Smirnios v Byrne
[2007] VSC 513
•12 December 2007
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 3535 of 2006
| PETER SMIRNIOS | Plaintiff |
| v | |
| STEPHEN PETER BYRNE | Defendant |
---
JUDGE: | LASRY J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 6 December 2007 | |
DATE OF JUDGMENT: | 12 December 2007 | |
CASE MAY BE CITED AS: | Smirnios v Byrne | |
MEDIUM NEUTRAL CITATION: | [2007] VSC 513 | |
---
Appeal from order of Taxing Master reducing the bill as taxed by 30 per cent – Appeal under s 3.4.47 of the Legal Profession Act 2004 (Vic) – Finding of breach of s 3.4.15(2) of the Legal Profession Act 2004 (Vic) – Appeal against an order as to costs only – Whether leave to appeal is required – Res judicata and issue estoppel – Disclosure obligations.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms K Knights | Wisewoulds Lawyers |
| For the Defendant | Mr R Berglund QC | Stephen Peter Byrne |
TABLE OF CONTENTS
Background......................................................................................................................................... 2
Has the Issue of Whether Leave Is Required Been Finally Resolved?.................................... 5
Does the Defendant Require Leave to Appeal?........................................................................... 7
Conclusion......................................................................................................................................... 11
HIS HONOUR:
Background
This is an appeal from orders made by the Taxing Master, Master Wood, on a Summons for Taxation of Costs under Division 7 of Part 3.4 of the Legal Profession Act 2004 (Vic).
After a hearing on 24 April 2007, the Taxing Master made the following orders:
1.Pursuant to s.3.4.44(2)(b) and/or (k) of the Legal Profession Act 2004 a reduction of 30 per cent be applied to the bill as taxed.
2.The bill of costs be taxed in the sum of $3,563.84.
3.The Defendant pay the Plaintiff the costs of taxation review pursuant to s.3.4.45(2) of the Legal Profession Act 2004.
4.The Plaintiff’s costs of the taxation review are fixed in the sum of $813.84.
On 27 April 2007 the defendant filed a Notice of Appeal from the order of Master Wood. On 1 May 2007 that Notice of Appeal was amended pursuant to leave granted by Williams J in circumstances which I will describe shortly.
It is not in dispute that the basis for the Taxing Master making the order to reduce the bill by 30 per cent was that in his opinion the defendant had breached the disclosure requirements of the Legal Profession Act 2004 (Vic). This ruling was contained in the “Other Matters” section of the General Form of Order made by Master Wood on 24 April 2007, and authenticated by the Prothonotary on 30 April 2007. The ruling was expressed in paragraph 4 as follows:
A breach of s.3.4.15(2) of the Legal Profession Act 2004 is established.
The ruling was not, however, contained in the formal orders of Master Wood, which are set out in full above.
The Court file contained a document entitled “Brief Reasons on Taxation”, in which a more detailed description of the basis of the Master’s decision is given under the heading “Disclosure and Review Provisions”.
Section 3.4.15 of the Legal Profession Act 2004 (Vic) is in the following terms:
(1)Written disclosures to a client under this Division—
(a)must be expressed in clear plain language; and
(b)may be in a language other than English if the client is more familiar with that language.
(2)If the law practice is aware that the client is unable to read, the law practice must arrange for the information required to be given to a client under this Division to be conveyed orally to the client in addition to providing the written disclosure.
On 1 May 2007, the proceedings came before Williams J, sitting as a single judge in the Trial Division of this Court, as a matter of urgency. There was some dispute before her Honour as to whether the defendant had requested a hearing before the Court as a matter of urgency, or whether the urgency related only to the authentication by the Registry of Master Wood’s orders.
It appears that upon receiving the authenticated orders, counsel for the defendant was surprised to find no order to the effect that there had been a breach of the Legal Profession Act 2004 (Vic). The Notice of Appeal had indicated that the defendant was seeking to appeal the ruling of Master Wood in relation to the breach of the disclosure requirements pursuant to s 3.4.47 of the Legal Profession Act 2004 (Vic), which provides:
A person may appeal to the Supreme Court from a decision of the Taxing Master, in accordance with the rules of the Supreme Court.
However, Williams J was concerned that because the formal orders of Master Woods were “as to costs only”, they were not subject to appeal except by leave of the Court. Her Honour referred to Rule 77.05(2) of the Supreme Court (General Civil Procedure) Rules 2005. Rule 77.05 provides:
(1)Subject to paragraph (2), any person affected by any judgment given or order made by a Master under any Chapter of the Rules of the Supreme Court may appeal to a Judge.
(2)No judgment or order of a Master given or made by consent or order of a Master as to costs only shall be the subject of appeal under paragraph (1) except by leave of a Judge or the Master. …
Counsel for the defendant conceded that as the formal orders were as to costs only, in order to appeal such orders his client would require leave of the Court. He emphasised that the defendant was more concerned about the ruling that he had breached the Legal Profession Act 2004 (Vic), rather than the orders reducing the bill. However, given that the actual orders made by Master Wood did not contain any reference to the finding that there was a breach of the Legal Profession Act 2004 (Vic), the appeal was considered by Williams J to be an appeal against a costs order.
The defendant was unable to proceed with the request for leave to appeal before Williams J, as further affidavit material needed to be filed. Justice Williams therefore adjourned the matter, making the following orders:
1.The Defendant file and serve an amended notice of appeal seeking leave to appeal under 77.05(2) of the Supreme Court Rules by 4:00 pm on 8 May 2007.
2.The Defendant file and serve any affidavit in support of any application for leave to appeal by 4:00 pm on 15 May 2007.
3.The Plaintiff file and serve any affidavit in response by 4:00 pm on 29 May 2007.
4.The further hearing of the application for leave to appeal be adjourned for hearing in the Practice Court on 28 June 2007.
5.The Defendant pay the Plaintiff’s costs of this day thrown away by reason of the adjournment.
The view of the defendant on the need to obtain leave to appeal from the order of Master Wood changed, as did counsel in the case. Mr Berglund, of Her Majesty’s Counsel, became involved in the matter, and it then came before Cavanough J on 28 June 2007 in the Practice Court. His Honour found that having regard to the content of the order of made by Williams J on 1 May 2007, an issue arose as to whether or not it was open to the defendant to argue that leave to appeal the order of Master Wood was not necessary. Counsel for the defendant maintained before Cavanough J that the issue as to whether or not leave was required under Rule 77.05(2) was still one to be determined by the Court and further maintained that leave was not necessary. Counsel for the plaintiff submitted that the issue had been determined by Williams J on 1 May 2007, and that leave to appeal was necessary. His Honour therefore concluded that the matter was not one appropriate to be dealt with in the Practice Court, and referred the matter to the Listing Master to be fixed for hearing.
Before me, a number of questions arose which have to be resolved before the appeal can proceed by a hearing de novo pursuant to Rule 77.05(7). The questions are:
1.In the hearing before Williams J, did her Honour resolve the question of whether leave is required to appeal against the order of Master Wood in a manner which would preclude me from hearing further submissions on that question and, potentially, coming to a different view?
2.Assuming that it is open to me to hear further submissions as to whether leave is required, is it correct that before this appeal can be pursued, leave of the Court is required under Rule 77.05(2)?
3.If leave is required, should leave be granted in this case?
Has the Issue of Whether Leave Is Required Been Finally Resolved?
In order to deal with this question, it is first necessary to give some outline of what occurred before Williams J on 1 May 2007. When the matter was called on, her Honour immediately raised with counsel for the defendant the question of whether leave was required and the matter was then stood down whilst counsel obtained instructions. On resuming, Williams J raised the possibility that the application could be dismissed unless counsel was applying for leave to appeal against a costs order. Counsel indicated, given that risk, that he was applying for leave. The application then developed into a discussion about the basis on which leave might be granted, which included what counsel described as a “substantial injustice” to the defendant. Counsel informed her Honour that he needed time to file affidavits to support the application for leave and there was a discussion about that. At the conclusion of that debate the necessary orders were made (including an order for costs thrown away by reason of the adjournment).
Before me, the defendant submits that this was a directions hearing with orders, and that no authoritative decision was made on the question of leave by Williams J. Mr Berglund submits that the proceedings before me are really a continuation of the proceedings, albeit before a different judge. In effect he submits that if Williams J were still dealing with the matter, her Honour could be asked to reconsider the views she expressed which were effectively truncated by counsel’s concession that leave was required. Mr Berglund also refers to what he described as the “management requirements of the court”[1] by which I understand him to mean that it may regularly be the case that directions given by a judge in the Practice Court are sought to be further examined before the judge allocated to hear the matter in full.
[1]Transcript of Proceedings, Smirnios v Byrne (Supreme Court of Victoria, Lasry J, 6 December 2007) at 35.
On the other hand the plaintiff submits that Williams J made a judicial determination on the issue of law that leave to appeal was required.[2] However, Ms Knights of counsel, who appeared on behalf of the plaintiff, conceded that if the proceedings before me had continued before Williams J, it would be open for her Honour to reconsider the views she had expressed. Given that the application proceeded before me, Ms Knights was submitting that the difference was significant because I would be put in a position of reviewing – in an almost appellate way – the ruling and orders made by Williams J. Such a role is clearly beyond my jurisdiction as a single judge of the Trial Division of the Court.
[2]See Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; Chamberlain v Deputy Commissioner of Taxation (1987) 164 CLR 502; Blair & Ors v Curran & Ors (1939) 62 CLR 464.
In my opinion, Williams J was giving directions in the case and made orders accordingly. It is true that she expressed a very clear view that the defendant required leave in order to pursue an appeal against a Master’s costs order, but the matter was not argued and did not produce any considered ruling by her Honour. Counsel for the defendant capitulated in the face of a strong view from the judge. Despite the submission Ms Knights makes, what occurred here is not akin to a situation where a judge makes a ruling on evidence and then a different judge is asked to make a different ruling on the same question.[3] In this case Williams J has expressed a view when the proceedings commenced which then received no resistance from counsel for the defendant. She then proceeded to give directions on that basis without hearing any debate on the matter. I therefore consider that it is open to the defendant to make further submissions to me on whether leave is required in this particular case.
[3]Transcript of Proceedings, Smirnios v Byrne (Supreme Court of Victoria, Lasry J, 6 December 2007) at 19-20.
I would regard the submissions before me as a continuation of the debate which began before Williams J, which was resolved not with a considered ruling but with directions. I therefore consider that the matter has not been finally resolved and that it is open to the defendant to make further submissions to me that leave to appeal against the order of Master Wood is not required.
Does the Defendant Require Leave to Appeal?
This appeal is pursuant to s 3.4.47 of the Legal Profession Act 2004 (Vic), the terms of which I have already quoted (above). The primary questions are:
(a)whether such an appeal is as of right because “leave” is not referred to in the s 3.4.47; and
(b)whether the words “… in accordance with the rules of the Supreme Court” import the consequence of requiring leave provided in Rule 77.05.
The defendant submits that the limitation in Rule 77.05(2) does not apply because an appeal from a decision of a Taxing Master under s 3.4.47 of the Legal Profession Act 2004 (Vic) is “as of right” (a position which is disputed by the plaintiff). It is submitted that if Parliament intended that the right of appeal in such circumstances be limited, it could have inserted the limitation into s 3.4.47. The plaintiff submits that Master Wood’s orders relate solely to costs, and that the order clearly falls within the limitation contained in Rule 77.05(2). The plaintiff also submits that the reference in s 3.4.47 to an appeal being “in accordance with the rules of the Supreme Court” makes any right to appeal subject to the application of Rule 77.05(2).
However, the defendant contends that the reference to orders “as to costs only” in Rule 77.05(2) is a reference to costs orders pursuant to the powers of the Court contained in s 24 of the Supreme Court Act 1986 (Vic). The intention behind Rule 77.05(2) is to limit the occasions in which the Judge in the Practice Court is required to review a discretionary decision of a Master as to who should pay the costs of litigation and the extent to which they should be paid. This submission is based on the requirement in s 17A of the Supreme Court Act 1986 (Vic) that an appeal against an order made pursuant to s 24 can only be made to the Court of Appeal, with leave of the Trial Division. So, according to the defendant, Rule 77.05(2) should be read to include the underlined words:
No judgment or order of a Master given or made by consent or order of a Master as to costs only which are in the discretion of the Court shall be the subject of appeal under paragraph (1) except by leave of a Judge or the Master.
The plaintiff responds that no such limitation on the application of Rule 77.05(2) is expressed or implied in the Rule. In addition, the plaintiff submits that an appeal pursuant to s 3.4.47 of the Legal Profession Act 2004 (Vic) is more appropriate under the review procedures provided for in Rule 63.56(1) (review by the Taxing Master of the initial costs order made on taxation) and Rule 63.57 (a review by a judge of an order made by the Taxing Master under Rule 63.56(1)). The defendant submits that these Rules have no application.
In my opinion, s 3.4.47, in conferring a right of appeal from the decision of a Taxing Master, is not intended to confer that right without the requirement for leave where the Supreme Court (General Civil Procedure) Rules 2005 otherwise require it. As I understand it, there is effectively a policy against appeals as of right against orders “as to costs only” for very good reason. As Williams J noted earlier in this case,[4] an application for leave to appeal the taxation of costs is “a most unusual process”.
[4]Transcript of Proceedings, Smirnios v Byrne (Supreme Court of Victoria, Williams J, 1 May 2007) at 13.
In dealing with the contingency that Rule 77.05(2) applies, the defendant submits that Master Wood’s first order was not “as to costs only”. Rather, it was an order of the Master exercising a power to reduce a taxed bill of costs having regard to the alleged failure by the solicitor to comply with the provisions of the Legal Profession Act 2004 (Vic).
In the course of submissions, counsel discussed the applicability to this case of the reasoning of Batt JA in Etna v Arif.[5] In that case Smith J had granted specific performance of contracts for the sale of land and had ordered the vendor’s solicitors to pay the purchaser’s costs of two days of the trial on the basis that they had been negligent within the meaning of Rule 63.23. On appeal, the Court of Appeal concluded that because the order for costs against the solicitors was an order in the disciplinary jurisdiction of the Court, it was not an order “as to costs only” within the meaning of s 17A(1)(b) of the Supreme Court Act 1986 (Vic), and therefore leave to appeal from such an order was not required. Before me, the defendant relied heavily on the following passage from the judgment of Batt JA:
In the case of the solicitors the respondents adopted the same attitude on the questions of a summons, extension and leave itself as they did in the case of the appellant. It is established that an order that a solicitor personally pay costs is not an order “as to costs only” which are in the discretion of the court, but rather is an order in the disciplinary jurisdiction of the court (even though the main object of the order may be compensatory). In the first-mentioned case (scil., Re Bradford, Thursby and Farish) it was held that a judge had no discretion to make an order for costs against a solicitor personally unless there had been misconduct or negligence and that on that question there ought to be an appeal without leave. Later cases have taken a wider view and in Thompson v Fraser Sir John Donaldson M.R. said that the court was unanimously of the view that an appeal in such circumstances did not relate only to costs “or, indeed, primarily to costs: it relates to the conduct of the solicitor”. Although the word “only” does not appear in the Victorian s. 17A(1)(b), that difference does not, in my view, make the long-established line of authority distinguishable and, whilst it is not binding upon this court, I consider that we should follow it. If, however, leave is required I would grant leave, for the appeal raises a question of some general importance as to the interpretation of r. 63.23 and a prima facie case of error in the interpretation and application of that rule is shown.[6]
[5][1999] 2 VR 353 at 379.
[6]Ibid at 379 (citations omitted).
Mr Berglund for the defendant submits that there is no distinction in principle between the Court requiring a solicitor to pay costs and the Taxing Master being able to reduce the costs because of a failure by a solicitor to comply with the Legal Profession Act 2004 (Vic). The orders made in such circumstances are both disciplinary in nature. In my opinion the important part of the extract of Batt JA’s judgment is his Honour’s reference to Sir John Donaldson MR’s observations about the appeal not relating to “costs only”, but to the conduct of the solicitor. It is worth noting that in Thompson v Fraser,[7] the Court of Appeal was concerned with a rule very similar to that with which we are concerned here. Section 18(1)(f) of the Supreme Court Act 1981 (UK) barred an appeal without leave of the judge concerned
… from any order of the High Court or any other court or tribunal made with the consent of the parties or relating only to costs which are by law left to the discretion of the court or tribunal …” (emphasis added)
In the circumstances, this section was held to have no application because the particular order related to the conduct of a solicitor.
[7][1985] 3 All ER 511.
Ms Knights on behalf of the plaintiff submits that the case is distinguishable from the present one on the basis that the only reason the defendant was ordered to pay the costs of the Taxing Master’s review was because the reduction of the bill was by more than 15 per cent (see s 3.4.45(2) of the Legal Profession Act 2004 (Vic)).[8] With respect, I think that submission misses the point the defendant seeks to make, which is that the reduction in the bill of 30 per cent occurred in connection with the conduct of the solicitor – indeed, because the Taxing Master found that the solicitor had breached the Legal Profession Act 2004 (Vic) –and that therefore the order was not an order “as to costs only”.
[8]Section 3.4.45(2) provides that unless the Taxing Master otherwise orders, and subject to subs (3), the law practice to which the legal costs are payable must pay the costs of the review if:
I therefore have come to the conclusion that in the particular circumstances of this case, leave is not required for this appeal as it is not an appeal “as to costs only”.
My conclusion that leave is not required means that the appeal in the form of a hearing de novo can proceed. I have considered if I should attempt to offer reasoning as to whether, if I am wrong on the question of leave not being required, I would have granted leave. I have concluded that to do so is somewhat artificial. There are two elements to the test for leave being granted: first, the decision sought to be appealed is attended by sufficient doubt in all the circumstances of the case to justify leave to appeal; and, second, a substantial injustice will be done by leaving the decision unreversed because of the quantum of costs in issue.[9] In this case, on the second limb of that test, the leave would not be granted because the amount of costs involved is a very small sum.
[9]See Bloomingdale Holdings Pty Ltd v 87 Stevedore Street Pty Ltd [2006] VSC 513 at [7] (per Osborn J).
However, there seems to be no utility in me now somewhat hypothetically applying the test for leave for an order “as to costs only”, when I have come to the conclusion that that is not the nature of the Master’s orders (at least as to the reduction Conclusion of the taxed bill by 30 per cent).
Conclusion
I have therefore come to the following conclusions:
1.It was open to the defendant to make further submissions to me that leave for his appeal against the order of Master Wood is not required.
2.The appeal which is sought to be pursued by the defendant is not an appeal against an order of a Master “as to costs only” within the meaning of Rule 77.05(2), and therefore leave is not required.
I will hear submissions from counsel as to the appropriate orders.
---
(a) on the review the legal costs are reduced by 15% or more; or
(b) the Taxing Master is satisfied that the law practice failed to comply with Division 3.
2
6
0