any consideration of the question of costs is that costs generally follow the event, and that those costs should be assessed by the Costs Court on a standard basis.  Accordingly, the following issues arise on the submissions of the parties:

(a)   first, whether Jender, as the successful party, should be deprived of any or all of its costs by reason of the proportionality issue, or any other reason;

(b)  secondly, whether an agreement to compromise this proceeding and the Magistrates’ Court proceeding was reached in March 2020;

(c)    thirdly, whether or not an agreement had in fact been reached in March 2020, whether Jender should receive part or all of its costs of the proceeding on an indemnity basis, by reason of the conduct of FES in resiling from the March 2020 agreement or the 11 March offer, or its conduct generally in resisting Jender’s application for judicial review;

(d)  fourthly, how the costs of the stay application should be dealt with; and

(e)   fifthly, in the event there is an award of costs in favour of Jender, whether I should certify counsel’s fees, in whole or in part; and

(f)    finally, in the event that I ordered that FES pay part or all of Jender’s costs of the proceeding, should FES be granted an indemnity certificate?

1. My conclusions with respect to the question of costs are as follows:

(a)   subject to paragraphs (b) and (c) below, Jender should have its costs of the proceeding up to and including 12 March 2020 on a standard basis;

(b)  subject to paragraphs (c) and (d) below, Jender should have its costs of the proceeding on an indemnity basis from 13 March 2020;

(c)   FES should have its costs of the stay application on a standard basis;

(d)  Jender’s costs of the proceeding, insofar as they relate to counsel’s fees, should be fixed in the sum of $23,634.00; and

(e)   FES should be granted an indemnity certificate.

1. My reasons follow.

1. Taking first the proportionality issue, FES’s submission to the effect that Jender has spent an inordinate amount of money to overturn a default judgment for a rather modest sum has, at least at first glance, some merit.  Many observers would be understandably dismayed about the public and private resources consumed by this dispute.  However, I am not persuaded that Jender’s pursuit of its remedy in this proceeding was so disproportionate so as to deny Jender part or all of its costs in this proceeding, all other things being equal.  Subject to the conclusions I have reached regarding Jender’s application for indemnity costs and the quantum of counsels’ fees, the quantum of the amount in dispute is a matter which can be taken into account by the Costs Court in any assessment of the costs claimed by Jender. 

1. In particular, I accept that, while the quantum of default judgment is modest, the fact remains that Jender was almost certainly not liable to pay FES, and FES refused to accept this basic proposition despite being provided with persuasive evidence to the contrary at an early stage of the dispute.  Further, given that the real debtor, Davis Glass 1 Pty Ltd, disputed the size of the bill rendered by FES on other grounds (namely the scope and value of the services provided to it by FES), this was not a matter where Jender could practically pass on the responsibility to meet the claim to the proper party.  I also accept that there may be some unquantifiable, but tangible, deleterious effects upon Jender of having a judgment registered against its name.  And further, I accept that in the absence of reaching any compromise with FES, the only remedy practically available to Jender was to seek judicial review of the learned magistrate’s refusal to grant the rehearing application.  This is not a case where some type of administrative process was available to Jender to obtain the remedy it was otherwise entitled to seek. 

1. Finally, FES’s reliance upon the decision of Actrol Parts[22] is somewhat misplaced.  I take no issue with the statements of principle made in the extracts relied upon by FES in its submissions, but that was a very different case.  That proceeding was brought by a disgruntled employer against a former employee it accused of misusing its confidential information upon his departure from his employment.  The employer obtained and executed an intrusive search order upon the employee’s home, and the parties proceeded to spend hundreds of thousands of dollars in legal costs in the lead up to the trial.  On the first day of a seven day trial (with senior and junior counsel briefed on both sides), senior counsel for the employer announced to the Court that it had suffered no loss and damage as a result of the alleged wrongdoings of the former employee, but then went on to litigate the matter to judgment.  In those circumstances, the employer’s conduct in pursuing the matter to judgment at great cost was understandably the subject of criticism, as it claimed no real remedy.

   [22][2015] VSC 758.

1. This case is quite different.  In this proceeding, Jender sought a real, not illusory, remedy with real practical consequences.  Further, while the stay application was unsuccessful, no criticism can be directed at Jender (or for that matter, FES) for the manner in which the proceeding was conducted: the matter proceeded as quickly and efficiently as most proceedings of this kind. 

1. Accordingly, save for the costs of the stay application, Jender should not be deprived of its costs of the proceeding by reason of the proportionality issue or, for that matter, any other reason.  The question remains as to whether it ought receive its costs of the proceeding, in part or in whole, on an indemnity basis. 

1. As noted earlier in these reasons, Jender seeks its costs of the proceeding on an indemnity basis on two bases: first, based upon its submission that FES acted unreasonably in defending the proceeding at all, and secondly, on the basis that FES resiled from the March 2020 agreement (this submission being predicated on the assumption that a binding agreement had in fact been reached on 12 March 2020). 

1. Taking first the submission that the unreasonable conduct of FES had pervaded the proceeding as a whole, again, this submission is not without merit, particularly given that it was arguable, in all of the circumstances, that FES had unreasonably opposed the rehearing application, and then Jender’s application for judicial review, and as such, Jender should have its costs of the entire proceeding on an indemnity basis.

1. Apart from the decision in Denlay,[23] there is little authority regarding the scope for making special costs orders against an unsuccessful defendant in a judicial review proceeding.  Jender relied upon the following passage of the reasons of Logan J in support of its application for indemnity costs:

Taking all of the factors to which I have adverted into account, it does seem to me that there is a very particular and intimate connection, and not just an intimacy derived from a temporal connection, between the decision by the Commissioner to defend this particular challenge and the occasion offered by the solicitor’s correspondence of 22 December 2011 to reflect upon whether, having regard to the provenance of the stay orders, this was a case where the Commissioner should either concede the quashing or even earlier decide to vacate the decisions concerned.  In other words, whilst the actual conduct of the litigation was fair, that it was conducted at all in the circumstances strikes me as a continuation of a decision which was unreasonable in the sense described in the principal judgment.  That to me is a basis upon which an order for indemnity costs can and ought to be ordered.[24]

[23][2013] FCA 358.

[24]Ibid [33].

1. In Denlay,[25] the respondent, the Commissioner of Taxation (‘Commissioner’) had refused to withdraw garnishee notices directed at two taxpayers, on what turned out to be an indefensible basis.  The consequence of the Commissioner’s enforcement efforts was that, among other things, the taxpayers went bankrupt.  In reaching his decision to make an award of indemnity costs in a proceeding to set aside the garnishee notices in favour of the taxpayers, his Honour observed that the wide discretion given a Court with respect to costs extended to the circumstances in which a Court may award indemnity costs, noting the categories of cases and conduct which may warrant an award for indemnity costs are not closed, save that the discretion must be exercised judiciously, not arbitrarily or capriciously, and not on grounds unconnected with the litigation.[26]

   [25]Ibid.

   [26]Ibid [11].

1. His Honour also observed that, “even in relation to judicial review proceedings, there is no hard and fast rule that an award of indemnity costs is not possible”.[27]  Particularly relevant in the circumstances of the case before him was the fact that, immediately following the issue of the garnishee notices, the solicitors for the taxpayers informed the Commissioner, among other things, of a stay of the relevant judgment debt in the Queensland Supreme Court.  His Honour observed as follows:

It is fair to say that, prior to furnishing reasons, the Commissioner’s attention was specifically directed not just to the consensual basis of stay orders made most recently in the Queensland Supreme Court but to the history behind those particular orders in terms of the contest which had ensued in that court. It is, in those circumstances, somewhat surprising that, in the course of embarking on the process of giving reasons after the event of the making of the decisions, the decision-maker did not better avail himself of the opportunity for mature reflection presented by that correspondence. This was not a case where the reasons concerned accompanied the decisions. There was occasion for reflection. That occasion necessarily included an ability on the part of the decision-maker to vacate the decisions concerned, having regard to the points that were made in the Denlays’ solicitor’s email of 22 December 2011.[28]

[27]Ibid [15].

[28]Ibid [18].

1. And further:

It was also put on behalf of the Commissioner that in the actual conduct of the litigation, the Commissioner had behaved fairly. I respectfully agree with that. The concession to which I refer in the principal judgment is eloquent in that regard. Further, it was obvious to me as the trial judge that the Commissioner’s conduct of the case was fair.

The question which might be asked though is whether the case should have been conducted at all given the pause for thought that was offered by the solicitor’s communication? In the end, whilst there was reference in submissions to offers for compromise, it was not pressed strongly on behalf of Mr and Mrs Denlay that this is how that communication ought to be characterised. Rather, it was put that it was more in the nature of a submission that there was a particular fatal flaw about the decision, or, at least, an exposing of the same such that the defence of the decision was unreasonable.[29]

[29]Ibid [26]-[27].

1. It could be said, in relation to the current case, that FES was provided with ample opportunity for “mature reflection” upon its prospects of successfully resisting Jender’s application for judicial review.  However, with some hesitation, I do not consider that merely defending this proceeding was so unreasonable so as to justify a special order for costs against FES.  First, and significantly, it had a favourable decision from the learned magistrate, which it was prima facie entitled to defend and enforce.  Secondly, the decision concerned was not reviewable, at least in the ordinary course of events, on its merits: the onus was on Jender to establish that the decision was tainted by legal error, particularly in circumstances where the decision to refuse Jender’s rehearing application involved, at least to some extent, the exercise of a discretion. 

1. I do not consider that the decision in Denlay[30] assists Jender to any great extent in the current application.  While this decision confirms that it is open for the Court to make an order for indemnity costs against a defendant in an application for judicial review, once again, the circumstances were quite different in that case from those in the current case.  In particular, in Denlay,[31] the Commissioner was the decision maker as well as the defendant, while in the current case the decision maker was the learned magistrate, not FES.  Further, the defendant in Denlay[32]was a public authority which would ordinarily be expected to conduct itself as a model litigant, in circumstances where the enforcement of its statutory powers arguably circumvented the orders of another court, and caused the litigants concerned to become bankrupt. 

   [30]Ibid.

   [31]Ibid.

   [32]Ibid.

1. Accordingly, I would not order that FES pay Jender’s costs of the proceeding on an indemnity basis of its defence of the proceeding generally.  FES had a favourable decision it was entitled to protect, and, subject to my comments regarding the March 2020 correspondence below, the manner in which FES conducted this proceeding was not unreasonable per se, noting that, in order for a party to have indemnity costs ordered against it by reason of their unreasonable conduct, that conduct must be connected with the litigation itself, not the underlying dispute.  For similar reasons, I agree with FES’s submissions to the effect that the possibility that FES may resist the remitted rehearing application is not relevant to the question of costs in this proceeding. 

1. Turning now to the March 2020 correspondence, there is scope for debate about whether the first email from Wisewould Mahony to Snowton Saje on 12 March 2020, which referred to the 11 March offer being accepted subject to certain “conditions”, amounted to an acceptance of the 11 March offer, such that there was an immediately binding agreement between the parties.  On one view, and probably the better view, what were described by Wisewould Mahony as “conditions” were really matters of machinery, rather than any fundamental alteration to the fundamental terms of the 11 March offer, such as to constitute a counter-offer.  That view is reinforced by the exchange of emails between Snowton Saje and Wisewould Mahony at 11.05am and 11.47am, discussing what would be required to finalise the proceeding in this Court, noting the requirements of the relevant practice note with respect to proposed consent orders which would have the effect of setting aside a decision under review.[33] 

   [33]Paragraph 8.1 of the Practice Note SCCL 9 provides as follows: “Where proposed consent orders would set aside or vary a decision under review or appeal or would involve the remittal of any matter or would otherwise affect the conduct or the result of a proceeding or matter before an external decision-maker, judicial power is engaged in relation to the functions of a public authority, and the Court may need to consider for itself whether the orders should be made, particularly where the proceeding or matter affected is executive or administrative in nature.  Where orders of such a kind are sought “on the papers”, a joint memorandum explaining the legal justification for the proposed orders must be provided to the Court.  The Court may nevertheless require the attendance of practitioners.  Even if satisfied that the proposed consent orders are appropriate, the Court may consider it necessary to publish reasons for the making of the orders or at least to direct that a copy of the joint memorandum be served on the decision-maker affected together with a copy of the orders made.”

1. It would have no doubt been a matter of shock and surprise for Wisewould Mahony to receive the email that it did at 12.48pm.  While this email sought that Jender agree to the 11 March offer unconditionally, the true position was that any implementation of the terms of the 11 March offer needed to grapple with and provide a process for meeting the requirements of the Court as set out in the Practice Note.  Further, the reference to adjourning the oral examination (listed for the afternoon of 12 March 2020) was clearly a matter of convenience only: it could hardly have been a deal breaker.  While it is not possible to draw any firm conclusions regarding what lay behind Snowton Saje’s email of 12.48pm, the email does convey a whiff of buyer’s remorse.

1. In any event, the analysis of whether the parties had in fact reached a concluded agreement on 12 March 2020 is relevant, but not determinative, of the question of costs.  The authorities make it clear that the categories of conduct which might justify or warrant an order for indemnity costs are not closed. 

1. In the current case, for FES, in circumstances where Jender, through its solicitors, had accepted the fundamental terms of the 11 March offer, and the ensuing discussion concerned merely the machinery of giving effect to the terms of the 11 March offer, the conduct of FES in resiling from the 11 March offer was unreasonable.  Accordingly, subject to my further comments below regarding the costs of the stay application and the quantum of counsel’s fees, FES ought pay Jender’s costs of the proceeding incurred after 12 March 2020 on an indemnity basis.  

1. I do not accept that Jender should receive its costs of the stay application.  Jender’s summons seeking the stay are also included an application to amend the originating motion, which was subsequently withdrawn.  I do not see how the costs of that application should be visited upon FES.  Further, while I understand why it was thought that the costs of the stay application ought await the determination of the proceeding as a whole, the stay application was a discrete application, and there is no good reason why FES should bear the costs of opposing Jender’s application for, in effect, an indulgence from the Court. 

1. As for counsel’s fees, I agree with Jender’s submissions that in the interests of efficiency and expedition, I should fix the counsel’s fees payable to Jender.  Given the nature of the current proceeding, which was decided largely upon the submissions of the parties, I am in as good a position as any to determine what is appropriate to order for counsel’s fees. 

1. The table below summarises the amount claimed by Jender for each counsel and each task, and the amount allowed in respect of those claims.

Barrister	Description	Amount Claimed	Amount Allowed
Mr Clarke QC	Trial and preparation	$13,800.00	$13,800.00
Mr J Lipinski	Submissions and appearance at stay application	$3,750.00	Nil
Trial submissions, preparation and appearance	$75,00.00	$5,500.00
Mr E Nekvapil	Trial submissions/reviewing defendant’s submissions	$2,134.00	$2,134.00
Mr PR Miller	Advice/drawing originating motion	$2,200.00	$2,200.00
Total:	$23,634.00

1. Accordingly, I have reduced the counsel’s fees claimed to deduct the amount payable with respect to the stay application, and the preparation of submissions regarding the costs of the proceeding, which should await the final determination of the current application.  Further, I do not consider that it was necessary for Jender to brief two counsel for the trial of the proceeding.  However, I am prepared to allow fees for one counsel at the rate charged by senior counsel for the trial, which I accept is well below the rate chargeable under the scale. [34]   Generally, the fees charged by Jender’s counsel seem to be reasonable given the range and complexity of the issues in dispute.

   [34]In making allowance for senior counsel alone, I do not wish to be taken as conceding that junior counsel provided no valuable input, to the contrary.  Further, I have no intention of interfering with the terms of the retainer between counsel and Jender and/or Jender’s solicitors.

1. Also, for the avoidance of doubt, I would have certified for counsel’s fees in the amounts referred to above even if I had not accepted Jender’s submissions regarding its entitlement to indemnity costs.  Accordingly, the quantum of the difference between the costs payable on a standard basis and costs payable on an indemnity basis after 12 March 2020 may be quite modest. 

Indemnity certificate

1. FES submitted that in the event that I ordered that FES pay part or all of Jender’s costs, it seeks an indemnity certificate.

1. Section 4 of the Appeal Costs Act 1998 (Vic) (‘Act’) provides as follows:

Application by respondent for indemnity certificate in respect of appeal

(1)       If an appeal against a decision of a court in a civil proceeding—

(a)       to the Trial Division of the Supreme Court; or

(b)to the Court of Appeal, including an appeal to the Court of Appeal from a decision of the Trial Division of the Supreme Court; or

(c)to the High Court of Australia from a decision of the Supreme Court—

succeeds, a respondent to that appeal may apply to the Supreme Court for, and the court may grant, an indemnity certificate in respect of costs.

1. It is settled law that an application to this Court for judicial review is a proceeding in the nature of an appeal, and thus FES is eligible to apply for an indemnity certificate.[35]

   [35]Celsius Fire Services Pty Ltd v Magistrates’ Court of Victoria (No 2) [2020] VSC 120 [9]. Section 35A of the Act provides that an indemnity certificate may not be provided in favour of a party which is a corporation with a paid up capital of $200,000 or more, or the subsidiary of such a corporation.

1. The purpose and scope of s 4 of the Act was recently considered by Forbes J in Kukulka v Floatcast Technology Pty Ltd,[36] as follows:

   [36][2021] VSC 198.

The policy that underlies s 4, and its predecessor s 13(1) of the Appeal Costs Act 1964 (Vic), is “that an error of law occurring in a court may ordinarily be attributed to a fault of the administration of justice rather than of the parties, so that the costs of having the error rectified ought ordinarily not to be borne by the unsuccessful respondent to the appeal but to be paid from a public fund established for that purpose”.

In Eureka Funds Management Ltd v Freehills Services (No 2), Cavanough AJA, speaking for the Court, said:

7.The grant of a certificate will usually lead to the expenditure of public money. In my view it is not enough that a case merely falls within one of the descriptions in s 4. The Court needs to be satisfied that it is appropriate in all the circumstances that a certificate should be granted. It is a discretion to grant, not a discretion to refuse, a certificate. On the other hand, a relatively generous approach to the exercise of the discretion is supported by the remarks of the then Attorney-General in her second reading speech for the 1998 bill for the Act, as follows:

The bill repeals the current Appeal Costs Act 1964 and replaces it with a new, simpler and clearer act. In so doing, the bill implements the government’s justice policy objective of reforming the justice system so that it is accessible and efficient.

The Appeal Costs Act originated as a form of compulsory insurance. It was based on the premise that, although the majority of legal disputes can be resolved in one substantive hearing, in a small proportion of cases it is necessary for an appeal or a re-hearing. For example, a party may have to appeal to the Court of Appeal or the High Court because there are conflicting authorities or the area of law in question is new. Equally, in a small number of cases it is necessary to have a re-hearing because the original hearing was aborted or discontinued: for example, because the jury had to be discharged. The act was designed to apply only to those cases where the appeal or re-hearing was necessary. It does not apply if an appeal is brought simply because the party who lost at the first hearing was dissatisfied with the decision.

...

The principal objective of this bill is to address these inconsistencies and anachronisms to ensure that the underlying policies of the appeal costs scheme are properly reflected in the legislation.

The basis for granting an indemnity certificate has been made simpler and more consistent under the bill. The bill provides that the decision to grant or refuse a certificate following a successful appeal is in the discretion of the court.

For example, a party may have succeeded in atrial by deliberately misleading the trial judge. The losing party may then have to appeal against the judgment. The appellate court may allow the appeal and order the respondent to pay the appellant’s costs. In these circumstances the court may refuse to grant an indemnity certificate to the respondent, on the ground that if the respondent had not misled the judge in the court below, it would not have been necessary to have the appeal.

Discretionary factors which might mitigate against a grant include whether the need for an appeal was generated by inappropriate conduct of the respondent.[37]

(citations omitted)

[37]Ibid [30]-[32].

1. Neither party addressed me upon whether any relevant discretionary factor told in favour or against the grant of an indemnity certificate in favour of FES.

1. The only discretionary factors of any relevance to the current case are whether:

(a)   it was “necessary” to have a rehearing of (or, more accurately, to review) the learned magistrate’s decision; and

(b)  FES’s conduct of the rehearing application before the learned magistrate below, and its conduct in defending this proceeding.

1. In relation to (a) above, although the current proceeding does not concern new or developing law, or a matter of great public significance, in my view, given the plain injustice of allowing the default judgment to stand in circumstances where Jender was not liable for the debt upon which the default judgment was based, means that it was “necessary” for this proceeding to be initiated by Jender. As for the conduct of FES, while I have criticised FES’s conduct in some respects, in my view, there was nothing in the manner in which it conducted the hearing before the learned magistrate which would disentitle it to an indemnity certificate, subject to FES providing proper proof that it is not a corporation which falls within the terms of s 35A of the Act. However, the indemnity certificate will not extend to the costs of the remitted rehearing application: if FES wishes to defend that application, it should do so at its own risk.

1. Draft orders will be circulated in order to give effect to the findings in the primary reasons, and these reasons.  My preliminary view is that Jender should have the costs of the dispute between the parties with respect to costs on a standard basis, to be taxed in default of agreement.  If any party seeks orders to the contrary,  they should provide notice of their proposed orders to the other party and the Court within seven days.