Ryan v Vizovitis; Vizovitis v Ryan
[2020] ACTSC 150
•11 June 2020
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Ryan v Vizovitis; Vizovitis v Ryan |
Citation: | [2020] ACTSC 150 |
Hearing Date: | 9 June 2020 |
DecisionDate: | 11 June 2020 |
Before: | Elkaim J |
Decision: | See [39] |
Catchwords: | CIVIL LAW – APPLICATION IN PROCEEDING – Costs – Fixed costs order – rule 1702 agreement – rule 1721 order |
Legislation Cited: | Court Procedures Rules 2006 (ACT) rr 6, 1702, 1720, 1721 |
Cases Cited: | Ryan v Vizovitis [2017] ACTCA 3 |
Texts Cited: | David Hammerschlag, Hammerschlag’s Commercial Court Handbook (LexisNexis Butterworths, 2019) |
Parties: | Georgia Vizovitis (Applicant) Eunice Catherine Mary Ryan t/as Ryans Barristers and Solicitors (Respondent) |
Representation: | Counsel N Oram (Applicant) J Burnside AO QC (Respondent) |
| Solicitors McInnes Wilson Lawyers (Applicant) Ryans Barristers and Solicitors (Respondent) | |
File Numbers: | ACTCA 52 of 2014; SC 694 of 2004 |
ELKAIM J:
There are two Applications in Proceeding before the Court. The first is in SC 694 of 2004 and the second in ACTCA 52 of 2014. Ms Georgia Vizovitis is the applicant in both applications. Ms Eunice Ryan trading as Ryans Barristers and Solicitors is the respondent in each application. I will accordingly refer to the parties as applicant and respondent respectively.
Although the two applications are in separate proceedings, no submission was made that there should be more than one decision. In addition, it is inherent in the arguments advanced by the parties that the two proceedings must be viewed together.
This saga commenced in 1994 when the applicant was involved in a motor vehicle accident. She had another accident in 1996. She retained the respondent to act on her behalf in proceedings for damages arising from injuries she had received in the accidents.
I was informed that the damages proceedings were resolved on the second day of hearing.
After the proceedings were completed the applicant commenced an action against the respondent seeking a declaration that the costs agreements that had been executed by the parties was not binding upon them and sought damages.
Although the proceedings were commenced in 2004 it was not until 2010 that the hearing commenced before Master Harper. His Honour delivered the judgment in 2014 (Vitzovitis v Ryan [2014] ACTSC 243). The Court declared that the costs agreements were not binding and awarded damages to the applicant in the sum of $53,250. The respondent was ordered to pay the applicant’s costs.
The respondent appealed, in 2015, but the appeal was dismissed, with costs, in 2017 (Ryan v Vizovitis [2017] ACTCA 3).
Since the dismissal of the appeal the parties have been engaged in an extended dispute concerning the quantum of the costs orders that had been made both at first instance and on appeal. The history of this dispute is set out in the two affidavits of Ms Shelley Mulherin affirmed on 12 May 2020. It is also described in the chronology which is Exhibit B.
The dispute seemed to have been resolved by an exchange of correspondence in early 2019. On 15 January 2019 the respondent offered to pay the applicant $380,000 in settlement of the costs orders for both the primary proceedings and the appeal. Before the expiry of the offer, the applicant wrote back, on 4 February 2019, accepting the offer. I will refer to these two emails as the final correspondence. The correspondence also reveals that 85.85% of the lump sum was attributed to the primary proceedings and 14.15% to the appeal.
Notwithstanding the apparent agreement, the respondent has not paid the $380,000 to the applicant.
In order to secure the payment of the $380,000 the applicant, relying on r 1702 of the Court Procedures Rules 2006 (ACT), filed the above correspondence constituting the agreement in Court in order, under this rule, to obtain a judgment in her favour.
The Senior Deputy Registrar, on 21 May 2019, responded to the filing by email, stating that:
It is my preliminary view that the exchange of correspondence is not sufficient of itself to satisfy rule 1702. Rule 1702 contemplates an agreement signed by the parties (not separate documents which, read together, constitute an agreement).
The first matter to be dealt with concerns the above affidavits of Ms Mulherin. The two affidavits are essentially identical but designed to be relevant to each of the respective applications.
The respondent objected to the exhibits annexed to the affidavits as well as the affidavits themselves. The basis of the objection was that the correspondence between the parties exhibited and asserted to lead up to, and include, the agreement was not admissible because it was without prejudice correspondence.
As I understood the objection, it was put at two levels: Firstly it was said that the correspondence, having been exchanged on a without prejudice basis, was simply inadmissible. Secondly it was submitted that the final correspondence, evidencing the asserted agreement, was not relevant because it could not constitute a ‘r 1702 agreement’.
In relation to the first point, I accept that correspondence exchanged on a without prejudice basis would not normally be admissible. There are however exceptions to this general rule. Those exceptions relate to evidence of settlement negotiations. The correspondence here was part of the ongoing settlement negotiations between the parties as to costs.
Section 131 of the Evidence Act 2011 (ACT) provides a list of exceptions to the above general rule. In my view two of the exceptions listed apply to the present matter. They are to be found in subsections (2)(f) and (h). As relevant here, s 131 states:
131 Exclusion of evidence of settlement negotiations
(1) Evidence must not be presented of—
(a)a communication that is made between people in dispute, or between 1 or more people in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or
(b)a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.
(2) Subsection (1) does not apply if—
…
(f)the proceeding in which it is sought to present the evidence is a proceeding to enforce an agreement between the people in dispute to settle the dispute, or a proceeding in which the making of the agreement is in issue; or
…
(h) the communication or document is relevant to deciding liability for costs;
As I understood it, the respondent’s reply to the suggestion that s 131(2)(f) permitted the admissibility of the correspondence was to the effect that the subsection might normally be applicable but not in this case because the correspondence did not establish an agreement capable of falling under r 1702.
In my view both ss 131(2)(f) and (h) are applicable because the correspondence is evidence being used to enforce an agreement falling within subsection (2)(f) or, and perhaps in an even more straightforward sense, plainly encompassed by
subsection (2)(h).
As to the relevance point, it is firstly to be observed that the applicant’s primary argument does not rely on the correspondence amounting to a r 1702 agreement but rather as a basis for a fixed costs order under r 1720(3). The correspondence is certainly relevant to this argument. I also think it is relevant to the r 1702 debate, at least to the argument that, whether correct or not, the final correspondence constitutes a qualifying agreement.
For the above reasons I allowed the applicant to rely on the affidavits of Ms Mulherin and the annexed exhibits.
The next issue is to set out the manner in which the applicant has put her case. As stated above, it is not her primary contention that the final correspondence constitutes an agreement sufficient to satisfy r 1702. That is her secondary, or ‘back-up’, contention.
The applicant’s first argument is that a fixed costs order, under r 1720(3), should be made because such an order would be a just resolution of a matter with an “extraordinary” history. The history was so described because:
(a)The proceedings were very long-standing, having been commenced in 2004.
(b)The original proceedings were themselves about costs. The hearing extended over 28 days in the course of 3 years.
(c)The applicant was “wholly successful”, the Court having found that the costs agreements between the parties were unfair and unreasonable.
(d)The Court at first instance found that the applicant had been overcharged to the extent of $30,000, to which interest had been added.
(e)The appeal failed. The Court of Appeal referred to the proceedings, at [9] as “tragically disproportionate and wasteful”. The Court endorsed findings in the Court below (for example from [34] to [38]) about the manner in which the original proceedings had been conducted by the respondent.
The applicant then reminded me about the very wide discretion held by a court in relation to costs. This stemmed from both the inherent jurisdiction of the Court and from r 1721.
The applicant submitted that looking back through the correspondence about the resolution of the costs, it was clear that the parties’ intention was to resolve their differences without the need for further proceedings, such as an assessment of costs. This was evident, for example, from the letter from the respondent dated 7 July 2017 in which the respondent said “The proceedings have been conducted since 2004 and we would like to resolve the matter without further proceedings particularly as the writer may not be continuing in her current circumstances for an extended period”.
The applicant further submitted that to now refer the matter for assessment would be to incur further costs which the respondent could probably not pay, let alone the assessed costs which would probably be more than $380,000. The likely assessment and its associated costs are evident from the affidavit of Mr Ronald Travers which is exhibited, at page 128, to the affidavit of Ms Mulherin.
Against the above background, submitted the applicant, a lump sum order was warranted. Such an order would give effect to the purpose of the rules on costs and would avoid a protracted and expensive extension of the proceedings.
The respondent firstly submitted that the agreement referred to in r 1720(1) must be an agreement that fell within r 1702. I do not see why that should be the case. I note here that the respondent did not submit that, other than for r 1702 purposes, an agreement could not be constituted by an exchange of correspondence. As I understood the respondent’s submissions the hurdles which the alleged agreement faced were its existence, notwithstanding the correspondence having been on a without prejudice basis, and whether or not it fell within r 1702.
Having overcome the without prejudice argument, I see no basis upon which an agreement referred to in r 1720 must also be an agreement under r 1702. The second point made by the respondent was that, under r 1720(2), the rule only applied to assessed costs. Again, I disagree. Sub-rule (2) explicitly excludes an agreement, as allowed as an option in sub-rule (1), from its compass.
Finally, in relation to a lump sum costs order, the respondent submitted that the history was not as extraordinary as posited by the applicant. For example, while the proceedings may have been commenced in 2004, the dispute about costs had only been in existence for 16 months.
I do think that the history of the matter is “extraordinary”. Sixteen months may perhaps not be long-standing (although I think it is) but what has been happening through the 16 months has been a concerted effort by the parties to reach an agreement on costs. They finally did so in February 2019, which should have signalled the end of the dispute. Not only would the dispute, had the money been paid, have been resolved but the resolution would most likely have been for a sum well below the result of an assessment.
Hammerschlag’s Commercial Court Handbook, commencing at [2.36.16], has this concise statement about the use of fixed costs orders:
2.36.16…The kinds of cases in which such orders are appropriate are usually, but not exclusively, long and complex and a lengthy contested and extensive costs assessment is likely. Such orders avoid further expense, delay and inconvenience.
2.36.17Material considerations can include the complexity of proceedings in relation to their cost, the disproportion, if any, between the issues litigated and the costs claimed, the relative responsibility of the parties with respect to the costs incurred and the ability of the loser to satisfy a liability for costs.
2.36.18The court does not embark on detailed examination of the costs in a manner akin to formal assessment, but adopts a broader-brush approach to arrive at an appropriate assessment. It is incumbent on a party seeking such an order, or resisting it, to place sufficient material before the court to enable the court to make an informed decision.
I agree that a lump sum costs order is appropriate. My orders will reflect this conclusion.
In relation to the amount to be fixed it is not even necessary here to take a broad-brush approach. The parties have themselves settled on what they both consider to be an appropriate sum. No doubt they have both compromised on their original aspirations, but as suggested in the Handbook, the expense and potential results of an assessment would, amongst other considerations, have motivated the parties to reach an agreed sum. My adoption of their sum is an acknowledgement of their negotiated result.
In case I am wrong in the above conclusion I think I should make some comments about r 1702. Whether intentional, or otherwise, I think the rule does stipulate a single document signed by the parties. I agree with the preliminary view stated by the Senior Deputy Registrar in his email of 21 May 2019 (quoted above at [11]). In this case there would probably need to be a separate agreement in respect of each proceeding.
I would add however, that I do not accept the criticism of the applicant to the effect that the current problem would have been solved by her preparing a suitable agreement. Firstly, I think this obligation rested equally on the respondent and secondly, I strongly suspect that the monies would still not have been paid had there been a signed agreement. The overwhelming impression that I have from the material is that, notwithstanding the agreement, the respondent at some stage resolved, perhaps because of an incapacity to pay the $380,000, to not uphold the agreement.
Had I not decided to proceed under r 1720, however, I would not have allowed my interpretation of r 1702 to defeat the applicant’s claim. The approach I would have taken would have been to invoke r 6 to allow me to dispense with the strict requirements of
r 1702, or at least to modify the rule to fit the current circumstances.
In relation to the costs of the applications there was no dispute that the loser should pay. The applicant, however, on the basis of an affidavit of Ms Mulherin affirmed and served on 9 June 2020, requested a fixed costs order for these costs as well. There is much to be said for this approach, again based on the history I have outlined above. However the respondent has not had the opportunity to dispute the contents of the latest affidavit so that I do not think it would be just to make the order as sought.
The orders of the Court are:
(a)In SC 694 of 2004, the respondent is to pay the applicant the sum of $326,224 pursuant to r 1720(3) of the Court Procedures Rules 2006 (ACT) in satisfaction of the costs order made by the Court on 13 November 2014.
(b)In ACTCA 52 of 2014, the respondent is to pay the applicant the sum of $53,776 pursuant to r 1720(3) of the Court Procedures Rules 2006 (ACT) in satisfaction of the costs order made by the Court of Appeal on 1 February 2017.
(c)The respondent is to pay the applicant’s costs of the two Applications in Proceeding dated 13 May 2020.
| I certify that the preceding thirty-nine [39] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Elkaim. Associate: Date: 11 June 2020 |
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