Slaveski v State of Victoria
[2013] VSC 76
•28 February 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
PRACTICE COURT
No. 8519 of 2006
| LUPCO SLAVESKI (By his litigation guardian SNEZANA SLAVESKA) | Plaintiff |
| v | |
| STATE OF VICTORIA & ORS | Defendants |
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JUDGE: | McMillan J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 13 February 2013 | |
DATE OF JUDGMENT: | 28 February 2013 | |
CASE MAY BE CITED AS: | Slaveski v State of Victoria | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 76 | |
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COSTS – Whether award of damages to the plaintiff should be set off against the costs awarded to the first named defendant – Power of the Court to order a set off of costs – Costs to be in the discretion of the Court – Section 24 of the Supreme Court Act 1986 - Order 63.02 of the Supreme Court (General Civil Procedure) Rules 2005 – Set off allowed in the discretion of the Court as part of its inherent jurisdiction - Sivritas v Sivritas (No 2) (2008) 23 VR 349 – Relevant factors in the exercise of the discretion of the Court.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | In Person | |
| For the First Defendant | Mr B. M. Ihle | Victorian Government Solicitor’s Office |
| For the Second to Twenty-Fourth Defendants | No Appearance |
HER HONOUR:
Introduction
On 1 October 2010, the Honourable Justice Kyrou delivered judgment as to the nature and outcome of this proceeding.[1] On 10 December 2010, his Honour delivered judgment on the issues of aggravated and exemplary damages and interest and costs[2] and made final orders (‘the orders’),[3] inter alia, that:
[1]Slaveski v Victoria [2010] VSC 441.
[2]Slaveski v Victoria [2010] VSC 569.
[3]General Form of Order made by the Honourable Justice Kyrou made on 10 December 2010 in this proceeding, being no 8519 of 2006. Note: the order made by his Honour is provided in the appendix to Slaveski v Victoria [2010] VSC 569.
1.The Firstnamed Defendant (the State) pay to the plaintiff;
(a) $28,300 by way of damages; and
(b) $1,457 by way of interest.
…
4.The plaintiff pay 90 per cent of the costs of the Firstnamed Defendant, including any reserved costs, calculated on a party and party basis up to and including 27 January 2010.
…
7.The payment of damages, interest and costs pursuant to this judgment be stayed for 28 days from the date of this judgment.
By a summons filed 7 January 2011, the State made an application for a set-off and an extension of the stay of the payment of damages, interest and costs, seeking orders that:
(a)the award of damages, pursuant to order 1 of the orders, be set off against the award of the State's costs payable by the plaintiff pursuant to order 4; and
(b)Alternatively, the stay of the payment of damages, interests and costs, pursuant to order 7 of the orders, be extended until the final determination of the plaintiff's appeal to the Court of Appeal.
On 7 February 2011, Vickery J ordered by consent that the hearing of the present application be adjourned to 28 March 2011. On 28 March 2011, Osborne J adjourned the hearing of the application until 14 days after the final determination of the plaintiff’s appeal to the Court of Appeal. Further orders were made in the proceeding extending the stay of payment of damages, interest and costs until 14 days after the final determination of the plaintiff’s appeal to the Court of Appeal.
On 1 February 2013, the Court of Appeal dismissed the plaintiff’s appeal by reason of the failure of Mrs Snezana Slaveska, the wife of the plaintiff and his litigation guardian, to pay security for costs as ordered by the Court of Appeal.[4]
[4] Slaveski v State of Victoria (2013) VSCA (I February 2013) (Neave JA and Vickery AJA).
The State re-listed the application for hearing on 13 February 2013.
In support of its application, the State made written and oral submissions, and relied upon an affidavit by Huong Nguyen, solicitor, sworn on 7 January 2011.
In opposition to this application, Mrs Slaveska made oral submissions and otherwise relied on an affidavit sworn by her on 28 March 2011, as well as an email from her to the Court dated 6 February 2013. The email informed the State that she intended to appeal the decision made by the Court of Appeal on 1 February 2013 to the High Court. In her email, Mrs Slaveska sought orders that the payment of damages, interest and costs ordered by Kyrou J on 10 December 2010, and as extended thereafter by the Court, be further extended until 14 days after the outcome of the foreshadowed appeal to the High Court.
Background
In this proceeding, the plaintiff claimed damages against the State and 23 serving and former members of the Victoria Police. The claims against the police were many and varied, but in effect they included allegations of assault and battery, false imprisonment, malicious prosecution, defamation, trespass, conversion, detinue and negligence.[5] The claims arose out of 13 separate incidents, which allegedly occurred between 8 September 2000 and 7 May 2007.[6]
[5]Slaveski v Victoria [2010] VSC 441 [1] (Kyrou J).
[6]Ibid [2].
The trial occupied some 117 sitting days.[7] At the conclusion of the trial, the plaintiff's claims were dismissed in respect of the negligence claim and each of the thirteen incidents apart from one, being an incident that occurred on 13 December 2005.
[7]Slaveski v State of Victoria (2011) VSCA (25 November 2011) [2] (Harper JA).
In respect of the one incident for which he was successful, the plaintiff claimed damages allegedly arising from 14 separate causes of action. However, the plaintiff was successful only in relation to three of the causes of action. The members whose conduct was said to give rise to the liability, which transferred to the State,[8] were held to be immune from suit pursuant to s 123(1) of the Police Regulation Act 1958.
[8]Pursuant to Police Regulation Act 1958 s 123(2).
Each of the three causes of action upon which the plaintiff was successful were not pleaded in the original statement of claim. These claims first arose on 15 June 2010, on day 106 of the trial, upon the plaintiff’s litigation guardian filing a further amended statement of claim pursuant to leave granted by the Court.[9]
[9]Exhibit to HN-2 to affidavit of Huong Nguyen dated 7 January 2011, [35].
The plaintiff sued in his own name and conducted the case on his own behalf until Ms Slaveska was appointed his litigation guardian on 28 January 2010.[10] The costs order made against him reflects only the period in which he acted other than by way of litigation guardian and is adjusted to allow for his out of pocket expenses reasonably incurred for the part of the action for which he was successful.[11]
[10]Ibid [97].
[11]Ibid [87], [97].
In considering the award of costs to the defendants (including the award of costs to the State) the Court found that:
[The plaintiff] was substantially unsuccessful in this proceeding. Put another way, the defendants were substantially successful in defending the proceeding.[12]
[12]Ibid [60].
Applicable Principles: The Court's Power to Order a Set-Off
In support of its application, the State provided a succinct summary of the applicable principles of the Court’s power to order a set-off.[13] I accept that the applicable principles as submitted by the State set out the relevant principles to apply to this application. The plaintiff did not address the Court on the applicable principles.
[13]See [8]–[14] of the firstnamed defendant’s submissions dated 25 March 2011.
Counsel submitted that the Court's power to order the set-off sought by the State arises from its inherent jurisdiction with respect to costs and to control its own processes. The exercise of that power is discretionary and should, so far as possible, ensure that unfairness is not visited upon litigants.
The Court has inherent jurisdiction in relation to costs.[14] The exercise of the Court's discretion to set off an award of costs in favour of one party against an award of damages payable by that party has traditionally been exercised as a function of the Court's equitable jurisdiction.[15] However, recent Supreme Court decisions in this State and others,[16] including a recent decision of this Court,[17] identify the source of the power to be the Court's inherent jurisdiction.
[14]Supreme Court Act 1986 s 24 and the Supreme Court (General Civil Procedure) Rules 2005 O 63.02.
[15]See, for example, Elphick v Elliott [2003] 1 Qd R 362 (Dutney J).
[16]See in New South Wales: Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 1106 (24 September 2010) [46] (Barrett J) and in Queensland: Team Dynamik Racing Pty Ltd v Longhurst Racing Pty Ltd [2008] QSC 36 (29 February 2008) (Fryberg J).
[17]Sivritas v Sivritas (No 2) (2008) 23 VR 349 (Kyrou J).
In Sivritas v Sivritas,[18] the plaintiff sought to have his unascertained costs of the proceeding, being those costs that had not yet been taxed, set off against any funds flowing to the defendants from the sale of land, which was the subject of the proceedings. In dealing with the application the Court analysed, in detail, the source of the Court's power to make the order sought.[19] The Court considered and adopted the reasoning of the leading Australian text on set-off[20] on this point as follows:
It has been the practice of the common law courts since the eighteenth century to allow one judgment or order for the payment of a sum of money to be set off against another. This practice extends to a judgment for damages, as well as to an order for the costs, including costs in bankruptcy proceedings. Furthermore, it is not an objection that one of the judgments had existed at the commencement of the other action, and might have been pleaded as a defence in that action. The set off in these cases is not pursuant to the Statutes of Set off, but rather it is allowed in the discretion of the court as part of its inherent jurisdiction. It has been described as a form of 'equitable' jurisdiction possessed by the common law courts for the purpose of preventing absurdity or injustice. In allowing a set off the court is at liberty to impose such terms as it considers reasonable and just.[21]
[18]Ibid.
[19]Ibid 388—390.
[20]Rory Derham, The Law of Set Off (Oxford University Press, 3rd ed, 2003) 50—51.
[21]Sivritas v Sivritas (No 2) (2008) 23 VR 349, 388 (Kyrou J), citing Rory Derham, The Law of Set Off (Oxford University Press, 3rd ed, 2003) 50—51.
The Court then went on to consider the authorities that relied on the Court's equitable jurisdiction to make an order for a set-off.[22] However, after considering these authorities, and the application of the equitable ‘impeachment test’, Kyrou J came to the conclusion that:
[l]t will usually be artificial to describe an order for costs, which is made after the court has already assessed the parties' claims, as going to the root of, being bound up with or impeaching a claim the court has already upheld.[23]
[22]Sivritas v Sivritas (No 2) (2008) 23 VR 349, 388-390 (Kyrou J).
[23]Ibid 390.
In Sivritas, the Court cited with approval the reasoning of the leading Australian text on set-offs, as outlined above, and indicated that the Court’s preferred view was that its power to make set-off orders in relation to costs arose from its inherent jurisdiction.[24] The Court also relied on the decision of the Victorian Court of Appeal in Flinn v Flinn[25] as further support for this view and ordered the set-off sought.[26]
[24]Ibid.
[25][1999] 3 VR 712 (Brooking, Charles and Batt JJA).
[26]Note: in Sivritas v Sivritas (No 2) (2008) 23 VR 349, whilst the Court held that the source of the Court's power to award the set-off was pursuant to the Court's inherent jurisdiction, it did not make the order pursuant to that power. Rather, as the parties to that case argued the point on the (misapprehended) basis that it was the equitable jurisdiction of the Court which was being invoked, and thus the ‘impeachment test’ was the applicable principle, the Court made the order on that basis. Notwithstanding, Kyrou J, in his decision, made clear that the inherent jurisdiction was the source of the power and further observed that had the case been argued. At [39], on this basis, his Honour:
(W]ould have concluded that the circumstances of [that] case overwhelmingly supported the making of the set-off order in favour of the Plaintiff.
Counsel for the State also referred to and relied on the Queensland decision of Team Dynamik Racing Pty Ltd v Longhurst Racing Pty Ltd,[27] which considered the source of the power to set off costs orders. It was accepted by the applicant plaintiff in that case that the costs awarded to it are not sufficiently ‘mutual’ to impeach the order it was seeking to set off.[28] Accordingly, there was no common law or equitable right of set-off per se. However, citing the breadth and nature of the Court's inherent jurisdiction, Fryberg J held as follows:
It seems to me that the Court's inherent power in relation to costs is general. It is discretionary and that discretion ought not to be limited by a search through the categories of equity which … does not seem to me likely to be a process of greater clarity or certainty that the exercise an undefined inherent jurisdiction.[29]
[27][2008] QSC 36 (29 February 2008) (Fryberg J).
[28]Ibid 2.
[29]Ibid 8.
His Honour went on to:
(a)find that he had the power to order a set-off notwithstanding there being no right of set-off in recognized equity or in common-law;[30] and
(b)make the order for set-off sought.[31]
[30]Ibid 8.
[31]Ibid 13.
Counsel also referred to the recent New South Wales Supreme Court case of Tim Barr Pty Ltd v Narui Gold Coast,[32] where Barrett J considered a defendant's application to stay the payment of restitutionary damages and it was ordered to pay the plaintiff until the costs awarded to its favour were quantified.[33] Citing a previous decision of that Court,[34] Barrett J held that:
[32][2010] NSWSC 1106 (24 September 2010).
[33]Ibid.
[34]Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd [2006] NSWSC 560 (6 June 2006) (White J).
(a)He had the power to order a set-off award of damages from awards of costs awarded in the same proceeding.[35]
(b)The source of his power to do so order arose:
(i)not from statutes for set-off, or the general equitable jurisdiction; but
(ii)from the Court's inherent jurisdiction to exercise control over its own proceedings.[36]
(c)The possibility of an appeal, and the prospect of the variation of one of the Orders subject of the set-off application, was another consideration in the exercise of the discretion to award the set-off.[37]
(d)The set-off be allowed ‘so that a net-sum only eventually changes hands’[38] but that this would only occur after there was a full quantification of the plaintiff's costs liability.[39]
[35]Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 1106 (24 September 2010) [46], [53] (Barrett J).
[36]Ibid [46], citing with approval Australian Beverage Distributors Pty Ltd v Evans & Tate Premium Wines Pty Ltd [2006] NSWSC 560 (6 June 2006) (White J).
[37]Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2010] NSWSC 1106 (24 September 2010) [52] (Barrett J).
[38]Ibid [53].
[39]Ibid [52].
Factors Relevant to the Exercise of the Court’s Discretion
In considering the exercise of the Court’s discretion in this application, counsel for the State submitted that the following factors are relevant:
(a)The plaintiff's ongoing and demonstrable failure to pay previous costs orders made in this proceedings to the State and the other defendants.[40]
[40]See Affidavit of Huong Nguyen sworn 7 January 2011.
(b)The plaintiff’s ongoing failure to pay previous costs orders subsists notwithstanding this Court’s determination as to appropriate instalment payments.[41]
[41]Ibid [14].
(c)The plaintiff’s ongoing and demonstrable failure to pay previous costs orders to the State made in related proceedings.[42]
[42]Affidavit of Huong Nguyen sworn 7 January 2011, [16]—[20].
(d)The plaintiff is, and has been for some time, in receipt of a disability pension and does not work.
(e)The disability for which he receives the benefits has not arisen due to any wrongful act of the State or the other defendants.
(f)The plaintiff’s litigation guardian and wife openly stated in Court that she has no intention of abiding by the Court’s costs orders.[43]
[43]Affidavit of Huong Nguyen sworn 7 January 2011, [23].
(g)The plaintiff’s failure to pay previous costs orders, either in total or by instalments ordered by the Court, necessarily reflects either an incapacity to pay or a contumacy of the Court’s orders. Because the litigation brought by the Commonwealth Bank against the plaintiff, his litigation guardian and his mother whereby the Bank sought repayment of unpaid loans is no longer on foot,[44] counsel for the State submitted that, as the property the subject of the Bank’s proceeding has been sold, an inference should be made that the outstanding costs orders have not been paid because the plaintiff chooses not to pay them. Any inability to pay the costs would no longer exist because the property has been sold.
[44]The litigation guardian informed the Court that the Bank proceeding had settled: Transcript of Proceedings, Slaveski v State of Victoria (Supreme Court of Victoria, McMillan J, 13 February 2013) 13.
(h)This conclusion is supported by the reasons given by the Court of Appeal for dismissing the appeal, which included that the conduct of the plaintiff had been contumelious of Court orders, deliberate, calculated and lacking in bona fides.[45]
[45] Slaveski v State of Victoria (2013) VSCA (I February 2013) [20] (Neave JA and Vickery AJA).
(i)The plaintiff and his litigation guardian advised the Court, during the proceeding, and in support of their application to have the plaintiff’s litigation guardian act as lay advocate, that they could not afford a lawyer of their own.[46]
[46]Slaveski v State of Victoria [2009] VSC 596 (14 December 2009) [47] (Kyrou J).
(j)The financial circumstances of the plaintiff are such that he will not be able to meet the costs orders made against him.[47]
[47]Exhibit HN-7 to affidavit of Huong Nguyen dated 7 January 2011, 6.
(k)The costs orders made against the plaintiff and his litigation guardian would have the effect of bankrupting each of the plaintiff and his litigation guardian.[48]
[48]Ibid.
(l)The State’s costs for which the plaintiff is liable will, by far and away, exceed the damages and interest ordered in his favour.[49]
[49]Affidavit of Huong Nguyen sworn 7 January 2011, [22].
(m)A large proportion of the costs awarded to the State is representative of the inordinate delay in the completion of the proceedings due to the plaintiff’s conduct throughout the proceeding.
(n)The plaintiff obtained waivers of obligations to pay court fees and the like (including transcription fees) on the basis of his impecuniosity.[50]
[50]Exhibit HN-7 to affidavit of Huong Nguyen dated 7 January 2011, 6; Exhibit HN-2 to affidavit of Huong Nguyen, [88].
(o)The plaintiff was warned, on numerous occasions, about the risk associated with costs in the way in which the proceeding was brought and run.
(p)The plaintiff was ‘substantially unsuccessful’ in his claims against the State.[51]
(q)The State is a model litigant and, as such, has responsibilities to the State of Victoria. The costs order was made more than two years ago and interest does not accrue on the costs until they are taxed. No steps have been able to be taken in relation to the taxation because of the stay of the orders. The estimate of the legal costs incurred for the relevant period of time, namely, the 24 days in Court when the plaintiff was self-represented, is likely to exceed the sum of $28 300. In the unlikely event that this turns out to be incorrect, the State will comply with any order made by the Court if it is found there is a net sum payable to the plaintiff.
(r)The order by the Court of Appeal dismissing the appeal for want of prosecution favour the making of the application for set-off because there are no present proceedings on foot.
(s)Although the litigation guardian intends to seek leave to appeal the decision of the Court of Appeal, any application for leave to appeal does not need to hold up the application for set-off.
(t)Any application to the High Court would be hopeless. There is no principle of general application. The orders made by the Court of Appeal are confined to the facts as they found them; it was a discretionary order; there is no identifiable point of public interest and no error is readily identifiable in the Court’s reasons for coming to its decision.
(u)If the plaintiff were successful in the leave application, for the orders of Kyrou J to be disturbed, either it would be necessary to remit the proceeding to the Court of Appeal to be decided in accordance with the law in relation to the dismissal, or the High Court could give its own reasons. In the decisions made by the Court of Appeal on both 25 November 2011 and 1 February 2013, the prospects of a successful appeal by the plaintiff was viewed as lacking any real prospects of success. For the orders to be altered there would need to be not only a successful appeal but a trial that involved a net result representing a greater success for the plaintiff, which is unlikely.
(v)There is a very real prospect, based on past conduct as referred to above, that the costs orders when taxed either will not be met, or every step will be taken to avoid their being met.
[51]Exhibit HN-2 to affidavit of Huong Nguyen dated 7 January 2011, [60].
The State submitted that all of these factors point to the practical inability of the State to recover the costs order made in its favour. The evidence relied upon suggests that it is highly probable that the State will be unable to recover the costs awarded to it.[52] Since the plaintiff’s appeal has been dismissed, the costs ordered to be paid by the plaintiff will have increased, which, in turn, will add to the costs consequences for the State.
[52]Exhibit HN-7 to affidavit of Huong Nguyen dated 7 January 2011, 6, where Kyrou J said the costs orders made against the plaintiff would have the effect of bankrupting him.
Counsel for the State also brought to the attention of the Court the fact that the final costs order made against the plaintiff has not yet been taxed, and submitted that this fact does not preclude an order for set-off. In support of this submission, counsel relied on Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd,[53] where an ascertained sum was being sought to be set off against an unascertained costs order. Notwithstanding, the order for set-off was made subject to a stay until the unquantified costs could be ascertained.[54] Counsel also relied on Sivritas,[55] where an application was made in circumstances where the proceeds of sale of a property (at that time unascertained)[56] were sought to be set off against ‘two-thirds’ of the plaintiff’s costs (again, at that time, unascertained).[57] In those circumstances, the Court ordered the set-off.
[53][2010] NSWSC 1106 (24 September 2010).
[54]At [53] Barrett J said:
In the whole of the circumstances (including [the plaintiff’s] admitted circumstances of financial weakness) it is appropriate that the financial consequences flowing from the final orders be suspended until there has been full quantification of the plaintiff's costs liability and that set-off be allowed so that a net sum only eventually changes hands.
[55]Sivritas v Sivritas (2008) 23 VR 349.
[56]The sale post-dated the delivery of the judgment. See Sivritas v Sivritas (No 2) (2008) 23 VR 349, 387 [2].
[57]Ibid 387 [3].
The Plaintiff’s Submissions
The plaintiff’s principal submission was that, because there would be an application by the plaintiff to seek leave to appeal the decision by the Court of Appeal to dismiss the appeal, the application for set-off should be stayed pending the outcome of that application.
Conclusion
In my view, I consider that the many factors relied on by the State in support of its application strongly favour the making of the order for set-off. The foreshadowed application by the plaintiff for leave to appeal to the High Court is not, in my view, a compelling factor to refuse the order sought. Fairness to the State’s position and the prejudice it would suffer if it were required to pay the award of damages and interest to the plaintiff in circumstances where the payment of costs might not eventuate demands the exercise of the Court’s discretion in favour of the set-off sought.
Accordingly, I order that the award of damages made against the first defendant in favour of the plaintiff be set off against the plaintiff’s liability to pay the costs of the first defendant pursuant to the orders of Justice Kyrou made on 10 December 2010.
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SCHEDULE OF PARTIES
| LUPCO SLAVESKI (by his litigation guardian SNEZANA SLAVESKA) - and - | Plaintiff |
| STATE OF VICTORIA - and - | First Defendant |
| SHAUN BINGHAM - and - | Second Defendant |
| MARK SMITHWICK - and - | Third Defendant |
| PAUL KIRKRIGHT - and - | Fourth Defendant |
| LEIGH COLE - and - | Fifth Defendant |
| CATHERINE SADLER - and - | Sixth Defendant |
| ADRIAN TYNNESON - and - | Seventh Defendant |
| GLENN PARKER - and - | Eighth Defendant |
| PHIL LOWERSON - and - | Ninth Defendant |
| GRAEME WHEELER - and - | Tenth Defendant |
| PAUL SMITH - and - | Eleventh Defendant |
| ANDREW ROBERTS - and - | Twelfth Defendant |
| TIMOTHY ROBINSON - and - | Thirteenth Defendant |
| ANDREW STEPHEN - and - | Fourteenth Defendant |
| CRAIG RHODES - and - | Fifteenth Defendant |
| GARRY BARTON - and - | Sixteenth Defendant |
| PETER JONES - and - | Seventeenth Defendant |
| TIMOTHY PECK - and - | Eighteenth Defendant |
| KEVIN NOLAN - and - | Nineteenth Defendant |
| MICHAEL BAADES - and - | Twentieth Defendant |
| PHILIP WENDT - and - | Twenty-first Defendant |
| PETER ANDERSON - and - | Twenty-third Defendant |
| MATTHEW KNOWLES | Twenty-fourth Defendant |
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