The Roman Catholic Trusts Corporation for the Archdiocese of Melbourne v VWA
[2019] VSC 22
•5 February 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COSTS COURT
S ECI 2018 00192
| THE ROMAN CATHOLIC TRUSTS CORPORATION FOR THE ARCHDIOCESE OF MELBOURNE | Applicant |
| v | |
| VICTORIAN WORKCOVER AUTHORITY | Respondent |
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JUDICIAL REGISTRAR: | Gourlay JR |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 30 November 2018 |
DATE OF JUDGMENT: | 5 February 2019 |
CASE MAY BE CITED AS: | The Roman Catholic Trusts Corporation for the Archdiocese of Melbourne v VWA |
MEDIUM NEUTRAL CITATION: | [2019] VSC 22 |
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COSTS COURT – Question of common costs – Smith v Madden [1946] HCA 19; (1946) 73 CLR 129; Geatches v Anglo Coal (Moranbah North Management) Pty Ltd & Anor [2014] QSC 106 considered.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr D Masel SC with Mr S Warne | Wooton + Kearney |
| For the Respondent | Mr J Simpson | Russell Kennedy |
JUDICIAL REGISTRAR:
The applicant was the occupier of the premises where a worker was injured. The worker sued both the applicant and her employer for damages to compensate her for the injuries she suffered (the worker’s action). The VWA was the insurer of the employer and paid weekly compensations and other benefits to her pursuant to its obligations under the Accident Compensation Act 1985. The VWA commenced proceedings pursuant to s. 138 of the Accident Compensation Act 1985 against the applicant (the recovery action). That proceeding was listed to commence immediately after the conclusion of the worker’s proceeding as is the usual practice with these matters.
The worker’s action was conducted before a jury and commenced on 13 November 2012. On that day orders were made in the recovery action that:
1.The evidence in worker’s proceeding, including interrogatories and answers to interrogatories, be evidence in this proceeding subject to – (a) any objection being taken to the same in this proceeding; and
(b) any further evidence by way of recall of witnesses or otherwise.
2.The parties have leave to rely upon documents
(a) produced to the Court pursuant to subpoena; or discovered, in the worker’s proceeding, subject to any objection being taken to same in this proceeding.
After a 21-day trial the jury found that there was no negligence on the part of the applicant and the worker’s proceeding was dismissed against it. The recovery action was also dismissed. The worker was ordered to pay the applicant’s costs of the worker’s action following applications made in both proceedings for a special costs order, including that the respondent pay the common costs of both proceedings on the basis that:
the defence of the recovery action has made a real and material contribution to the costs incurred by the school in the worker’s proceeding. [1]
[1]See paragraph 6 below.
The applicant seeks taxation of its bill of costs pursuant to orders made on 8 February 2013 by Justice John Dixon[2] in the recovery action. The applicant was the first defendant and the respondent was the plaintiff in the order which states:
(a) The proceeding is dismissed.
(b)The plaintiff pay the first defendant’s costs of the proceeding, including reserved costs, to be taxed as between party and party up to and including 23 November 2012, and thereafter on an indemnity basis.
(c)Liberty to the plaintiff to apply on written notice to the first defendant if the judgment entered on the jury’s verdict against the second defendant in that proceeding, who is the first defendant in this proceeding, is set aside.
[2][2013] VSC 26 (8 February 2013) proceeding No S CI 2009 09760 – referred to as the ‘recovery action’.
These orders were made after the applicant applied for a ‘special order’ that the costs of the recovery action should include the ‘common costs’ of the workers action[3]. Justice John Dixon stated that:
18On this application, the school submitted that it was entitled to its costs in the worker’s proceeding against the Authority as a non-party to that proceeding as well as its costs in the recovery action and, or alternatively, that that it was entitled to an order against the Authority, as unsuccessful plaintiff in the recovery action, for the school’s costs of the recovery action, which was extended to include, as common costs, costs incurred in the worker’s proceeding. As I understood the submission, it was contended that costs orders should be made against the Authority, as a losing plaintiff, in the recovery action, and as a non-party in the worker’s proceeding. It was submitted that there was no prospect of the school doubling up on its costs as that prospect would be avoided either by the costs court on taxation or assessment of the quantum of the costs orders or by the application of the principles against double recovery on execution of those costs orders.[4]
[3]Referred to as the ‘worker’s action’.
[4][2013] VSC 26.
His Honour concluded after considering the submissions that:
36In the present circumstances, although there is a significant connection between the non-party and the proceeding, it is a connection which is not material to the issue of costs.
37I accept that there is a real and direct connection between the two proceedings. So much is clear from the procedural orders made at the commencement of the worker’s proceeding and the orders that the trial of the recovery proceeding immediately follow the jury trial before the same judge. If the Authority has any entitlement to a statutory indemnity from the school it arises in the exact circumstances of any entitlement in the worker to recover damages from the school. The Authority stood to benefit from the worker’s proceeding because the jury’s fact finding determines, one way or the other, whether the injury for which compensation has been paid by the Authority was caused under circumstances creating a liability in a third party to pay damages. Plainly, that is a substantial benefit.
38The fact that the Authority has an interest in and may benefit from that litigation is not a sufficient connection. The presence of a real and direct connection between the Authority as a non-party and the worker’s proceeding does not, of itself, demonstrate how that connection is material to the issue of the school’s costs in the worker’s proceeding.
39The Authority played no active part before the court during the trial supporting the worker to establish the liability of the school. The school has not been able to point to any aspect of the Authority’s connection to the worker’s proceeding that has caused it to incur costs, or incur increased costs, in the defence of that proceeding. The school did not identify, either by evidence or submission, any particular aspect or item of costs in the worker’s proceeding that was affected by the prospect of liability in the recovery action. The school submitted that some costs might be common to its defence of each proceeding but that contention merely restates the existence of the connection between the two proceedings that has been identified as a necessary but not a sufficient condition for a non party costs liability to be found. The fact that costs are common does not show that the defence of the recovery action has made a real and material contribution to the costs incurred by the school in the worker’s proceeding.
40Taking all of those considerations into account and for the reasons that I have expressed, I refuse the school’s application for a non-party costs order in the worker’s proceeding and for the costs order to be made in its favour in the recovery action to be extended to include common costs incurred in the worker’s proceeding. [5]
The applicant’s bill of costs as filed claims professional costs of $118,119.81 and disbursements in the sum of $237,197.08, a total of $355,416.49. The bill includes a number of items where the description includes a notation that the item is apportioned to the fifty percent. From this notation, it can be presumed, that the sum claimed is half of the amount incurred. The remaining half, presumably the draftsperson assumes, is common with the worker’s proceeding. Examples of such claims are item 65 which claims perusing Plaintiff’s (Worker’s Proceeding) Notice to the school (Worker’s Proceeding) to Admit Facts (apportioned as to fifty percent) and item 66, which claims drawing a Notice of Dispute in reply. These are documents filed in the worker’s proceeding only. There are other similar claims throughout the bill. The most significant in monetary terms are claims for an instructing solicitor and counsel’s fees for the 21 day trial of the worker’s proceeding.
The respondent’s Notice of Objection commences with a General Objection that:
The plaintiff submits that the bill of costs has not been drawn in accordance with the Orders, having regard to the ruling delivered by His Honour Justice Dixon on 8 February 2013 which expressly limits the scope of the Order by excluding any entitlement to claim common costs.
At the commencement of the taxation the applicant sought leave to file an amended items in the bill of costs that are claimed as apportioned to the full cost amount of each apportioned item. At present the amended bill has not been filed and its filing is opposed by the respondent. The applicant submitted that the costs order states that the respondent is to pay all necessary or proper costs required for or the attainment of justice and to defend the applicant’s rights. It was submitted that these costs must include costs that are common with the worker’s proceeding. Examples of such costs, the applicant submitted, are the costs of reading medical and investigation reports as they would have application to both proceedings. The applicant submitted that counsel retained for the trial was required to cross-examine witnesses and call evidence for a joint purpose of defending both the worker’s action and the recovery action. As such:
‘the common costs (including disbursements) were necessarily and properly incurred, or at least necessarily or properly incurred, in the defence of the VWA’s recovery action and in defence of the worker’s proceeding. The fact that they were incurred in the defence of both proceedings does not deprive them of their character as costs necessarily or properly incurred in the defence of the VWA’s recovery proceeding’.
In both cases, orders were made that the respective plaintiffs pay the School’s costs. In each proceeding, such costs include cost peculiar to the proceeding and costs common to both proceedings. The effect of the orders was that the School could claim its common costs in either proceeding or both proceedings, but the rule against double recovery would preclude it from enforcing any such orders to recover common costs twice, once against Ms Hudspeth and again against the VWA.
It follows that the common costs must not be disallowed merely because they were also incurred in the defence of the claim made by Ms Hudspeth in her proceeding. They should be disallowed only if they do not satisfy the tests in rr. 63.29 and 63.30.1.[6].
[6]Applicant’s submission dated 27 November 2018 at para 22 - 24.
The applicant submitted that the order of Justice John Dixon did not exclude the applicant from seeking to recover the common costs of the worker’s proceeding.
The trial of the worker’s action was concluded prior to the commencement of the recovery proceeding. The applicant was required to defend two separate and distinct actions, one by the worker seeking damages for injuries suffered in the course of her employment at the applicant’s premises and the other brought by the VWA seeking recovery of compensation paid to the worker. The issues in each matter were different, although some evidence in the worker’s action was relevant to defence of the recovery action. If the plaintiffs in each proceeding had succeeded the applicant would most likely have been ordered to pay two distinct damages payments and the costs of each proceeding[7].
[7]Depending on any offers that might have been made.
The applicant relied on the affidavit of Andrew Reiner Seiter, sworn on 29 November 2018, to support of its application. Mr Seiter swears that the solicitors were retained to defend both actions. The solicitor’s file was a single, common file for both proceedings and included all correspondence, advices, court documents and other documents for both proceedings. Counsel retained to appear and advise in both actions received a brief common, rather than separate briefs for each action. Counsel marked only one fee, rather than separate fees for each proceeding. However, the respondent’s solicitors and counsel did not appear in the worker’s action. Rather the respondent’s counsel was present in court as an observer of the worker’s trial only.
The applicant seeks the costs that are common to both actions in the face of distinct costs orders made in separate matters. The role of the Costs Court is to quantify costs on the basis of the orders made. The order states that the applicant is entitled to payment of the costs of the recovery action. There is no order that the respondent is to pay, and the applicant is not entitled to claim, costs of its defence of the worker’s action as part of these costs. Justice Dixon’s ruling above[8] is clear. The application to include common costs of both actions as costs of the recovery proceeding was refused by him.
[8]At paragraphs 5 and 6.
This issue of orders allowing claims for common costs was discussed in Smith v Madden[9] where Justice Dixon (as he then was) observed at 136 – 137:
… [A]lthough there can be no apportionment of items of costs between the two parts of the cause, it may be necessary to divide an item of costs in two parts. This will occur when there is a single charge for work, but a severable part of that work relates to the claim, and the other severable part of the work relates to the counterclaim. It will then be necessary to divide the single charge in accordance with the two classes of work it covers. Division of charges in this way must be distinguished from apportionment, but it is easy to see that under cover of division, apportionment in the sense of the chancery practice may be really be applied. The likelihood of a disguised apportionment thus occurring is not lessened by the use of the word “apportion” to describe the division necessary. Indeed, the subject is embarrassed by the ambiguity, generality and indefiniteness of much of the terminology employed in the cases. Some attempt, however, has been made to find more specific terms. Charges which cover, without discrimination, work referable to the action and work referable to the counterclaim have been called “mixed” … An example of such a mixed item is a fee of a pleader for drawing the defence and counterclaim or drawing a reply that includes a defence to a counterclaim. Such a fee covers work that belongs to the claim and severable work that belongs to the counterclaim. In contrast to such mixed items, there are items that serve as much the purpose of the claim as the counterclaim. These are “common” items. Thus, the costs of witnesses whose evidence relates to an issue arising both on the claim and on the counterclaim would be a common item … But there are many items … which are not common … They, of course, all form part of the costs of the action, but so do the common items. The mixed items must, however, be divided, and a proper part attributed, to so much of the work covered by the charges as belongs to the counterclaim and the rest of the action … It is possible that a charge or item may cover some work belonging to the claim, some work belonging to the counterclaim and some that is common to both. In such a case the division should be of the amount properly attributable to the work relating to the counterclaim from that representing the work with reference to the claim and from the work common to both. The two latter form part of the costs of the action.
[9][1946] HCA 19; (1946) 73 CLR 129 (19 July 1946).
After citing this passage Justice Henry, in Geatches v Anglo Coal (Moranbah North Management) Pty Ltd & Anor,[10] said:
Thus, a so-called “mixed cost” may result in a division of the cost attributable to the action against one party compared to the action against another; whereas a so-called “common costs” would not be so divided and a successful party would get the whole of the assessed amount. On the face of it, the only way to achieve an apportionment of the latter category is for the court to order it expressly. The need for that exceptional course to be specifically articulated was emphasised by the Chief Justice in Parker v Borg [2002] QSC 215 where his Honour said:
“The meaning of this order is plain and the implicit rationale for it having been made as covering all costs, equally plain.
I would think it falls to a defendant in this situation, seeking to have the recoverable costs limited, to ensure that the order made is specifically limited, otherwise where an order is made in the terms used by this learned judge it should, in my view, receive its natural interpretation; that is, as covering the costs of the proceedings as against all defendants.”
[10][2014] QSC 106.
The applicant has applied for a prospective ruling on whether the costs of one action can be recovered as ‘common’ costs in the other action. The Costs Court has the power to apportion or divide items of costs where proceedings were heard together or are conducted in tandem. However these costs are not ‘common’ to the proceedings as the issues involved were different between the proceedings. Some work done in one matter may have relevance to the prosecution or defence of the other matter. It is likely that correspondence may refer to both actions and the relevant parts may be allowed as costs of the recovery action. However, such allowances are different to the concept of ‘common costs’ where work is claimable for the defence of both actions. The costs orders made in the worker’s action are for the worker to pay the applicant School’s costs of its successful defence. The applicant submitted that there had been a compromise of the costs order in the worker’s action following the worker’s successful appeal. That compromise does not change the orders made that the respondent pay the applicant’s costs of the recovery action only. By seeking a prospective ruling before the commencement of the taxation of costs that the costs of the recovery action include ‘common costs’ the applicant is seeking to circumvent the clear order for costs in the recovery action. Professor Dal Pont in Law of Costs states:
If two separate sets of proceedings are heard together because they share common features, it may be a matter of pure chance whether the expense of presenting an argument or evidence relevant to the common feature falls within one or the other sets of proceedings. It is consistent with the interests of justice in such a case that the court’s jurisdiction to make a global order for costs relating to both sets of proceedings not be fettered by the imposition of any implied limitation upon that jurisdiction. [11]
[11]Dal Pont Law of Costs (2018) at 11.64 Citations omitted.
However, Justice John Dixon declined to make such an order, the proceedings were not heard together and specific orders have been made in each. This ruling does not prevent argument on an item by item basis that the costs claimed are necessary or proper for the defence of the recovery claim. However it is not possible to rule on these items prospectively. It is a matter for the applicant to obtain advice and act accordingly. Presumably the current bill of costs was filed after receiving such advice. If the applicant now seeks to amend its bill of costs on the basis of its current advice, as was indicated at the hearing, then such application can be dealt with after these reasons have been considered by the parties.
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