You v Thomas (No. 2)
[2014] VSC 338
•18 July 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S CI 2013 6526
| REN CHUAN YOU | Plaintiff |
| v | |
| BRYAN THOMAS, REBECCA CAMERON, PETER JOLLY and STEPHEN KIP (sitting as the Building Appeals Board) | First Respondent |
| - and - | |
| WAL MYKYTENKO | Second Respondent |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 2 June 2014 |
DATE OF JUDGMENT: | 18 July 2014 |
CASE MAY BE CITED AS: | You v Thomas (No. 2) |
MEDIUM NEUTRAL CITATION: | [2014] VSC 338 |
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Costs — Judicial review — Jurisdictional error — Costs sought against contradictor — Indemnity costs sought — Appeal costs indemnity certificate sought — Building Act 1993, s 93 — Appeal Costs Act 1998, s 4
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms S M C Fitzgerald | Fairweather Legal |
| For the First Respondent | No appearance | |
| For the Second Respondent | Mr Coke Tomyn |
HER HONOUR:
Introduction
The applicant and the second respondent are neighbours. The applicant is currently undertaking construction work on his property. Amongst other disputes between the parties, the second respondent sought a determination by the Building Appeals Board (‘the Board’) that the insurance policy taken out in respect of the work did not comply with the Building Act 1993 (‘the Act’). The Board ruled in his favour. The applicant then sought judicial review of that decision, and on 2 June 2014 I ordered that the decision of the Board be set aside and the dispute be remitted to the Board for determination.[1]
[1]You v Thomas [2014] VSC 255 (2 June 2014) [40] (McMillan J).
At the delivery of my reasons, owing to the desire of the parties not to have further unnecessary costs incurred, I directed the parties to file any written submissions they wished to make in respect of the costs of the application. The parties then provided those submissions. The applicant seeks costs against the second respondent on an indemnity basis. The second respondent seeks that there be no order as to costs, and that further or in the alternative the second respondent be indemnified pursuant to the Appeal Costs Act 1998 (‘the Appeal Costs Act’). For the reasons that follow, I have determined that the second respondent should pay the applicant’s costs of the application on the standard basis, and that the second respondent should be entitled to an indemnity certificate.
I would note at the outset that the Board took no active role in the proceeding, other than indicating by letter that it consented to the order being set aside.[2] It indicated that it would abide the decision of the Court in accordance with the principles enunciated in R v Australian Broadcasting Tribunal; ex parte Hardiman (‘Hardiman’).[3] No party sought that the Board pay the costs of the application, but the position taken by the Board is relevant to the determination of the appropriate costs order to be made.
[2]Ibid [9].
[3](1980) 144 CLR 13, 35.
The applicant provided copies of a number of letters containing offers of compromise made prior to the proceeding. In short compass, the content of those letters is as follows:
(a) The initial offer put forward by the applicant was by letter dated 26 February 2014. That letter sought the assurance of the second respondent that he would not act as a contradictor and otherwise agreed to the relief sought, and stated that it would be produced on the issue of costs. The second respondent was given until 2.00pm on 28 February 2014 to give a response.
(b) A second letter with the same date and deadline was also produced. The offer in that letter was on the terms that the parties agree that the decision be quashed, the applicant pay sums owing to the second respondent by 17 March 2013,[4] the second respondent agree that the insurance contract is appropriate, and each party bear their own costs in relation to both this proceeding and the proceeding below.
(c) By e-mail shortly after the proposed deadline on 28 February 2014, the second respondent indicated (essentially by way of counter-offer) that he would agree that the matter be referred back to the Board for proper determination pursuant to s 93, the sums owing be paid forthwith, and each party bear their own costs in relation to this proceeding. He also indicated that he would have no objection to the matter being adjourned so that discussions could continue without incurring the cost of retaining counsel.
(d) The applicant on 28 February 2014 then extended the offer to 2.00pm on 4 March 2014, and rejected a further adjournment of the hearing.
[4]Presumably intended to read 17 March 2014.
The appropriate order as to costs
There is clear authority in Victoria in support of the proposition that costs ought not be awarded against a statutory tribunal whose decision is quashed unless it can be shown that the tribunal was guilty of serious misconduct.[5] The general rule that costs follow the event has been accepted as applying in a proceeding for judicial review,[6] and the applicant submitted that it should by analogy apply to proceedings under the Administrative Law Act 1978. The applicant further submitted that consistent with the purpose of costs orders generally,[7] the second respondent ought to compensate the applicant for the expense of having the decision quashed.
[5]Psychologists Registration Board of Victoria v Herald & Weekly Times Pty Ltd [2000] VCA 118 (16 June 2000) [11] (Charles JA, with whom Winneke P agreed); R. v. Liverpool Justices, ex parte Roberts [1960] 1 W.L.R. 585 at 586-7; Our Town FM Pty. Ltd. v. Australian Broadcasting Tribunal & Anor. (No.3) [1987] FCA 393; (1987) 77 A.L.R. 609 at 612; City of Subiaco v. Minister for Planning and Heritage (1996) Butterworths Unreported Judgments BC 9700422 at 6; Munro v. West, Unreported, Smith, J., 7 March 1997 at page 1; Charter Homes Pty. Ltd. v. Housing Guarantee Fund Ltd. & Ors., Unreported, Chernov, J., 10 June 1997 at page 3.
[6]R v Racing, Gaming and Liquor Commission; Ex Parte Tangentyere Council Inc (No 2) (1988) 91 FLR 62.
[7]Latoudis v Casey (1990) 170 CLR 534, 543 (Mason CJ) 562 (Toohey J) 567 (McHugh J).
The second respondent submitted that the settled practice in cases of judicial review of administrative action was that there ought be no order as to costs generally, relying on the decision of Doyle CJ in Keogh v Medical Board of South Australia (No 2) (‘Keogh’).[8] That case does not support that proposition. The second respondent further submitted that he was not in the position of a antagonist to the proceedings, but appeared merely to assist the Court, and put forward a number of propositions in support of that position:
[8][2007] SASC 421 (23 November 2007).
(a) The second respondent was necessarily joined as a party, and indeed appropriately joined having regard to his rights;
(b) The claim made by the applicant is solely against the Board;
(c) The second respondent filed no affidavit material in opposition, and ‘in other words’ was a ‘passive passenger in the carriage of this proceeding’;
(d) The second respondent did not brief counsel to oppose the relief sought;
(e) The second respondent was not a protagonist in respect of the correctness of the decision, appearing only to inform the court of matters that may be relevant to the Court’s determination;
(f) The Court could not have granted relief in this case without a hearing in some form; and
(g) Once the applicant’s solicitors received the advice of the Board that they consented to a part of the decision being set aside the applicant knew or ought reasonably have known that the hearing before this Court would be little more than a mere formality.
In Stewart v Building Practitioners Board (‘Stewart’),[9] both the Building Appeals Board and the Building Practitioners Board chose to take the approach described in Hardiman. Gillard J was critical of that decision, indicating that the Building Practitioners Board, a litigant in the original proceeding, ought either to have appeared to oppose the judicial review sought or, if they formed the view that the decision below could not be supported, consent to the order sought and inform the Court accordingly. The second respondent sought to argue that as a lay person he could not possibly have made an informed decision as to whether the Board’s decision was supportable.
[9][2001] VSC 349 (28 September 2001).
In my view, the second respondent was not merely as a ‘passive passenger’ in the proceeding. Neither at trial, nor in the correspondence between the parties prior to trial, did his solicitor indicate that he did not oppose the decision being set aside. Instead, he made submissions against those put by the applicant, albeit that many of the submissions made were irrelevant. A party in the second respondent’s position is not entitled to sit on the fence, attacking the application for relief while seeking protection from a costs order. If the second respondent’s view is that the decision of the Building Appeals Board should be upheld, it is appropriate that the second respondent appear, and make submissions on that point. If the second respondent’s view is that the decision of the Building Appeals Board cannot be upheld, it is appropriate that the second respondent inform the applicant and the Court that that is the position he takes. There is no position available to the second respondent whereby he can in substance argue that the decision of the Building Appeals Board should be upheld, because that is advantageous to his position, yet at the same time claim to take no formal position and thereby seek protection against an adverse costs order.
The application for indemnity costs
The principles in respect of Calderbank offers and the reasonable rejection of such an offer were set out by the Victorian Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2),[10] and do not need to be reiterated. The applicant submitted that the offers shown to the Court ought to have been accepted, because:
[10](2005) 13 VR 435.
(a) The offer was made early in the proceedings;
(b) The letter explained the reasons why the applicant was confident that the Board’s decision would be set aside;
(c) The offer was repeated after the Board consented to the decision being quashed;
(d) Although the timeframe proposed was short, this was explicable in light of the fact that the deadline for the filing of submissions was approaching, which would cause further costs; and
(e) The initial timeframe was extended on the basis that the timeframe for the filing of submissions would also be extended.
The second respondent submitted that the approach taken by the applicant in this respect was misconceived. On the second respondent’s submissions, there was no compromise available to the second respondent, and the offer was not an offer of compromise. Rather;
This attempt by the applicant to procure such assurances from the second respondent with the threat of legal costs on an indemnity basis is not a Calderbank offer nor is it one for which the second respondent in non-compliance should be liable for the applicant’s costs.
In the second respondent’s e-mail rejecting the offer, the second respondent specifically sought that the matter be remitted for a rehearing that included:
All of the issues referred to in that Act and specifically that the policy be taken out in the name of the owner and not by the builder as is the case in the current situation. If this can be rectified our client would be happy with such a policy.
In relation to the rehearing point raised, the applicant noted:
This means that your client simply wants to run the same argument again below contradicting our client’s case that the relevant policy is appropriate. If it is the case that this policy does not meet the requirements of s 93 of the Act, as your client still maintains, then this raises serious implications in respect of the protection works that are now completed.
Therefore, unless your client agrees to abandon these arguments advanced by your client which led the Board into error, our client will be forced to press on with its application for judicial review of this issue to ensure there is no repetition of the same erroneous points before the Board or any risk of its committing further error following your client’s erroneous submissions.
As I noted in my decision, the fact that the policy failed to name the owner as the insured was not dealt with by the Board in their reasons:
At the hearing before the Board, the solicitor for Mr Mykytenko, Mr Tomyn, submitted that the policy was invalid because it did not name Mr You, the owner, as the insured. By contrast, reason (2) of the Board’s reasons why the policy did not comply with s 93 is that it did not name Mr Mykytenko, the adjoining owner, as the insured. At trial, Ms Fitzgerald made submissions in favour of the proposition that s 93 did not require Mr You to be named in the policy. Given that none of the Board’s reasons was that Mr You was not named as the insured, it is unnecessary to consider those submissions.[11]
[11]You v Thomas [2014] VSC 255 (2 June 2014) [22] (McMillan J).
The argument that the second respondent was asked to surrender in the proposed compromise was an argument that was not for determination in this Court, but rather for determination by the Building Appeals Board upon remittal. It was not reasonable for the applicant to seek that a further issue in what remains a substantial dispute between the parties be sacrificed. In the counter-offer of the second respondent, the second respondent in substance agreed to the terms of offer save for this issue. The offer of compromise was reasonably rejected by the second respondent, especially given that, save for the further issue not determined in the proceeding, the parties were in substantial agreement and it was the applicant who refused a counter-offer based on that substantial agreement. It is not appropriate to make a costs order in the nature of an indemnity costs order in this case.
Conclusions generally
As pointed out by Gillard J in Stewart[12] and Doyle CJ in Keogh,[13] a judicial review proceeding is not one that can proceed merely by the consent of the parties. Equally importantly, in many such cases it is necessary and appropriate to have a contradictor appear to oppose the quashing. But a potential contradictor in cases such as these who sets out to protect their interests cannot hide behind the fact that they are a necessary party to avoid an order as to costs. The contradictor does not get a ‘free kick’ while the applicant bears the expense of seeking to have the decision set aside. In this case, the second respondent appeared at trial, and made submissions in support of the Court upholding the decision by the Board. In those circumstances, I consider the appropriate order to be that costs should follow the event.
[12][2001] VSC 349 (28 September 2001).
[13][2007] SASC 421 (23 November 2007).
Finally, the second respondent sought an indemnity certificate in respect of the costs under s 4 of the Appeal Costs Act. As this proceeding was necessitated by the error of the Board, and as this proceeding is one in the nature of an appeal from a court as defined in s 3 of the Appeal Costs Act,[14] I would grant that certificate.
[14]Anstee v Eyers (No 2) [2011] VSC 86 (11 March 2011) [15] (Osborn J).
Orders
Accordingly, I order:
(1) The second respondent pay the costs of the applicant on the standard basis.
(2) The second respondent be entitled to an indemnity certificate in respect of costs pursuant to s 4 of the Appeal Costs Act 1998.
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