Pathik v Bata (Costs)

[2023] VCC 765

IN THE COUNTY COURT OF VICTORIA

AT Melbourne

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

Case No. CI-22-01834

Amitabh Pathik	Plaintiff
v
Mark Bata & Ors	Defendants

---

JUDGE:	Her Honour Judge Burchell
WHERE HELD:	Melbourne
DATE OF HEARING:	Submissions dated 26 April 2023
DATE OF RULING:	17 May 2023
CASE MAY BE CITED AS:	Pathik v Bata & Ors (Costs)
MEDIUM NEUTRAL CITATION:	[2023] VCC 765

RULING
---

Subject:COSTS

Catchwords:              Late application to amend statement of claim, vacate trial date and adduce expert evidence – breach of overarching obligations – costs of and occasioned by amendment of the statement of claim – costs  thrown away by reason of vacation of the trial date and late filing of expert reports

Legislation Cited:      Civil Procedure Act 2010 (Vic) ss7, 24, 25 & 28; County Court Civil Procedure Rules 2018 rr63.20.1, 63A.17 & 63A.20.1; Wrongs Act 1958 (Vic) s58

Cases Cited:Edelman v Badower [2010] VSC 427; Burke v Ash Sounds Pty Ltd (No 2) [2019] VSC 290; Cassimatis v Australian Securities and Investments Commission (ASIC) (2016) 334 ALR 350; Sobey v Commissioner of Taxation [2008] FCA 1621; Ziliotto v Hakim (No 2) [2012] NSWSC 1079; Dale v Clayton Utz (No 3) [2013] VSC 593; Stanley v Layne Christensen Company [2006] WASCA 50

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Francke Lawyers Pty Ltd
For the Fourth and Fifth Defendants	Clyde & Co

HER HONOUR:

Introduction

1The fourth and fifth defendants (collectively, the “Building Surveyor”) made an application via correspondence dated 14 April 2023 that the plaintiff (“Pathik”) be ordered to pay their reasonable costs of and incidental to Pathik’s application for leave to amend his statement of claim, vacate the trial date of 31 May 2023 and adduce expert evidence.

2On 17 April 2023, I made orders, inter alia:

(a)   refixing the trial date listed for 31 May 2023 to 16 April 2024;

(b)   granting leave to Pathik to file and serve an amended statement of claim dated 17 March 2023;

(c)   requiring Pathik to file and serve any further expert evidence by 30 July 2023 and the Building Surveyor to file and serve any further expert witness statements in reply by 15 September 2023; and

(d)   requiring Pathik and the Building Surveyor to file and exchange outlines of submissions on the issue of costs.

3The Building Surveyor submits that it is just and appropriate that Pathik be ordered to pay its “costs thrown away” on a standard basis, occasioned by Pathik’s late application for leave to amend his statement of claim, vacate the trial date and adduce expert evidence.

4Pathik submits that the application for costs by the Building Surveyor is premature, and the appropriate order at this point in time is that costs be reserved. In reserving costs, the Court is not shutting out the Building Surveyor from making an application for costs in the future. Likewise, it is not shutting out an argument in the future by Pathik that such costs should be “costs in the proceeding”.

5For the reasons set out below, I order that Pathik pay the Building Surveyor’s costs of and occasioned by the amended statement of claim, and their costs thrown away by reason of the vacation of the trial date and the late filing of the experts’ reports on a standard basis to be taxed in default of agreement.

Background

6On 13 May 2022, Pathik filed his statement of claim with the County Court seeking, inter alia, damages against the Building Surveyor for breach of contract and statutory duties, in relation to building surveying services provided by the Building Surveyor to Pathik in relation to Pathik’s property at 1 Kananook Avenue, Seaford,  in the State of Victoria.

7In relation to the timetabling orders made by me on 16 June 2022, the Building Surveyor notes, inter alia, that:

(a)   on 11 July 2022, the Building Surveyor filed their defence to the statement of claim;

(b)   on 23 January 2023, the Building Surveyor filed the expert report of Gregory du Chateau in support of their defence;

(c)   Pathik did not file and serve any expert evidence on or before 1 October 2022, or at all.  At no time prior to the mediation on 27 February 2023 did Pathik convey to the Building Surveyor any intention on his part to obtain, file and serve expert evidence in response to Gregory du Chateau’s report (or otherwise);

(d)   on 27 February 2023, the parties attended a mediation (which was to have occurred by 12 December 2022 pursuant to the Court’s orders). The mediation was unsuccessful.

8Pathik submits that he communicated to the Building Surveyor his intention to amend his statement of claim at the conclusion of the mediation on 27 February 2023.

9On 17 March 2023, approximately two months before the hearing was to commence on 31 May 2023, Pathik circulated a proposed amended statement of claim that included new and substantial changes to his claim against the Building Surveyor.

10On 6 April 2023, Pathik filed a proposed summons in which he sought, amongst other things, leave to file his proposed amended statement of claim and the vacation of the hearing date on 31 May 2023. An affidavit in support sworn by Matthew Francke, Pathik’s solicitor (“Francke Affidavit”), was filed and served in support of the proposed summons. The affidavit set out that Pathik had instructed Mr Greg Payne and Mr George Cross to provide expert opinions.[1] The Building Surveyor was not previously (prior to 6 April 2023) aware of these matters.

[1] See paragraphs 6 and 7 of the Francke Affidavit.

11In correspondence, solicitors for the Building Surveyor sought Pathik’s consent to an order that Pathik pay their costs of and incidental to Pathik’s application for leave to amend his statement of claim. Pathik refused to consent to the order.

Issues

12The issues to be determined are whether Pathik ought to pay the Building Surveyor’s costs of and occasioned by the amendment and the costs thrown away by reason of the vacate the trial date and late filing of expert evidence. 

Legal context

13Rule 63A.17 of the County Court Civil Procedure Rules 2018 (“the Rules”) provides that:

“Where a pleading is amended (whether with or without leave) the costs of and occasioned by the amendment and the costs of any application for leave to make the amendment are the parties' costs in the proceeding, unless the Court otherwise orders”.

14In Edelman v Badower (“Edelman”),[2] Associate Justice Mukhtar considered the meaning of the phrase “costs of and occasioned by the amendment” in r63.17 of the Supreme Court Rules 2015 (the equivalent to r63A.17 of the Rules). His Honour held that this phrase does not include costs incurred prior to the date of an amendment. Rather, r63.17 of the Supreme Court Rules 2015 is concerned with prospective or consequential costs. The conclusions of Mukhtar AsJ were more recently affirmed by Justice McDonald in Burke v Ash Sounds Pty Ltd (No 2)[3] and Justice Edelman in Cassimatis v Australian Securities and Investments Commission (ASIC).[4]

[2] [2010] VSC 427 at [29]–[30].

[3] [2019] VSC 290 at [11].

[4] (2016) 334 ALR 350 at [56]–[57].

15As approved by Edelman J in Cassimatis v Australian Securities and Investments Commission (ASIC),[5] it is well established that “costs thrown away” are those costs that “have been reasonably incurred that relate to work done and wasted”.[6]

[5] Ibid.

[6] Sobey v Commissioner of Taxation [2008] FCA 1621 at [21] (per Kenny J).

16The question of whether costs are thrown away involves a causal enquiry. It is necessary to ask whether costs that were incurred would not have been incurred but for the relevant event, here: the amendment of the statement of claim, the adjournment of the trial date and the delay in adducing expert evidence.

17In Ziliotto v Hakim(No 2),[7] Justice Davies expressed it in this way:[8]

“The enquiry must be directed to what costs were expended which would not have been expended had it not been for the adjournment and what prompted the need for the adjournment. I agree with Mukhtar AsJ’s analysis that “costs thrown away” is looking to past costs — compensation for work already done and wasted because of the adjournment, or amendment or error. It does not refer to costs which have not yet been incurred even though they would not have been incurred but for the adjournment”.

[7] [2012] NSWSC 1079 at [47].

[8] The judgment of Davies J was overturned in part on appeal in Zilliotto v Hakim [2013] NSWCA 359, however, not on this point.

18Further, costs are ordinarily taxed at the conclusion of proceedings, as set out in r63A.20.1 of the Rules:

“If an order for costs is made on an interlocutory application or hearing, the party in whose favour the order is made shall not tax those costs until the proceeding in which the order is made is completed, unless the Court orders that the costs may be taxed immediately”.

19As reasoned by Justice Hollingworth in Dale v Clayton Utz (No 3),[9] given the fact that interlocutory applications usually do not conclude a proceeding, the Court is not generally in a position to determine where costs should fall between the parties. However, the Court does maintain its discretion in respect of taxation of costs.

[9] [2013] VSC 593 at [13].

Building Surveyor’s submissions

20The Building Surveyor submits that, as a result of Pathik’s late application and late instructing of an expert building surveyor, the Building Surveyor’s solicitors are required to:

(a)   review Pathik’s amended statement of claim;

(b)   re-take instructions from the Building Surveyor in relation to the amended pleading;

(c)   draft and file a defence to the amended statement of claim;

(d)   review Pathik’s new expert evidence (once served);

(e)   consider and, if necessary, re-engage Gregory du Chateau, to provide a further opinion in response to any expert report filed and served by Pathik, including as to the new allegations.

21The Building Surveyor submits that there will be inevitable wasted legal costs incurred in duplicating tasks previously undertaken in response to the originally pleaded claim.

Pathik’s submissions

22Pathik submits that the Building Surveyor’s claim relates to the amendments to the statement of claim, rather than the vacation of the trial date. As such, Pathik has only addressed the issue of costs in relation to his amended statement of claim.

23Pathik submits that the amendments to the statement of claim, as relevant to the Building Surveyor, are the insertion of new paragraphs 65(e) and 65A-F. The other amendments are not substantial or are simply to further clarify an otherwise broadly satisfactory pleading. Relying on Stanley v Layne Christensen Company,[10] Pathik submits that this would ordinarily result in such costs being costs in the proceeding.

[10] [2006] WASCA 50 at [55].

24As to paragraphs 65A-F in the amended statement of claim, Pathik submits that facts had been initially pleaded in the Building Surveyor’s defence dated 11 July 2022 (paragraphs 65-66) and had been responded to in Pathik’s reply (paragraphs 65-66) dated 5 August 2023, however, it was not until the Building Surveyor served the expert witness report of Gregory du Chateau on 23 January 2023 that considerable additional detail was provided.

25Whilst the Building Surveyor criticises Pathik for not having filed and served any expert opinion in relation to the Building Surveyor by 1 October 2022, even if Pathik had done so, the issues that have arisen in this case, have arisen as a result of detail contained in Gregory du Chateau’s report served on 23 January 2023. The nature of the matters raised by Gregory du Chateau required response, and required appropriate clarification of the claim put against the Building Surveyor.

26Pathik submits that the Court does not know at this time:

(a)   whether the Building Surveyor will file an amended defence, and if so, what the extent of those amendments will be;

(b)   whether the Building Surveyor will file and serve a further expert witness report, and if so, what issues that report will encompass.

27As such, there is insufficient information before the Court to determine:

(a)   costs of and occasioned by the amendment to the statement of claim (Pathik submits that this phrase means “prior to the amendment”, but see Edelman,[11] above, which states that the phrase is concerned with prospective costs);

(b)   costs thrown away (i.e. costs reasonably incurred that relate to work done and wasted);

(c)   whether such costs would not have been incurred but for the relevant event.

[11] [2010] VSC 427.

28Pathik, therefore, submits that the Building Surveyor’s application for costs is premature.

Analysis

29In coming to my conclusion, I note the following timeline:

(a)   by 1 October 2022, pursuant to the timetabling orders made by the Court, Pathik was to file and serve any expert report in relation to his loss or damage (which he did not);

(b)   on 23 January 2023, the Building Surveyor filed and served the expert report of Mr du Chateau;

(c)   on 27 February 2023, the parties participated in mediation (the matter did not resolve);

(d)   on 17 March 2023, Pathik circulated his proposed amended statement of claim;

(e)   on 6 April 2023, Pathik emailed to the Court a proposed summons requesting, inter alia, leave to:

(i)vacate the trial date of 31 May 2023;

(ii)file and serve his amended statement of claim dated 17 March 2023; and

(iii)file and serve any expert witness statements in reply by 23 June 2023.

30The overarching purpose of the Civil Procedure Act 2010 (Vic) (“CPA”) in relation to civil proceedings is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.[12] The CPA imposes “overarching obligations” on parties to proceedings and their legal practitioners. Relevant obligations include to:

(a)   use reasonable endeavours to ensure that legal costs and other costs incurred in connection with the civil proceeding are reasonable and proportionate;[13] and

(b)   use reasonable endeavours in connection with the civil proceeding to act promptly and minimise delay.[14]

[12] CPA s7.

[13] Ibid s24.

[14] CPA s25.

31Section 28(2) of the CPA provides that a Court may take into account any contravention of the overarching obligations when exercising its discretion as to costs.

32Pathik reasons that the amendments to the statement of claim and filing and service of expert reports in reply were necessitated by considerable additional detail provided in Mr du Chateau’s expert report, and that issues that have arisen in this case, have arisen as a result of detail contained in his report. Pathik argues that the matters raised by Mr du Chateau required response and appropriate clarification of the claim put against the Building Surveyor.

33In my view, there was delay by Pathik in circulating his proposed amended statement of claim. Pathik submits that he communicated his intention to amend his statement of claim at the conclusion of the mediation and that the reasons for the amendment arose as a result of Mr du Chateau’s report. However, Pathik did not circulate his amended statement of claim until almost two months after Mr du Chateau’s report was provided. This was two months prior to the initial trial date of 31 May 2023. Pathik’s proposed summons seeking leave to file and serve his amended statement of claim was not emailed to the Court until 6 April 2023. This resulted in the Court making orders on 17 April 2023 that the trial be adjourned to 16 April 2024, almost 11 months post the initial trial date. I find that Pathik did not use reasonable endeavours in connection with the civil proceeding to act promptly and minimise delay.

34Further, the amendments to the statement of claim, as relevant to the Building Surveyor, are the insertion of new paragraphs 65(e) and 65A-F. These inserted paragraphs relate largely to the contract between Pathik and the Building Surveyor and present new allegations against the Building Surveyor. It is not to the point that the other amendments are not substantial or are simply to further clarify an otherwise broadly satisfactory pleading. The amendments relevant to the Building Surveyor are significant and provide considerable additional detail to the alleged breaches. As a result, the Building Surveyor has had to file an amended defence.

35Moreover, the Building Surveyor was not aware that Pathik had instructed Mr Greg Payne and Mr George Cross to provide expert opinions until Pathik filed the Francke Affidavit in support of his proposed summons on 6 April 2023. This is despite the fact that in order to make good an allegation of professional negligence under s58 of the Wrongs Act 1958 (Vic), Pathik needed to adduce evidence from a suitably qualified building surveyor to opine on what could reasonably be expected of a person possessing that skill. In addition, I accept that the Building Surveyor is required to consider and, if necessary, re-engage Gregory du Chateau to provide a further opinion in response to any expert report filed and served by Pathik, including as to the new allegations.

36In my view, Pathik’s late application to amend his statement of claim and late instructing of an expert building surveyor caused the Building Surveyor to incur costs which would not have been incurred but for the relevant event, here, the amendment of the statement of claim, the adjournment of the trial date and the delayed filing of expert evidence.

37The costs order in favour of the Building Surveyor is not premature as they have not sought immediate taxation under r63.20.1 of the Rules. Instead, the costs made on an interlocutory hearing shall not be taxed until the proceeding in which the order is made is concluded. It is clear on any view that at that stage, the prospective or consequential costs will be known.

Conclusion

38Accordingly, Pathik ought to pay the Building Surveyor’s costs of and occasioned by the amendment and the costs thrown away by reason of the vacation of the trial date and late filing of expert reports of:

(a)   reviewing Pathik’s amended statement of claim;

(b)   re-taking instructions from the Building Surveyor in relation to the amended pleading;

(c)   drafting and filing a defence to the amended statement of claim;

(d)   reviewing Pathik’s new expert evidence (once served);

(e)   considering and, if necessary, re-engaging Gregory du Chateau, to provide a further opinion in response to any expert report filed and served by Pathik, including as to the new allegations,

on a standard basis to be taxed in default of agreement. 

- - -
Certificate

I certify that these 11 pages are a true copy of the ruling of her Honour Judge Burchell delivered on 17 May 2023.

Dated: 17 May 2023

Andrea Ko
Associate to Her Honour Judge Burchell