Tsahrelias v Hanna & LH Holding (No 2)
[2024] VSC 476
•13 August 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
CRIMINAL DIVISION
S ECR 2023 0161; S ECR 2023 0102
| Between: | |
| GEORGIA TSAHRELIAS | Applicant |
| -and- | |
| LAITH HANNA | First Respondent |
| -and- | |
| L H HOLDING MANAGEMENT PTY LTD (ACN 118 908 660) | Second Respondent |
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JUDGE: | Croucher J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | By written submissions dated 25 July, 6 August and 7 August 2024 |
DATE OF JUDGMENT: | 13 August 2024 |
CASE MAY BE CITED AS: | Tsahrelias v Hanna & LH Holding (No 2) |
MEDIUM NEUTRAL CITATION: | [2024] VSC 476 |
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COSTS — Where applicant succeeded in application to lift stay on compensation order but failed in application under slip rule — Whether costs should follow event — Whether parties should bear their own costs — Whether costs should be paid on standard basis or indemnity basis — Order that respondents to pay applicant’s costs and, in default of agreement, those costs to be taxed on the standard basis, which may occur immediately — Supreme Court Act 1986 (Vic), s 24; Sentencing Act 1991 (Vic), s 85K; Supreme Court (General Civil Procedure) Rules 2015 (Vic), order 63.20.1.
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APPEARANCES: | Counsel | Solicitors |
| For the applicant | Mr P Duggan | Carbone Lawyers |
| For the respondents | Ms M Isobel | Ward & Co Legal Consultants |
HIS HONOUR:
Overview
This is an application for costs by Georgia Tsahrelias following her successful application for an order lifting a stay (effected by operation of law) on a compensation order for $120,000 made in her favour against Laith Hanna and LH Holding Management Pty Ltd (“LH Holding”).[1]
[1]See Tsahrelias v Hanna & LH Holding [2024] VSC 420.
Ms Tsahrelias submits that costs should follow the event. She also submits that there should be indemnity costs because of the behaviour of the respondents since the compensation order was agreed and then made.
Mr Hanna and LH Holding submit that the parties should bear their own costs. Part of their argument relies on the general rule to that effect in s 85K of the Sentencing Act 1991 (Vic). They also rely on the fact that Ms Tsahrelias had only partial success, and only then on a point that was not at the forefront of her submissions.
For reasons that follow, I have determined that Mr Hanna and LH Holding should pay Ms Tsahrelias her costs and that, in default of agreement, those costs are to be taxed on a standard basis, which may occur immediately.
Background
I turn first to the background to the dispute.
On 19 February 2024, following a plea of guilty by LH Holding to the workplace manslaughter of Michael Tsahrelias, I sentenced the company to a fine of $1,300,000, with conviction. Further, upon his plea of guilty, I sentenced Mr Hanna, with conviction, to a two‑year community correction order, with conditions, for being an officer (viz, the sole director) of LH Holding when the company had committed workplace manslaughter attributable to the officer’s failure to take reasonable care.
The same day, by agreement between the relevant parties, pursuant to s 85B of the Sentencing Act, I ordered that LH Holding and Mr Hanna pay Georgia Tsahrelias (who is Michael Tsahrelias’s sister) $120,000 in compensation, and dismissed claims for compensation by their parents.
When imposing the sentences and making the compensation order, I delivered an oral summary of my reasons, and then published full written reasons on 6 March 2024.[2]
[2]See R v LH Holding & Hanna [2024] VSC 90.
On 7 June 2024, I heard an application by Ms Tsahrelias for, among other things, an order, pursuant to s 311(2) of the Criminal Procedure Act 2009 (Vic) (“the CPA”), lifting the stay on the compensation order effected by operation of the same provision. I reserved my decision.
On 1 July 2024, I granted Ms Tsahrelias’s application in part, and ordered to the effect that, prospectively, there was no longer any stay in respect of the compensation order. I gave a brief summary of reasons for my decision, and indicated that I would publish detailed reasons at a later date, which I did on 17 July 2024.[3]
[3]See Tsahrelias v Hanna & LH Holding [2024] VSC 420.
Also on 1 July 2024, I indicated that, since both parties had sought their costs of this application, I would determine the question of costs on written submissions, unless, having considered those submissions, I considered it necessary to hear oral argument. Now that I have received and considered the parties’ written submissions on costs, I have determined that it is unnecessary to hear oral argument.
Consideration
Introduction
Counsel’s written submissions essentially raise three issues to be determined.
The first is whether Ms Tsahrelias’s costs of and incidental to the application should be paid by Mr Hanna and LH Holding or whether instead the parties should bear their own costs.
The second issue is whether, if Ms Tsahrelias is to have her costs, in default of agreement, they should be taxed on an indemnity basis or a standard basis.
The third is whether such costs may be taxed immediately.
Costs should follow the event
Ms Isobel, who appeared for Mr Hanna and LH Holding (“the respondents”), submitted that Ms Tsahrelias (“the applicant”) failed on her principal arguments and succeeded on an issue that either really became the Court’s point on a novel area of the law or, at least, was not a point at the forefront of the applicant’s submissions.
Mr Duggan, who appeared for Ms Tsahrelias, accepted that some of his arguments concerning proposed amendments to the compensation order failed. They included those as to the application of the slip rule, the express specification in the compensation order of the date up to which no order for costs would apply and of the date from which penalty interest would run, and that the lifting of the stay should be ordered nunc pro tunc. However, Ms Tsahrelias was successful in her application for an order, pursuant to s 311(2) of the CPA, directing the lifting of the stay of the compensation order effected by operation of the same provision. In Mr Duggan’s submission, for the purposes of the general rule that costs follow the event, success on that part of the application was the relevant event.
The costs of and incidental to all matters in the Court are in the discretion of the Court. Further, the Court has full power to determine by whom and to what extent the costs are to be paid.[4]
[4]See s 24 of the Supreme Court Act 1986 (Vic).
In my view, Mr Duggan’s submissions should be accepted, and they should cause me to exercise the discretion to order that the respondents pay the applicant’s costs of and incidental to the application.
While it is true that Ms Tsahrelias’s application failed in the respects identified, she succeeded in obtaining an order lifting the stay. Her application was directed principally at causing the respondents to be required to pay the compensation order immediately, which the respondents had resisted at every turn. While she failed under the slip rule, she succeeded in that endeavour under s 311 of the CPA.
It is also true that Ms Tsahrelias’s success in the latter regard concerned a novel issue, at least in so far as there were no authorities on the point. But it involved principally a conventional exercise in statutory construction, and an examination of the DPP’s notices of appeal and written cases.
Ms Isobel submitted that there is no reason to depart from the general rule about costs in compensation order applications as set out in s 85K of the Sentencing Act, which is in these terms:
Despite any rule of law or practice to the contrary or any provision to the contrary made by or under any other Act, each party to a proceeding under this Subdivision must bear their own costs of the proceeding unless the court otherwise determines.
In my view, however, it is necessary to determine otherwise in this case. The respondents resisted Ms Tsahrelias’s application on the basis that this Court had no jurisdiction to lift the stay effected by s 311 of the CPA, and that the stay should remain in place until the DPP’s appeals were determined. For the reasons I explained in the judgment, I rejected the respondents’ submissions in both respects. While the respondents were correct to submit that s 311 effected a stay, that did not prevent them from paying the compensation order. Yet, if the stay were not lifted, there was a greater chance that LH Holding would be insolvent before Ms Tsahrelias had recovered the compensation payable to her. Thus, in order to protect her position, she was, in effect, forced to pursue her application to this Court and to incur costs in doing so.
In those circumstances, I think that the general rule — that costs follow the event — should apply, and the respondents must pay Ms Tsahrelias’s costs of and incidental to the application.
Costs on the standard basis, not indemnity costs
Mr Duggan submitted that the respondents’ conduct since the indication of their consent to the making of the compensation order at the plea hearing, and since the formal making of the order subsequently, invited the imposition of an indemnity costs order.
He submitted that the discretionary considerations to which regard should be had in considering an order for indemnity costs include the following:
a)As early as the plea hearing on 4 December 2023, the respondents indicated their consent to pay the compensation order, and made various statements to the Court of goodwill regarding payment of that order, which they relied on as a factor in mitigation of sentence.
b)Notwithstanding the foregoing statements to the Court, the making of the compensation order on 19 February 2024, my expression (in my written reasons of 6 March 2024) of the desirability of the compensation being paid forthwith, and the filing and service of Ms Tsahrelias’s application on 8 May 2024, the respondents failed to make any payment whatsoever of the compensation order until 9 May 2024.
c)On 9 May 2024, Mr Hanna paid the applicant $5,000 of the amount owing, but offered Ms Tsahrelais no indication concerning whether or when any further payment or payments would be made.
d)On 1 July 2024, I made orders removing the stay on the compensation order, and provided a summary of my reasons.
e)On 17 July 2024, I published my full written reasons, which included:
i.express assumptions “that the proceedings in respect of the statutory demand will now fall away [which] should save all parties from incurring further expense”;
ii.my urging of the respondents “to pay that compensation in full as soon as practicable”; and
iii.my noting that it would seem “there would be ample funds in the company alone to pay Ms Tsahrelias” and/or to obtain a loan “at a cheaper rate than penalty interest”.[5]
f)Since 1 July 2024 and despite a formal demand upon them, the respondents:
i.have paid nothing further to the applicant;
ii.have offered no explanation for that non-payment; and
iii.have made no offers of compromise, payment by instalments, or similar.
[5]Tsahrelias v Hanna & LH Holding [2024] VSC 420 at [171]-[174].
Mr Duggan submitted that the foregoing matters (and other considerations) showed that the respondents, as the losing parties on the application, engaged in unmeritorious, deliberate and high-handed conduct. That conduct, he submitted, warranted the Court showing its disapproval via an award of indemnity costs, which would also prevent Ms Tsahrelias — the successful party — from being left out of pocket.
While Ms Isobel did not address the issue of indemnity costs, her submissions concerning the points on which Ms Tsahrelias failed, in my view, do have a bearing on whether costs should be ordered on a standard basis or an indemnity basis. While the matter would have taken a day’s hearing with or without the losing points pursued by Ms Tsahrelias, I expect the preparation for all points would involve somewhat more work than would be required on just the winning point.
The Court is entitled to examine the realities of the case and will attempt to do substantial justice as between the parties on matters of costs.[6] As I indicated earlier, while the respondents were correct in submitting that there was, by operation of s 311, a stay on the compensation order until it was lifted, that did not prevent them from ensuring that Ms Tsahrelias was paid before that stay was lifted. On the other hand, I accept that some of the preparation undertaken by both parties concerned points pursued by Ms Tsahrelias that failed in the end. In those circumstances, I think that substantial justice will be achieved as between the parties if costs are ordered on a standard basis, not on an indemnity basis.
[6]See, e.g., Chan & Ors v Chen & Ors [2009] VSCA 233 at [10] (per Maxwell P, Redlich JA and Forrest AJA).
Costs may be taxed immediately
Rule 63.20.1 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) provides as follows:
If an order for costs is made on an interlocutory application or hearing, the party in whose favour the order is made shall not tax those costs until the proceeding in which the order is made is completed, unless the Court orders that the costs may be taxed immediately.
In Mr Duggan’s submission, the compensation order proceeding now appears to have been concluded, and an order under rule 63.20.1 should be unnecessary. Nevertheless, for the avoidance of (what he described as) the considerable doubt borne out of the applicant’s recent unhappy experience in this matter, he submitted that the costs order in her favour should include an order enabling her to tax costs immediately, if thought necessary.
Ms Isobel addressed no argument on this point.
In the circumstances of this case — especially given the almost certain prospect that LH Holding will become insolvent at some point — I am prepared to make such an order.
Orders
Accordingly, I shall order that:
1) the respondents pay the applicant’s costs of and incidental to her application dated 8 May 2024;
2) in default of agreement, those costs be taxed on a standard basis; and
3) such costs may be taxed immediately.
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