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[2015] VSC 37
Supreme Court of Victoria
2015-02-16
McDONALD J
Original judgment source is linked above.
APPEAL - Costs order by Judicial Registrar - Notice of Application to Reconsider Costs Order of Judicial Registrar - Application heard by Costs Judge - Nature of review under s 17HA of Supreme Court Act 1986 - Whether review by way of hearing de novo - Manner in which proceedings conducted by Appellant inconsistent with a hearing de novo - Appellant not permitted to advance submissions inconsistent with manner in which proceedings were conducted before Costs Judge - No legal, factual or discretionary error established - Appeal dismissed - Supreme Court Act 1986 ss 17C, 17D, 17GA, , ; s 3.4.38, 3.4.44A, 3.4.45, 3.4.45(2A), rr 1.15(1)(b), 63.56.2, 77.06.
1 On 29 May 2012, the respondents ('Mathieson') filed a summons for taxation seeking to tax three bills of costs of the appellant ('AJH'). The three bills totalled $35,709.10.
2 This judgment is in respect of an appeal pursuant to s 17I of the Supreme Court Act 1986 ('the Act') from a decision of Wood AsJ sitting as a Costs Judge. Mathieson Nominees Pty Ltd v AJH Lawyers.[1] This decision was a review of a costs order made by Gourlay JR on 17 February 2014 ('Costs Order').
3 Wood AsJ accurately described the history of the proceeding as 'long, acrimonious and expensive.'[2] The summons for taxation occupied 15 days of hearing before Gourlay JR. In addition there was a one day hearing before Ferguson J on referral pursuant to r 63.51 of the Supreme Court (General Civil Procedure) Rules 2005 ('Rules'), a two day hearing before Wood AsJ and a further day of hearing before myself. In the hearing before me, both AJH and Mathieson were represented by senior counsel. The subject-matter of the litigation is a costs order in respect of a dispute over legal fees of $35,709, which commended in May 2012. The amount in dispute pales into insignificance compared with the legal fees which have been incurred.
4 Having regard to the issues which were ventilated in the proceedings before me, it is necessary to set out in some detail the history of the proceedings before Gourlay JR. The taxation commenced on 24 September 2012. At the commencement of the proceedings AJH submitted that the Judicial Registrar should not follow the decision of Wood AsJ in Law Institute of Victoria v Keen.[3] Keen was authority for the proposition that the Costs Court is required to consider what is the fair and reasonable amount of legal costs under s 3.4.44(1)(c) and (2) of the Legal Profession Act 2004 ('LPA') when conducting a review of costs where there is an applicable costs agreement. Gourlay JR rejected this submission. Thereafter the taxation continued on 25 September 2012 and on 11, 12 and 13 February 2013. By 13 February 2013, an amount of approximately $8,500 had been taxed off the bill.[4]
5 On 28 February 2013, AJH made an application pursuant to r 63.51 of the Rules for the following questions to be referred from the Costs Court to a judge of the trial division of the Supreme Court:
(i) On the proper construction of s 3.4.44 and s 3.4.44A of the LPA, do the criteria in s 3.4.44(1)(c) and s 3.4.44(2) apply to a costs review where there is an applicable costs agreement and s 3.4.44A applies?
(ii) Is a Judicial Registrar entitled to adjust costs on the basis of the criteria set out in s 3.4.44(2) where s 3.4.44A applies?
6 Gourlay JR granted the application for a referral. The matter was heard before Ferguson J on 12 April 2013 and judgment was delivered on 21 June 2013.[5]
7 Ferguson J answered both of the questions set out above in the negative. However, notwithstanding her Honour's conclusion that the Costs Court was not required by reason of s 3.4.44(1)(c) and (2) of the LPA to consider the fairness and reasonableness of the amount of legal costs when a costs agreement is in place, her Honour stated:
Moreover, before one reaches the question of the amount of the legal costs, the Costs Court has to determine two matters: first, that it was reasonable to carry out the work and secondly, that the manner in which the work was carried out was reasonable. The legislation does not set out the factors that the court may take into account in determining those issues. However, particularly in relation to the second issue, it may be that the Costs Court would have regard to matters which appear in s 3.4.44(2) such as the quality of the work done or the skill, labour and responsibility displayed amongst other things. Those matters would not be taken into account as a result of their inclusion in s 3.4.44(2). Rather, they would be considered because in the particular circumstances of the case they were matters that were independently relevant to the issues to be determined under s 3.4.44(1)(a) and (b) albeit that coincidentally they appear in s 3.4.44(2).[6]
8 Referring to the passage in the judgment of Ferguson J set out above, Wood AsJ in his reasons for decision stated:
Further, although the questions posed to Ferguson J were answered in the negative, it was an arid outcome because the decision confirmed in conclusion that 'the criteria in section 3.4.44(1)(c) and (2) do not apply in considering the amount of the costs because the work that would have been done by those provisions is dealt with by s 3.4.44A.' In terms of a practical difference there was little achieved and it hardly justified the costs involved in the referral.[7]
9 His Honour further observed that the answers to the questions on the referral 'had little practical impact'.[8]
10 Although the effect of Ferguson J's judgment was that Gourlay JR erred by following Keen, Ferguson J's judgment confirmed that in circumstances where a costs agreement was in place the Costs Court was required to determine whether it was reasonable to carry out the work and whether the manner in which the work was carried out was reasonable. During proceedings on 2 September 2013, Gourlay JR stated that all of the rulings which she had made in the taxation up to 25 September 'related to the manner of the work being done, not the fairness and reasonableness.'[9] Wood AsJ was correct to conclude that the judgment of Ferguson J had little practical impact upon the way in which the taxation had been conducted.
11 On 2 September 2013, the taxation resumed before Gourlay JR. On that day, AJH submitted that because of the judgment of Ferguson J all items in the bills of costs that had been adjusted by the Costs Court, save for the items which had been conceded by AJH, ought to be reversed and orders made finalising the matter. Gourlay JR appears to have accepted AJH's submission that as the taxation had followed her ruling that the taxation was to be conducted in accordance with the decision in Keen, the taxation should start afresh.
12 The taxation resumed on 17 February 2014. At the commencement of the hearing AJH made a submission that Gourlay JR should recuse herself on the grounds of apprehended bias. This application was rejected. Immediately thereafter AJH's counsel made submissions in respect of an open offer of compromise dated 5 February 2014 from Mathieson to AJH ('Offer'). Mathieson had offered to compromise the proceeding on the following terms:
(a) AJH pay the amount $1,000 to Mathieson; and
(b) AJH pay the legal costs of and incidental to the review process of the legal costs to Mathieson.
13 AJH's counsel also made submissions in respect of a letter dated 10 February 2014 that was written in response to the Offer ('Letter'). Among other things, the Letter states:
(a) As the Applicants are prepared to accept the sum of $1,000 to settle these proceeding [sic], the Respondent does not consider it necessary for the parties to continue to proceed to conduct the review afresh, pursuant to the judicial determination of Ferguson J made on 21 June 2013 as it would simply incur unnecessary costs.
(b) Insofar as the offer seeks that the Respondent pay the costs of these proceedings, the Respondent does not agree to do so.
(c) In light of the above and in a genuine attempt to settle these proceedings, the Respondent offers to pay the sum of $5,500 with each party bearing their own costs in full and final settlement of these proceedings. This is an open offer made on a not without prejudice basis ... and is open for acceptance until 9.30am on Monday 17 February 2014. If the offer is accepted, the sum of $5,500 will be paid within seven (7) days from the date of acceptance of this offer.[10]
14 During the proceedings before Gourlay JR on 17 February 2014, counsel for AJH read the Letter in its entirety into the Transcript.[11] Immediately thereafter, counsel made the following submission:
I draw that to the court's attention because in my submission it should be said that that offer has not been accepted, but the court does have power under 3.4.45(2) to otherwise order or depart from what is laid down by the section as the prima facie consequence of a reduction of 15 per cent or more.
But not only pursuant to 3.4.45(2) does the court have the power to depart from that, but the court has power in the Civil Procedure Act, of course, itself to make costs orders that follow from any departure from the requirements of that Act.[12]
If the reality is that the other side are saying, '$1,000 is an appropriate reduction', and we're saying, 'Not only will we say $1,000 is fine, but $5,500 is fine', and that's rejected, then the court should draw appropriate conclusions about the genuineness of the position of the applicant.
It would be - if there is any scintilla of genuineness in the offer which is made 12 days ago, then given the power of the court to deal with costs, it would be appropriate, in my submission, that - no, I hear my learned friend say (indistinct) this offer hasn't come to his attention and that is troubling, but the court ought not spend further time, in my submission, if the parties are genuinely that short distance apart, and the court ought to proceed to deal with questions of the costs of the taxation rather than to spend further time in dealing with items and an item - a detailed review, and to have my learned friend correct what were inappropriate objections, amongst other things. But - - -.[13]
No, I am inviting the court to rule that an open offer having been made, that the respondent accepts a reduction of $1,000, that open offer having been made by the applicant, the court should fix that figure as the relevant reduction, and you can't have your cake and eat it too effectively, and seek to obtain a benefit in the eyes of the court by making an open offer without being prepared to meet the consequences, and it would seem that that's what the applicant is now seeking to do, and our counter offer, which is couched in reasoned terms, goes beyond, and accepts the $1,000 as an appropriate reduction, but the counter offer is effectively in respect of the costs over and above the $1,000.
So where the court has, what is put forward as an open offer, with a figure nominated and the figure being accepted by the other party, and the court always retaining discretion in respect of costs at any point, whether an offer of compromise is accepted or not, then it would be appropriate for the court, rather than spending time and the court resources, in proceeding to tax to determine whether it should be $1,000 or whether it should be $800 or whether it should be $1,200, whether it should be $3,000.
Both parties are, in an open way, saying to the court $1,000 is an appropriate reduction. We are only at issue, we are only at odds with one another in respect of costs, and absent total consent, the costs are always in the discretion of the court.
So that's why I submit that where there is unanimity as to the quantum, it's not desirable to spend more time in seeking to refine whether it should be $1,000, $1,200 or some other figure of a reduction because we can bypass that and go straight to the real issue, the real issue being the cost of the taxation because that's all that the parties are at issue about at this stage.[14]
15 Having heard submissions from the parties regarding the Letter, Gourlay JR stated:
I am going to fix the sum at $1,000. I am going to order that the respondent pay the applicant the sum of $1,000 in respect of the respondent's bill of costs the subject of the summons for taxation. I have no issue about fixing them at that.[15]
16 Gourlay JR then heard submissions from the parties regarding the costs orders which should be made. Following this, Gourlay JR gave an ex tempore ruling as follows:
I doubt that there is anything more that can be said that is going to affect the decision that I make. I really think that both parties have had broad range and much time has been spent through the whole matter with parties making lengthy submissions on each side and there has been little or no ground given by either party. It has been a hard-fought and difficult issue right from the start.
My impression has been that the solicitor has from the start taken umbrage at the fact that his bills have been reviewed. The summons that was issued at the time was a summons which was a fairly standard form for summonses for review under the Act and it seems to me that from the start of the commencement of the proceedings under 3.4.38 of the Act that the cost lawyers have sought orders, they have in fact not sought orders pursuant to the section but sought orders outside the section broadly.
The objections that were drawn at that time largely arose because of a failure to comprehend the work that was done, largely because access to the file was prevented and my impression is that it was really only as a result of the court's directions that access to the file was in fact granted, and then there were issues about it being delivered and taken away and it had to be produced to the court rather than the solicitor making it available at their offices. There have just been disputes and issues all the way through this.
It has also been a standard practice of people bringing applications under s 3.4.38 and 40, or the respondents in 3.4.40 to attack the costs agreement and costs disclosure. It is not helpful for the parties to behave in that way, and although there may be disclosure breaches they only in fact at the end of the day go to a reduction of the bill under 3.4.17.
The conduct all the way through has been repeated. The fact that these solicitors at the time of the application on 24 September having heard my ruling - on 24 September 2012 - having heard my ruling chose not then to seek to refer the matter across the road, rather the matter proceeded through taxation and was almost complete before they repeated that application, was not helpful. The late affidavits of Mr Rubenstein and Mr Armitage again were controversial and difficult and really did not help again, and all in all the conduct of the parties has not assisted the court very much in the whole taxation.
However, when I consider that in fact this has resulted in an order that the respondent is to repay moneys that the respondent has had the use of for over three years and has seriously resisted making any offer other than basically a payment of costs, in the two offers that the respondent appears to have been made, or the three offers the respondent has been made have been made as all-in offers for small amounts of costs that don't nearly reflect the costs of the proceeding at any time when the offers were made. It cannot in my view be said to be reasonable to award the respondent any costs in this matter.
The question arises whether the applicant should recover any or part of the costs of the taxation, and in my view the applicant should recover some costs of the taxation.
The costs that the applicant will recover are 50 per cent of its costs, save for the costs of the referral to Ferguson J under Rule 63.51 and also the applicant will not recover the costs of today.
Each party will bear their own costs in relation to the costs of the referral to Ferguson J and will bear their own costs of today. They are the orders that I intend to make.[16]
(1) The Costs Court must determine the costs of a costs review.
(2) Unless the Costs Court otherwise orders and subject to subsection (3), the law practice to which the legal costs are payable or were paid must pay the costs of the review if -
(a) on the review the legal costs are reduced by 15% or more; or
(b) the Costs Court is satisfied that the law practice failed to comply with Division 3.
(2A) Unless the Costs Court otherwise orders and subject to subsection (3), if the law practice is not, under subsection (2), liable to pay the costs of the review, the costs of the review must be paid by the party ordered by the Costs Court to pay those costs.
(3) A Costs Judge of the Costs Court may refer to the Supreme Court constituted by a Judge of the Court within the meaning of the Supreme Court Act 1986 any special circumstances relating to a costs review and the Supreme Court constituted by a Judge of the Court may make any order the Court thinks fit concerning the costs of the costs review.
18 Gourlay JR made an order on 17 February 2014 ('Order'). Although the Offer had lapsed without being accepted, Gourlay JR determined the review on the basis of selecting the first element of the offer. The Order states in substance:
1. The Respondent [AJH] pay the Applicant [Mathieson] the sum of $1000.00 in respect of the Respondent's bills of costs the subject of the Summons for Taxation.
2. The Respondent pay the Applicants 50% of the Applicants' costs of the proceeding, save for the costs of the referral to the Court pursuant to Order 63.51 and the costs of today.
3. The parties are granted a Certificate pursuant to Section 19 of the Appeal Costs Act 1998 for the case stated and heard by Her Honour Justice Ferguson on 12 April 2013. Ultimate costs of transcription are reserved.
19 The parties took no issue with paragraphs 1, 3 or 4 of the Order. The proceedings before Wood AsJ and before me were confined to paragraph 2 of the Order.
20 As reflected in paragraph 1 of the Order, AJH was ordered to pay to Mathieson $1,000 in respect of AJH's bills of costs the subject of the taxation. The bills ― dated 17 and 29 February 2012 and 19 March 2013 ― total $35,709.10. It follows that on the review the legal costs of AJH were reduced by approximately 2.8%.
21 Since the legal costs were not reduced by 15% or more, and the Costs Court was not satisfied that AJH had failed to comply with Division 3 of Part 3.4 of the LPA, s 3.4.45(2A) of the LPA was enlivened. Subject to certain exceptions, that subsection requires the costs of the review to 'be paid by the party ordered by the Costs Court to pay those costs'.
22 The phrase 'unless the Costs Court otherwise orders' in s 3.4.45 of the LPA seems to have placed an onus on Mathieson, being the party faced with a costs order, to persuade the Costs Court that circumstances justified the Costs Court exercising its discretion to 'otherwise order'.[17] Gourlay JR decided to exercise the discretion in s 3.4.45(2A) of the LPA in its favour. This is evident from paragraph 2 of the Order, which states:
The Respondent pay the Applicants 50% of the Applicants' costs of the proceeding, save for the costs of the referral to the Court pursuant to Order 63.51 and the costs of today.
23 After the Order was made, AJH filed a 'Notice of Application to Reconsider Order of Judicial Registrar' dated 3 Match 2014 ('Notice'). The Notice sought an order that in lieu of paragraph 2 of the Order made by Gourlay JR on 17 February 2014, Mathieson's costs of the review be wholly disallowed and AJH's costs of the review be allowed in full.
TAKE NOTICE that the Respondent objects to the order of the Judicial Registrar made on 17 February 2014 in respect of certain items taken to be included in the bill of costs of the Respondent dated 17 February 2012, 29 February 2012 and 19 March 2012 and applies to the Judicial Registrar to reconsider the order.
The items the subject of the application, the grounds of objection to the order of the Judicial Registrar and the order sought in place of that order are set out below.
(Emphasis added.)
Was the Notice of Application for Reconsideration an application pursuant to r 63.56.2
25 Although not expressly referred to in the Notice, it is beyond doubt that the application was made pursuant to r 63.56.2 of the Rules. AJH's written submissions of 17 December 2014 expressly acknowledged that at the time of filing the Notice it was an application made in accordance with r 63.56.2. That rule relevantly provides:
(1) If any party interested objects to an order of the Costs Court constituted by a judicial registrar -
(a) allowing or disallowing, wholly or in part, any item in a bill; or
(b) allowing some amount in respect of any item -
the Costs Court constituted by that judicial registrar, on the application of that party, may reconsider the order.
(2) If any party interested objects to an order of the Costs Court constituted by a Costs Registrar (who is not a judicial registrar) or by a Deputy Costs Registrar -
(a) allowing or disallowing, wholly or in part, any item in a bill; or
(b) allowing some amount in respect of any item -
the Costs Court constituted by a judicial registrar, on the application of that party, may review the order.
(3) An application under paragraph (1) or (2) shall be made by notice.
(4) The notice under paragraph (3) shall -
(a) state by a list each item in the bill in respect of which the party objects to the order of the Costs Court constituted by a judicial registrar ...; and
(b) state specifically and concisely the grounds of objection to that order and the order sought in its place.
(5) Within 14 days after the making of the order which is the subject of reconsideration or review -
(a) the notice under paragraph (3) shall be filed; and
* * *
(c) a copy of the notice shall be served on each party interested.
(6) Upon the application, the Costs Court constituted by a judicial registrar -
(a) shall reconsider or review the taxation upon the objections stated in the notice;
(b) shall make an order confirming, setting aside or varying the taxation or make such further or other order as may be necessary; and
(c) may make any other order the case requires.
(7) For the purposes of the reconsideration or review, the Costs Court constituted by a judicial registrar may receive further evidence in respect of any objection.
(8) The Costs Court constituted by a judicial registrar may, and if required by any party within seven days after the order is made under paragraph (6) shall, give written reasons for the decision in respect of any item in the bill to which objection was taken in the notice.
26 In their written submissions dated 17 December 2014, Mathieson submitted that the Notice was not an application made pursuant to r 63.56.2 of the Rules. I do not accept this submission. The following aspects of the Notice support the conclusion that it was an application pursuant to r 63.56.2 of the Rules:
(a) The rule is headed 'Reconsideration or review by Costs Court constituted by Judicial Registrar' and the Notice is headed 'Notice of Application to Reconsider Order of Judicial Registrar';
(b) Subsection (1) of the rule states that an application may be made if 'any party interested objects to an order of the Costs Court constituted by a judicial registrar', and the Notice states on the first page that AJH "objects to the order of the Judicial Registrar";
(c) Subsection (1) of the rule provides that an order may be reconsidered on application by the 'judicial registrar' who made the order, and the Notice states that AJH'applies to the Judicial Registrar to reconsider the order'; and
(d) Subsection (4) of the rule requires the application notice to:
(i) 'state by a list each item in the bill in respect of which the party objects to the order'; and
(ii) 'state specifically and concisely the grounds of objection to that order and the order sought in its place';
and the Notice states on the first page: 'The items the subject of the application, the grounds of objection to the order ... and the order sought in place of that order are set out below.'
27 Contrary to what is contemplated by the Notice, the application was not heard by Gourlay JR. Rather, the application made by the Notice was heard and determined by a Costs Court Judge, Wood AsJ. His Honour heard the matter on 22 May 2014 and 2 June 2014, and published the Decision on 26 June 2014.
28 In his Decision, Wood AsJ dismissed AJH's notice of application for reconsideration filed 3 March 2014. His Honour concluded:
There is sufficient grounds and justification for the decision of the Judicial Registrar to have been made in the terms it was. Even if it could be demonstrated that some of her reasoning was defective, the correct result has been reached for the reasons above.[18]
29 On 8 July 2014, the appellant filed a notice of appeal from the Decision. The appeal is brought pursuant to s 17I of the Act. On the hearing of the appeal, counsel accepted that the appeal from the Decision was governed by r 77.06 of the Rules.[19]
30 Before considering the grounds contained in AJH's notice of appeal, it is necessary to consider the jurisdiction which was exercised by Wood AsJ. His Honour states at para 7 of the Decision:
Neither party addressed the court on the question of jurisdiction and the matter proceeded on the assumption that there was jurisdiction. For the removal of doubt I will address the issue. The costs order does not fall within the ambit of r 63.56.2 of Supreme Court (General Civil Procedure) Rules 2005 ('the Rules') which allows reconsideration by the Judicial Registrar as that rule is restricted to rulings made in relation to particular items in a taxation. The respondent's review notice states on the first page that rule is restricted to rulings made in relation to particular items in a taxation. The respondent's Review Notice states on the first page '...and applies to the Judicial Registrar to reconsider the order'. Such an application is misconceived. However, the Costs Court is to conduct itself with little formality. In reality the respondent's application is one pursuant to Section 17HA of the Supreme Court Act 1986 ('the Act').[20]
31 Neither of the parties addressed me on the question of whether it was open to Wood AsJ to treat the Notice as an application pursuant to s 17HA of the Act. Accordingly, on 11 December 2014, I invited the parties to file written submissions addressing the following questions:
(a) Was the application made by the Notice, an application made in accordance with r 63.56.2 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) and why?
(b) If one is answered in the affirmative, in the absence of any amendment to the Notice, was it open to the Honourable Associate Justice Wood to deal with the application on the premise that it was not an application made in accordance with that rule?
32 Wood AsJ's conclusion that the application made by the Notice was misconceived, is correct. That application was made pursuant to r 63.56.2. The jurisdiction of the Costs Court to review a determination under that rule is confined to 'an item in a bill'. As a matter of plain English, a Costs Order is not an item in a bill. In Treasurer of Victoria v Tabcorp Holdings Ltd, the Court of Appeal stated:
But if the words are clear and unambiguous, and can be intelligibly applied to the subject-matter, the provision must be given its ordinary and grammatical meaning, even if the result may seem incorrect or unjust.[21]
33 In written submissions filed by AJH on 17 December 2014, AJH submitted that the Costs Order ought to have been considered an item of the bill of costs, and therefore amenable to review under r 63.56.2, because the question of costs was dealt with at the taxation and thus formed part of the costs taxed pursuant to r 63.36.[22] This submission must be rejected. The expression 'item in a bill' is unambiguous; on no view does it extend to a Costs Order made in respect of a summons for taxation.
34 AJH's written submissions dated 17 December 2014 contend that on 1 April 2014 at a call-over Gourlay JR 'ordered that the Notice stand as a notice of review and referred it directly for hearing by Associate Justice Wood.'[23]
35 The proceedings before Gourlay JR on 1 April 2014 were not transcribed. There is no record on the court file of an order having been made in the terms referred to above. Further, it is plain from the terms of para 7 of the Decision that Wood AsJ was unaware of any order or ruling having been made by Gourlay JR that the Notice was to stand as a notice of review for the purposes of s 17HA of the Act. Had his Honour been aware of such an order or ruling his reasoning at para 7 of the Decision would have been otiose.
36 Notwithstanding the absence on the court file of any order or ruling to the effect that the Notice stand as a notice of review for the purposes of s 17HA of the Act, I accept AJH's unchallenged submission that such an order was made on that day. Absent such an order having been made, a question would have arisen in the present proceedings as to whether his Honour was entitled, in the absence of any amendment to the terms of the Notice, to treat it as an application under s 17HA. However, given the matters set out above, I proceed on the basis that his Honour, although unaware of the terms of the order made by Gourlay JR on 1 April 2014, was entitled to proceed on the basis that the Notice should stand as a notice for review under s 17HA.
37 Grounds 2(a) and (b) of AJH's notice of appeal are as follows:
(a) The learned Associate Judge failed in conducting his review under s 17HA of the Supreme Court Act 1986 to consider for himself what order for costs of the proceeding ought to have been made (pursuant to the mandatory duty under s 3.4.45(1) of the Legal Profession Act 2004 which provides that the 'Costs Court must determine the costs of a costs review' ('the costs of the proceeding') but instead erred (at [18] of his Reasons) by addressing the question whether there had been 'clear error' on the part of the Judicial Registrar and erred by applying the principles of law applicable to interfering with discretionary decisions concerning an application for leave to appeal from a Costs Judgment.
(b) The learned Associate Judge in conducting his review under s 17HA of the Supreme Court Act 1986 ought to have exercised for himself the discretion and duty of the Costs Court in relation to the costs of the proceeding under s 3.4.45(1) of the Legal Profession Act 2004.
It is not contentious that for a court to overturn a costs order there must be clear error. As stated by Williams J in Owens v Oakley Thompson & Co at para 20_:_[24]
In Spotless Group Ltd v Premier Building & Consulting Pty Ltd, (footnote omitted) Redlich JA (with whom Dodds-Streeton JA agreed) said this of an application for leave to appeal from a costs judgment:
It is well established that an appellate court will not, in the absence of strong reasons, interfere with the exercise of discretion by the Court below with respect to the question of costs. As Callaway JA said in Hanlon v Brookes:
It is almost invariably the case that the judge at first instance is better placed to deal with the costs after a long trial and counsel seeking leave ordinarily has a difficult task. The test is not whether we should have exercised the discretion in the same way as his Honour did but whether there was or were a ground or grounds on which he could reasonably do so.
This Court may disturb the costs orders made below where an error in principle is identified, where the judge acted on a manifestly erroneous view of the facts, or where the award is manifestly unreasonable. But the applicant must satisfy a high threshold for the grant of such leave. The test to be applied is not whether the Court of Appeal would have made the same order but whether there is a ground upon which the order by his Honour could reasonably be made. Some manifest error must be exposed to take the case out of the ordinary situation in which, wherever a discretion is to be exercised, minds may differ on the result. Ormiston JA recognised this high threshold in Transport Accident Commissioner v O'Reilly observing that:
It is extraordinarily difficult to show that a court of first instance or a tribunal with wide discretionary powers has erred in the exercise of its powers to award costs, if there be some basis for making an order other than the conventional order in favour of the successful party. (Footnotes omitted)
39 In addition to the above, Wood AsJ stated at para 58 of the Decision:
There are sufficient grounds and justification for the decision of the Judicial Registrar to have been made in the terms it was. Even if it could be demonstrated that some of her reasoning was defective, the correct result has been reached for the reasons above.
40 In its submissions, AJH contends that his Honour's reasoning at paras 18 and 58 is erroneous. AJH submits that in conducting the review under s 17HA of the Act it was incumbent upon Wood AsJ to conduct a de novo hearing whereby his Honour should have made his own determination of the original application for costs as if he were the decision-maker at first instance.[25]
41 AJH submitted that in light of the legislative context of s 17HA a review conducted by a Costs Court Judge pursuant to that provision should be conducted as a de novo hearing. As to the relevant legislative context, AJH placed particular reliance upon s 17GA which provides that the powers of a judicial registrar of the Costs Court are subject to the general direction and control of a Costs Judge.
42 In considering grounds 2(a) and (b) of AJH's notice of appeal, it is necessary to have regard to the way in which the proceedings were conducted before Wood AsJ. As noted at para 7 of the Decision, no submissions were made by either AJH or Mathieson regarding the source of the court's jurisdiction to conduct a review of Gourlay JR's Costs Order. The only application before the court was that which had been filed by AJH pursuant to r 63.56.2. The Notice contains 11 grounds. Each of the grounds is expressed in terms of the Judicial Registrar having been in error. The grounds in the Notice are consistent with an appeal from an exercise of discretion. Indeed, AJH's written submissions dated 17 December 2014 contended that at the call-over on 1 April 2014 'the Judicial Registrar said that she would not hear the application for reconsideration as it concerned a discretionary order...'[26]
43 The terms in which the grounds are expressed fall squarely within the statement of principle in House v The King as to the circumstances in which an appellate court will interfere with an exercise of discretion, namely:
If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the material for doing so.[27]
44 The written and oral submissions made by counsel for AJH in the proceedings before Wood AsJ addressed each of the 11 grounds of error alleged in the Notice. No mention was made in either the written or oral submissions of AJH that the source of the court's jurisdiction to review the Costs Order was s 17HA of the Act. Indeed, a cursory review of the transcript of proceedings discloses that the review was conducted by counsel for AJH in a manner consistent with an appeal by way of rehearing challenging an exercise of discretion. When I raised these matters with counsel for AJH, his response was to point to a single sentence in paragraph 10 of AJH's written submissions dated 22 May 2014: 'This review is properly a hearing de novo'. Immediately thereafter the written submissions address a wide range of propositions consistent with a challenge to a discretionary decision based upon the principles set out above from the High Court's judgment in House v The King.
45 An appeal by way of hearing de novo was considered in Southern Motors Pty Ltd v Australian Guarantee Corporation Ltd,[28] where Brooking J stated:
The appeal is to be a rehearing de novo. Rehearings are of more kinds than one, but the expression 'rehearing de novo' shows that what is contemplated is (except to the extent to which r 16(6) goes on to provide otherwise) a complete rehearing, that is to say, the application is to be heard de novo in the sense that the party who was the applicant before the Master is the party to begin, the appeal is determined on the evidence placed before the Judge, no regard being had to the evidence placed before the Master, and the Judge determines the appeal without being in any way fettered by the decision of the Master, but giving such weight to the decision of the Master as appears proper.
46 Plainly the hearing before Wood AsJ was not conducted on the basis of a hearing de novo. Had it been conducted on this basis it would have been necessary for Mathieson, as the applicant in the proceedings before Gourlay JR, to have had carriage of the proceedings before Wood AsJ. This did not occur. Rather, counsel for AJH had carriage of the proceedings before Wood AsJ and conducted the proceedings in a manner entirely consistent with a review by way of rehearing from an exercise of discretion. Had the costs application been heard afresh as a de novo hearing a significant question would have arisen as to whether it was possible to disaggregate the question of costs from the amount of $1,000 which AJH had been ordered to repay to Mathieson. However, by reason of the manner in which AJH conducted the review this question did not arise.
47 The application which was before Wood AsJ was in the terms of the notice filed pursuant to r 63.56.2 containing 11 grounds of review which, prima facie, sought to enliven the principles in House v The King. In these circumstances, if AJH proposed to contend that the hearing before Wood AsJ was to be conducted on any basis other than a review by way of rehearing from an exercise of discretion, it was incumbent upon AJH at the outset of proceedings to have explicitly drawn to the attention of Wood AsJ that, contrary to the 11 grounds contained in the application by way of Notice, he was not to determine the case on the basis of error on the part of Gourlay JR, but rather was to make a determination afresh on the question of costs.
48 When I raised the matters set out above with counsel for AJH, his response was to refer to the opening sentence of para 10 of AJH's written submissions as set out above and to contend that AJH's primary submission was that the proceeding was by way of a hearing de novo and that any submissions consistent with an appeal by way of rehearing from an exercise of discretion were put in the alternative. The difficulty with this submission is that the conduct of a de novo hearing is significantly different from an appeal by way of rehearing. Consistent with the judgment of Brooking J in Southern Motors Pty Ltd set out above, if AJH intended to maintain the position that the hearing was by way of a de novo hearing, it was incumbent upon it to conduct the proceeding in a manner consistent with a de novo hearing. It did not do so. By the manner in which it elected to conduct the proceedings, AJH waived its right to rely on the contention that the proceeding was by way of a hearing de novo.
49 The matters set out above enliven the principle that a party is bound by the conduct of its case. As the High Court observed in Coulton v Holcombe, citing the court's then recent decision in Metwally v University of Wollongong (No 2):[29]
It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.[30]
50 AJH submits that the principle set out above has no application because at [10] of its written submissions before Wood AsJ it expressly submitted that the review was a hearing de novo. I do not accept this submission. To avoid the operation of the principle in Metwally and Coulton v Holcomb[31] it is not enough for AJH to point to one sentence in a written submission to which no reference was made during the course of the proceedings and in circumstances where the proceedings were conducted in a manner inconsistent with that submission. An appellant may be permitted to advance a point on appeal which was not taken below if it is expedient and in the interests of justice for the new point to be raised and agued.[32] I do not consider it expedient and in the interests of justice for AJH to be permitted to resurrect on appeal a point which for all intents and purposes was not advanced before Wood AsJ. Appeal grounds 2(a) and 2(b) must be rejected.
51 If I am wrong in my conclusion that AJH is precluded from relying upon appeal grounds 2(a) and 2(b) by reason of the manner in which it conducted the proceedings before Wood AsJ, I would in any event dismiss these grounds of appeal.
52 Contrary to AJH's submission, I have concluded that a review by a Costs Judge pursuant to s 17HA of the Act of a costs order made by a judicial registrar is not to be conducted by hearing de novo, but rather to be conducted by way of a review by way of a re-hearing, where the costs order will not be set aside, unless the applicant establishes that the order is attended by error of the type identified by the High Court in House v The King.[33]
(1) Subject to the rules, a party who objects to a determination made by a judicial registrar in accordance with this division (including a review under s 17H) may apply to the Costs Court constituted by a Costs Judge for a review of that determination.
(2) An application for review under sub-s (1) is to be made -
(a) within the time period allowed by the rules; and
(b) otherwise in accordance with the rules.
(5) A review under this section is to be heard and determined in accordance with the rules.
54 The Costs Order which was the subject of the proceedings before Wood AsJ was made by Gourlay JR pursuant to the power conferred by s 3.4.45(1) of the LPA. This section provides:
(1) The Costs Court must determine the costs of a costs review.
Contrary to AJH's submission, the jurisdiction exercised by Wood AsJ was not conferred by s 3.4.45. Relevantly, that jurisdiction had already been exercised by Gourlay JR on 17 February 2014 when the Costs Order was made. The only source of jurisdiction underpinning the review conducted by Wood AsJ was that conferred by s 17HA of the Act.
55 By virtue of ss 17HA(2) and (5), in conducting the review of the Costs Order, Wood AsJ was required to do so in accordance with the rules. His Honour correctly concluded that there was no rule which expressly applied to a review by a Costs Judge of a costs order by a Judicial Registrar.
56 Rule 1.15(1)(b) of the Rules states where the manner or form of the proceeding - by which the jurisdiction, power or authority of the court is exercisable - is not prescribed by the rules or under any Act, or for any other reason there is doubt as to the manner or form of that procedure, the court shall determine what procedure is to be adopted and may give directions.
57 Section 17D(2) of the Act states that the Costs Court has such powers of the court as are necessary to enable it to exercise its jurisdiction. Under s 17D(4), the Costs Court may regulate its own procedure. I agree with the conclusion reached by Wood AsJ at para 15 of his Decision that ss 17D(2) and (4) in conjunction with r 1.15 supports the conclusion that s 17HA provided jurisdiction for the Costs Court to review the Costs Order.
58 There are numerous authorities which support the proposition that costs orders are generally subject to the principle in House v The King, set out above.[34]
59 In Schweppes Ltd v Archer[35] Jordon CJ stated:
In appeals as to costs, the principles to be applied are these. The Court will always review a decision of a Taxing Officer where it is contended that he has proceeded upon a wrong principle, for the purpose of determining the principle which should be applied; and an error in principle may occur both in determining whether an item should be allowed and in determining how much should be allowed. Where no principle is involved, and the question is, whether the Taxing Officer has correctly exercised a discretion which he possesses and is purporting to exercise, the Court is reluctant to interfere. It has undoubted jurisdiction to review the Taxing Officer's decision even where an exercise of discretion only is involved, and will do so freely on a proper case, using its own knowledge of the circumstances: Western Australian Bank v Royal Insurance Co (7 CLR at 388); Clark, Tail & Co v Federal Commissioner of Taxation [1931] HCA 26; (47 CLR 142, at 145-6), but it will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case.
60 This passage continues to be quoted with approval.[36]
61 Wood AsJ considered the application by reference to s 17HA(1) of the Act and, at para 18 of the Decision, stated that '[i]t is not contentious that for a Court to overturn a costs order there must be clear error.' This statement of principle involved no error. In the circumstances, it was incumbent upon AJH to establish that Gourlay JR applied a wrong principle, considered or gave weight to extraneous or irrelevant matters, failed to consider or give weight to relevant matters, and/or mistook the facts.
62 Paragraph 3 of AJH's written submissions dated 15 October 2014, submits:
In light of the legislative context of s 17HA, Harris v Caladine[37] supports the statutory interpretation that a 'review' by a judge, specifically that of a determination made by a delegated jurisdiction, such as a Judicial Registrar, whose capacity is secondary, and one of assistance, to judges, is conducted by a judge with reference to questions of fact and law, and as a de novo hearing.
63 In Harris a deputy registrar of the Family Court of Australia made an order by consent for a property settlement. The wife (Harris) applied for a review of the order pursuant to O 36A r 7 of the Family Law Rules. Order 36A r 7(4) provided:
A court reviewing an exercise of power by a ... Registrar shall proceed by way of a hearing de novo but may have regard to the proceedings, including the evidence given and any affidavit filed, before the ... Registrar, as the case requires.
64 AJH placed particular reliance upon the judgment of Mason CJ and Deane J at paras 94 and 95 of Harris. This includes the following:
The legislative power of Parliament to authorise the exercise by officers of the Family Court of part of its jurisdiction, powers and functions is subject to some limitation, as is the power of the court to delegate some part of its jurisdiction, powers and functions whether in the exercise of its rulemaking power under s 123 of the Family Law Act 1975 (Cth) ("The Act") or in the exercise of its inherent jurisdiction. The limitation is that the legislative power and the power of delegation cannot be exercised in a manner that is inconsistent with the continued existence of the Family Court as a Federal Court constituted under Ch III. In other words, both the legislative power and the power of delegation must be exercised in conformity with the requirement that the Court's Federal jurisdiction, powers and functions are to be exercised by a court whose members are judges appointed pursuant to s 72 of the Constitution.
It seems to us that, so long as two conditions are observed, the delegation of some part of the jurisdiction, powers and functions of the Family Court as a federal court to its officers is permissible and consistent with the control and supervision of the Family Court's jurisdiction by its judges. The first condition is that the delegation must not be to an extent where it can no longer properly be said that, as a practical as well as a theoretical matter, the judges constitute the court. This means that the judges must continue to bear the major responsibility for the exercise of judicial power at least in relation to the more important aspects of contested matters. The second condition is that the delegation must not be inconsistent with the obligation of a court to act judicially and that the decisions of the officers of the court in the exercise of the delegated jurisdiction, powers and functions must be subject to review or appeal by a judge or judges of the court. For present purposes it is sufficient for us to say that, if the exercise of delegated jurisdiction, powers and functions by a court officer is subject to review or appeal by a judge or judges of the court on questions of both fact and law, we consider that the delegation will be valid. Certainly if the review is by way of hearing de novo, the delegation will be valid.[38]
65 The passages set out above from the judgment of Mason CJ and Deane J in Harris, upon which AJH places express reliance, do not support the conclusion that the power of review conferred upon a Costs Judge by s 17HA of the Act is confined to a review by way of a hearing de novo. First, as is plain from the passage set out above, the power of delegation under s 37A(1) of the Family Law Act (which empowered judges of the Family Court to make rules of court delegating to registrars all or any powers of the court) could not be construed in a manner inconsistent with the existence of the Family Court as a Federal Court constituted under Ch III of the Commonwealth Constitution. This Constitutional limitation does not apply to the construction of s 17HA. Second, in contradistinction to s 17HA, O 36A r 7 expressly provided that the review was to be conducted by way of a hearing de novo. Third, contrary to the position under the Family Law Rules, the Costs Order made by Gourlay JR was not made pursuant to a delegation of power. Rather, the order was made pursuant to an express grant of power conferred by s 17GA(1)(b) read in conjunction with s 3.4.45 of the LPA. Fourth, even if the making of the Costs Order did involve the exercise of delegated jurisdiction, that delegation was valid 'if the exercise of the power is subject to review or appeal by a judge or judges of the court on questions of fact and law'. That is precisely the type of review conducted by Wood AsJ. Harris is not authority for the proposition that such review must be by way of a hearing de novo.
67 In Wende the applicants were parties to a costs assessment and were dissatisfied with the determination of the costs assessor. They were entitled to apply for and did apply for a 'review of the determination' pursuant to s 373(1) of the Legal Profession Act 2004 (NSW) ('LPA NSW'). Sections 375(1) and (2) of the LPA NSW provides:
(1) A panel constituted under this sub-division may review the determination of the costs assessor and may:
(a) affirm the costs assessor's determination, or
(b) set aside the costs assessor's determination and substitute such determination in relation to the costs assessment as, in their opinion, should have been made by the costs assessor who made the determination that is the subject of the review.
(2) For the purposes of sub-s (1), the panel has, in relation to the application for assessment, all of the functions of a costs assessor under this Part and is to determine the application, subject to this Subdivision and the regulations, in the manner that a costs assessor would be required to determine an application for costs assessment.
68 AJH placed particular reliance upon para 158 of the judgment of Barrett JA in Wende:
The function of a review panel under s 375(1) is to 'review the determination of the costs assessor'. Under s 375(2), a review panel has an obligation to 'determine the application, subject to this Subdivision and the regulations, in the manner that a costs assessor would be required to determine an application for costs assessment.' The reference to 'the application is a reference to the application for assessment', that is, the application that was before the costs assessor in the first instance. The appeal panel must therefore deal with the original application for assessment and ultimately make its own determination of that application as if the panel were a costs assessor.
69 Contrary to AJH's submission that s 375(2) of the Act is 'substantially similar' to s 17HA, there are significant differences between the two provisions. In particular, s 17HA prescribes no procedure for the conduct of the review, save that it is to be heard and determined in accordance with the Rules. Nor is there any approved form for the making of an application for review.
70 Further, the judgment in Wende does not support the proposition that a review conducted pursuant to s 17HA must be by way of a hearing de novo. At paras 164 and 166 Barrett JA stated:
The function of the review panel will vary according to the way in which the applicant for review chooses to frame the application. If specific objections are stated, the panel will, of necessity, deal with them. If no objections are stated and the implicitly indicated desire of the applicant is merely to have the review panel conduct a general review, no specific matter will call for attention. In either such case, however, the function of the review panel is, as stated in s 375(1), to 'review the determination of the costs assessor' and to decide whether the assessment should be affirmed or altered.
Where the person making an application for review elects to raise particular objections, a review panel will be entitled to proceed on the basis that the person is, in all other respects, content with the original assessment. In such a case, the panel will adequately perform its function by dealing with the expressed grounds of objection and giving each of them separate and distinct consideration.[41]
71 AJH's Notice of Application for Reconsideration of the Costs Order of Gourlay JR contained 11 separate grounds alleging error. Applying the reasoning of Barrett JA set out above, Wood AsJ was entitled to conduct the review by reference to those grounds, rather than conducting a de novo hearing.
72 There are sound policy reasons why a review pursuant to s 17HA of a Costs Order should be subject to the principle in House v The King set out above rather than being by way of a hearing de novo. If a party dissatisfied with a Costs Order of a judicial registrar had an unfettered right to seek a review by way of a hearing de novo before a Costs Judge this would act as an incentive for disgruntled parties to prolong proceedings in relation to costs. The present proceedings demonstrate very clearly the potential for proceedings confined to the issue of legal costs to be out of all proportion to the amount in dispute between the parties. Such an outcome is irreconcilable with the express statutory mandate under s 24(b) of the Civil Procedure Act 2010 that parties ensure that costs incurred in connection with civil proceedings are reasonable and proportionate to the amount in dispute.
73 For the reasons set out above, if, contrary to my primary finding that AJH is precluded from relying upon appeals grounds (a) and (b), by reason of the manner in which the proceeding before Wood AsJ was conducted, I would in any event conclude that the appeal grounds should be rejected.
74 Appeal grounds 2(c) to 2 (e) are in the following terms:
(c) The learned Associate Judge ought to have proceeded on the basis that because the amount of the actual reduction of the Appellant's legal costs was less than 15%, the Appellant was, by reason of sections 3.4.45(2A) and 3.4.45(2)(a) of the Legal Profession Act 2004, prima facie entitled to an order for its costs of the people.
(d) The learned Associate Judge ought to have ordered that the Respondents (Applicants) pay the costs of the proceeding pursuant ot sections 3.4.45(2A) and 3.4.45(2)(a) of the Legal Profession Act 2004 since the Appellant's legal costs were not reduced by the Judicial Registrar under the Act by 15% or more but in fact by approximately 2.8% and there was no disentitling conduct or other circumstance.
(e) The learned Associate Judge erred by considering at paragraphs [45] to [48] of his Reasons what might have happened if the proceeding had continued and resulted in the reduction of the Appellant's legal costs by a larger amount rather than determine, as he ought to have done, the question of the costs of the proceeding by reference to the actual order of the Judicial Registrar, that is, for the reduction of those costs by $1,000 or approximately 2.8%.
75 In substance, appeal grounds 2(c) to (e) advance the same proposition: that in circumstances where AJH was ordered to pay Mathieson the sum of $1,000 being 2.8% of the legal costs in dispute, AJH had a prima facie entitlement for an order for costs in its favour, and Gourlay JR erred in failing to so order.
76 As with my consideration of appeal grounds 2(a) and (b), it is once again necessary to pay careful regard to the manner in which AJH conducted the proceedings before Gourlay JR. I have set out earlier in this judgment the exchange which took place between counsel for AJH and the Judicial Registrar on 17 February 2014. That exchange was directed to the circumstance of Gourlay JR ordering AJH to pay Mathieson the sum of $1,000. Indeed, counsel for AJH urged the Judicial Registrar to adopt that very course. The transcript of the exchange speaks for itself. The inference is irresistible that counsel for AJH wished to allay any concern which the Judicial Registrar may have entertained that by ordering AJH to pay Mathieson the insignificant sum of $1,000, Mathieson would automatically be exposed to a cost liability by falling well short of the 15% threshold prescribed by s 3.4.45(2)(a) of the LPA. Doubtless, for this reason, counsel was at pains to point out to the Judicial Registrar that the court had a discretion not to order Mathieson to pay costs notwithstanding that the amount of $1,000 fell well short of the 15% threshold. This inference is supported by examination of the submissions which were advanced by counsel for AJH on the question of the costs of the proceeding once the Judicial Registrar had indicated her intention to make an order that AJH pay Mathieson the sum of $1,000. In stark contrast to the submissions advanced before Wood AsJ and before myself, counsel for AJH did not submit that by reason of the Judicial Registrar having ordered AJH to pay Mathieson a sum equivalent to 2.8% of the costs in dispute, Mathieson was liable to pay AJH's costs by reason of falling well short of the '15% Rule' prescribed by s 3.4.45(2)(a) of the LPA.[42] Such a submission would have been plainly untenable given the earlier exchange between himself and the Judicial Registrar in which he had been at pains to point out that the Judicial Registrar had a discretion to depart from the prima facie position prescribed by s 3.4.45(2)(a).
77 Before Gourlay JR counsel for AJH made no reference to s 3.4.45 of the LPA. In the proceedings before Wood AsJ, counsel submitted:
That the fundamental point in a Review of this kind is that the event is statutorily defined, the 15% Rule, which as its predecessor in the one-sixth Rule, is a longstanding and well understood clear statutory definition of what the event in a Review of her solicitor and her client or third party payer, is. In this case there has been a large departure from that Rule, in that the Judicial Registrar has not only not awarded us the costs of the Review which in my submission she should have done, but has actually awarded part of the costs of the Review in the opposite direction of a 15 per cent Rule.
78 During the course of the proceedings before me, I raised with counsel for AJH the tension between the submissions which were advanced before Gourlay JR and those advanced before Wood AsJ and myself. The following exchange took place between myself and counsel for AJH:
HIS HONOUR: It does appear on a fair reading of that submission from Mr Sandbach that he was - he was positively submitting to the Judicial Registrar that the, for want of a better term, the 15% rule did not tie her hands so to speak if an order was made for a reduction of less than 15%.
MR VAN de WIEL: Provided there were satisfactory sustainable reasons to do so. Now that's not expressed, but that would have to be the logical basis of what my learned friend, Mr Sandbach, said.[43]
...
HIS HONOUR: But Mr Sandbach has made a submission which I understand it's an agreed position at the Bar Table, the upshot of the submission at Court Book 246, line 13-23, was an invitation to the Judicial Registrar that she was not constrained by the 15% rule, if an order was made. If an order was made in favour of Mathieson for less than 15%. And that was in the context that we now - it now appears that Mr Sandbach referring to your client's offer all in at $5,500.
MR VAN de WIEL: Yes.
HIS HONOUR: Now all that's being ordered by the Judicial Registrar is $1,000.
MR VAN de WIEL: Yes.
HIS HONOUR: Alright, so you've got another $4,500 there.
MR VAN de WIEL: Yes.
HIS HONOUR: A fortiori in that circumstance, if the invitation was being extended, if you make an order for $5,500, the rule - the 15% rule doesn't apply. A fortiori, if what flows is $1,000 the invitation to depart from the 15% rule must be even stronger. Now you can't walk away from that Mr Van de Wiel.
MR VAN de WIEL: I'm not walking away from it, I'm not ---
HIS HONOUR: Well, you need to address it.
MR VAN de WIEL: I'm addressing it, what I submitted to your Honour earlier was valid reasons, not fallacious reasoning, not conjecture, not reasons which cannot be considered and found to be logical. For example, to say, well I will reduce it because you've been paid three years previously and therefore I will reduce it, is fallacious reasoning. To say, because you've gone to the Supreme Court and challenged the basis upon which I was originally considering matters albeit wrong I will hold against you ---
HIS HONOUR: Yes.
MR VAN de WIEL: --- To say because there's been a history of offers and you have not accepted those within a particular time when counteroffers were made and also not accepted is fallacious, and we say that if you look at all of the reasons which are considered to reduce the ordinary rule under 44.45, they're not reasons which can withstand appropriate scrutiny.[44]
79 It is beyond argument that Gourlay JR had a discretion to refrain from ordering costs in favour of AJH, notwithstanding that the amount which AJH was required to pay Mathieson was less than 15% of the amount of the costs in dispute. As is plain from the exchange set out above, AJH's complaint is that this discretion was not properly exercised. Gourlay JR's ex tempore reasons set out earlier in this judgment identify three matters which underpin the exercise of the discretion to refrain from making a Costs Order in favour of AJH. First, the result of the proceeding was that an amount of $1,000 was to be paid to Mathieson. Second, AJH had had the use of that money for a period of some three years. Third, AJH had not made any offers of settlement save for offers which did not reflect the cost of the proceedings at the time the offers were made.
80 Grounds 1 to 6 of AJH's Notice of Application to Reconsider the order of the Judicial Registrar are in the following terms:
81 Grounds 1, 3 and 5 ignore the fact that, as conceded expressly by counsel for AJH, Gourlay JR had a discretion to refrain from making a Costs Order in favour of AJH. Grounds 2, 4 and 6 contend that Gourlay JR has given excessive weight to particular circumstances, or failed to give sufficient weight to other circumstances. Insofar as these grounds challenge the weight which Gourlay JR has given or failed to give to a particular matter, a particularly heavy onus falls upon AJH. It is well-established that a party who seeks to challenge a discretionary decision upon a question of weight, must establish that there has been a failure to exercise the discretion in question.[46] Individually and collectively the grounds in the Notice fall well short of establishing a failure on the part of the Judicial Registrar to exercise the discretion to refrain from making an order for costs in favour of AJH.
82 Contrary to the terms of appeal ground 2(e), Wood AsJ did not determine the proceeding 'by reference to what might have happened if the proceeding had continued.' The matters canvassed by his Honour at paras 45 to 47 of the Decision simply formed part of the chain of reasoning in respect of his conclusion at para 47 that the figure of $1,000 did not represent what would have actually occurred if the matter had proceeded to a full taxation again. The $1,000 figure was arrived at as a way of finalising the matter without further costs being incurred. This was a matter which Wood AsJ properly took into account in considering whether the Judicial Registrar's decision to refrain from ordering Mathieson to pay AJH's costs was attended by error.
(f) The learned Associate Judge erred in reasoning at paragraph [55] of his Reasons that the delay from 24 September 2012 to 28 February 2013 in the Appellant making its application for the referral of questions to a Judge of the Court tended against the Appellant on the question of the costs of the proceeding when the fact was that that reference reduced the ultimate cost of the matter to the parties and the Court by avoiding the review and appellate processes which would, in the ordinary course, have been necessary before the decision in Law Institute of Victoria v Keen could have been corrected by a Judge of the Court.
...
(h) The learned Associate Judge erred in reasoning at paragraphs [56] and [57] of his Reasons that because the proceeding ran for 4 days after the Judicial Registrar ruled that she would apply the decision in Law Institute of Victoira v Keen and before the Appellant applied for the referral questions to a Judge of the Court, the Appellant had not minimised delay which finding tended against the Appellant on the question of the costs of the proceeding.[47]
84 Paragraphs 55 to 57 of Wood AsJ's Decision are as follows:
The respondent argues that they should not be penalised for waiting until the conclusion of the taxation before requesting a referral of questions to a judge. However, in their own written submission it is put that the referral was the preferred course over reconsideration by the Judicial Registrar, then review to the Associate Judge who decided LIV v Keen, and then in all likelihood an appeal to a judge would follow.[48] This is precisely why a referral of questions was the more appropriate course and the earlier the better after the first ruling was made by the Judicial Registrar on 24 September 2012. Even then the respondent failed to raise the issue in the six months prior to 11 February 2013 when the matter was next listed to resume. An application for a referral could have been initiated in the interim period. The matter then ran on 11, 12 and 13 February 2013 to conclusion without the referral application being made.
Sections 22 and 24 of the Civil Procedure Act 2010 are pertinent in relation to reasonable endeavors to resolve matters, and ensure costs are proportionate. As discussed above, the case ran for four more days before the respondent asked for a referral of questions to a judge. Further, the respondent also did not convey an offer to refund $1,000 at the start of the proceedings even though it was conceded by counsel during the hearing that a refund was likely, and their offer of 10 February 2014 made it clear they would have accepted such a proposal if it had been made at the outset of the proceeding.
Implicit in the reasons of the Judicial Registrar for the costs ruling are the issues surrounding the respondent's conduct in relation to inspection of the file, the offers made, and the delay in seeking a referral of questions to the judge. There are sections of the Civil Procedure Act 2010 that are germane to and underpinning these factors - the obligation to co-operate[49], make reasonable endeavours to resolve disputes[50], minimise delay and act promptly.[51]
85 In its written submissions dated 15 October 2014, AJH submitted, in respect of appeal grounds 2(f) and 2(h):
The learned associate judge failed to consider at [55]-[57] of his Reasons (AB 500-501) the fact that the referral reduced the ultimate costs, and ultimate delay, of the proceedings, by avoiding the reconsideration and review process (AB 476), in circumstances where:
(a) the respondents oppose the appellant's request for the referral;
(b) from the start and throughout the review, the appellant had submitted the costs that the cost agreement applied and that the Judicial Registrar could not reduce or disallow items of costs by considering whether the amount was fair and reasonable under s 3.4.44(1)(c) and 3.4.44(2) of the LPA, and the Judicial Registrar completely rejected the appellant's submissions; and
(c) the appellant was entitled to follow the ordinary process for review and appeals under the court's rules, the SCA and the LPA.
86 The submission set out above does not support a finding that Wood AsJ's reasoning at paras 55 to 57 of this Honour's Decision was erroneous. I have set out earlier in this judgment the chronology of events relating to AJH's application for a referral of questions of law pursuant to r 63.51. Upon the commencement of the taxation on 24 September 2012, AJH submitted that the Judicial Registrar should not follow the decision in Keen.
87 That submission was rejected by Gourlay JR on 24 September 2012. Thereafter the taxation proceeded for a full four days of hearing, ultimately concluding on 13 February 2013. By this time an amount of $8,500 had been taxed off the bills. An application for referral was not made until 28 February 2013. It is beyond argument that the referral application could have been made on 24 September 2012. Four days of court time and costs were expended which could otherwise have been avoided. This was a matter to which Wood AsJ was entitled to have regard when considering whether the exercise of discretion by Gourlay JR to refrain from making a Costs Order in favour of AJH was attended by an error.
(g) The learned Associate Judge erred in reasoning at paragraphs [45] to [49] and [56] to [57] of his Reasons that the various settlement offers made by the parties which were in evidence tended against the Appellant on the question of the costs of the proceeding when the proceeding was not resolved on the basis set out in any of them and the result of the proceeding was not comparable with any of the offers in evidence.[52]
89 Paragraphs 45 to 49 and 56 to 57 of the Decision are as follows:
The respondent was willing to accept a resolution, seven days before what turned out to be the final hearing, on the basis that they would bear their own costs and pay $5,500 to the applicants. On the basis of the $1,000 offer from the applicants with costs, the respondent has then in effect agreed at that point to repay $1,000 plus offer $4,500 towards the applicants' costs instead of receiving all their own costs. Prior less favourable offers of the respondent were found by the Judicial Registrar not to constitute genuine attempts to resolve the matter. On the original taxation 24% of the bill was taxed off. If the matter had been re-taxed in February 2014 at least 15% would have been taxed off for reasons other than the answers to the questions on referral to Ferguson J.
For example, some $6,615 was claimed for work that was classified as legal research and consideration of substituted service and the law relating to examinations under Corporations Law.[53] This work would have been vulnerable to disallowance on re-taxation having regard to the commercial expertise of the respondent and the hourly rates charged given that a legal skill component is built in to these figures. A solicitor cannot educate himself in relation to mundane matters at the expense of the client. This figure represents more than 15% of the bills.
The respondent relies on the $1,000 figure to try to trigger the legislative provisions relating to reduction of the bill by less than 15% on a full taxation. The final refund of $1,000 does not represent what would have actually occurred if the matter had been taxed again. In fact, the figure appears to have been arrived at as a way of finalising the matter without further cost being incurred. There was no argument about the gross sum of $1,000. The dispute revolved around the costs order for the proceedings. As commented on by the Judicial Registrar on 17 February 2014:
REGISTRAR: No. In my view the applicant in making the offer to accept $1,000 has in fact gone just down a commercial route and decided that I have to finish this, this is ridiculous, I suppose.
MR SANDBACH: Yes, yes, and we're not saying that's an inappropriate offer to be made. In fact on the contrary, we're saying it's a very appropriate offer to be made, and if made at an appropriate time then we would have avoided a lot of costs, because we would always have accepted that.
On 5 February 2014 the applicants made an Offer of Compromise with the applicants agreeing to accept the sum of $1,000 by way of refund from the respondent together with the costs of the proceedings. The respondent did not accept this offer but put an open counter proposal on 10 February 2014 to pay the applicants $5,500 but otherwise with each party bearing their own costs. Consistent with the statement made by counsel for the respondent on 17 February 2014 quoted above, the letter includes the statement that
Had the Applicants offered to accept the sum of $1,000 prior to the commencement of proceedings or at the start of the proceedings, the respondent would have accepted the offer to finalise the matter.
The respondent could have communicated that willingness at the time, namely the commencement of the proceedings. All parties have the obligation pursuant to the Civil Procedure Act 2010 to make genuine attempts to resolve matters.[54]
Sections 22 and 24 of the Civil Procedure Act 2010 are pertinent in relation to reasonable endeavors to resolve matters, and ensure costs are proportionate. As discussed above, the case ran for four more days before the respondent asked for a referral of questions to a judge. Further, the respondent also did not convey an offer to refund $1,000 at the start of the proceedings even though it was conceded by counsel during the hearing that a refund was likely, and their offer of 10 February 2014 made it clear they would have accepted such a proposal if it had been made at the outset of the proceeding.
Implicit in the reasons of the Judicial Registrar for the costs ruling are the issues surrounding the respondent's conduct in relation to inspection of the file, the offers made, and the delay in seeking a referral of questions to the judge. There are sections of the Civil Procedure Act 2010 that are germane to and underpinning these factors - the obligation to co-operate[55], make reasonable endeavours to resolve disputes[56], minimise delay and act promptly.[57]
90 In its written submissions dated 15 October 2014, AJH submitted in respect of ground 2(g) that the learned Associate Judge failed to consider that:
(a) the original matter was not settled on the basis of any of the offers of settlement made by the parties ('the offers') (AB 87-95);
(b) none of the offers made by either party resembled the potential Costs Order as indicated by the learned Judicial Registrar during the proceedings, or the final orders actually made by the learned Judicial Registrar;
(c) the respondents could equally have communicated their willingness or made an offer to receive $1,000 or 2.8% reduction at the commencement of the original proceedings.
91 This appeal ground must be rejected for the following reasons. First, appeal ground 2(g) assumes that the power of review exercised by Wood AsJ pursuant to s 17HA of the Act was by way of a hearing de novo. The appeal ground assumes that Wood AsJ was under an obligation to determine for himself the amount of any costs which should be awarded as between the parties, as opposed to determining whether or not the order made by Gourlay JR was attended by error. For reasons set out above, the premise of the appeal ground is rejected. Second, insofar as the appeal ground alleges error on the part of Wood AsJ, the ground is without substance. His Honour's reference to earlier offers of settlement prior to 17 February 2014 merely constitute part of his consideration of the Costs Order which was ultimately made on 17 February 2014. As his Honour notes at para 45 of the Decision, the offer made by AJH on or about 7 February 2014 was effectively an offer to pay Mathiesons $1,000 plus $4,500 towards their costs. The fact that AJH was prepared to make a contribution of $4,500 in excess of the $1,000 which was ultimately awarded in their favour by Gourlay JR on 17 February 2014, was a relevant consideration. This is particularly so given the fact that the relief sought by AJH in the proceedings before Wood AsJ included an order that Mathieson pay all of the costs of the proceeding before Gourlay JR. Plainly, such an order would have been inconsistent with the terms of the offer made on or about 7 February 2014.
(i) The learned Associate Judge erred in reasoning, if he did so, at paragraph [5] of his Reasons that the fact (according to the learned Associate Judge) that a proceeding of this kind ought to have taken 2 to 3 days at the most tended against the Appellant on the question of the costs of the proceeding when, in truth, the necessary hearing time depended on the ambit of the objections of the Respondents (Applicants), the nature of item by item argument in the Costs Court, and the variety of other issues raised by the Respondents (Applicants).
93 The opening sentence of para 50 of the Decision is as follows:
A matter of this quantum should have taken no more than two to three days hearing at most.
AJH's attempt to elevate this unremarkable observation into a ground of appeal is entirely misconceived. The ground of appeal speculates that there is a causal nexus between his Honour's observation as set out and his decision to dismiss the application constituted by the Notice. His Honour's observation that a taxation in respect of a bill of costs of $36,500 should have taken no more than two to three days hearing at most, is unremarkable. It involved no appellable error.
The learned Associate Judge erred in reasoning, if he did so, at paragraph [54] of his Reasons that the fact that the Respondent (Applicants) had paid the Applicant's bill tended against the Appellant on the question of the costs of the proceeding.
95 In para 54 of the Decision, Wood AsJ sets out an exchange between the Judicial Registrar and counsel for AJH in which counsel confirmed that the disputed legal costs had been paid by Mathieson to AJH. In its written submissions dated 15 October 2014, AJH contends that Wood AsJ erred at para 54 of the Decision by agreeing with the Judicial Registrar that the fact that AJH had paid the disputed legal costs tended against AJH. It submitted that section 3.4.45(2) of LPA applies equally to situations where such costs have and have not been paid by the objector.
96 Paragraph 54 of the Decision does no more than set out an exchange between counsel for AJH and the Judicial Registrar. Contrary to appeal ground 2(j), and the submissions in support thereof, it contains no finding that the payment to AJH by Mathieson of disputed legal costs 'tended against [AJH]'. The appeal ground is speculative and must be rejected.
The learned Associate Judge erred in finding at paragraph [40] of his Reasons that there was no reasonable basis for the Appellant 'to resist earlier production to the liquidator after 30 July 2012' and that the Appellant's 'stance was clearly unco-operative (in breach of section 20 of the Civil Procedure Act 2010)' and erred in reasoning at paragraph [57] of his Reasons that such finding tended against the Appellant on the question of the general costs of the proceeding rather than being relevant merely to the costs of the day of 31 August 2012.
98 Paragraphs 40 and 57 of the Decision are as follows:
It is no surprise that a mention on 31 August 2012 was arranged at the request of the applicants and that the Judicial Registrar had to resort to an order for production to the court in order to resolve the issue. There was no reasonable basis for the respondent to resist earlier production to the liquidator after 30 July 2012 and their stance was clearly uncooperative (in breach of s 20 of the Civil Procedure Act 2010).
...
Implicit in the reasons of the Judicial Registrar for the costs ruling are the issues surrounding the respondent's conduct in relation to inspection of the file, the offers made, and the delays in seeking referral of questions to the judge. There are sections of the Civil Procedure Act 2010 that are germane to and underpinning these factors - the obligations to cooperate, make reasonable endeavours to resolve disputes, minimise delay and act promptly.
99 The conclusion expressed by Wood AsJ at para 40 of the Decsision as set out above follows on from a section of the Decision which commenced at para 30 in which his Honour set out what he described as 'the key communications' in relation to the dispute between the parties concerning inspection of AJH's files. It is not necessary to set these matters out in detail in this judgment. They self-evidently support his Honour's conclusion at para 40. Suffice to refer to para 38 of his Honour's Decision:
On Friday 24 August 2012 at 4.36pm the solicitor for the applicants sent an email to the respondent requesting access to the file at the respondent's premises at 10.00am on Monday 27 August 2012. The respondent replied by letter dated 24 August 2012 marked "By post only" which would not have been received by the solicitor for the applicants before the appointed time. The respondent followed this up by email, but only after 10.00am on 27 August 2012 when the appointed time had passed. [58] The letter offered dates some considerable time later: 17, 18, 19 September which were only a few days before the scheduled hearing on 24 September 2012 thus denying the applicants sufficient preparation time.
100 Contrary to appeal ground 2(k), Wood AsJ's conclusion at paras 47 and 57 did not involve any misapprehension of the facts.
The learned Associate Judge erred in finding at paragraphs [28], [29] and [41] to [43] of his Reasons that the proceeding took longer because of the way the work was claimed, the state of the file and the way the file was maintained and erred in reasoning, if he did so, that such findings (in the circumstances) tended against the Appellant on the question of the costs of the proceeding.
102 Paragraphs 28, 29 and 41 to 43, which are the subject of appeal ground 2(l) are as follows:
Part of the explanation for the wide objections remaining was the way work was claimed in the bills. For example, work performed at the same time by the same individual was broken up into separate activities and a claim was made for separate 6 minute units and then aggregated. This meant that activities that in reality took a certain number of minutes were claimed at a greater number of minutes. Because the work was linked in this way, all items in relation to blocks of work had to be objected to. An analysis of this phenomenon was exhibited at "SS - 7".[59] Further, the way in which the respondent's file was maintained and work was claimed meant that excessive time was spent arguing individual items. One example of this was item 3 in the first bill. The argument occurred on 2 September 2013 and the transcript discloses that argument occupied 13 pages[60] for this item.
The matter also occupied more time than usual as a result of claims for work performed by a number of practitioners involved in the conduct of the matter. The following exchange is illustrative of the point:
REGISTRAR: Yes, thank you. So you're telling me that it is reasonable, for what is, in effect, an email of around 150 words, to charge six units for Ms Durali, six units for Mr Ho and a further number of units for Ms Akhounov to correct and check the veracity of the emails, you're telling me it is 40 - - -
MR SANDBACH: If it had been me typing it, it would have been a lot more than six units.
REGISTRAR: It is not you typing, though. You're telling me it is 40 minutes for two practitioners, so 40 minutes each for two practitioners, yes?
MR SANDBACH: Yes.
REGISTRAR: Six units, 36 minutes, for two practitioners, together with a further amount of time for the person who actually knew what happened to draft a report that says, "We attended, Simon Gardiner was there, Mr Rubenstein appeared, Mr Katz and Mr Knight produced documents, they've been produced, they have to be returned to the court by the 10th and we're going to make copies of them and Associate Justice Gardiner made orders and we attach the draft orders", you're telling me that that will take a practitioner, if we amalgamate the time, more than an hour to prepare and that is a reasonable manner in which to undertake what is, in effect, a simple email that I would have thought a second-year solicitor could draft, not a senior solicitor and a partner in concert. The manner in which that work is done is not reasonable..."
...
The state of the file may explain the respondent's reluctance to produce it. The file was an electronic one. The absence of written file notes by solicitors employed by the respondent meant that argument took longer as time sheet records were the most prevalent record. As a general rule, notes entered on electronic time sheets are necessarily briefer than hand written file ones. For example, claims were made in general terms like 'review and consideration of issues prior to hearing.'[61]
There were no written file notes in respect of attendances of Mr Ho and comment was made about this on 2 September 2013:
REGISTRAR: Mr Ho does not make any file notes as far I can see. He relies on working in concert with another solicitor and having the other solicitor doing the recording, which, in my view, can hardly be said to be working in a reasonable manner, but - - -
MR SANDBACH: Saving his time - - -
REGISTRAR: No, it's not saving his time. A solicitor cannot charge a client for making an aide memoir.
MR SANDBACH: No.
REGISTRAR: And therefore, if Mr Ho is having to record, or somebody else is having to record for Mr Ho, what Mr Ho is dictating to him and that solicitor is seeking to charge at $300 an hour for that recording or dictating, it is not working in a reasonable manner.
MR SANDBACH: I'm not sure that's got the issue.
REGISTRAR: No, it may not be it here but this file has puzzled me because there is no note that the solicitor has made that has been produced to me where Mr Ho has made a handwritten note of anything. There are very few handwritten notes that I have seen. They are all these time recording notes.
MR SANDBACH: Yes. They seem to be typed - the ones that I've seen seem to be typed memos of file notes.[62]
The Judicial Registrar queried at one stage as to whether the file had in fact been 'reconstituted.'[63] This was denied by counsel for the respondent. The state of the file led to more argument than usual on the part of the respondent, particularly with regard to the absence of detail as to the work actually performed[64], and particularly in proportion to the sums involved. The Judicial Registrar mentioned s 24 of the Civil Procedure Act 2010 on 2 September 2013.[65] This appears to be another factor as to why the matter took longer than it should as extensive argument ensued in relation to the time claimed by Mr Ho and others in the absence of written file notes. This may account for the reluctance to produce the file.
103 The paragraphs set out above must be read in conjunction with para 27 of the Decision, which is as follows:
It is true that the applicants' objections were comprehensive and remained so even after inspection of the respondent's file. It is also true that the applicants filed and served a number of affidavits where there was ground for some criticism. The Judicial Registrar was clearly aware of these matters. She took them into account and balanced them in her reasons when for example, she made reference to the affidavits of Messrs Rubenstein and Armytage and the state of the objections (all of which were filed by the applicants).
104 It is noteworthy that this appeal ground does not positively contend that Wood AsJ did conclude that the findings made at paras 28, 29 and 41 to 43 did weigh against AJH on the question of costs of the proceeding. For this reason alone, the appeal ground must be rejected. It is speculative in nature. All of the findings which are recorded in [28], [29] and [41] to [43] of the Decision were plainly open to Wood AsJ on the material before him.
105 In its written submissions dated 15 October 2014 at para 25, AJH complains that the findings at paras 28 to 29 were in error because of reliance placed by Wood AsJ upon 'the inadmissible affidavit of Sergey Sizenko sworn 21 May 2014.' At para 28 of his Decision, Wood AsJ refers to exhibit SS-7 to the affidavit of Sergey Sizenko. Upon the commencement of proceedings before Wood AsJ, counsel for AJH submitted in reference to the exhibits to Mr Sizenko's affidavit: 'Yes, the exhibits can go in'.[66] The basis of the appeal ground is therefore misconceived. Further, Wood AsJ's primary finding of fact as recorded in para 28 that work performed at the same time by the same individual was broken up into separate activities and a claim was made for separate six minutes units and then aggregated, is not challenged and was plainly correct.
106 AJH takes issue with Wood AsJ's finding that the way in which AJH's file was maintained and work was claimed meant that excessive time was spent arguing individual items before Gourlay JR. Wood AsJ provides as an example item 3 of the first bill and refers to the fact that 'argument occurred on 2 September 2013 and the transcript discloses that argument occupied 13 pages for this items.'[67] AJH contends that the argument only took up six pages of transcript. Accepting this to be the case, this does not in any way undermine his Honour's primary finding that the way in which Mathiesons' file was maintained and work claimed meant that excessive time was spent arguing individual items. The fact that AJH's submissions in respect of one item took six pages of transcript is still consistent with his Honour's findings that excessive time was spent arguing individual items.
The learned Associate Judge erred in failing to afford procedural fairness to the Appellant in that the matters set out in Grounds (e) to (l) in this paragraph were not raised as issues with the Appellant through its Counsel or otherwise before becoming a significant or decisive part of the Reasons of the learned Associate Judge.
108 This ground of appeal must be rejected. First, it proceeds from the misconceived premise that the matters canvassed in appeal grounds 2(e) to 2(l) were 'a significant or decisive part' of the Reasons of Wood AsJ. The proceedings before Wood AsJ were conducted by reference to the 11 grounds contained in AJH's notice for reconsideration filed 3 March 2014. In order to succeed in the review it was incumbent upon AJH to establish error in the exercise of discretion by Gourlay JR. In order to do so AJH had to establish that Gourlay JR's exercise of discretion was attended by error of the type identified in House v King. For reasons set out earlier in this judgment, AJH has failed to do so. Wood AsJ correctly found that Gourlay JR was justified in making the Costs Order on 17 February 2014. None of the grounds canvassed by AJH in grounds 2(e) to 2(l) could sustain a finding that there was a failure by Gourlay JR to exercise the discretion or that the Decision was manifestly wrong.
109 In Pantorno v R[68] Mason CJ and Brennan J stated:
A court is under no duty to a party to advise him how to present his case; the court's duty is to give him a reasonable opportunity to present his case: per Deane J in Sullivan v Department of Transport (1978) 20 ALR 323 at 343 ... The responsibilities of counsel cannot be assumed by the court, for its even-handedness would be compromised by assuming a responsibility for the conduct of the case of one of the parties.[69]
110 The proposition underpinning appeal ground 2(m) that AJH was denied procedural fairness by reason of non-disclosure by Wood AsJ is entirely without merit. The proceedings before Wood AsJ were conducted over two days of hearing. A reading of the transcript before his Honour discloses that he displayed great tolerance in permitting both AJH and Mathieson's counsel to advance all submissions that they wished to. The submissions of the parties were wide-ranging. Indeed, on a number of occasions his Honour had to remind both parties that the central issue before him was the correctness of the Reasons given by Gourlay JR for making the Costs Order in question.[70] These exchanges, which were not gainsaid by counsel for AJH, are entirely inconsistent with the proposition now advanced that the proceeding was to be conducted before his Honour as a hearing de novo. The following list is not exhaustive but demonstrates that all of the issues which underpin AJH's grounds of appeal were 'in the ring'[71] and contested during the conduct of the proceedings:
111 No question of denial of procedural fairness by reason of non-disclosure arises in the present proceedings. Even if I was satisfied that there was any substance in AJH's contention that it had been denied procedural fairness (which I am not) I would reject this ground because the contention which underlies it is futile.[77] The source of that futility is twofold. First, the appeal ground proceeds without any proper regard to the nature of the review conducted by Wood AsJ. The nature of the review placed an onus upon AJH to establish error on the part of Gourlay JR in the exercise of the discretion to refrain from making a costs order in favour of AJH. For the reasons set out above, it has not discharged this onus. Second, the appeal ground is underpinned by the misconceived premise that the matters ventilated in appeal grounds 2(e) to 2(l) were a significant or decisive part of his Reasons. They were not significant or decisive. Wood AsJ correctly approached the review on the basis that in order to overturn Gourlay JR's costs order, AJH had to establish clear error. This in turn required AJH to establish that the three matters which underpinned the exercise of Gourlay JR's discretion (the fact that $1,000 was being paid to Mathieson by AJH and that AJH had had the use of that money for three years, and the inadequacy of AJH's offers of settlement) produced the result that the order was clearly erroneous. The appeal grounds at 2(e) to 2(l) do not provide any foundation for a successful challenge to Gourlay JR's exercise of discretion.
The learned Associate Judge erred in saying at paragraph [6] of his Reasons that the Appellant had abandoned the issue of the Judicial Registrar's refusal to recuse herself on 17 February 2014 on the ground of apprehended bias when the Appellant by its Counsel had done no more than agree that the apprehended bias issue had no separate utility and need not be considered if the learned Associate Judge was, in any event, to decide the question of the costs of the proceeding for himself which, however, the learned Associate Judge did not do (addressing, instead, the question of the correctness of the decision of the Judicial Registrar as an exercise of discretion by applying the principles of law applicable for an application for leave to appeal a costs judgment).
The Review document also sought a reconsideration of the Judicial Registrar's refusal to recuse herself on 17 February 2014 on the ground of apprehended bias. At the hearing of the Review on 22 May 2014 the respondent abandoned this aspect and the matter proceeded as a review of the costs order only.
114 At the commencement of proceedings before Gourlay JR on 17 February 2014, counsel for AJH made an application that the Judicial Registrar recuse herself on the ground of apprehended bias. At the conclusion of the submissions on this issue the Judicial Registrar refused the application and made directions to facilitate the taxation proceeding the following day. [78] At that point counsel for AJH submitted:
One other matter if I could just raise briefly. It might possibly avoid needing to come back tomorrow or indeed Wednesday. The parties have exchanged open offers in recent days.[79]
Thereafter counsel for AJH made submissions as set out earlier in this judgment to the effect that Gourlay JR should make an order that AJH pay Mathieson $1,000.
115 Gourlay JR's refusal of AJH's apprehended bias application was a determination which could have been challenged forthwith. AJH did not adopt this course. Rather, it successfully advanced a submission that the Judicial Registrar should order AJH to pay Mathieson the sum of $1,000. Had it been necessary for me to do so, I would have held that by its conduct AJH waived its right to challenge the Judicial Registrar's refusal to recuse herself on the grounds of apprehended bias.[80] However, it is unnecessary to consider the question of waiver because appeal ground 2(n) is misconceived.
116 The Notice for Reconsideration filed by AJH on 3 March 2014 contained 11 grounds challenging Gourlay JR's Costs Order. Under the heading 'Orders Sought', the notice sought an order, inter alia, setting aside the Costs Order made by Gourlay JR and ordering in lieu thereof that Mathieson's costs of the review be wholly disallowed and that AJH's costs of the review be allowed in full. Under the heading 'Alternative Orders Sought', AJH sought a reconsideration of the refusal of Gourlay JR on 17 February 2014 to recuse herself on the grounds of apprehended bias.
117 The written submissions filed by AJH in advance of the hearing before Wood AsJ did not address the alternative orders sought. At the commencement of the proceeding before Wood AsJ, his Honour raised with AJH's counsel the absence of any submission directed to the question of apprehended bias. Counsel for AJH agreed with Wood AsJ that there was 'no utility' in spending time on the apprehended bias issue.[81] This concession is hardly surprising. AJH's submissions before Gourlay JR on the morning of 17 February 2014 disclose that the basis of the apprehended bias application was the fact that the Judicial Registrar had undertaken a taxation prior to the referral of questions of law which was heard by Ferguson J. No question of apprehended bias arose in relation to the costs order which was made by Gourlay JR. So much is plain from the fact that having heard Gourlay JR's rejection of the apprehended bias application, counsel for AJH invited the Judicial Registrar to make an order requiring AJH to pay Mathieson the sum of $1,000. The apprehended bias issue was of no relevance whatsoever to the question of costs which was the subject of the review before Wood AsJ. The statement at para 6 of the Decision that AJH abandoned the apprehended bias point is factually correct. Ground 2(n) must be rejected.
118 An appeal under s 17I of the Act from a review by a Costs Judge under s 17HA is subject to the same test which applies to an appeal from an Associate Judge under r 77.06 of the Rules. In order for the appeal to be successful, it must be established that the decision of the Costs Judge is attended by legal, factual or discretionary error.[82] No such error has been established. The appeal must therefore be dismissed.
119 Wood AsJ did not finally determine the question of costs of the proceeding before him. I was requested by both AJH and Mathieson to determine that question together with the costs of the current appeal. The orders of the court will be:
1. The appeal from the Decision of Wood AsJ dated 26 June 2014 be dismissed.
3. AJH is to pay the costs of the proceedings before Wood AsJ.
[1] Mathieson Nominees Pty Ltd v AJH Lawyers (Unreported, Supreme Court of Victoria, Wood AsJ, 26 June 2014) ('Decision').
[3] (Unreported, Supreme Court of Victoria, Wood AsJ, 25 July 2008) [17] ('Keen').
[4] Exhibit A12: Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Wood AsJ, 22 May 2014) T63, L7.
[5] Mathieson Nominees Pty Ltd v AJH Lawyers [2013] VSC 325.
[9] Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Gourlay JR, 2 September 2014) T80, LL14-15.
[11] Exhibit A9: Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Gourlay JR, 17 February 2014) T156 L19-T159 L12.
[14] Ibid T171 L20-T172 L23 (Emphasis added).
[16] Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Gourlay JR, 17 February 2014) T204.
[17] See CMC (Australia) Pty Ltd v Sarantinos (2013) 95 ACSR 64 [7] (Brereton J). Cf Croft v Evertop Investments Pty Ltd [2014] FCA 1098 [144] (Baker J); Blackman v Gant (No 2) [2010] VSC 229; (2010) 29 VR 29 [14] (Vickery J).
[19] See Gadens Lawyers v Beba Enterprises Pty Ltd [2012] VSC 519 [11]-[13] (Emerton J).
[21] [2014] VSCA 143 [2]. See also Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297, 304-305 (Gibbs CJ), 319-321 (Mason and Wilson JJ).
[22] Appellant's written submissions dated 17 December 2014 [8], [9].
[25] Appellant's written submissions dated 15 October 2014 [9].
[26] Appellant's written submissions dated 17 December 2014 [14].
[27] (1936) 55 CLR 409, 505 ('House v The King').
[28] [1980] VR 197. See also Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 [13]; Allesch v Maunz (2000) 203 CLR 172 [23].
[29] [1985] HCA 28; (1985) 59 ALJR 481 ('Metwally'). See also AIG Australia Ltd v Jaques [2014] VSCA 332 [81]; Weiland v Texxcon Pty Ltd (2014) 313 ALR 724 [83]-[85].
[31] [1986] HCA 33; (1986) 162 CLR 1, 7-9 ('Coulton v Holcombe').
[32] Devon v Capital Finance Australia Ltd [2014] VSCA 73 [75]-[77] (Whelan JA, with whom Santamaria JA agreed).
[33] [1936] HCA 40; (1936) 55 CLR 499, 505.
[34] See, eg, Country Endeavours Pty Ltd v Casacir Pty Ltd [2012] VSC 22 [34] (Emerton J); ; Slaveska v Elenchevski [2013] VSCA 283 [48] (Neave JA, with whom Warren CJ and Priest JA agreed); Australian Coal and Shale Employees Federation v Commonwealth [1953] HCA 25; (1953) 94 CLR 621, 627-629.
[35] [1934] NSWStRp 17; (1934) 34 SR (NSW) 178, 183-4.
[36] See, eg, Hobsons Bay City Council v Viking [2010] VSC 386 [14] (Osborn J); Malaugh Holdings (No 2) Pty Ltd v Seal (No 2) [2011] SADC 37 [36] (David Smith J); Australian Coal and Shale Employees Federation v Commonwealth [1953] HCA 25; (1953) 94 CLR 621, 628-629 (Kitto J).
[37] [1991] HCA 9; (1991) 172 CLR 84 at 94-95 ('Harris').
[39] [2014] NSWCA 170 [155]-[161] ('Wende').
[40] Appellant's written submissions dated 15 October 2004 [4].
[42] Exhibit A12: Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Wood AsJ, 22 May 2014) T 13, LL16-28.
[43] Exhibit A9: Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Gourlay JR, 17 February 2014) T 195 L16-T203 L3; Transcript of Proceedings, AJH Lawyers v Mathieson Nominees Pty Ltd & Anor (Supreme Court of Victoria, S CI 2012 3047, McDonald J, 20 October 2014) T100 LL22-31.
[44] Transcript of Proceedings, AJH Lawyers v Mathieson Nominees Pty Ltd & Anor (Supreme Court of Victoria, S CI 2012 3047, McDonald J, 20 October 2014) T 111 L 24-T 113 L 2.
[46] Lovell v Lovell [1950] HCA 52; (1950) 81 CLR 513, 519, 533; Gronow v Gronow [1979] HCA 63; (1979) 144 CLR 513.
[47] Appellant's Notice of Appeal dated 8 July 2014.
[48] Respondent's Outline of Submissions dated 19 September 2013 [23].
[52] Appellant's Notice of Appeal dated 8 July 2014.
[53] Bill B9420 - items: 26, 37, 43, 44, 52, 53, 54, 57, 60, 65, 68, 69, 70, 73, 74; Bill B9428 - items: 47, 53, 66, 75.
[58] E-mail at 12.29pm exhibited as part of 'ND-2' to the affidavit of Ms Durali dated 30 May 2014.
[59] Affidavit of Sergey Sizenko sworn 21 May 2014.
[60] Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Gourlay JR, 2 September 2013) T14-27.
[61] Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Gourlay JR, 2 September 2013) T36.
[62] Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Gourlay JR, 2 September 2013) T19.
[63] Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Gourlay JR, 2 September 2013) T16 (emphasis in original).
[64] See, eg, Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Gourlay JR, 2 September 2013) T31, 35, 36, 39., 47.
[65] Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Gourlay JR, 2 September 2013) T26.
[66] Exhibit A12: Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Wood AsJ, 22 May 2014) T8 L5.
[68] (1989) 1 66 CLR 466.
[70] Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Wood AsJ, 22 May 2014) T61 LL22-6, T111 L127- T112 L6.
[71] See Miba Pty Ltd and Ors v Nescor Industries Group Pty Ltd and Ors (1997) 150 ALR 633, 644.
[72] Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Wood AsJ, 22 May 2014) T17 LL 9-31, T24 LL18-31.
[73] Ibid T21 LL 15-29, T35 L225-T51 L23, T99 L18- T109 L20.
[74] Ibid T22 L4-T24 L17, T116 L7-T117 L30.
[75] Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Wood AsJ, 22 May 2014) T93 LL3-17, T95 L7-T96 L6.
[77] Ucar v Nylex Industrial Products Pty Ltd [2007] VSCA 181; (2007) 17 VR 492, 519 [75] Redlich JA; Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141, 145.
[78] Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Gourlay JR, 17 February 2014) T155 L14.
[80] See Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; (2011) 244 CLR 427 [85].
[81] Transcript of Proceedings, Mathieson Nominees Pty Ltd & Anor v AJH Lawyers (Supreme Court of Victoria, S CI 2012 3047, Wood AsJ, 22 May 2014) T6 LL20-2.
[82] See Oswal v Carson [2013] VSC 355 [11]; Applebee v Monash City Council [2013] VSC 481 [9]-[20]; Re Nom de Plume Nominees Pty Ltd v Wallace-Smith [2014] VSC 75 [2]-[8].
AJH Lawyers
Mathieson Nominees Pty Ltd & Anor [2015] VSC 37
(1978) 20 ALR 323
(2010) 29 VR 29
(1981) 147 CLR 297
(1936) 55 CLR 409
(2000) 203 CLR 194
(2000) 203 CLR 172
(1985) 59 ALJR 481
(2014) 313 ALR 724
(1986) 162 CLR 1
(1936) 55 CLR 499
(1953) 94 CLR 621
(1991) 172 CLR 84
(1950) 81 CLR 513
(1979) 144 CLR 513
(1997) 150 ALR 633
(2007) 17 VR 492
(1986) 161 CLR 141
(2011) 244 CLR 427