Turner v State of Victoria
[2020] VSC 191
•24 April 2020
| IN THE SUPREME COURT OF VICTORIA |
AT MELBOURNE
COSTS COURT
COSTS COURT LIST
S CI 2012 04394
BETWEEN
| REBEKAH TURNER (BY HER NEXT FRIEND ANJA TURNER) | First Applicant |
| JAMES GRAY | Second Applicant |
| v | |
| STATE OF VICTORIA (DEPARTMENT OF EDUCATION AND EARLY CHILDHOOD DEVELOPMENT) | Respondent |
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JUDGE: | Wood AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 16 April 2020 |
DATE OF JUDGMENT: | 24 April 2020 |
CASE MAY BE CITED AS: | Turner & Anor v State of Victoria |
MEDUIM NEUTRAL CITATION: | (2020) VSC 191 |
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LEGAL COSTS – County Court scale – Certification of counsel fees – Interest on taxed costs – Section 101(1) Supreme Court Act 1986 – Costs set off – Rule 63.55 Supreme Court (General Civil Procedure) Rules 2015.
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APPEARANCES: | Counsel | Solicitors |
| For the First Applicant | Mr D Bean | Springvale Monash Legal Service Inc. |
| The Second Applicant in person | Just Law | |
| For the Respondent | Ms J Wirth | Maddocks |
| For Gabriel Kuek (Interested party) | Mr B Djung | Access Law |
HIS HONOUR:
The Court has already published reasons in this matter on 25 January 2018. The result at that time was the addition of Mr Gray as the second applicant in this proceeding. For simplicity, Mr Gray will be referred to as the second applicant in these reasons, even in relation to events that occurred prior to 2018 when he was not yet a party. A hearing occurred on 16 April 2020 to finalise the respondent’s liability for costs comprising fees owing to the second applicant. At the conclusion of the hearing the decision was reserved and I now publish the decision and reasons.
The second applicant previously acted as counsel for the first applicant in Victorian Civil and Administrative Tribunal (’VCAT’) proceedings brought against the respondent. The respondent was found liable for the first applicant’s costs at 90% of County Court scale ‘D’ in a VCAT order made on 11 November 2009.
Access Law were the solicitors on record for the first applicant in VCAT and initiated these proceedings in the Costs Court to recover these party/party costs against the respondent. The second applicant’s fees were included in that bill of costs.
In a consent order made by Costs Registrar Deviny on 7 November 2012, the first applicant’s costs were quantified (in part) and on an interim basis at $101,400. The fees of the second applicant were specifically excluded from that settlement figure.
The second applicant subsequently sued Gabriel Kuek (Access Law) and the first applicant in the County Court in proceeding CI 14 – 04136. The parties to that proceeding entered ‘Interim Terms of Settlement’ (‘Settlement’) on 10 May 2016. The Settlement provided (in part) for Mr Kuek to reactivate and finalise the taxation of the second applicant’s fees in the current proceeding.[1] A Costs Consultant (Blackstones) was to be appointed and the parties agreed to abide by any amount determined by this Court or, by agreement between the Costs Consultant and the respondent.[2] The second applicant released Mr Kuek and the first applicant from any claim for additional fees.[3] The second applicant agreed to pay the costs of the resumed taxation in this Court.[4]
[1]Paragraph 1 of the Settlement.
[2]Paragraphs 2 and 7 of the Settlement.
[3]Paragraph 10 of the Settlement.
[4]Paragraph 8 of the Settlement.
However, the issue of the costs of the County Court proceedings was expressed to remain outstanding[5] and any amount recovered from the respondent in the current Costs Court proceeding was to be ‘held in trust by the costs consultant or alternatively, be paid into court or any other place by written agreement.’[6] The reference to ‘court’ and ‘parties’ in that context was to the County Court and the parties to the County Court proceedings.
[5]Paragraph 13 of the Settlement.
[6]Paragraph 12 of the Settlement.
The taxation proceeding was reactivated in April 2017. Blackstones were appointed as costs consultants in the Settlement[7] and participated in an unsuccessful mediation in the current proceeding on 28 June 2017. Thereafter they were no longer involved in the current proceeding and Mr Gray (second applicant) appeared for himself and successfully applied to become the additional applicant to this proceeding as outlined in paragraph 1 above.
[7]Paragraph 2 of the Settlement.
In the resumption of the taxation of his costs referrable to his role as counsel, he sought sums outside the parameters of items in the County Court Scale. At the conclusion of the taxation on 20 August 2018 his fees were quantified at $37,948.68. This sum could have been ordered, even on an interim basis at that time,[8] however at the request of the second applicant the matter was adjourned to a date to be fixed as he foreshadowed an approach to VCAT to obtain the necessary certification of allowances above the scale sums as required by item 29(h)(v)(A) in the County Court scale.
[8]Rule 63.56(3) Supreme Court (General Civil Procedure) Rules 2015.
There is no issue that the trial in VCAT commenced and ran to judgment before Deputy President McKenzie after a number of hearing days. Judgment was published on 22 May 2009, a hearing was scheduled for 9 July 2009 in relation to the appropriate remedies, and an order was ultimately made on 11 November 2009 in relation to costs in the terms outlined in paragraph 2 above. Ordinarily certification of counsel fees, if allowed, is made as part of the order for costs. Here, the VCAT order was silent in that respect.
The authenticated order arising from the taxation in this Court on 20 August 2018 contains the following in ‘Other matters’:
The following allowances were identified as recoverable by the second applicant. Item 4 - directions hearing ($223.20), item 6 - mediation ($1,520.10), items 7 & 8 - witness statements ($3,893.58), item 201 - mediation ($1,520.10), item 202 - mediation ($1,520.10), items 210 & 212 - allowance for questions for experts as requested ($207), item 221 – submissions ($207), item 223 - brief ($1,520.10), and item 224 - refreshers ($27,337.50). A tentative total of $37,948.68 was identified but not formalised in an order at the request of the second applicant for the reasons that follow.
In the preamble to the Scale there is a general discretion to allow an appropriate amount where the Scale item is seen to be inadequate. However there are specific provisions in relation to counsel which apply notwithstanding anything contained in the Scale. One provision states that apart from mediation (item 20A) ‘the trial judge ONLY’ can allow higher fees for counsel in any proceeding - see item 29(h)(iv). The VCAT trial ran for a number of days. Item 29(h)(v)(A) states that ‘the trial judge ONLY’ may allow higher fees for counsel for the trial. Claims were made for drafting witness statements and trial preparation. The VCAT order makes no provision for certification of counsel fees for preparation work and therefore entitlement in addition to the brief and refresher fees in the Scale.
Items 7 & 8 were claimed as hourly rates for drafting witness statements. Item 29(a) in the Scale provides a lump sum for counsel drawing pleadings and settling other documents ($230). Assuming that was applicable (and a strict reading might suggest it was not) the entitlement for statements at this lump sum rate was $2,691. I was prepared to allow the ‘drawing’ rate provided for a solicitor as per item 26(a) in the Scale on the basis that there was no claim for this work in the bill and counsel performed the work. Accepting the folio count in items 48 to 58 in the bill for witness statements (446 folios) I was prepared to allow the higher figure of $3,893.58 on the drawing rate of $9.70 per folio. There was no entitlement for ‘engrossing’ as it was clear this was performed prior to May 2006 by a volunteer (Ms Phillips) before she was employed by the solicitors who came on record in May 2006.
The amount taxed and allowable at the conclusion of the taxation on 20 August 2018 was $37,948.68. The 10% discount provided for in the VCAT order of 11 November 2009 was included. A claim for preparation for a trial needs to be certified for by the ‘trial judge’ before an additional amount over and above the ‘Brief on Trial’ and ‘Refresher fee’ allowances in items 29(f) and 29(g) of the Scale can be allowed. This is because preparation for trial comes within the ordinary meaning of the language utilised in item 29(h)(v)(A), namely ‘such higher fee for counsel for the trial’.
The second applicant had been allowed the scale items for ‘brief on trial’ and ‘refreshers’. Allowances for a brief to appear at a trial have a preparation component already built in. Magna Alloys & Research Pty Ltd v Coffee (No 2)[9] is often cited as an authority for that proposition.[10] A taxing officer would normally have a discretion to allow more than scale items. However, in this case the discretion is expressed to specifically vest in the hands of the trial judge. That is why certification for preparation over and above the fee on brief is required where the County Court scale is involved.
[9](1982) VR 97 (per Fullager J).
[10]See Dal Pont – Law of Costs (4th ed.) at 17.48
After the hearing on 20 August 2018 the second applicant unilaterally approached VCAT and obtained two orders. The first, made by Deputy President G. Nihill on 14 June 2019, certified that the second applicant appeared as counsel in the VCAT matter and that he attended at the Tribunal on the dates and times specified by him. That order also recited the fact that Deputy President C. McKenzie was no longer a serving Tribunal Member. A second order dated 10 July 2019 stated ‘..to the best of my knowledge and belief, taking into account that I was not the presiding member, the fees of counsel for preparation of this matter appear to be reasonable.’
The matter resumed in this Court on 15 August 2019 and the respondent advised that they had not been given notice of the approach made to VCAT and had already filed an application at VCAT on 29 July 2019 to set the orders aside immediately upon becoming aware of their existence. The proceeding in this Court was adjourned again pending the outcome of that fresh application by the respondent to VCAT.
On 1 October 2019, Deputy President Nihill set aside the orders of 14 June 2019 and 10 July 2019 and heard an application by the second applicant for certification of his fees in the sum of $197,300. This application was refused in a judgment published on 4 December 2019.
The matter resumed in this Court on 16 April 2020 to attempt to finalise the proceeding. Prima facie the second applicant is entitled to an order in the sum of $37,948.68 to be paid by the respondent.
The mention of the matter was initially listed for 6 April 2020. This date was not suitable for the second applicant so the parties were advised by email on 23 March 2020 that the matter was relisted on 16 April 2020 with the time for written material to be extended to 4.00pm on 14 April 2020.
The respondent filed written submissions, a chronology and a copy of Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd.[11] They were received by my Associate via email at 7.02pm on 14 April 2020. The second applicant sent an email at 11.28am on 15 April 2020.
[11](2011) VCC 981.
In the email the second applicant seeks an order for the taxed amount ($37,948.68) together with interest from 2012. In relation to costs of the proceedings the second applicant submits that there be no order as to costs or, in the alternative, the first applicant pay the respondent’s costs.
Dealing with the question of payment of the sum first, the second applicant conceded at the hearing on 16 April 2020 that the taxed sum representing his fees should be paid into the County Court, consistent with the Settlement.
In relation to interest, the second applicant submitted at the hearing on 16 April 2020 that the taxed sum was calculated on 2012 rates and interest should apply as the respondent was in effect receiving a benefit by paying in 2012 dollars in 2020. However, an application for interest was previously made by the second applicant on 20 August 2018 and it was refused at that time. It is recorded in ‘Other matters’ in the order from that day that :
An application for interest by the second respondent was refused on the basis of section 101 Supreme Court Act …. where it is clear interest runs from the date of quantification by the Costs Court…
The issue had previously been analysed in Weingart v Leanne Cain & Associates (No 2)[12] and, in relation to when interest runs, section 101(1) states as follows :
….in the case of costs which are assessable by the Costs Court, from the date of the order of the Costs Court stating the result of the assessment or such other date as the Court orders.
[12](2018) VSC 245 at [16]–[17].
Interest does not run until the sum is embodied in an order. The order will be made upon publication of this decision and reasons. The reference in the section to the ‘Court’ ordering otherwise is not a reference to the Costs Court. It is a reference to the Court making the order for costs. There is no power for me to order interest from an earlier date generally, and particularly in relation to a VCAT order.
The case included with the respondent’s submissions (referred to in paragraph 18 above) was only relied upon to highlight the fact that the second applicant appeared as counsel in that County Court matter in 2011 and opposed certification of counsel fees. He was therefore said to be aware of the impact of, and requirement for, certification by the individual presiding in the trial in VCAT when applying the County Court scale.
The primary thrust of the respondent’s written submissions is to seek costs against the second applicant relying on offers of compromise and alleged breaches of the Civil Procedure Act 2010. At paragraphs 2 and 3 of the written submissions the respondent stated:
2.The Respondent seeks its costs of the Costs Court proceeding since 2012 from the Second Applicant.
3.The Respondent relies upon an offer of compromise served on 13 August 2012 and a further offer of compromise served on 8 February 2018 and the provisions of the Civil Procedure Act 2010 (Vic).
At the hearing on 16 April 2020, the respondent clarified that they were only seeking costs from the second applicant from 2016.
With the consent of the parties at the hearing on 16 April 2020, the respondent’s formal Offers of Compromise were filed after the hearing.
The first one in time, dated 13 August 2012, was made to the first applicant prior to the taxation before Costs Registrar Deviny. The offer was for the respondent to pay $140,000. The first applicant and respondent subsequently settled part of the costs for $101,400 in November 2012 and the final entitlement for the balance of $37,948.68 in respect of the second applicant’s fees was only quantified in August 2018. A total of $139,348.68 has finally been allowed in relation to the VCAT order.
The consent order of 7 November 2012 provided that the costs of the taxation to that point were held in abeyance. The respondent’s chronology states that it was agreed as between the respondent and the first applicant in December 2012 that the first applicant’s costs of the taxation to that point were $2,400. The Court was told that the figure was agreed but not paid. The question of costs as between the respondent and the first applicant remains to be finalised. The question of whether the first applicant acted unreasonably in not accepting an offer for $140,000 is undetermined. If the dispute between the first and second applicants was evident at that time the first applicant could not have accepted the offer as it would have finalised the fees of the second applicant as well.
At the hearing on 16 April 2020, the respondent was in a position to argue the point. From the written submissions the respondent is opposing payment of costs to the first applicant for work prior to the offer and does not seek costs from the first applicant for work subsequent to the offer.[13] It was apparent at the hearing that the first applicant’s legal representative required an opportunity to take proper instructions and those parties should have an opportunity to resolve this issue without incurring further expense and occupying Court resources. Liberty to apply will be granted to those parties in relation to that issue if the Court is required.
[13]Paragraphs 5 and 8 of the Respondent’s written submissions.
The respondent’s second formal Offer of Compromise, dated 8 February 2018, was made after publication of the decision to join the second applicant on 24 January 2018, but before the result was embodied in an authenticated order on 26 February 2018. The offer was to pay $70,000 for the part of the bill of costs represented by the fees of the second applicant. The Offer of Compromise is addressed to the first applicant, not the second applicant. Although the second applicant was provided with a copy in a letter from the respondent the formal offer in that form was not technically capable of acceptance by the second applicant as it was not addressed to him. That formal Offer of Compromise is not a matter to be taken into account when forming any conclusion in relation to costs as between the respondent and second applicant.
The second applicant submitted at the hearing on 16 April 2020 that he had not unduly delayed the proceedings and that the respondent had been unsuccessful in maintaining that he was not entitled to any costs.
It is true that in terms of the Civil Procedure Act2010 there has been delay as a result of the conduct of the second applicant. For example, there was delay of over a year because the second applicant reverted to VCAT without giving notice to the respondent that he was seeking additional orders in the Tribunal in a matter they were a party to.
It is also true that but for the dispute between the second applicant, the first applicant and Mr Kuek (Access Law) which culminated in County Court litigation, the taxation of the respondent’s liability pursuant to the VCAT order would have been finalised in 2012. The respondent has incurred more costs of the taxation which, in part, has not come about as a result of its own conduct.
It is the second applicant’s unsuccessful quest to recover fees over and above those allowed in the scale that has kept the proceeding on foot since 2012 and occupied the Court again since April 2017. For practical purposes the effect of the Costs Registrar’s initial ruling in 2012 was maintained by me in 2018 and by VCAT in 2019. This has added to the respondent’s costs. I note from the respondent’s chronology that the proceeding was dormant (and their involvement absent) from 2012 until 29 August 2016.
The respondent is entitled to some of the costs of the proceeding from 29 August 2016 when the foundations for reactivation of the proceeding in 2017 commenced. Although the second applicant did not become a party until 2018, the respondent’s costs, which recommenced in 2016 with contact from Blackstones, were incurred as a result of actions taken initially on his behalf and subsequently by him. In the Settlement it is stated that the second applicant is to be responsible for the costs after May 2016 for the resumed proceeding in this Court.[14]
[14]Paragraph 8 of the Settlement.
Subject to a carve out of some of the costs identified in paragraph 38 below, the respondent is entitled to the costs of the proceedings since August 2016. The subsequent involvement of the Court dates from when the matter resumed before Costs Registrar Deviny on 13 April 2017. For clarity the costs include, but are not limited to, the mention on 8 May 2017, the mediation on 28 June 2017, three vacated mentions (23 March 2018, 14 May 2018 and 21 May 2018), a mention on 18 June 2018, and the hearing on 16 April 2020. There is an existing order for costs already made in favour of the respondent against the second applicant for the mention on 15 August 2019.
The respondent is not entitled to the costs of the second applicant’s successful application to be added as a party. There is evidence filed in the proceeding that the respondent initially adopted a neutral position in relation to this issue.[15] The respondent then unsuccessfully opposed the application and should not have opposed it. As a model litigant the respondent also failed to advise the Court of a relevant authority.[16] These excluded costs relate to the mention on 24 October 2017, hearing on 7 December 2017, judgment delivered on 24 January 2018 and mention on 26 February 2018. The respondent is also not entitled to the costs associated with the second Offer of Compromise dated 8 February 2018.
[15]See paragraph 14 of the Decision and Reasons dated 24 January 2018.
[16]Oakley Thompson & Co Pty Ltd v Maisano (No 2) (2015) VSC 210.
The second applicant’s primary submission on costs was that there be ‘no order for costs.’ For the reasons above this submission cannot be sustained. He does not seek costs and, in any event, he would not be entitled to costs in accordance with the decision in Bell Lawyers Pty Ltd v Pentelow.[17]
[17](2019) HCA 29.
The second applicant’s alternative submission was for the first applicant to pay the respondent’s costs. In the Settlement the first applicant authorised Mr Kuek to revive this Costs Court proceeding but in reality it was the second applicant who had the running of it. The Settlement provides that the second applicant is liable for the costs of the taxation after May 2016, including the costs of Mr Kuek in assisting him in the taxation and the costs of Blackstones.[18]
[18]Paragraph 8 of the Settlement.
The first applicant has not been an active participant in the proceedings since they were reactivated in 2017. In any event, the Settlement contains the provision that the second applicant agrees to ‘pay the costs of the taxation after May 2016’.[19] These words are wide enough to be interpreted to even include any costs of the taxation ordered in favour of the respondent. There is no basis to accept the second applicant’s alternative submission.
[19]Ibid.
In its written submissions the respondent seeks an exercise of the discretion to order that any entitlement to costs be set off as against the second applicant’s entitlement payable by the respondent pursuant to Rule 63.65 of the Supreme Court (General Civil Procedure) Rules 2015. The relevant Rule is 63.55.
There are two reasons why a set off is not appropriate. First, the respondent’s costs are obviously not quantified and there would be further delay in finalising the proceeding. Secondly, the sum payable by the respondent is not necessarily an amount that the second applicant has an unrestricted claim upon. The Settlement agreed to by the parties to the County Court proceeding provides that the sum recovered from the respondent in the Costs Court proceeding be quarantined until the parties to the County Court proceeding have an opportunity to consider whether they will make a claim against it. The costs of the unresolved County Court proceeding were excluded from the Settlement.[20]
[20]Paragraph 13 of the Settlement.
The sum payable by the respondent is therefore $37,948.68 and as the costs consultants (Blackstones) are no longer engaged in the matter, I direct that it be paid into the County Court in respect of proceeding CI 2014 – 04136 pursuant to the terms of the Settlement.
The second applicant is to pay the respondent’s costs of the proceeding from August 2016 excluding the costs of, and incidental to, the Offer of Compromise dated 8 February 2018 and the second applicant’s successful application to be joined as a party including, but not limited to the hearings on 24 October 2017, 7 December 2017, 24 January 2018 and 26 February 2018.
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