VWA v Venamis Group Pty Ltd and Lockwood (Ruling No 2)
[2011] VCC 976
•8 August 2011
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
DAMAGES AND COMPENSATION
GENERAL DIVISION
Case No. CI-05-01400
| VICTORIAN WORKCOVER AUTHORITY | Plaintiff |
| v | |
| VENAMIS GROUP PTY LTD | First Defendant |
| (ACN 097 323 610) | |
| and | |
| DAVID NEIL LOCKWOOD | Second Defendant |
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| JUDGE: | HIS HONOUR JUDGE PARRISH |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 30 June and 1 July 2011 |
| DATE OF RULING: | 8 August 2011 |
| CASE MAY BE CITED AS: | VWA v Venamis Group Pty Ltd and Lockwood (Ruling No 2) |
| MEDIUM NEUTRAL CITATION: | [2011] VCC 976 |
| RULING AS TO COSTS |
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Catchwords: ACCIDENT COMPENSATION – S.138 Accident Compensation Act 1985 – appropriate costs order – percentage of costs to be awarded – application of Rule 63A.02 and 63A.04 of the County Court Civil Procedure Rules 2008
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D Turner | Wisewoulds |
| For the Second Defendant | Mr J Greentree (Solicitor) | Brand Partners |
| HIS HONOUR: |
1 On 30 June 2011, I gave a ruling[1] in relation to two preliminary questions argued before me pursuant to Rule 47 of the County Court Civil Procedure Rules 2008 (“the Rules”).
[1] [2011] VCC 976
2 On that day, I stood the matter over until 1 July 2011 in order for the parties to consider their respective positions and propose orders for the disposition of the proceeding.
3 On 1 July 2011, I understood the parties to accept that part of the ruling had the effect that the proceeding should be dismissed. Questions arose as to the appropriate costs order and I permitted the parties to make further written submissions over the next month (when the Court was not sitting) and that otherwise, the matter would be adjourned for a costs ruling on 8 August 2011.
The Proceeding
4 In this proceeding, the Victorian WorkCover Authority (“the Authority”) sought indemnity pursuant to s.138 of the Accident Compensation Act 1985 (as amended) (“the Act”) from the second defendant, David Neil Lockwood (“Lockwood”), in respect of compensation paid to Mr Murat Goga (“Goga”), who suffered personal injury arising out of or in the course of his employment with F & T Industries Pty Ltd (“F & T”).
5 Lockwood was appointed Receiver and Manager of F & T by Exelerate Funding Pty Ltd on 29 June 2001, under the terms of its debenture charge registered on 11 September 2000. It was alleged by the Authority that the injury suffered by Goga was caused by the negligence and/or breach of duty owed to Goga by Lockwood when he was the Receiver and Manager of F & T. Lockwood denied generally that he was liable to indemnify the Authority pursuant to s.138 of the Act and in particular, relied on two defences:
(a)
that being appointed Receiver and Manager of F & T he was not a “third party” within the meaning of s.138 of the Act and, accordingly, could have no liability to indemnify (“the third party defence”);
(b)
that even in the event that he was a third party and had a liability to indemnify the Authority, such liability was a claim provable in his bankruptcy which commenced on 4 June 2004 and continued until discharge on 19 December 2007. Such defence turned on the application of s.82(1) and (2) of the Bankruptcy Act 1966 (Cth). Section 153 of that Act provides that where a bankrupt is discharged from a bankruptcy, the discharge operates to release him from debts provable in the bankruptcy (“the bankruptcy defence”).
6 The hearing of this matter commenced on 20 October 2010. The parties sought that what I have referred to as “the third party defence” and “the bankruptcy defence” be heard as preliminary questions pursuant to Rule 47 of the Rules. I acceded to such application as both parties accepted that if the third party defence was made out, such was a complete defence to any claim under s.138 of the Act and in a similar way, if the bankruptcy defence was made out, it had the potential to be a complete defence to any claim under s.138 of the Act. (Senior Counsel for the plaintiff did note that there was also potential that, properly construed, such a defence (if it be one) may only be a partial defence and leave Lockwood exposed to indemnify the Authority to some extent).
7 Goga had travelled from interstate and I directed that his evidence be taken before submissions be made on the two preliminary questions.
8 The evidence of Goga and other minor preliminary matters occupied 20 October 2010 and some part of the day of 21 October 2010. Thereafter the parties spoke to written submissions on 21 and 22 October 2010 in relation to the third party defence and the bankruptcy defence.
The Ruling made on 30 June 2011
9 In the ruling made on 30 June 2011, I ruled that Lockwood was a “third party” in the proceeding brought by the Authority and, accordingly, that defence was unsuccessful. However, I also ruled that any liability of Lockwood to indemnify the Authority pursuant to s.138 in respect to compensation paid to Goga (if so established) is a provable debt and liability within the meaning of s.82(1) of the Bankruptcy Act 1966 (Cth) and, accordingly, pursuant to s.153 of the Bankruptcy Act 1966 (Cth), his discharge operated to release him from debts provable in the bankruptcy. Accordingly, Lockwood was successful in relying on the bankruptcy defence.
The Costs Issue
10 In such circumstances, the parties accept that the proceeding should be dismissed. Issues arise as to:
(a) Whether Lockwood should recover all his party-party costs given that he failed on the discrete issue as to whether or not he was a “third party” within the meaning of s.138 of the Act; (b) Whether Counsel’s fees should be awarded on a daily basis or rather on the basis of brief fee and refreshers; (c) ancillary matters such as costs for “preparation” and conferring with witnesses. 11 Both parties have provided written submissions on the issue of costs.
12 The thrust of the submissions made by the Authority is that essentially the hearing of this matter involved the determination of two preliminary questions, one of which went in favour of the Authority and one of which went in favour of Lockwood and, accordingly, there should be a proportionate costs order as recognised by Rule 63A.04 of the Rules. Such Rule states:
“(1) The Court may make an order for costs in relation to a particular
question in or a particular part of a proceeding.(2)
Where the Court makes an order under paragraph (1), the Court shall by order fix the proportion of the total costs of the proceeding which is attributable to the particular question in or the particular part of the proceeding.”
13 Accordingly, the Authority submits[2] that Lockwood should only recover the following:
[2] Written submissions dated 28 July 2011
(a) fifty per cent of his party-party costs in the proceeding up to and including 19 October 2010, with such costs to be taxed on Scale D of the County Court Scale of Costs; (b) In relation to the costs of the hearing, costs should extend to a brief fee for counsel of $2,022.00 for the first day and thereafter two refreshers at $1,346.00 for the subsequent two days but with the refreshers reduced by fifty per cent. 14 The thrust of the submissions made by Counsel for Lockwood was that his client has succeeded and consistent with the principle that costs follow the event, he is entitled to obtain a costs order in the following form:
(a) The plaintiff pay the second defendant’s costs in the proceeding, including reserved costs, on Scale D of the County Court Scale of Costs to be taxed in default of agreement; (b) Lockwood be granted the following certificates: (i) Brief fee of $3,500.00 per day on a daily basis for 20 October, 21 October and 22 October 2010; and
(ii) A further $3,500.00 per day for two days of “preparation, conferences and attendances” pursuant to Rule 63A.82 of the Rules.
15 Counsel for Lockwood also submitted in the alternative (and as a fallback position) that appropriate orders would be:
(a) (i) Subject to paragraph (ii), the Authority pay Lockwood’s costs of the proceeding, including reserved costs, to be taxed on Scale D of the County Court Scale of Costs in default of agreement; (i) The Authority pay ninety per cent of Lockwood’s costs of the hearing on 20, 21 and 22 October 2010.
(b)
Certify Counsel’s brief fee at $3,500.00 together with two refreshers at two-thirds of brief fee and a further three hours of special conferences and attendances at $350.00 per hour.
Relevant Considerations
16 There is no issue that the Court has a wide discretion in determining the issue of costs.[3]
[3] See Rule 63A of the Rules
17 Proceedings under s.138 of the Act are relatively commonplace, and the legal principles to be applied in their disposition are reasonably well established. The circumstances of this matter were novel in that it raised directly issues as to whether or not a receiver and manager privately appointed to an employer and being the agent of the employer, can be a third party for the purposes of s.138 and whether or not a liability established under s.138 can be a provable debt for the purposes of the Bankruptcy Act 1966.
18 I accept that such issues extend beyond what may be referred to as the “normal issues” usually associated with a s.138 proceeding. However, such issues are still to be determined by the application of common law precedent and statutory construction.
19 Furthermore, I note that the proceeding extended over a relatively short period (three days) and a considerable amount of that time involved the taking of evidence from Goga.
20 Accordingly, although I do accept that was a degree of novelty and complexity about the issues raised in the preliminary questions, I am of the view that it is appropriate to charge Counsel’s fees on the basis of a brief fee and refreshers rather than on a daily basis. In this respect, I refer to the comments of Fullagar J in Magna Alloys & Research Pty Ltd v Kevin Lindsay Coffee (No 2)[4] wherein he stated:
“The time honoured basis of charging counsel's fees in respect of a court hearing remains the basis of a brief fee and refreshers of two-thirds of that fee, and prima facie this is the basis upon which counsel's fees will be taxed as between party and party. There must, in my opinion, be an onus upon the party who seeks a departure on taxation from that traditional and usual basis, and the onus must be one of satisfying the taxing officer that the traditional method of fee marking could not reasonably have been followed in all the circumstances of the case.”
[4] [1982] VR 97
21 However, because of the complexity and novelty of the matter, I consider that it is appropriate to certify for a higher brief fee and thus each refresher. In all the circumstances, I consider that an appropriate brief fee for Counsel is $3,500.00 and thereafter refreshers on a two-thirds basis. I am of the opinion that prima facie the refreshers should cover the further days of the hearing and also one refresher should be allowed for the preparation of the written submissions.
22 The critical issue in this matter is whether or not, notwithstanding that the defendant has succeeded in defending the action, whether there should be a general order for party-party costs in his favour or, alternatively, some type of proportionate order as suggested by the Authority.
Relevant Legal Principles
23 I refer to the Court of Appeal decision of Investec Bank (Australia) Ltd v Glodale Pty Ltd & Ors (No 2)[5] wherein the Court of Appeal referred to with seeming approval the comments of Eames J in Pricom Pty Ltd v Sgarioto[6] wherein he stated:
“‘As a general rule costs should follow the event, and a successful party should obtain all of the costs of the action even although it failed to establish some of the alternative heads of its claim … However, in the exercise of its discretion the court may decline to order costs in favour of a successful party, or may order the successful party to pay the costs of the unsuccessful party, where the plaintiff failed to establish discrete heads of claim, or failed to establish issues which it pursued in its claim, although ultimately succeeding on the basis of another discrete head of claim. … .’”
[5] [2009] VSCA 113 (14 May 2009)
[6] Unreported, Supreme Court of Victoria, 12926 of 1990, Eames J, 10 April 1995
24 I also refer to the matter of Joseph Street Pty Ltd & Ors v Tan,[7] a decision of J Forrest J wherein he referred to the decision of Chen v Chan[8] which sets out the relevant principles to the making of an order for costs in circumstances where a proportionate order may be contemplated. J Forrest J stated:
[7] [2011] VSC 41
[8] [2009] VSCA 233
“(1) The general rule is that costs should follow the event. Absent disqualifying conduct, the successful party should recover its costs even where it has not succeeded on all heads of claim. (2) The Rules of Court permit significant flexibility in determining questions of costs. In particular, 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.
(3)
Where there is a multiplicity of issues and mixed success has been enjoyed by the parties, a court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis. Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount.
(4)
A court may, when fixing costs in a claim where there has been mixed success, take into account complications which it considers will arise in the taxation of costs, as part of its consideration of the overall interests of justice.
(5)
Where a court determines to make an order apportioning costs, then it does so primarily as ‘a matter of impression and evaluation,’ rather than with arithmetical precision, having considered the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter.
… .”
25 As J Forrest J stated in Joseph Street Pty Ltd & Ors v Tan,[9] the determination of making a proportionate costs order “is not a process of mathematical calculation, but rather impression and evaluation”.
[9] op cit at paragraph 18
26 It must always be borne in mind that the Authority sought indemnity from Lockwood and Lockwood has been successful in defending such application. Furthermore, Lockwood at no time admitted that he had a “liability to pay damages” within the meaning of s.138(1) of the Act and to this end it is to be commended that the parties chose to agitate the third party defence and the bankruptcy defence which both parties acknowledged had the potential of bringing about a dismissal of the claim, rather than pursuing a course which would involve the calling of various witnesses to establish the remedy under s.138 of the Act. It is idle to speculate whether the Authority, absent the subject defences, would have established a liability in Lockwood to pay damages. Of course, the bankruptcy defence is predicated on the basis that there is prima facie a liability of Lockwood to pay damages pursuant to s.138(1) of the Act.
27 Notwithstanding the foregoing, Lockwood chose to allege throughout the proceeding that he was not a third party within the meaning of s.138 of the Act. Furthermore, Lockwood sought that issue, together with the bankruptcy issue, be agitated as preliminary questions. He failed on the third party notice.
28 In all the circumstances, I consider that appropriate orders are as follows:
(1) That the Court declares that the second defendant is able to be a third
party for the purposes of s.138 of the Accident Compensation Act 1985;(2)
That the Court declares that any liability of the second defendant to indemnify the proceeding pursuant to s.138 of the Accident Compensation Act 1985 in respect of compensation paid to a worker is a provable debt and liability within the meaning of s.82(1) of the Bankruptcy Act 1966 (Cth);
(3) That the proceeding be dismissed; (4) That the plaintiff pay the costs, including the reserved costs of the
second defendant to be taxed on Scale D of the County Court Scale of
Costs in default of agreement;
(5)
Certify brief for Counsel at $3,500.00, together with three refreshers at two-thirds of brief fee and two hours of special conferences at $350.00 per hour;
(6) That the plaintiff pay eighty per cent of the second defendant’s costs of
the hearing on 20, 21 and 22 October 2010.- - -
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