Tucker v State of Victoria (Costs Ruling No 2)
[2020] VSC 192
•21 April 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
EMPLOYMENT AND INDUSTRIAL LIST
S CI 2017 05032
| TOBIAS JOHN TUCKER (also known as Toby Tucker) | Plaintiff |
| v | |
| THE STATE OF VICTORIA | First Defendant |
| PAUL BRODERICK (in his capacity as the Commissioner of State Revenue) | Second Defendant |
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JUDGE: | Ierodiaconou AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | Determined on the papers (submissions filed on 26 March 2020, 30 March 2020, 6 April 2020). |
DATE OF RULING: | 21 April 2020 |
CASE MAY BE CITED AS: | Tucker v State of Victoria (Costs Ruling No 2) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 192 |
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COSTS – Stay of execution – Proposed appeal application – Short stay – Cost should not be reserved – Offer of compromise made by the defendants pursuant to Order 26 of the Supreme Court (General Civil Procedure)Rules 2015 – Offer not accepted – Plaintiff should pay indemnity costs
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APPEARANCES: | Counsel | Solicitors |
| The Plaintiff appeared in person | ||
| For the Defendants | Mr J Bourke QC with Ms R Preston | Maddocks |
TABLE OF CONTENTS
Summary.............................................................................................................................................. 1
Issues in Dispute................................................................................................................................ 1
Is recusal required?............................................................................................................................ 2
Analysis.......................................................................................................................................... 2
Should judgment be stayed?........................................................................................................... 2
Analysis.......................................................................................................................................... 3
Should costs be reserved?................................................................................................................. 4
Analysis.......................................................................................................................................... 4
Should the plaintiff pay indemnity costs?.................................................................................... 5
Analysis.......................................................................................................................................... 6
Costs of Notice to Produce dated 10 October 2019.................................................................... 13
HER HONOUR:
This determination addresses the issue of costs in respect of a trial concerning whether or not an undertaking as to damages could be enforced. It was held to be enforceable (‘the undertaking as to damages judgment’).[1]
[1]Tucker v State of Victoria (Undertaking as to Damages) [2020] VSC 121.
The first defendant seek costs on an indemnity basis and relies on an offer of compromise. It seeks costs on a standard basis for the prior period.
The plaintiff seeks recusal on the ground of apprehended bias. He seeks payment of damages be stayed or reserved pending appeals and other proceedings, and says that s 570 of the Fair Work Act 2009 is applicable. Further, the plaintiff submits that the defendants have breached the Civil Procedure Act 2010 (‘CPA’) and are disentitled to costs.
Summary
I will make orders that the plaintiff pay the first defendant’s costs on an indemnity basis consequential to the offer of compromise and on a standard basis for the prior period. I will make orders that the plaintiff pay the costs of a notice to produce on an indemnity basis. Execution of judgment will be stayed until 4.00pm on 30 April 2020 to enable the plaintiff to file his proposed appeal.
Issues in Dispute
The following issues shall be examined in turn.
(a) Is recusal required?
(b) Should judgment be stayed?
(c) Should costs be reserved?
(d) Should the plaintiff pay indemnity costs?
(e) Costs of Notice to Produce dated 10 October 2019.
Is recusal required?
The plaintiff says that I should recuse myself from this ruling because a perception may arise that I may strive to be consistent with an earlier costs ruling, now under appeal, and as such an apprehension of bias arises.
The defendants say that there is no authority to support the plaintiff’s contention and that such a recusal would be contrary to the overarching purpose of the CPA, particularly efficiency.
Analysis
Recusal is not required.
Firstly, the plaintiff’s submission is misconceived. I have already held that s 570 of the Fair Work Act 2009 is not applicable to this proceeding (‘the substantive costs ruling’).[2] The undertaking as to damages trial is part of the proceeding. Accordingly, a separate analysis of whether s 570 is applicable is unnecessary.
[2]Tucker v State of Victoria (Costs Ruling) [2019] VSC 481.
Secondly, the plaintiff relies on Livesey v New South Wales Bar Association.[3] This does not provide authority for his contention. It concerns findings of fact or credibility in a previous case which are of significance in a subsequent case.[4] Here, the costs ruling concerns a question of law.
[3](1983) 151 CLR 288 (‘Livesey’). See the oft-cited Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 for a more recent High Court authority on recusal.
[4]Livesey at 300 (per Mason, Murphy, Brennan, Deane, Dawson JJ).
Should judgment be stayed?
The plaintiff submits that payment of damages should be stayed pending appeal of the substantive costs ruling and a proposed appeal of the undertaking as to damages judgment. Further, that there be a stay pending the determination of his unfair dismissal claim in the Fair Work Commission. He says this will protect his appeal rights by preventing the defendants from premature enforcement, will limit the impact of any claims and counterclaims, and reduce litigation costs going forward.
Alternatively, the plaintiff seeks a stay of 42 days in order to file his appeal papers.
The plaintiff refers to the defendants’ obligations as Model Litigants. He refers to a Court of Appeal Notice to Practitioners dated 1 May 2017.
The defendants say there is no sound basis for staying the orders. The usual basis is that if a party is successful on appeal they may not be able to recover the judgment sum that has already been paid. That is not the case here.
Analysis
Rule 64.39 of the Supreme Court (General Civil Procedure) Rules 2015 concerns stay applications and the Court of Appeal. It provides:
Stay of execution
Except so far as the Court of Appeal otherwise orders—
(a)an application for leave to appeal or appeal shall not operate as a stay of execution or of proceedings under the decision appealed from; and
(b) no intermediate act or step shall be invalidated.
Practice Notice SC CA 3 ‘Civil Applications’ currently applies to civil appeals. Paragraph 13 explains the procedure for applications, including stay applications. Paragraph 13.8 provides:
In respect of an application for a stay pending determination of an application for leave to appeal, ordinarily the stay application will not be considered before the application for leave to appeal and any accompanying required documents have been filed and served in accordance with the Rules and this Practice Note.
There is power generally to grant a stay pursuant to the inherent jurisdiction of the Court and also pursuant to r 66.16. It provides:
Stay of execution
The Court may stay execution of a judgment.
There are well-established principles concerning whether or not a stay should be granted until the appeal is determined. They provide, amongst other things, that a stay should not be granted unless there is at least an arguable ground of appeal.[5] It would be pre-emptive and inappropriate to rule on this issue as the primary decision-maker. That application is not properly made before me.
[5]Cellante v G Kallis Industries Pty Ltd [1991] 2 VR 653 (Young CJ and Brooking J); Maher v Commonwealth Bank of Australia [2008] VSCA 122 [19]–[27] (Redlich and Dodds-Streeton JJA).
Turning now to the plaintiff’s application for a 42 day stay to enable the filing of appeal papers. I will make orders for a short stay to enable the plaintiff, who is a solicitor although representing himself, time to prepare and file his appeal papers. There is no prejudice to the first defendant that could not be met by interest. The undertaking as to damages judgment was published on 19 March 2020. I will stay the orders for a period of 42 days calculated from that date.
As to the alternative ground, being a stay on the basis of the unfair dismissal proceeding, the plaintiff has not identified the special or exceptional circumstances that warrant a stay on the basis of that proceeding.
Should costs be reserved?
The plaintiff says that the question of costs should be reserved pending the determination of the substantive costs ruling appeal.
The defendants say there should be no delay in making the costs order. The plaintiff could amend his notice of appeal to include it if he wished. The Court of Appeal has not yet set a date for the hearing of the substantive costs ruling. The defendants say proceeding in this way is consistent with the overarching purpose in s 7 of the CPA.
Analysis
The cost issue is before me for adjudication and I should proceed to determine it. As the defendants say, this is consistent with the overarching purpose in s 7 of the CPA. It is ‘is to facilitate the just, efficient, timely and cost‑effective resolution of the real issues in dispute’. Costs should not be reserved because of the substantive costs ruling appeal. This is not a circumstance where there is an imminent determination. The application for leave to appeal is yet to be listed.
Should the plaintiff pay indemnity costs?
The first defendant seeks costs on an indemnity basis consequential to the offer of compromise served on the plaintiff. It was not accepted and it was held he should pay damages in excess of the offer. The defendants’ solicitor deposes that the offer was made after service of their outline of argument and affidavits of their witnesses.[6] They say that the plaintiff was accordingly on notice of the case and evidence against him.
[6]Affidavit of Alison Paget Gallaher, the defendants’ solicitor, affirmed on 26 March 2020 (‘the Gallaher affidavit’).
The defendants say there is a prima facie entitlement to recover costs on an indemnity basis. There is no reason why this has been displaced.
The plaintiff says the offer of compromise was premature and disingenuous. He says offers must be genuine and this was not.
The plaintiff submits that, firstly, the defendants have breached s 24 of the CPA and paragraph 2(g) of the Attorney-General Model Litigant Guidelines in their prosecution of the undertaking as to damages. To the extent relevant, given the issues in the substantive costs appeal before the Court of Appeal, the defendants’ conduct disentitles them to costs. He says that these are relevant matters in the Court’s discretion as to award costs.
The plaintiff relies on his affidavit in which he deposes that the defendants spent approximately $543,000 in less than four months in litigation against him. He says these costs were neither reasonable nor proportionate and refers to the service by the defendants of submissions on costs prior to the Court seeking those submissions.
The plaintiff says, secondly, that it was not unreasonable for him to disregard the offer of compromise. It was served prior to the parties filing their submissions and materials. No explanation was provided why the offer should be accepted or why their claim was bound to succeed. Further, the plaintiff says that it was not unreasonable for him to disregard the offer given the uncertainty as to whether s 570 of the Fair Work Act 2009 applied to the proceeding.
Analysis
On 22 August 2019, the defendants served an offer of compromise on the solicitor acting for the plaintiff at that time.[7] They sought to compromise the undertaking as to damages claim by the plaintiff paying $150,000 and costs on a standard basis to date. It was not accepted.
[7]Exhibit ‘APG-1’ to the Gallaher affidavit.
Rule 63.16 provides:
Offer of compromise
Where an offer of compromise is served and the offer has not been accepted at the time of verdict or judgment, liability for costs shall be determined in accordance with Rule 26.08.
Rule 26.08 provides:
Costs consequences of failure to accept
(1)This Rule applies to an offer of compromise which has not been accepted at the time of verdict or judgment.
(2)Where an offer of compromise is made by a plaintiff and not accepted by the defendant, and the plaintiff obtains a judgment on the claim to which the offer relates no less favourable to the plaintiff than the terms of the offer, then, unless the Court otherwise orders, the plaintiff shall be entitled—
(a)if the claim of the plaintiff is for damages for or arising out of death or bodily injury, to an order against the defendant for the plaintiff's costs in respect of the claim taxed on an indemnity basis;
(b)in the case of any other claim of the plaintiff, to an order against the defendant for the plaintiff's costs in respect of the claim before 11.00 a.m. on the second business day after the offer was served, taxed on the ordinarily applicable basis and for the plaintiff's costs thereafter taxed on an indemnity basis.
(3)Where an offer of compromise is made by a defendant and not accepted by the plaintiff, and the plaintiff obtains a judgment on the claim to which the offer relates not more favourable to the plaintiff than the terms of the offer, then, unless the Court otherwise orders—
(a)the plaintiff shall be entitled to an order against the defendant for the plaintiff's costs in respect of the claim before 11.00 a.m. on the second business day after the offer was served, taxed on the ordinarily applicable basis; and
(b)the defendant shall be entitled to an order against the plaintiff for the defendant's costs in respect of the claim thereafter taxed on the ordinarily applicable basis.
(4)Where an offer of compromise is made by a defendant and the plaintiff unreasonably fails to accept the offer and the claim to which the offer relates is dismissed or judgment on the claim is entered in favour of the defendant, then unless the Court otherwise orders—
(a)the defendant shall be entitled to an order against the plaintiff for the defendant's costs in respect of the claim until 11.00 a.m. on the second business day after the offer was made, taxed on the ordinarily applicable basis; and
(b)the defendant shall be entitled to an order against the plaintiff in respect of the defendant's costs after the time referred to in paragraph (a) taxed on an indemnity basis.
(5)Where a plaintiff obtains judgment for the recovery of a debt or damages and—
(a)the amount for which the Court pronounces judgment includes an amount for interest or damages in the nature of interest; or
(b)by or under any Act the Court awards the plaintiff interest or damages in the nature of interest in respect of the judgment amount—
for the purpose of determining the consequences as to costs referred to in paragraphs (2) and (3) the Court shall disregard so much of the amount recovered by or awarded to the plaintiff for interest or damages in the nature of interest as relates to the period after the day the offer of compromise was served.
(6)For the purpose only of paragraph (5), the Court may be informed of the fact that the offer of compromise was served, and of the date of service, but shall not be informed of its terms.
(7)Paragraphs (2), (3) and (4) shall not apply unless the Court is satisfied by the party serving the offer of compromise that that party was at all material times willing and able to carry out the party's part of what was proposed in the offer.
(8)Where the plaintiff obtains judgment for the recovery of a debt or damages, and the amount of the debt or the damages was not in dispute, but only the question of liability, paragraph (2) shall not apply unless the Court is satisfied that the plaintiff's offer was of a genuine compromise.
The plaintiff relies on North West Melbourne Recycling Pty Ltd v Commissioner of State Revenue (No 2).[8] In that decision, Croft J held that the defendant should have known that there was no chance of success and consequently an indemnity costs order was justified.[9] The Model Litigant Guidelines were considered and held to be obligations that were additional to CPA obligations.[10] Further, that the Court is empowered by s 29 of the CPA to make orders that costs be paid on an indemnity basis as a result of a breach of the overarching principles[11] (section 29 of the CPA outlines sanctions for breach of the overarching obligations). Croft J held that it was unreasonable for the defendant to reject the offer of compromise having regard to the strength of the plaintiff’s case, and that the plaintiff had made a genuine offer to settle.[12]
[8][2017] VSC 726 [16].
[9]Ibid [4].
[10]Ibid [11].
[11]Ibid [16].
[12]Ibid [2017] VSC 726 [30]–[31].
In Marriner v Australian Super Developments Pty Ltd, the Court of Appeal held:[13]
In our opinion, Sloss J was correct in taking into account the provisions of the CPA in determining whether the Marriner parties acted unreasonably in not accepting the deemed Calderbank offer. That Act contains overarching obligations which seek to encourage parties to civil litigation to settle such litigation and to ensure that legal costs are reasonable and proportionate having regard to the amount in dispute. It must follow that provisions such as these may, in an appropriate case, inform the question of whether non-acceptance of a Calderbank offer was unreasonable. In the light of the long and tortuous history of the present litigation and the alarmingly large costs that had been expended on it, this was an appropriate case for proportionality considerations to be taken into account. Those considerations were relevant to the overarching purpose of facilitating the just, efficient, timely and cost-effective resolution of the real issues in dispute.
[13][2016] VSCA 141 [266] (citations omitted).
A key distinction between these cases and the circumstances here is that the CPA was taken into account in assessing the conduct of the recipient of the offer, and whether or not it was reasonable to accept the offer, not the general conduct of the party making the offer.
I adopt the following statement of principles given recently by the Court of Appeal.[14]
[14]PCCEF Pty Ltd v Geelong Football Club Ltd [No 3] [2019] VSCA 191 [23]–[25] (citations omitted).
The party seeking to displace the prima facie rule in r 26.08 bears the onus. The onus is not readily discharged. In Gamboni, Tate JA and Kyrou AJA stated:
In Simonovski, Ashley J stated that while the Court retains a discretion under r 26.08(2)(b) of the … Rules, an ‘order otherwise’ should not be lightly made, and that the prima facie position established by the rule ‘is a strong one, not easily displaced’.
In Saric, McMillan J referred to the language used in the authorities to describe the kinds of case where the prima facie rule has been displaced:
The Court must exercise caution in departing from the prima face rule and only do so in cases that warrant such a departure, invariably expressed in terms such as ‘compelling and exceptional circumstances’, ‘for proper reasons which, in general, only arise in an exceptional case’ and ‘special circumstances’.
Whether the Court will ‘otherwise order’ depends on whether doing so advances the purpose of O 26. That purpose, broadly speaking, is to encourage the compromise of litigation and the saving of the private and public costs associated with it. The reasonableness of the rejection or non-acceptance of an offer is one matter that may be taken into account, but is not of itself determinative.
The plaintiff has not displaced the prima facie rule in r 26.08. It should apply for the reasons below. Consequently, pursuant to r 26.08, orders will be made requiring the plaintiff to pay indemnity costs.
As the plaintiff deposes, he elected to disregard the offer of compromise:[15]
(a)I regarded it as a disingenuous offer;
(b)I considered that it was served prematurely in advance of the filing of my materials;
(c)at [the] time it was served, there was no evidence from Paul Broderick, the relevant delegate holder; and
(d)my concerns that section 570 of the Fair Work Act 2009 (Cth) rendered the offer of compromise nugatory.
[15]Affidavit of the plaintiff affirmed on 25 November 2019 [19] (‘the plaintiff’s affidavit’).
These grounds do not constitute reasonable grounds for disregarding the offer of compromise for the following reasons.
Firstly, the offer of compromise was made in accordance with the rules and remained open for acceptance for 14 days. The offer was a genuine compromise. Had the plaintiff accepted the offer, the amount he paid would be almost $50,000 less than the damages awarded to the first defendant at trial. That is, almost 25% less than the damages ultimately awarded.
The defendants did not explain why the offer should be accepted or how it had been calculated. Nor did the plaintiff seek an explanation. The defendants’ outline of argument had been served. The plaintiff was certainly in a position to compare the offer with the quantum of damages being claimed as it was particularised in Annexure 1 to the defendants’ outline of argument filed on 16 August 2019. The offer of compromise was an amount that was slightly less than the plaintiff’s gross salary amount for the relevant period.
Secondly, at the time the offer was served, the defendants had already filed substantial materials including affidavits and their outline of argument. It is immaterial that the plaintiff had not filed his materials at that time. He did not file affidavits in respect of any witness other than himself.
Thirdly, at the time of the offer of compromise, there was no evidence from the second defendant. The second defendant ultimately gave evidence at the trial as he was subpoenaed by the plaintiff. However, the plaintiff was in the position to assess his likelihood of successfully defending the undertaking as to damages claim. Although he did not yet know the evidence that the second defendant would give, it was evident on the correspondence common to the parties that by 23 February 2018 they all proceeded on the basis that the termination of his employment was imminent.[16]
[16]Undertaking as to damages judgment [76].
Fourthly, as discussed above, a determination had already been made that s 570 of the Fair Work Act 2009 did not apply to this proceeding.
For completeness, I will address the plaintiff’s submissions regarding the defendants’ expenditure on legal costs.
The plaintiff says that the defendants have breached the overarching obligations in s 24 of the CPA. Section 24 provides:
Overarching obligation to ensure costs are reasonable and proportionate
A person to whom the overarching obligations apply must use reasonable endeavours to ensure that legal costs and other costs incurred in connection with the civil proceeding are reasonable and proportionate to—
(a) the complexity or importance of the issues in dispute; and
(b) the amount in dispute.
The plaintiff deposes that he received the information regarding the amount of legal costs expended by the defendants concerning the plaintiff on 30 October 2019.[17] He exhibits a letter, a response from the SRO, regarding his freedom of information request indicating that for the period 7 June – 30 September 2019 approximately $455,000 was paid to legal practitioners, and approximately $88,000 was owing to legal practitioners.[18] The legal practitioners are said to include counsel, the firm on the record in this proceeding, and additionally the Victorian Government Solicitor’s Office. It is not evident that these monies were expended in relation to the undertaking as to damages trial. I do not draw that inference. The period predates the substantive judgment published on 16 July 2019.[19] The undertaking as to damages trial was only listed after that. Accordingly, the fees may include legal costs in defending the substantive proceeding. The plaintiff has also referred to other proceedings that he has initiated in the Fair Work Commission. It is not evident whether or not the costs relate to defending those proceedings.
[17]The plaintiff’s affidavit.
[18]Exhibit ‘TJT-01’ to the plaintiff’s affidavit.
[19]Tucker v State of Victoria [2019] VSC 420.
The plaintiff refers to costs submissions that were provided by the defendants to him on 7 November 2019 and prior to judgment.[20] The cover email dated 7 November 2019 states that they are provided so that the plaintiff will be in a position to respond to both applications on the day judgment is handed down, if required. I accept that explanation. The submissions were not wasted costs given the defendants succeeded at trial and rely upon them.
[20]Exhibit ‘TJT-01’ to the plaintiff’s affidavit.
The plaintiff has not established that the defendants have breached s 24 of the CPA.
The plaintiff says that the defendants have breached paragraph 2(g) of the Victorian Model Litigant Guidelines that requires the State of Victoria, its departments and agencies:
[W]here it is not possible to avoid litigation, keep the costs of litigation to a minimum, including by:
i.not requiring the other party to prove a matter which the State or the agency knows to be true;
ii.not contesting liability if the State or the agency believes that the main dispute is about quantum;
iii.taking such steps, if any, as are reasonable to resolve such matters as may be resolved by agreement and to clarify and narrow the remaining issues in dispute; and
iv.monitoring the progress of the litigation and, where appropriate, attempting to resolve the litigation, including by settlement offers, offers of compromise and ADR;
The plaintiff has not established the defendants’ legal spend breaches these guidelines. Indeed, the offer of compromise was consistent with the obligation to take reasonable steps to resolve matters as may be resolved by agreement. Had the plaintiff accepted the offer, then the defendants’ legal costs of trial would have been entirely avoided.
Finally, the defendants’ expenditure on legal costs in the undertaking as to damages trial will be an issue relevant to the taxation of indemnity costs. If there are any costs that are an unreasonable amount or unreasonably incurred, those costs are disallowed pursuant to r 63.30.1:
Indemnity basis
(1)Subject to paragraph (2), on a taxation on the indemnity basis all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred.
(2)Any doubt which the Costs Court may have as to whether the costs were unreasonably incurred or were unreasonable in amount shall be resolved in favour of the party to whom the costs are payable.
Costs of Notice to Produce dated 10 October 2019
On 16 October 2019, I made orders setting the plaintiff’s notice to produce wholly aside. The defendants seek the costs of the notice to produce on an indemnity basis as a consequence of the plaintiff’s conduct.[21]
[21]Defendant’s Outline of Submissions filed on 7 November 2019.
Costs should follow the event. Orders will be made requiring the plaintiff to pay the defendants’ costs of the notice to produce.
It is unnecessary to make a determination concerning the plaintiff’s conduct in relation to the notice to produce and whether it should attract an indemnity costs order in respect of the first defendant. Given the finding above that indemnity costs are payable to the first defendant following the offer of compromise, and that the notice to produce was served within that period, the indemnity costs order will include the costs of the notice to produce.
In respect of the second defendant, the costs of the notice to produce should be paid on an indemnity basis. The plaintiff’s conduct in serving the notice to produce and persisting in agitating it, was unmeritorious and inconsistent with the overarching purpose in s 7 of the CPA. The late service of the notice had the potential to jeopardise the close of the trial on 16 October 2019. It was served on 10 October 2019, after the closing of the defendants’ case on 24 September 2019. There was no forensic purpose for the notice to produce. On 14 October 2019, the plaintiff was put on notice by the defendants that if he did not withdraw the notice, they would issue a summons and seek indemnity costs. The notice was not withdrawn and the summons was issued.
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