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[2020] VSC 696
General information, not legal advice.
Supreme Court of Victoria
2020-10-20
Keith JR
Original judgment source is linked above.
COSTS - Appeal from Magistrates' Court - Contravention of overarching obligations imposed by the Civil Procedure Act 2010 - Appellants appealing compensation orders awarded in favour of Respondent - Respondent awarded costs as legal practitioner, despite representing himself - Appellants seeks orders of Magistrates' court be stayed until appeals determined - Respondent seeks appeals be dismissed - Whether compensation can be categorised as financial loss or loss stemming from a contravention of an overarching obligation - Issue of statutory interpretation - Whether respondent seeks compensation for financial loss or for legal costs - Whether Respondent should be compensated as a practitioner - Whether Costs Court have jurisdiction to determine issue - Court refuses to enter summary judgment in each proceeding - Notices of appeal do have real, and not fanciful, prospects of success - Application for summary judgment dismissed - Appellants submit court resources wasted if appeals prove successful - Stay generally not granted unless special or exceptional circumstances - Respondent has not yet obtained benefit of the Magistrates' Court decision - Appropriate in circumstances for respondent to not enjoy benefit straight away - Not clear the respondent would suffer loss if stay granted - Stay granted.
1 These proceedings form a part of disputes the subject of several other decisions of the Court and the Court of Appeal, most recently on 10 September 2020.[1]
2 These three proceedings pursuant to s 109 of the Magistrates' Court Act 1989 are appeals from final orders made by Magistrate Radford on 5 June 2020. The three appeals raise some common questions and some questions that arise in some but not all of the previous appeals. In the Magistrates' Court, findings were made that the proceedings had been conducted in contravention of the overarching obligations imposed by the Civil Procedure Act 2010 ('CPA'). I now provide my reasons for orders on multiple interlocutory applications in each proceeding.
3 The respondent in each appeal, Mr Davey, had previously acted as the solicitor for Dessco Pty Ltd and Mr Dessmann, the appellants in proceeding S ECI 2020 02844. In the Magistrates' Court, Mr Davey sued his former clients for legal fees for services rendered. In March 2019, Mr Davey was awarded judgment in the amount of $81,748.00 plus interest and no appeal has been commenced in relation to that judgment.
4 The appeal by Dessco and Mr Dessman is against the June 2020 orders in the Magistrates' Court action by which the Magistrate ordered Mr Davey recover compensation from Dessco and Mr Dessmann.
5 In the Magistrates' Court action Mr Elvin, the appellant in proceeding S ECI 2020 02841, acted as the solicitor for Dessco and Mr Dessman for the period from 10 June 2016 to 6 February 2017. The appeal by Mr Elvin is against the June 2020 orders in the Magistrates' Court action by which the Magistrate ordered Mr Davey recover compensation from Mr Elvin.
6 In the Magistrates' Court action Mr Silverstein, the appellant in proceeding S ECI 2020 02840, acted as the solicitor for Dessco and Mr Dessman for the period from 6 February 2017 until the date of the orders. The appeal by Mr Silverstein is against the June 2020 orders in the Magistrates' Court action by which the Magistrate ordered Mr Davey recover compensation from Mr Silverstein.
7 The Magistrate made a separate order in June 2020 for payment of disbursements by Dessco and Mr Dessman. That order is not the subject of these appeal proceedings.
8 The Magistrate made findings about the conduct of the proceedings before the Magistrates' Court and made adverse findings against Dessco and Mr Dessman as well as against Mr Elvin and Mr Silverstein. The adverse findings concerned breaches of the obligations imposed by the CPA. The Magistrate exercised powers created by s 29 of that Act and made orders in favour of Mr Davey for compensation.
9 Mr Davey, as the appellant in the Magistrates' Court action, had acted on his own behalf and sought to recover his costs as the legal representative for the appellant. The appeals to this Court against the several orders made by the Magistrate raise questions of law that include the consequences for orders under s 29 of the CPA and from the decision of the High Court of Australia in Bell Lawyers v Pentelow[2] ('Bell Lawyers'). The High Court published its reasons for decision in that matter on 4 September 2019. That decision was handed down after the conclusion of the substantive proceedings in the Magistrates' Court in March 2019 and prior to the completion of argument on cost orders, culminating in the orders of the Magistrate in June 2020.
10 In each proceeding the respondent Mr Davey has made application by Summons for orders that the appeal proceedings be dismissed and for other orders.
11 In each proceeding the appellants have made application by Summons for orders that the operation of the orders of the Magistrates' Court be stayed until the determination of the appeals, as well as other orders.
12 The parties have relied on affidavits and submissions filed in the proceedings as well as some additional documents provided by email. I heard submissions on 12 August 2020.
14 Relevantly, s 62 of the CPA holds:
A respondent in a civil proceeding may apply to the court for summary judgment in the proceeding on the ground that a appellant's claim or part of that claim has no real prospect of success.
15 Whilst s 63 of the CPA holds:
(1) Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.
(2) A court may give summary judgment in any civil proceeding under subsection (1) -
(a) on the application of a appellant in a civil proceeding;
(b) on the application of a respondent in a civil proceeding;
(c) on the court's own motion, if satisfied that it is desirable to summarily dispose of the civil proceeding.
16 It is necessary to identify the claims and parts of claims made in the appeals. The definition in the CPA of the phrase "civil proceeding" is expressed in broad language. No party submitted these appeals were not civil proceedings for the purposes of the Act. The term "claim" as used in ss 62 and 63 is not defined. No party submitted the grounds of appeal, or questions of law stated in the notices of appeal, did not constitute "claims" for the purposes of the sections.
17 The test for summary judgment expressed in s 63 requires the Court be satisfied the claim has no real prospect of success. It is clear the language of the section should be applied and the Court should not seek to use equivalent language or comparative language.
18 In regard to how to put the issue, I was referred to well-known passages as outlined by the Court of Appeal in Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd:[3]
whether the respondent to the application for summary judgment has a 'real' as opposed to a 'fanciful' chance of success; that the 'real chance of success' test is to some degree a more liberal test than the 'hopeless' or 'bound to fail' test; and that, as the law is at present understood, the real chance of success test permits of the possibility that there may be cases, yet to be identified, in which it appears that, although the respondent's case is not 'hopeless' or 'bound to fail', it does not have a real prospect of succeeding.
19 I accept Mr Davey does not need to establish the appeal is hopeless or is bound to fail. A claim may be found to have no real prospect of success without having been found to be hopeless or bound to fail.
20 The decisions continue to affirm the power to order summary judgment should be exercised with caution. As Derham AsJ stated:[4]
The power to give summary judgment must be exercised in accordance with the overarching purpose of the CPA and taking into account the fact that, if granted, a party will be deprived of the chance to pursue its claim or defence.
Section 29 Orders for Compensation
21 The common issues arising in each appeal concern orders for compensation pursuant to s 29 of the CPA and consequential orders for the assessment of the quantum of compensation. The common issue (in summary) involves consideration of the question of "financial loss or other loss materially contributed to by the contravention of [an] overarching obligation". There are other issues, but each appeal puts in question whether Mr Davey suffered loss in a relevant sense for the purposes of s 29.
22 The compensation is said to be for the time and effort of Mr Davey in representing himself in the Magistrate Court. The appeal further puts in issue whether the loss said to have been suffered by Mr Davey is properly compensated by a calculation in terms of the practitioner remuneration order. The appeals challenge such a compensation order, as it is said to be contrary to the decision of the High Court of Australia in Bell Lawyers.
23 By their Notice of Appeal filed on 6 July 2020, Dessco Pty Ltd and Mr Dessmann appeal against two of the orders made by the Magistrate on 5 June 2020. Paragraph D of the order is a compensation order pursuant to s 29. Paragraph G of the order is to the effect that in the absence of agreement the amount of compensation to be paid shall be assessed by the Cost Court. Both orders refer to a Practitioners Remuneration Order ('PRO') as a basis for the assessment of the quantum of the compensation.
24 By the Notice of Appeal filed on 6 July 2020, Mr Silverstein appeals against two of the orders made by the Magistrate on 5 June 2020. Paragraph F of the order is a compensation order pursuant to s 29 and makes Mr Silverstein jointly and severally liable with Dessco and Mr Dessman for compensation based on the PRO from 6 February 2017 to the date of the order. Paragraph G of the order is to the effect that in the absence of agreement the amount of compensation to be paid shall be assessed by the Cost Court. Both orders refer to a PRO as a basis for the assessment of the quantum of the compensation.
25 By the Notice of Appeal filed on 6 July 2020, Mr Elvin appeals against the orders made by the Magistrate on 5 June 2020 insofar as the order relates to Mr Elvin. The Notice of Appeal shows in the relief sought on the appeal that two of the orders of the Magistrate be set aside. Paragraph E of the order is a compensation order pursuant to s 29 and makes Mr Elvin jointly and severally liable with Dessco and Mr Dessman for compensation based on the PRO from 10 June 2016 to 6 February 2017. Paragraph G of the order is to the effect that in the absence of agreement the amount of compensation to be paid shall be assessed by the Cost Court. Both orders refer to a PRO as a basis for the assessment of the quantum of the compensation.
26 In support of the appeals against orders D, E, F and G, the appellants have raised questions of law that require consideration of the proper interpretation of a 29 of the CPA. The question of law requires consideration of the proper interpretation of "financial loss or other loss materially contributed to by the contravention of the overarching obligation".
27 The interpretation of s 29 in these appeals arises in a case where Mr Davey as the appellant in the Magistrates' Court proceeding did not engage solicitors. Mr Davey conducted the proceedings on his own behalf as a legal practitioner. The decision of the High Court of Australia in Bell Lawyers[5] was published on 4 September 2019. The effect of that decision is generally described as having determined the "Chorley exception" was not recognised as part of the common law of Australia. The consequence for Mr Davey is said to be that he cannot recover professional costs for his own time and expertise in the conduct of the Magistrate Court proceedings, even though he had been successful as the appellant in obtaining judgment.
28 The sequence of events relating to the impact of the decision in Bell Lawyers is set out in the affidavits in these proceedings. The respondent submits the claim made in these appeals has no real prospect of success. In support of that application, reliance is placed on decisions concerning s 29 and the power to make orders for compensation for loss as a result of noncompliance with overarching obligations.
29 The claims made by the appellants arise in the context where the Chorley exception is not part of the common law. The decision in Bell Lawyers is relied on by the appellants to support claims that the financial loss or loss mentioned in s 29 ought not be read so as to include amounts calculated as if they were legal costs. In my view that question is novel and warrants consideration by the Court on the merits. The claim raised by the appeal as to the impact of Bell Lawyers (if any) on the exercise of powers under s 29 should proceed to hearing. To express my conclusion in the language of ss 62 and 63, I am not satisfied the claim has no real prospects of success. The application for summary judgment could succeed only if I am satisfied the claim has no real prospect of success. The prospect of success is not merely fanciful, but there is a real prospect of success on the argument as to the construction of s 29 in light of the principles stated by the High Court in Bell Lawyers.
30 My reasons for that conclusion include that the claim as to whether Mr Davey has suffered loss (financial or otherwise) is a claim which requires determination of the question of law as to the meaning of "loss" in s 29, in the circumstances where the Chorley exception is not part of the common law. Also, the question arises as to whether any loss Mr Davey has suffered can or should be determined by reference to the PRO. There is a question of law arising under s 29 as to whether costs assessed by reference to a PRO is "financial loss or loss" and I am not satisfied the question has no real prospects of success.
31 Recently, Macaulay J quoted the High Court's decision in Bell Lawyers to affirm "The very notion of 'costs' as used in the statutes has been interpreted to mean 'a measure of indemnity against the expense of legal costs actually incurred in the litigation"[6]
32 The Court of Appeal has considered the decision of Bell Lawyers in the context of a firm of solicitors conducting proceedings on its own behalf and the firm was not able to recover costs of employed solicitors.[7] The trial division has considered the decision of Bell Lawyers in the context of an incorporated legal practice, and the practice was not able to recover its costs.[8] The recent decisions do not conclude the question raised by these appeals as to the power to award compensation pursuant to s 29 in circumstances where costs could not be recovered on the basis of the removal of the Chorley exception.
33 The common issues raised by the notices of appeal in relation to Order G concern the order of the Magistrate that the quantum of the compensation, if not agreed, would be determined by the Costs Court. The Order seeks to establish that the amount of compensation to be paid is to be determined by reference to the PRO.
34 The grounds of appeal on this topic seek to question whether the Costs Court can properly carry out the function provided for in the orders. The Costs Court is a division of the Supreme Court of Victoria which deals with disputes pertaining to legal costs. The submission, put bluntly, is that Magistrate has not ordered costs but rather ordered the payment of compensation. It is submitted the assessment of compensation is not the function of the Costs Court.
35 The claims made in relation to order G do, in my view, have real prospects of success. I am not satisfied they have no real prospect of success. The claims put in issue the jurisdiction of the Costs Court to determine the amount of "compensation" pursuant to s 29, where that compensation is "financial loss or loss" under 29 (1)(c) rather than "costs" under 29(1)(a). The question of statutory interpretation requires a determination of whether the task given to the Costs Court is within the power of that division of the Court. The appeal on this point does have a real, and not fanciful, prospect of success.
36 The notice of appeal refers to the jurisdiction of the costs court established by Part 2 Division 2B of the Supreme Court Act 1986.[9] The notice of appeal claims the Act grants no relevant power to the Costs Court to enforce, or quantify, an order for compensation pursuant to s 29 of the CPA.
37 The claim as to the power of the Costs Court is a question of law as to the interpretation of the Supreme Court Act and the Supreme Court (General Civil Procedure) Rules 2015 ('General Rules') of procedure including Order 63 of the General Rules. It also requires, at least potentially, consideration of other powers of the Supreme Court, including inherent power. I am not satisfied the claim made in the notice of appeal has no real prospect of success. The notice of appeal raises a question of statutory interpretation.
38 The Order of the Magistrate appears to equate the loss with the quantum of costs assessed by reference to the PRO. The questions of law identified above may cause the Court to consider the Costs Court does not have power or jurisdiction to determine the quantum of loss for a compensation order under s 29.
39 The learned Magistrate observed[10] there is a significant distinction between the two sub-sections (s 29 (A) as to costs and s 29 (C) as to loss). The Magistrate went on to further say "there is no precedent and very little material to assist me on what compensation is meant to mean in circumstances such as these".
40 Mr Davey relied on the decision of Dixon J in Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 5) ('Dura')[11] and other cases. The decision in Dura was referred to by the learned Magistrate. That decision has been applied in several cases concerning the exercise of the power in s 29 and is clearly applicable to the exercise of the power to make an order for costs. However the decision in Dura was for payment of costs rather than compensation.[12] Moreover, it does not address the ground of appeal raised in the three proceedings before me. It is also a fact that Dura was decided prior to Bell Lawyers.
41 The grounds of appeal in these proceedings raise questions of whether loss has been suffered, for the purposes of s 29. Decided cases including the decision in Gabelich[13] illustrate the need to consider what loss has been suffered, whether as legal costs or as financial loss, and the associated issues of causation and identity of the person said to have suffered the relevant loss.
42 The questions of law raised by the notices of appeal and the claims made in these proceedings are not suitable for summary judgment. They are claims to be determined at the hearing of the appeal. I refuse to enter summary judgment on the application by the respondent in each proceeding.
43 As I have observed, the proceedings involve some issues that are not common between the three appeals. The respondent seeks summary judgment on each part of the appeals and it is necessary to consider the other issues.
44 In the Silverstein and Elvin appeals the orders are challenged on grounds relating to certain findings by the Magistrate which underpin the exercise of the jurisdiction under s 29 of the CPA. The questions go to the findings that enliven the power in s 29, namely there has been conduct contrary to the overarching obligations.
45 In the Silverstein appeal there is a question of law as to a finding of a failure to act honestly in breach of s 17 of the CPA. The grounds of appeal raise questions of the application by the Magistrate of principles stated in cases as to the findings necessary to support conclusions as to a failure to act honestly.[14]
46 In the Elvin appeal there is a question of law as to findings of contravention of s 18 of the CPA and as to findings of contravention of s 21 of CPA. The Elvin appeal also raises a question concerning the exercise of powers under Part 4.5 of the CPA.
47 I shall return to the Elvin appeal concerning Part 4.5. The claims concerning ss 17, 18 and 21 across the two appeals may however be dealt with together for the purposes of the summary judgment applications. Each notice of appeal sets out the question of law claimed to arise under the relevant section and the notices set out the claims or grounds in support. They raise matters of statutory construction and matters concerning the approach taken by the Magistrate in making the relevant findings. It is those claims that must be considered for the purposes of the summary judgment applications.
48 Mr Davey submits[15] each of the appeals are without merit, have no real prospects of success, and are vexatious and misconstrued in whole or in part. He also submits the appeals are a continuation of the conduct of the appellants that has resulted in grossly disproportionate delay and costs, and further that the appeals themselves breach the overarching obligations, particularly to have a proper basis.
49 The written submissions filed by Mr Davey address the summary judgment application in the Elvin appeal from paragraphs 46 to 74. The submissions are largely directed to the findings of contravention and a recitation of the conduct of Mr Elvin relied on by Mr Davey to support the case that established conduct in breach of overarching obligations in the Magistrates Court.[16] In oral submissions to the Court Mr Davey recited the factual basis for the findings. The written submissions[17] deal with matters of statutory interpretation and legal principle concerning the exercise of the power created by s 29 of the CPA.
50 The written submissions filed by Mr Davey address the summary judgment application in the Silverstein appeal from paragraphs 81 to 86. The submissions include reference back to the submissions in relation to the Elvin appeal. The written submissions as to matters of statutory interpretation and legal principle concerning the exercise of the power created by s 29 of the CPA are substantially the same in both the Elvin appeal and the Silverstein appeal.
51 Mr Davey submits the questions of law raised were not put in issue in the Court below and the appellants are unable to raise the points on appeal.[18] In my view, such a submission does not assist in the determination of an application for summary judgment. Even if the general principle advanced is accepted as applicable to an appeal on a question of law under s 109 of the Magistrates Court Act, it will remain a matter for the Court on the hearing of the appeal whether to preclude the appellant from advancing a ground of appeal if objection is taken on this basis.
52 The submissions advanced by Mr Davey rely, in part, on the decision in Dura[19] and for the purposes of this application the statements of principle may be accepted. The submissions do not however establish the appeals have no real prospect of success. The appeal puts in issue whether the learned Magistrate below correctly identified the principles and whether the principles were correctly applied to the facts of the case.
53 Mr Davey submits the grounds relied upon by the appellants have incorrectly drawn principles from criminal law cases dealing with dishonesty and the burden of proof and matters of evidence. The merits of that argument is, in my view, a matter for determination at the hearing of the appeals. I do observe the Briginshaw principles were accepted by Dixon J in the decision of Dura.[20]
54 The argument for the appellants concerns the proper interpretation of the provisions of the CPA in order to make a finding of a breach of obligation. Regarding these provisions:
(a) s 17 imposes an obligation to act honestly. The proper interpretation of this provision is a question for the hearing of the appeal. The applicability or otherwise of cases dealing with findings of dishonesty is not so clear or free of doubt as to allow for a summary judgment to be entered dismissing that ground of appeal;
(b) s 18 imposes an obligation which requires a proper basis for any claim or response. The section uses the familiar language of civil procedure in that a claim must not be frivolous or vexatious, be an abuse of process, or lack a proper basis. The Elvin notice of appeal raises a question of law as to whether or not a reasonable belief that a proper basis existed is a necessary enquiry for a finding under the Act. The ground of appeal is a matter which should be determined on the hearing of the appeal. It is not such a claim that can be said to have no real prospect of success; and
(c) s 21 imposes an obligation not to engage in conduct that is misleading or deceptive, or is likely to mislead or deceive. These are now familiar concepts in Australian law. The notice of appeal puts in issue the adequacy of the evidence relied on to support the finding and the reasoning process applied by the Magistrate. The question of law raises an issue of whether the Magistrate applied the proper test for such a finding. These are matters to be determined on the hearing of the appeal.
55 Mr Davey has referred to authorities in which the Court has considered the overarching obligations and made findings of breaches of those obligations.[21] However it is not necessary to consider the principles for the purposes of this decision. The questions raised on these appeals have real prospects of success even in the face of well-established principles and the decisions on the facts of other cases.
56 Although Mr Davey has martialled the facts relied on to support the several findings of contravention, the summary judgment applications do not present a case where the strength of evidence of itself can satisfy the summary judgment test and establish that the claims made in the notice of appeal have no real prospect of success. The notices of appeal do raise questions of law in relation to each of the findings of contravention that in my view cannot be said to have no real prospect of success. Whether the grounds are successful is a matter to be decided on the hearing of the appeals, but in my view they do have real, and not fanciful, prospects of success.
57 The appellants submit - in opposition to the applications for summary judgment - the absence of affidavit material in support of the applications is fatal, and the submissions do not show why the appeals are said to have no real prospect of success. I do not need to consider these submissions in any detail, as I have set out my reasons for concluding the summary judgment applications are to be dismissed. I accept the submissions advanced for the appellants, which show for the purposes of s 62 and 63 of the CPA the proper conclusion is the claims made in the appeals are not such that they have no real prospect of success.[22]
58 The Notice of Appeal filed by Mr Elvin states a ground of appeal is the learned Magistrate erred in deciding to make orders against Mr Elvin under Part 4.5 of the CPA. That part deals with powers as to costs. Section 65C allows for different awards of costs in relation to different parts of a proceeding and for other differential cost orders.
59 The learned Magistrate made express mention of Part 4.5 in the course of announcing the orders[23] and said "I further make these orders under Part 4.5 of the Civil Procedure Act". From the context it appears the reference is made for the purposes of providing additional power for the orders made pursuant to s 29.
60 It is clear Part 4.5 relates to powers as to costs. The orders made as to compensation pursuant to s 29 were recognised by the learned Magistrate earlier in the reasons to be distinct from an order as to costs. The appeal puts in issue questions of whether notice was given of such reliance, and whether procedural fairness was observed in relation to the reliance on Part 4.5. There is a sufficient basis for this claim in the Elvin appeal such that I am not prepared to dismiss it summarily. I am not satisfied the claim has no real prospect of success.
61 The respondent seeks, in the alternative, that some parts of the appeal should be struck out. An affidavit of Mr Davey dated 10 August 2020[24] is relied on in relation to a ground of appeal, asserting a lack of procedural fairness. In my view it is not appropriate to separate individual issues in these proceedings. There is a substantial factual history and a bitter dispute over an extended period of time. It is not appropriate to attempt an assessment of merits on individual grounds of appeal in the circumstances of this case and these three related appeals. If the procedural fairness point can be answered by Mr Davey briefly then it will not occupy much time on the hearing of the appeals.
62 In the written submissions by counsel for Mr Silverstein,[25] reference is made to Order 58 which is the relevant Order of the General Rules dealing with appeals on a question of law under s 109 of the Magistrates Court Act 1989, among other appeals. Reference is made to R58.09 - which from the context is understood to be intended to refer to R58.10 (09) - which is a provision allowing the Court to dismiss an appeal.
63 The submission is made that the application for summary judgment is misconceived for failing to address Order 58. It is not necessary for me to decide that question, but the powers of the Court under Order 58 and under the CPA Act are both applicable and neither excludes the other. The CPA applies to all civil proceedings.[26] The CPA expressly provides that the powers of the Court under Part 4.4 (which includes ss 62 and 63) are in addition to any powers a court has under rules of court in relation to summary disposal of any civil proceeding.[27]
64 For completeness, I do however express my conclusion that there is no basis on which the Court should exercise the power to dismiss the appeals pursuant to Order 58. The notices of appeal do identify the questions of law on which the appeal is brought. The appellants do have an arguable case on appeal. These are not cases where there would be no substantial injustice to the appellants if leave to appeal were refused. It cannot genuinely be said that the appeals are frivolous, vexatious or otherwise an abuse of the process of the Court. My reasons for these conclusions are the reasons for my decision that I am not satisfied the claims in the appeals have no real prospects of success.
65 The differences in language between the CPA and Order 58 are not material in this case, as I am satisfied that the summary judgment applications must be dismissed and I would refuse to dismiss the appeals on Order 58 grounds.
66 The appellants in each appeal proceeding seek to stay the orders made by the Magistrate pending the hearing and determination of the appeals.
67 Order 58 of the General Rules provides by R58.12 for a power to grant any stay necessary for the proper hearing and determination of the appeal. In accordance with Rule 84, a Judicial Registrar has power to hear and determine an application for a stay in proceedings brought under Order 58.
68 In support of the applications, the appellants submit the determination of the quantum of the compensation ordered by the Magistrate involves contested hearings in the Costs Court. The appellants submit the time and cost of the determination by the Costs Court will be wasted in the event the appeals are successful. The orders of the Magistrate include orders that Mr Davey recover disbursements from Dessco and Mr Dessmann, but no stay is sought against that part of the orders.
69 In proceeding S ECI 2020 02844 the appellants filed a Summons on 7 July 2020 seeking a stay of the orders against them. The application for a stay is supported by an affidavit of the solicitor for the appellants, Mr Silverstein, dated 22 July 2020 and filed in the proceeding on that day. The affidavit refers to, and the appellants seek to rely on, a separate affidavit of Christen William Corns sworn on 22 July 2020 and reference is made to documents set out at paragraph 23 of that affidavit. The affidavit of Mr Corns has been filed in proceeding S ECI 2020 02840.
70 In proceeding S ECI 2020 02841, the appellant filed a Summons on 7 July 2020 seeking a stay of the orders against him. The application for a stay is supported by an affidavit of the appellant Mr Elvin, affirmed on 28 July 2020. The affidavit seeks to extend the relief sought on the summons to include a stay of the Costs Court proceedings related to the orders of the Magistrates' Court.
71 In proceeding S ECI 2020 02840, the appellant filed a Summons on 6 July 2020 seeking a stay of the orders against him. The application for a stay is supported by an affidavit of Christen William Corns, a solicitor representing the appellant. The affidavit is unsworn and endorsed with respect to COVID-19 circumstances to say why it has not yet been sworn.
72 The orders of the Magistrates' Court make each of the appellants liable to compensate the respondent, although for different periods of time. The quantification of the amount for which each party is liable has been designated by the Magistrate to be an exercise for the Costs Court. The power of the Costs Court is one issue raised by the grounds of appeal in each proceeding. The anticipated costs of proceeding in the Costs Court and the time and effort associated with the proceedings are advanced as factors relevant to the stay applications.
73 The principles governing the grant of a stay have been stated in many decisions and are well settled.[28] When exercising the discretion whether to order a stay the Court is directed to take into account the circumstances of the case. The applicant for the stay bears the onus of demonstrating the stay is justified. Ordinarily the successful party below is entitled to the fruits of the judgment. The power will not be exercised unless special or exceptional circumstances are demonstrated. The applicant must establish there is at least an arguable ground of appeal, although the decisions recognise the Court does not have sufficient material to consider the merits of the grounds of appeal in detail.
74 In the three appeals with which I am concerned, the applications are made at a time the amount payable is yet to be quantified. The respondent in each appeal has quantified an amount of $607,951.00 as the quantum to be claimed. The orders of the Magistrate did not fix the amount payable but directed it be determined by the Costs Court, unless agreement was reached. Only the appellants Dessco and Mr Dessmann could on any view be liable for the full amount claimed by Mr Davey. The liability of Mr Elvin and Mr Silverstein is limited as to time and consequently can only be some proportion of the total amount claimed.
75 The appellants each submit the time and cost of proceedings in the Costs Court should not be expended and incurred pending the determination of the appeals. The grounds of appeal show that if successful, the Costs Court proceedings would be unnecessary.
76 The ground directed to the exercise of the power under s 29 of the CPA to award "compensation" in the amount recoverable in accordance with the PRO could result in no amount being payable, or it could result in a lump sum order for compensation. It could result in the question of compensation being remitted for further consideration. If the appeal were allowed it would remove the need for the Costs Court proceeding.
77 The ground directed to the power of the Costs Court would have the same consequence. If the compensation order was upheld but the Court held the Costs Court was not empowered, or was not the appropriate authority, then the Costs Court proceedings would be wasted.
78 The engagement of the parties in disputed proceedings before the Costs Court is sufficient to establish special or exceptional circumstances. In addition to the resources of the parties, the resources of the Court would be expended on a contested determination of issues that could be of no utility and have no authority or purpose. The history of the issues between these parties is evident from the materials before the Court and allows for an inference that the Costs Court proceedings would themselves involve disputed issues, the need for rulings, possible secondary proceedings by way of interlocutory applications and possible appeals.
79 The respondent submits he is entitled to the benefit of the judgment below. The unusual aspect of this dispute is the "benefit" has not yet been quantified. While an order for compensation has been made and is a "benefit" there is no money judgment that can be recovered or enforced. The appeal puts in doubt not only the basis of the liability but also the procedure for the determination of the quantum. The anticipation of significant further costs and allocation of resources is sufficient to outweigh the usual expectation that the respondent is entitled to the benefit of the orders.
80 The appellants would incur significant prejudice were the stay refused. It is not clear the respondent would suffer irrecoverable loss as a consequence of delay were a stay granted. Interest would presumably run on any amount recoverable. If the appeals were dismissed the Costs Court proceedings could then be undertaken, or negotiations entered into to agree on aspects of compensation to limit the issues for the Costs Court to determine.
81 The appellants in each proceedings have discharged the onus of demonstrating the orders for a stay are justified. The orders to be made pursuant to Order 58, at Rule 58.12, include orders for a stay of the proceedings in the Costs Court.
82 In each of the appeals the respondent made application by Summons for orders that each of the appellants pay into Court the amount of $607,951.00. I do not consider it appropriate to make such an order, whether as a condition of the stay or otherwise. The total amount of the claim for compensation should not be substituted for a determination of the amount recoverable. There is no basis to suggest Mr Elvin or Mr Silverstein could be liable for the full amount, let alone that each could be liable for the full amount. The liability of Dessco and Mr Dessmann is joint and several liability with Mr Elvin as to part of the relevant period and with Mr Silverstein for part of the relevant period. Application of principles of contribution between the debtors would also be a factor against the orders sought by the respondent.
83 In my view the stay does not require any funds be paid into Court. In any event the quantum of the "compensation" has not been determined. The merits of the appeal challenge the order for compensation. While this of itself may not be grounds to refuse the respondent's request, there is no merit in the application in the absence of determination of a sum certain due and payable. In addition to the absence of a sum certain, it is not possible to determine the appropriate amount for each of the appellants "share". I am further of the view there is insufficient evidence to find the respondent will be unable to recover any compensation to which he is entitled should the appeals be unsuccessful in setting aside the orders of the Magistrates' Court.
84 By paragraph 4 of the summons filed by the respondent on 16 July 2020 in the Dessco appeal, Mr Davey sought orders that Dessco and Dessman be required, as a condition of continuing their appeal, to pay the amount of the principle liability in the sum of $118,116.37.
85 The amount the subject of that application is the amount of the judgment obtained by Mr Davey against Dessco and Mr Dessman in the substantive proceedings in the Magistrates Court. It is the subject of the order made in March 2019. There has been no appeal from that order and there is no stay of that judgment. Mr Davey remains entitled to take such steps of enforcement and recovery as may be advised. The COVID-19 pandemic has altered the legislative time periods for proof of insolvency by statutory notice in Corporations Law or in Bankruptcy.
86 The appeal in the proceeding before me is an appeal by Dessco and Mr Dessman against the compensation orders made pursuant to s 29. It is not an appeal against the primary judgment for the debt. In my view there is no sufficient nexus between the appeal and the principal judgment such that proceeding with this appeal while the judgment remains unsatisfied could be considered to be an abuse of the process of the court. No sufficient basis has been established to require such an order. The grounds of appeal on the order for compensation under s 29 do not depend upon anything arising from the principal judgment. The enforcement and recovery of the principal judgment are separate matters.
87 In the exercise of my discretion I also have regard to the prospect that there could be off-setting debits and credits. The prospect there may be liabilities due by Mr Davey to pay amounts to the appellants is a factor to show the order sought by Mr Davey would not be appropriate. It is in my view not appropriate to isolate the payment of the judgment sum from other matters between the parties. The commercial arrangements between the parties is sufficiently dealt with by the existing legal obligations and remedies. These proceedings are not the only proceedings between the parties.
88 In this proceeding there is, on the view I have taken, to be a costs order in favour of Dessco and Mr Dessmann against Mr Davey on the application for summary judgment. Such an offsetting liability on the part of Mr Davey is a reason to refrain from making the order sought.
89 The Summons filed by the respondent in the Dessco proceedings seeks an order for security for costs in the sum of $25,000.00. The determination of that application has been referred to me by order of the Court made on 11 August 2020.
90 The Summons filed by the respondent is expressed as an application that the second appellant be ordered to pay security for costs in the sum of $25,000.00. However the second appellant is Mr Dessmann. The application is in fact directed to the first appellant, Dessco Pty Ltd. The confusion appears to arise from the title to the proceeding used by the respondent in which the order of the appellants has been changed. On the Court record the corporation is the first appellant and I proceed on the basis the security for costs is sought from the corporation.
91 The first appellant is described in the title to the proceedings as "Dessco Pty Ltd as trustee for the Dessmann Family Trust Pty Ltd (A.C.N. 072 755 590) trading as Vogue Signs".
92 The respondent has made submissions about the lack of solvency of both appellants, Dessco and Mr Dessmann.[29] The corporation is a trustee of a trading trust.
93 The appellants oppose any order for security for costs on the basis Mr Davey is not represented, and is no longer a legal practitioner, and therefore has no exposure to legal costs that could support an order for security for costs. The application for security for costs must fail in the absence of any evidence of a liability to pay costs. The evidence before me, and the submissions of the parties, satisfies me that as matters stand, the respondent does not have a liability to costs in the proceedings and consequently no order for security for costs is warranted.
94 Mr Davey has filed an affidavit with an estimate of some $140,000.00 in costs and has submitted he has a future intention to be represented. I do not consider those submissions to support the application for security for costs.
95 The Summons filed by the respondent in the Elvin proceedings does not seek an order for security for costs. The Summons filed by the respondent in the Silverstein proceedings does not seek an order for security for costs. The Summons in both proceedings does seek an order for payment into Court of an amount of $607,000.00 which I have considered elsewhere. The respondent has filed further submissions in the Elvin proceeding[30] as well as an affidavit in which the solvency of Mr Elvin and Mr Silverstein is put in issue. However no application for security for costs has been filed and hence the application has not been referred to me for determination.
96 The appellants Dessco and Mr Dessman seek an order that the respondent produce to the appellants a copy of the document referred to by Magistrate Radford in the ex tempore reasons for decision given on 5 June 2020, being a transcript of evidence prepared by the respondent.
97 The appellants acknowledge a version of the transcript was available to them but consider the page references used by Magistrate Radford do not correspond to the version available to them. It is an appropriate enquiry by a party to Court proceedings to see the same document that had been provided to the Court.
98 Should it be necessary to consider the power of a Judicial Registrar to hear and determine this application, it constitutes the production of a document within R40.12. Moreover, Rule 34.02 expressly extends directions to include Order 40 so the authority in R84.02(3) to give directions as provided for by Order 34 is enlivened.
99 The respondent seeks orders that the three proceedings in this Court be consolidated or heard together and invokes the power of the Court in Rule 9.12.[31] The respondent also relies upon provisions of the CPA: s 9, with powers to promote the overarching purposes; s 47, providing for judicial powers of case management; and s 53, to the effect that s 47 does not limit any other power of the Court. The Court is enabled to give directions and manage litigation to ensure efficiency and expedition.
100 The conditions specified in Rule 9.12 are satisfied, as there are common questions of law and the issues arise from the same factual background. There is a need to avoid duplication and to manage the litigation with a view to ensuring the common issues are dealt with at a single hearing.
101 The appellants submit the three appeals should be heard together but not consolidated. There should be a common appeal book prepared rather than the need for a complete book of documents in each of the three appeals.
102 I am satisfied there should be a direction for the three proceedings to be heard together, in order to promote efficiency and to avoid duplication. I do not consider consolidation is appropriate. There are common issues but there are also issues on which the separate appellants may have different positions and possibly conflicting positions. It is appropriate the three proceedings remain separate, but they be heard and determined together, subject to any further directions of the judge who may hear the appeals.
103 By orders of Daly AsJ dated 11 August 2020 in each proceeding the following applications by the respondent were referred to me for hearing and determination:
(a) summary dismissal of each of the three the appeals;
(b) security for costs to be paid in the Dessco appeal;
(c) payment into Court of the amount of $607,000.00 by each of the appellants;
(d) payment by Dessco and Mr Dessman of the $118,000.00 liability amount; and
(e) self-executing orders
104 Some parts of the applications made by Summons by Mr Davey have not been referred to me and have not been decided by me. Should the applications require consideration of the Court, then further directions should be sought on the return date of the directions hearings.
105 The submissions for the respondent and the additional submissions and materials sought orders not included in the applications by Summons. Furthermore, the orders the subject of such request have not been referred to the Judicial Registrar presiding and are not the subject of this decision.
106 In the Dessco proceeding, the Respondent, Mr John Davey, seeks leave to make an Application for an Extended Litigation Restraint Order and an Acting in Concert Order pursuant to ss 16 and 34 of the Vexatious Proceedings Act 2014. The application is listed for directions only before me. It is appropriate to hear the parties and give directions for affidavits and submissions in relation to that application. The submissions should address, amongst other matters, the provisions of s 16 whereby leave is to be granted only if the application has merit and would not be an abuse of process.
107 By Summons in the Elvin proceedings,[32] the respondent seeks an order that "the conduct of the appellant" be referred to the Legal Services Commissioner. By Summons in the Silverstein proceedings[33] the respondent seeks an order that "the conduct of the appellant" be referred to the Legal Services Commissioner. The referral of the Summons does not extend to consideration of this aspect of the application. If the application is to be pressed at this interlocutory stage then further directions will need to be made for the Court to give consideration to this question.
108 The respondent has filed an affidavit dated 5 August 2020 in support of the summons in each action. The affidavit was filed in the Elvin proceedings on 6 August 2020. The affidavit sets out conduct of Mr Elvin and conduct of Mr Silverstein of which Mr Davey complains. There is however no statement in the affidavit[34] or the submissions as to the particular conduct of either Mr Elvin or Mr Silverstein, said to be the subject of the application, that a reference to the Commissioner is required or appropriate.
109 No submissions are advanced as to the basis for such a referral in this case. The general principles by which a Court may report conduct are well established and the respondent relied on relevant authority for the general principles.[35] However no specific instructions were provided as to:
(a) the stage of proceedings at which a referral might be made;
(b) the nature of the specific conduct said to require such a referral;
(c) or as to the form of such referral.
Moreover, no instructions were provided in relation to what findings of this Court, if any, would be required for such a referral to be made.
110 In relation to the conduct of Silverstein, the recent decision of the Court of Appeal in contempt proceedings[36] may be relevant to this further application. It is not clear what conduct of Mr Silverstein is the subject of the application for a referral to the Legal Services Commissioner.
111 On the hearing before me, some discussion occurred as to a proposed application by Mr Davey to file a Cross‑Appeal in these proceedings. It appears the proposal had been raised in email correspondence. Although no formal application is before me, I express the view Order 58 does not contemplate a cross appeal procedure. The Orders regulating other types of appeal in which the cross appeal procedure is recognised do not, in my view, apply to an appeal on a question of law pursuant to s 109 of the Magistrates' Court Act 1989 and as regulated by Order 58.
112 On 25 September 2020 I entered orders in each proceeding in the following terms:
DESSCO PTY LTD AS TRUSTEE FOR THE DESSMANN FAMILY TRUST PTY LTD (ACN 072 755 590) TRADING AS VOGUE SIGNS v JOHN PATRICK DAVEY S ECI 2020 02844
MATTHEW POMEROY ELVIN v JOHN PATRICK DAVEY S ECI 2020 02841
RONALD DAVID SILVERSTEIN v JOHN PATRICK DAVEY S ECI 2020 02840
6. The respondent shall pay the costs of the application for production.
[1] The Queen on the application of Davey v Silverstein and Others [2020] VSCA 233; Davey v Dessco Pty Ltd [2018] VSC 720 (Daly AsJ); Davey v Dessco Pty Ltd [2017] VSC 743 (J Forrest J [contempt]) and Davey v Dessco Pty Ltd 2017] VSC 744 (J Forrest J [bankruptcy]); Davey v Silverstein [2019] VSC 302 (Daly AsJ) and The Queen on the application of Davey v Silverstein [2019] VSC 724 (Richards J).
[3] [2013] VSCA 158, [29] (Warren CJ and Nettle JA (Neave JA agreeing)).
[4] Innes-Irons & Anor v Forrest [2016] VSC 782, [23].
[6] Guneser v Aitken Partners Pty Ltd [2020] VSC 329, [17] ('Guneser').
[7] United Petroleum Australia Pty Ltd v Herbert Smith Freehills [2020] VSCA 15.
[10] Transcript of Proceedings, John Davey v Descco Pty Ltd & Anor (G11540735 & G11441224, Magistrate Radford, 5 June 2020), 8 - which transcript is contained in the exhibits to the affidavit of Christien William Corns filed in the Silverstein proceeding S ECI 2020 02840 - and relied on for each of the appeals.
[11] [2014] VSC 400 ('Dura').
[12] Ibid, [187] (Dixon J) - where the quantum is described as wasted costs on the relevant issue.
[13] Gabelich v Donaghey [2018] VSC 184, [89] - [90].
[14] Peters v R [1998] HCA 7; (1998) 192 CLR 493 and Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336.
[16] Ibid [47] - [52] deal with factual matters to support the findings.
[21] Hudspeth v Scholastic Cleaning (No 8) [2014] VSC 567 and the earlier appeals [2014] VSCA 3 and [2014] VSCA 78 [from the decision of Dixon J [2013] VSC 14]; Yara Aust v Oswal [2013] VSCA 337; Mathieson Nominees v AJH Lawyers [2017] VSC 377; Dura (above n 11).
[22] Dessco Pty Ltd (ACN 072 755 590) & Peter Patrick Dessmann, 'Outline of Submissions (Respondent's Applications)', submission in Dessco Pty Ltd v Davey, S ECI 2020 02844, 6 August 2020, [10] - [12]; Matthew Pomeroy Elvin, 'Submissions on behalf of the appellant, Matthew Elvin', submission in Elvin v Davey, S ECI 2020 02841, 28 July 2020, [17] - [18].
[23] Transcript of Proceedings, John Davey v Descco Pty Ltd & Anor (G11540735 & G11441224, Magistrate Radford, 5 June 2020), 20.
[24] John Patrick Davey, 'Affidavit in Reply (John Davey)', submission in Elvin v Davey, S ECI 2020 02841, 10 August 2020.
[25] Ronald David Silverstein, 'Appellant's Outline of Submissions in Reply' (Respondent's Applications)', submission in Silverstein v Davey, S ECI 2020 02840, 6 August 2020.
[28] Oakmont Properties Pty Ltd v Duan Lan Zhang & Anor [2019] VSC 568; Scarborough v Lew's Junction Stores [1963] VicRp 20; [1963] VR 129; Cellante v G Kallis Industries [1991] VicRp 99; [1991] 2 VR 653; Maher v CBA [2008] VSCA 122; Loftus v ANZ Bank [2016] VSCA 114; He v Huang [2017] VSCA 102; Uren v Uren [2017] VSCA 300; Quick v Lam [2019] VSCA 111; Commissioner v Websdale [2019] VSCA 165.
[29] John Patrick Davey, 'Respondents Outline of Submissions', submission in Dessco Pty Ltd v Davey, S ECI 2020 02844, 23 July 2020, [20] - [23]; John Patrick Davey, 'Respondents Outline of Submissions', submission in Elvin v Davey, S ECI 2020 02841, 23 July 2020, [20] - [23]; John Patrick Davey, 'Respondents Outline of Submissions', submission in Silverstein v Davey, S ECI 2020 02840, 23 July 2020, [20] - [23].
[30] John Patrick Davey, 'Respondent Further Submissions as to Security and Security for Costs', submission in Elvin v Davey, S ECI 2020 02841, 11 August 2020.
[31] The Summons incorrectly refers to "Reg. 9.12" but is understood as a reference to "Rule 9.12" of the General Rules.
[32] Order 2 of the Respondent's Summons filed on 17 July 2020.
[34] The affidavit of Mr Davey dated 10 August 2020 is relied on in support of a referral. The affidavit reviews conduct in several proceedings across several years and concludes at [50] with a statement that "solicitor Ronald David Silverstein be referred to the Legal Services Commissioner".
[35]Toksoz v Westpac [2012] NSWCA 288.
[36] The Queen on the application of Davey v Silverstein and Others [2020] VSCA 233.
(1998) 192 CLR 493
(1938) 60 CLR 336