Stephens v Giovenco; Dick v Giovenco (No 2)
[2011] NSWCA 144
•08 June 2011
Court of Appeal
New South Wales
Case Title: Stephens v Giovenco; Dick v Giovenco (No 2) Medium Neutral Citation: [2011] NSWCA 144 Hearing Date(s): On the papers Decision Date: 08 June 2011 Jurisdiction: Before: Allsop P at 1; Hodgson JA at 2
Decision: In matter number 2010/79805 (Stephens)
In Mr Stephens' appeal:
(1) Mr Dick's cross-claim against Mr Stephens dismissed.
(2) Ms Giovenco to pay Mr Stephens' costs of the proceedings below and Mr Stephens' costs of the appeal (excluding any incremental costs attributable solely to cross-claims between Mr Stephens and Mr Dick, and any incremental costs incurred by Mr Stephens solely attributable to Mr Dick's appeal).
(3) Mr Dick to pay Ms Giovenco one-third of the costs for which Ms Giovenco is liable to Mr Stephens at first instance and on appeal, and his own costs in respect of Mr Stephens' appeal.
(4) Mr Stephens and Mr Dick to pay their own incremental costs of the cross-claims.
In matter number 2010/80871 (Dick)
In Mr Dick's appeal:
(1) Mr Dick to pay Ms Giovenco's costs of the proceedings below (excluding costs solely attributable to her proceedings against Mr Stephens).
(2) Mr Stephens and Mr Dick to pay their own incremental costs of the cross-claims between them.
(3) Mr Dick to pay one-third of Ms Giovenco's costs of Mr Dick's appeal (excluding costs solely attributable to Mr Stephens' appeal), and his own costs of his appeal.
(4) Mr Dick to pay Mr Stephens any costs incurred by Mr Stephens which were solely attributable to Mr Dick's appeal.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]Catchwords: COSTS - Appeal from verdict of $350,000 against both of two defendants - Verdict against one defendant set aside entirely, and against other defendant reduced to $70,000 - Whether provision of s 338 and s 338A of the Legal Profession Act 2004 should be excluded - Whether Bullock or Sanderson order should be made - Appropriate orders as between various parties and proceedings.
Legislation Cited: Compensation to Relatives Act 1897 s 4
Cases Cited: Texts Cited: Category: Costs Parties: 2010/79805:
Paul Thomas STEPHENS t/as CTS PLUMBING (appellant)
Fiona GIOVENCO (first respondent)
Geoffrey John DICK (second respondent)
2010/80871:
Geoffrey John DICK (appellant)
Fiona GIOVENCO (first respondent
Paul Thomas STEPHENS t/as CTS PLUMBING (second respondent)Representation - Counsel: A HEWITT SC / M KUMAR (Ms) (Stephens)
S G CAMPBELL SC / A J STONE (Giovenco)
J SEXTON SC / R CHENEY (Dick)- Solicitors: Curwoods Lawyers (Stephens)
Stacks Goudkamp (Giovenco)
Lee & Lyons Lawyers (Dick)File number(s): 2010/79805; 2010/80871 Decision Under Appeal - Court / Tribunal: - Before: - Date of Decision: - Citation: - Court File Number(s) Publication Restriction:
Judgment
ALLSOP P: The parties agreed, prior to the retirement of Tobias JA, that Hodgson JA and I should deal with the question of costs. I agree with the reasons of, and orders proposed by, Hodgson JA.
HODGSON JA: On 15 March 2011, the Court gave its decision in appeals arising from proceedings in which Ms Giovenco had sued Mr Dick and Mr Stephens for damages under s 4 of the Compensation to Relatives Act 1897, by reason of an accident in which Ms Giovenco's partner died.
The primary judge had given judgment for Ms Giovenco against each of Mr Dick and Mr Stephens in an amount of $350,000, and had ordered them to pay her costs; and he also ordered that they bear responsibility for the judgment in the proportion 20 per cent to be borne by Mr Dick and 80 per cent to be borne by Mr Stephens.
Both Mr Dick and Mr Stephens appealed, and both appeals were allowed.
The result of Mr Stephens' appeal was that there was judgment in his favour in the claim against him by Ms Giovenco, and Mr Dick's cross-claim against him was dismissed. (The orders as expressed appear to have been expressed so as to omit this order, and for avoidance of doubt it will be made in this judgment.)
The result of Mr Dick's appeal was that there was a judgment against him for $70,000 in the claim against him by Ms Giovenco, and Mr Stephens' cross-claim against him was dismissed.
The parties were directed to provide written submissions on costs. The parties consented to the issue of costs being determined by Allsop P and myself, following the retirement of Tobias JA.
Contentions
The contentions of Mr Stephens were simple: that Ms Giovenco should pay his costs of the proceedings below and of the appeal; that Mr Stephens supported any submission from Ms Giovenco that there should be a Bullock order in respect of those costs against Mr Dick; and that in respect of the cross-claims, each party pay its own costs below and on appeal.
Mr Dick submitted that he should be ordered to pay Ms Giovenco's costs of the proceedings below, that there be no order for the costs below of the cross-claims, and that Ms Giovenco pay one-half of Mr Dick's costs of the appeal. He opposed any order excluding Ms Giovenco's costs from Div 9 of Pt 3.2 of the Legal Profession Act 2004, and opposed any Bullock order.
Ms Giovenco submitted that, in respect of Mr Stephens' appeal, she should be ordered to pay Mr Stephens' costs below, but that Mr Dick should indemnify her on a Bullock basis, and that Mr Dick should pay Mr Stephens' costs of the appeal. She submitted that in respect of Mr Dick's appeal, Mr Dick should be ordered to pay her costs below and of the appeal, and also to pay Mr Stephens' costs of the appeal, and that her costs of the trial and appeal should be exempted from Div 9 of Pt 3.2 of the Legal Profession Act 2004.
Statutory provisions
The relevant sections of the Legal Profession Act 2004 are ss 338, 338A, 340 and 341:
338 Maximum costs fixed for claims up to $100,000
(1) If the amount recovered on a claim for personal injury damages does not exceed $100,000, the maximum costs for legal services provided to a party in connection with the claim are fixed as follows:
(a) in the case of legal services provided to a plaintiff-maximum costs are fixed at 20% of the amount recovered or $10,000, whichever is greater,
(b) in the case of legal services provided to a defendant-maximum costs are fixed at 20% of the amount sought to be recovered by the plaintiff or $10,000, whichever is greater.
(2) The regulations may prescribe an amount to replace the amount of $100,000 or $10,000 in subsection (1) and may prescribe a percentage to replace the percentage of 20% in subsection (1). When such a replacement amount or percentage is prescribed, it applies for the purposes of subsection (1) in place of the amount or percentage that it replaces.
(3) The regulations may contain provisions of a savings or transitional nature consequent on the making of regulations under this section.
(4) When the maximum costs for legal services provided to a party are fixed by this Division the following provisions apply (subject to sections 339-341):
(a) a law practice is not entitled to be paid or recover for those legal services an amount that exceeds those maximum costs,
(b) a court or tribunal cannot order the payment by another party to the claim of costs in respect of those legal services in an amount that exceeds that maximum,
(c) in assessing the amount of those costs that is a fair and reasonable amount, a costs assessor cannot determine an amount that exceeds the maximum set by this section.
(5) In this Division:
(a) a reference to legal services provided to a party is a reference to legal services provided to the party by a law practice (including by an associate of the law practice), and
(b) a reference to costs for legal services does not include costs charged as disbursements for services provided by any other person or other disbursements.
(6) If proceedings are commenced on a claim, the amount sought to be recovered by the plaintiff is taken to be the amount sought to be proved by the plaintiff at the hearing of the claim.
(7) Maximum costs fixed by this Division apply despite regulations under section 329 (1) (b) (Regulations to provide for fixed costs) fixing those costs.
338A Maximum costs increased by additional amount for certain claims heard by the District Court
(1) This section applies to a claim for personal injury damages in respect of which the amount recovered does not exceed $100,000 that is made by proceedings heard by the District Court.
(2) If the District Court referred the proceedings to arbitration and, following the arbitration, made an order for a full or limited rehearing of the proceedings concerned on the application of a party, the maximum costs fixed by this Division for legal services provided in connection with the claim to the other party are increased by the additional amount.
(3) If the decision of the District Court in respect of a claim is the subject of an appeal, the maximum costs fixed by this Division for legal services provided in connection with the claim to the party who is the respondent to the appeal are increased by the additional amount or, if subsection (2) also applies to legal services provided to the respondent, by 2 times the additional amount.
(4) For the purposes of this section, the additional amount is:
(a) in the case of legal services provided to the plaintiff-15% of the amount recovered, or $7,500, whichever is the greater, and
(b) in the case of legal services provided to the defendant-15% of the amount sought to be recovered by the plaintiff, or $7,500, whichever is the greater.
(5) The regulations may prescribe a percentage to replace the percentage of 15% in subsection (4) and may prescribe an amount to replace the amount of $7,500 in subsection (4). When such a replacement percentage or amount is prescribed, it applies for the purposes of subsection (4) in place of the percentage or amount that it replaces.
(6) The regulations may contain provisions of a savings or transitional nature consequent on the making of regulations under this section.
...
340 Costs can be awarded on indemnity basis for costs incurred after failure to accept offer of compromise
(1) If a party to a claim for personal injury damages makes a reasonable offer of compromise on the claim that is not accepted, this Division does not prevent the awarding of costs against another party to be assessed on an indemnity basis in respect of legal services provided after the offer is made.
(2) An offer of compromise on a claim by a party is reasonable if the court determines or makes an order or award on the claim in terms that are no less favourable to the party than the terms of the offer.
(3) The regulations may make provision for or with respect to requiring disclosure by a law practice to the practice's client of information in relation to the operation of this section in respect of any refusal by the client to accept an offer of compromise.
(4) If it appears to the court in which proceedings are taken on a claim for personal injury damages that a law practice has failed to comply with any provision of the regulations under this section, and that the client of the practice has incurred an increased liability for costs as a result of refusing a reasonable offer of compromise in connection with the claim concerned, the court may of its own motion or on the application of the client make either or both of the following orders:
(a) an order directing the law practice to repay to the client the whole or any part of those increased costs that the client has been ordered to pay to any other party,
(b) an order directing the law practice to indemnify any party other than the client against the whole or any part of the costs payable by the party indemnified in respect of legal services provided after the offer is refused.
341 Court may order certain legal services to be excluded from maximum costs limitation
A court hearing a claim for personal injury damages may by order exclude from the operation of this Division legal services provided to a party to the claim if the court is satisfied that the legal services were provided in response to any action on the claim by or on behalf of the other party to the claim that in the circumstances was not reasonably necessary for the advancement of that party's case or was intended or reasonably likely to unnecessarily delay or complicate determination of the claim.
Issues
I will consider in turn the following issues:
(1) Exclusion of the Legal Profession Act provisions;
(2) Bullock or Sanderson order;
(3) Costs of Mr Dick's appeal;
(4) Cross-claims.
Exclusion of the Legal Profession Act provisions
Ms Giovenco relied on a number of offers of compromise served by her on Mr Dick and Mr Stephens, notably one served on 2 December 2008 offering to accept the sum of $80,000 plus costs. Ms Giovenco accepted that this could not bring her case within s 340 of the Legal Profession Act ; but submitted that Mr Dick's refusal of this offer, his failure to make any counter offer, and his raising of many points on which he was unsuccessful, satisfied s 341.
In my opinion, it cannot be said that there was action by Mr Dick that was not reasonably necessary for the advancement of his case or was intended or reasonably likely to unnecessarily delay or complicate determination of the claim.
Settlement is to be encouraged, but failure to make a settlement offer, where a party has a reasonable chance of total success, cannot be considered action satisfying s 341. As shown by both the majority and minority judgments on Mr Dick's appeal, he did have a reasonable chance of total success. Similarly, in my opinion, it cannot be suggested that various defences raised by Mr Dick constituted action satisfying s 341. I note that the primary judge did not make a finding that Mr Dick fully and consciously gave deliberately false evidence, and the Court of Appeal also stopped short of that finding.
Accordingly, in my opinion, the basis for exclusion of the ss 338 and 338A limits has not been made out.
Bullock or Sanderson order
It was submitted for Ms Giovenco that it was reasonable for Ms Giovenco to sue Mr Stephens as well as Mr Dick, that Mr Dick actively contended for the liability of Mr Stephens, and that these circumstances were sufficient to justify a Bullock or Sanderson order.
However, I accept the submission for Mr Dick that some conduct of the unsuccessful defendant prior to the joining of the successful defendant, which contributed to the joining of the successful defendant, is generally required to justify a Bullock or Sanderson order.
There are nevertheless factors in this case which in my opinion justify some contribution to be made by Mr Dick towards the costs liability of Ms Giovenco to Mr Stephens:
(1) There was a very reasonable offer made by Ms Giovenco to Mr Dick, albeit one which slightly exceeded the result.
(2) No offer of settlement was made by Mr Dick to Ms Giovenco.
(3) Accordingly, it is reasonable that Mr Dick be responsible for all costs incurred by Ms Giovenco due to his defence of the case brought against him.
(4) Had Mr Dick not defended the case, the contested case between Ms Giovenco and Mr Stephens would have been significantly shorter: that is, Mr Stephens would have incurred less costs, both at first instance and on appeal.
In my opinion, a proper reflection of these factors would be to order that Mr Dick pay one-third of the costs for which Ms Giovenco is liable to Mr Stephens.
Costs of Mr Dick's appeal
Although Mr Dick's ultimate liability under the judgment in favour of Ms Giovenco is unaltered as a result of the appeal, he has a reduced judgment entered against him, and has also achieved a significant reduction of costs for which he could be liable, by reason of ss 338 and 338A of the Legal Profession Act . Mr Dick had to appeal to achieve these results, and also to avoid liability for the whole $350,000 (given the success of Mr Stephens' appeal). No relevant settlement offer was made by Ms Giovenco in relation to the appeal.
However, the point on which Mr Dick succeeded, namely contributory negligence, was substantially conceded (albeit not formally conceded); and Mr Dick lost on all points which took significant time on the appeal. In my opinion, the appropriate order is that Mr Dick pay one-third of Ms Giovenco's costs of the appeal.
Cross-claims
The cross-claims as between Mr Dick and Mr Stephens were incidental to their defences. To the extent that the costs they have incurred were increased by the bringing of the cross-claims (that is, the incremental costs of the cross-claims), each party should bear its own costs.
Conclusion
I propose the following orders, in addition to earlier orders:
In Mr Stephens' appeal:
(1) Mr Dick's cross-claim against Mr Stephens dismissed.
(2) Ms Giovenco to pay Mr Stephens' costs of the proceedings below and Mr Stephens' costs of the appeal (excluding any incremental costs attributable solely to cross-claims between Mr Stephens and Mr Dick, and any incremental costs incurred by Mr Stephens solely attributable to Mr Dick's appeal).
(3) Mr Dick to pay Ms Giovenco one-third of the costs for which Ms Giovenco is liable to Mr Stephens at first instance and on appeal, and his own costs in respect of Mr Stephens' appeal.
(4) Mr Stephens and Mr Dick to pay their own incremental costs of the cross-claims.
In Mr Dick's appeal:
(1) Mr Dick to pay Ms Giovenco's costs of the proceedings below (excluding costs solely attributable to her proceedings against Mr Stephens).
(2) Mr Stephens and Mr Dick to pay their own incremental costs of the cross-claims between them.
(3) Mr Dick to pay one-third of Ms Giovenco's costs of Mr Dick's appeal (excluding costs solely attributable to Mr Stephens' appeal), and his own costs of his appeal.
(4) Mr Dick to pay Mr Stephens any costs incurred by Mr Stephens which were solely attributable to Mr Dick's appeal.
No order is made excluding the operation of s 338 and/or s 338A of the Legal Profession Act ; but these provisions have no application to the order that Mr Dick pay a proportion of the costs for which Ms Giovenco is liable to Mr Stephens.
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