Wales v Wales (No 2)

[2015] VSCA 365

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2015 0047

PERSEPHONE WALES (as the representative of the Estate of MURRAY WRIGHT WALES, deceased)	First Applicant
and
ROHAN WRIGHT WALES	Second Applicant
v
GLADYS WALES	First Respondent
and
ROSLYN MATEAR	Second Respondent
and
SUZANNE MARIE CASE	Third Respondent
S APCI 2015 0066
JULIAN WALES	Applicant
v
GLADYS WALES	First Respondent
and
ROSLYN MATEAR	Second Respondent
and
SUZANNE MARIE CASE	Third Respondent

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JUDGES:	KYROU and McLEISH JJA and GINNANE AJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	18 December 2015
DATE OF JUDGMENT:	18 December 2015
MEDIUM NEUTRAL CITATION:	Wales v Wales (No 2) [2015] VSCA 365

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COSTS – Trustees – Application for leave to appeal refused – Whether respondents’ costs of negotiating summary of facts should be paid by applicant – Whether applicant’s costs of preparing amended written case should be paid by respondents – Applicant ordered to pay respondents’ costs of the application for leave to appeal.

COSTS – Trustees – Applications for leave to appeal refused – Respondents sought direction that Costs Court may allow fees of senior counsel in excess of scale – Whether departure from scale justified – Direction refused – Supreme Court (Chapter I Scale of Costs Appendices A and B Amendment) Rules 2014 r 19.

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APPEARANCES:	Counsel	Solicitors
For the Applicants in S APCI 2015 0047	Mr R Wells	Tolhurst Druce & Emmerson
For the Applicant in S APCI 2015 0066	In person
For the Respondents	Mr C M Archibald	HWL Ebsworth Lawyers

KYROU JA
McLEISH JA
GINNANE AJA:

1. The Court dismissed these two applications for leave to appeal against orders as to costs in respect of a proceeding commenced and discontinued in the Trial Division.[1]  The question of costs now falls to be decided.

   [1]Wales v Wales [2015] VSCA 345.

1. The respondents in both applications sought orders that the respective applicants pay their costs of the application for leave.  They also sought a direction that, in assessing or taxing those costs, the Costs Court may allow the fees of senior counsel for the respondents in excess of scale.

1. The applicants in proceeding S APCI 2015 0047 (‘the first proceeding’) accepted that they should pay the respondents’ costs but resisted the direction in respect of the costs of senior counsel.

1. Julian Wales, the applicant in proceeding S APCI 2015 0066 (‘the second proceeding’), appearing in person, also accepted that he should pay the respondents’ costs, except that he sought an order that the costs of the negotiations for a joint summary of facts, which took place between the parties between approximately 3 August 2015 and 17 September 2015, and the costs of preparing his amended written case, should instead be paid personally by the respondents.  The joint summary in question was a summary in both proceedings which the registry had sought from all parties.  When Julian Wales commenced the second proceeding, pursuant to leave to do so out of time, an agreed summary in the first proceeding was either in the process of being agreed upon or had already been finalised.

1. The ordinary rule, in respect of an adversarial proceeding brought by a beneficiary against a trustee (as distinct from a proceeding seeking the guidance of the court, for example), is that costs will follow the event.[2]

   [2]Re Buckton [1907] 2 Ch 406, 414–5.

1. As a matter of principle, a distinction is to be drawn between proceedings at first instance and those on appeal.  The usual rule, where a beneficiary appeals unsuccessfully against a decision in favour of a trustee, is that the beneficiary will be ordered to pay the costs of the appeal.[3]  An unsuccessful appellant, including a trustee, is not presumed to be entitled to have their costs of an appeal paid out of a trust estate even if those costs were so paid at first instance.[4] 

   [3]Currie v Glen (1936) 54 CLR 445, 451; Fowler v Nield [1961] SR (NSW) 152, 161.

   [4]Lippe v Hedderwick (1922) 31 CLR 148, 154–5;  Re McIntyre [1993] 2 Qd R 383, 388; Tobin v Ezekiel (2012) 83 NSWLR 757, 791 [128].

1. The general rule does not, of course, apply in every case and the Court retains its discretion as to costs.  However, we do not consider that the present is a case warranting departure from the general rule. 

1. In respect of the negotiations for a joint summary, Julian Wales submitted that the respondents had behaved unreasonably in their approach to material which he sought to include in the summary.  He observed that by an email dated 24 August 2015 the Registry of the Court of Appeal had directed that objections to the summary should provide an explanation for any proposed amendment, rather than stating simply that asserted facts were ‘argumentative’ or in error.  He submitted that, contrary to this direction, the respondents had made general statements about proposed paragraphs being ‘contentious’, ‘argumentative’ and ‘disputed’ or ‘the subject of contention’.  In his submission, the material he was advancing was conclusively substantiated by affidavits he had filed, which had not been contested.  In some cases, he submitted, the material had ultimately been conceded by the respondents despite their objections during negotiations.

1. The respondents drew attention to the fact that the affidavit material in question, on which Julian Wales relied, had not been the subject of answering affidavits because the proceeding had been discontinued.  In the circumstances, the statements in question were contentious and belonged properly in the written cases.  It was submitted that the respondents had sought to deal in good faith with the suggestions made by Mr Wales.

1. The negotiations for a joint summary were unsuccessful and the registry ultimately directed that no summary be filed in the second proceeding and no joint summary be prepared.  The matters which Julian Wales sought to ventilate in the summary were subsequently canvassed in his amended written case and the oral argument.

1. Julian Wales was right to rely on provisions of the Civil Procedure Act 2010 which emphasise the importance of cooperation between the parties in connection with the conduct of a proceeding and the use of reasonable endeavours to ensure that costs are reasonable and proportionate.[5]  However, we do not consider that there is any substance in the contention that the respondents conducted the negotiations so unreasonably that they should be deprived of their costs.  The truth of the matter, as the hearing revealed, was that a substantial amount of the material which Julian Wales sought to incorporate in the summary was contentious and belonged properly in his written case.  But in any event, the respondents did not simply assert that this was so.  The material shows that the respondents went beyond such statements, inserting wording and deleting other wording and explaining that omitted material should be the subject of contentions rather than the agreed summary.  It is true that, after the respondents had asserted that many proposed additions were ‘argumentative, contentious and disputed’, the Registry directed that more detailed reasons should be given.  But the evidence shows that this was done.  Finally, a detailed letter was sent by the respondents to the applicants in both proceedings on 17 September 2015.  No special order should be made regarding the costs of the negotiations.

   [5]Sections 20, 22, 24.

1. Julian Wales also sought an exclusion from the costs order in respect of his application to amend his written case, and an order that he be paid his costs of that application.  Although the matter was left in some doubt, it was suggested that a filing fee had been incurred as a result of seeking leave to amend his written case.  The application was heard with the application for leave, and was allowed. 

1. In our opinion, there is no basis for making these orders either.  The amendment to the written case was necessitated by the failure of the parties to agree to a summary of facts.  The incorporation of the contentious material in the written case was the course which the respondents consistently argued Julian Wales ought to have followed at the outset.  The costs of the amendment are, like the costs of the failed negotiation of an agreed summary, properly treated as part of the costs of the whole application for leave.

1. Accordingly, the usual order for costs should be made in the second proceeding.

1. It is finally necessary to deal with the respondents’ submission that the Court should direct that, in assessing or taxing their costs, the Costs Court may allow the fees of senior counsel for the respondents in excess of scale.  The Court was informed that, on the applicable scale, the maximum daily fee for senior counsel was $8,094 (exclusive of GST).[6]  The maximum applies where costs are taxed pursuant to an order of the Supreme Court, unless the Supreme Court otherwise orders.[7]  The respondents placed reliance on the long involvement of senior counsel in the proceeding, the fact that the matter was an appeal from a judge of the Trial Division, and the important question of principle regarding costs said to have been involved.

   [6]Supreme Court (Chapter I Scale of Costs Appendices A and B Amendment) Rules 2014 r 4, app A, item 19(a).

   [7]Supreme Court (Chapter I Scale of Costs Appendices A and B Amendment) Rules 2014 r 4, app A, item 19(k).

1. Counsel for the applicants in the first proceeding submitted that the case did not require senior counsel and that, while it was an appeal, it was only on a point of costs.  It was submitted that there were no special circumstances warranting an order enabling the Costs Court to depart from the maximum daily fee.

1. If an order of the kind sought by the respondents is made, this leaves intact the discretion of the Costs Court as to costs.  It is not, and should not be interpreted as, a direction that the Costs Court should allow costs in excess of the cap.  Counsel for the respondents accepted that this was so. 

1. Counsel for the applicants in the first proceeding submitted that ‘special circumstances’ needed to be shown to justify an order permitting the maximum fee to be exceeded.  It is not necessary for us to enunciate such a test.  It is apparent that the purpose of the maximum fee, by which the exercise of the discretion to permit it to be exceeded must be guided, is to impose a general rule confining the discretion of the Costs Court to allow costs of counsel, in the interests of limiting the costs allowed.  Something in the circumstances of the case needs to be shown to justify exercising the discretion to depart from the general rule.  Such circumstances may include, without seeking to be exhaustive, the nature and history of the proceeding, the legal and factual issues involved, the amount charged by counsel and whether matters of public importance are in issue.  There may be other reasons why it is desirable to give the Costs Court a greater degree of flexibility than the maximum fee allows. 

1. It suffices to say that in our opinion there are no such circumstances in the present case.

1. Having refused to make the direction sought by the respondents, a question arises as to the costs of the applicants in the first proceeding, who consented to the orders sought against them except in respect of the direction.  Those applicants appeared at the hearing regarding costs only to resist the direction sought.  In our view, the respondents should pay their costs of doing so.[8]

   [8]These orders will of course leave unaffected the operation of r 63.26 of the Supreme Court (General Civil Procedure) Rules 2015, by which a trustee is entitled to the costs of the proceeding out of the fund held by the trustee in so far as the costs are not paid by any other person.

1. The order as to costs which should be made in each application is that the applicant, or applicants, pay the respondents’ costs of the application.