Marshalls & Dent & Wilmoth v Tandos (Costs)
[2024] VSC 123
•19 March 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
PRACTICE COURT
S ECI 2023 04805
| MARSHALLS & DENT & WILMOTH (A FIRM) | Applicant |
| v | |
| GEORGE TANDOS | First Respondent |
| and | |
| ABBEYVALE PTY LTD ACN 005 554 834 (ATF THE FIRST TANDOS FAMILY TRUST) | Second Respondent |
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JUDGE: | Quigley J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 19 March 2024 |
CASE MAY BE CITED AS: | Marshalls & Dent & Wilmoth v Tandos (Costs) |
MEDIUM NEUTRAL CITATION: | [2024] VSC 123 |
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COSTS — Extension of time pursuant to s 198(4) of the Legal Profession Uniform Law Application Act 2014 for costs assessment — Exercise of discretion under s 24(1) of the Supreme Court Act 1986 — Party’s obligations under s 65C(1) Civil Procedure Act 2010 — Indulgence required by the applicant — Whether r 63.14 applied — Offer of compromise made — Relevance of degree of unreasonableness of party’s behaviour in opposing application — No order for costs made.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Ms S V Kipen | Marshalls & Dent & Wilmoth Lawyers |
| For the Respondents | Mr S Bunce | A Agrotis & Associates |
HER HONOUR:
INTRODUCTION
On 15 February 2024, judgment was delivered in the application brought pursuant to s 198(4) Legal Profession Uniform Law Application Act 2014 (Vic) (‘the Uniform Law’)[1] for an extension of time for a costs assessment to be made.
[1]Marshalls & Dent & Wilmoth v Tandos [2024] VSC 44.
The application was contested by the respondents the basis of standing, that the delay and reasons for the delay were inadequate to justify the Court’s indulgence, that there was a lack of merit in the law firm’s claim, and that delay had prejudiced the respondents.
Directions were given for the filing of submissions on the question of costs. Detailed submission were made by both parties.
APPLICANT’S SUBMISSIONS
The applicant seeks an order for their costs on a standard basis to be taxed in default of agreement. If the Court were not prepared to do so, the applicant submitted that the respondents should pay its costs of the application from 2 January 2024, which was the date of the expiry of a compromise offer made by the applicant and styled as a Calderbank offer.[2]
[2]Affidavit of Alex Di Blasi sworn 20 February 2024, Exhibit ADB1/4‑6.
The applicant’s submissions argued that the applicable principles establish that costs are in the discretion of the Court[3] and that discretion should be exercised judicially and in accordance with established principles.[4]
[3]Supreme Court Act 1986, s 24(1); and Civil Procedure Act 2010, s 65C(1).
[4]Hazeldene’s Chicken Farm v VWA (No 2)(2005) 13 VR 435, 441 [25] Warren CJ, Maxwell P and Harper AJA.
Costs considerations should include the overarching purpose of the Civil Procedure Act 2010 (‘CPA’), including the public interest in the early settlement of disputes by agreement between the parties, efficient use of judicial resources and efficient conduct of court business.
Costs should follow the event here because the applicant was wholly successful and the respondents pursued and persisted with an unmeritorious argument on standing in the face of clear authority to the contrary.
Whilst an extension of time is typically considered an indulgence by the Court, this was not a case where the applicant had been idle and was at fault for the expiry of time.
The respondents resiled from their position to consent and actively opposed the application, contrary to the overarching obligations under the CPA.
The respondents unreasonably rejected reasonable offers by the applicant to settle the dispute (by letters on 14 November 2023 and 23 December 2023) by which time the respondents ought to have had the benefit of the submission and argument put against them and formed the view that there was good prospects of the applicant’s success in the application.
The application could have been dealt with more expeditiously but for the opposition by the respondents such that a contested hearing was required.
The applicant’s apparent position that it would recover costs no matter what the outcome is misconceived. Reliance on r 63.14 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) was misguided as that rule has no application in these circumstances. In any event, the rule provides for the Court to order otherwise by virtue of r 63.14 of the Rules.
Alternatively, the applicant sought its costs from 2 January 2024 which was the expiry date of the applicant’s offer of compromise made on 18 December 2023. It was argued that it was unreasonable for the respondents to have refused the offer and maintain active opposition.
RESPONDENTS’ SUBMISSIONS
The respondents opposed the application for costs on either basis put by the applicant and sought an order that the applicant bear the costs. Alternatively, they sought an order that costs be reserved to form part of the cost assessment process.
The respondents relied on r 63.14 of the Rules and the rationale behind that rule that a successful party for an extension of time will usually be required to pay the costs occasioned by the application. This reflects the fact that an applicant for an extension of time has not complied with a prescribed time limit and seeks an indulgence from the Court.[5]
[5]Bashour v VCAT (No.2) [2016] VSC 666.
Whilst there is some doubt that the rule applies to this type of application, the principle still ought to be applied.
There was no reason to depart from the usual rule because:
(a) there was no certainty of outcome of the application;
(b) the applicant sought an indulgence from the Court;
(c) this was an application for dispensation of the rules that applied and required the Court’s exercise of power;
(d) the hearing was conducted in a non-combative and efficient manner;
(e) the costs incurred are not extensive;
(f) appropriate concessions were made by the respondent; and
(g) just because an argument was unsuccessful does not make it unreasonable.
In respect of the offer of compromise, it ought not be seen adversely to the respondents because:
(a) it was not a genuine offer of compromise, rather it was a demand to surrender;
(b) it was not open for a reasonable time given it was made on 18 December 2023 and only open to 2 January 2024 (over the Christmas period) with a hearing date not scheduled until 5 February 2024; and
(c) if it were made as a Calderbank offer, the rationale and principles supporting it given its circumstances here being an indulgence from the Court rather than a private dispute between parties, it should not have application here. The Court could not resolve the matter without an order from the Court.
ANALYSIS
As I commented in the judgment at [69], the trajectory of this dispute is unfortunate and significant costs have been incurred on both sides over a relatively modest amount in dispute of just over $22,000.
At [70]–[71] I said:
There have been delays caused by procedural and forensic failures on both sides. Litigation can be like that. However, there is a dispute which must come to a conclusion. The applicant requires the indulgence of the court to grant an extension of time to proceed with an assessment which is a necessary precondition to the claim for fees being pursued, the Magistrates’ Court having found the costs agreement invalid. That does not mean there is no dispute as to fees owing, rather, it requires a different course to be pursued.
Whether on the merits there is any recovery of fees as claimed is not a matter for this Court to determine at this time.
Whilst I was satisfied on the material before me that there should be an extension of time as sought in the summons dated 28 September 2023, this does require an indulgence on behalf of the Court
There are good reasons for time limits to be set and whilst I accepted that the delay was explained, that does not automatically mean that an indulgence is not required and where that occurs, notwithstanding the applicability of r 63 it is a matter for the Court to consider. It is a commonly applied approach to order the party who required the indulgence to absorb those costs.
I accept that r 63 is not strictly applicable and that in any event if it does apply, the court retains discretion to otherwise order.
It is always an obligation on parties to act cooperatively to reduce the matters in dispute and not run unmeritorious points. This is required by the obligations set out in the CPA.
Whilst the applicant was successful, the matters did require judicial consideration and I do not form the view that the respondents opposition was unreasonable in the circumstances.
The indulgence granted was to enable the matter to be dealt with on the merits. This was at the heart of the decision to be satisfied that it was fair and just to extend the time. I note my observations about the conduct and expectations on a law firm to meet statutory deadlines at [62].
As to the conduct of the respondents and their reasonableness, their contribution to delay and extra work required to prepare for a contested application, I am not satisfied that the conduct was unreasonable and that the compromise offer made was determinative of tipping the balance in the favour of the applicant’s cause.
That said, parties are bound by the overarching obligations in the CPA and are required to act with efficiency and reasonableness. There is a public interest in the efficient conduct of court business and the efficient use of judicial resources.
I am not of the view that careful consideration was not required by the Court to grant the extension of time, whether the matter was opposed or otherwise.
I am not satisfied that an award of costs as sought by the applicant is appropriate on either of the basis sought by it. Taking into account all of the matters put to me, the appropriate course is to let costs lie where they fall and no order for costs to either party will be made.
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