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[2016] VSC 601
General information, not legal advice.
Supreme Court of Victoria
2016-09-01
Wood AsJ
Original judgment source is linked above.
The applicant concedes there is a 'tension' arising from these words and the intention was to provide that charging may occur if an order for costs is made.
30 The trigger in Part A - Paragraph 7 is 'amount recovered' which falls foul of the comment in Mainieri quoted in paragraph 20 above. Just as a practical matter the passage in Mainieri makes complete sense for this reason. If the indemnity principle is considered at the time of taxation (and it invariably is as this is when the issue arises), and the liability to the practitioner in an Agreement is triggered by a favourable costs order then the liability crystallises before the taxation. Where the liability is triggered by an amount recovered, there is no liability at the time of the taxation so the costs should not be included in the claim at a taxation because this would constitute a claim for recovery for costs from the other party when there was no liability to the practitioner at the time of the taxation. The indemnity principle would be breached by claiming costs at that point. It is a circular conundrum - you cannot tax your costs entitlement from the other party until you have a liability to pay your own practitioner for them, and under that arrangement you do not have a liability until they are taxed and not recovered.
31 The inescapable conclusion is that the applicant has no liability to Minter Ellison for professional costs. Only the expenses outlined in the Minter Ellison Costs Agreement can be claimed from the respondent, not professional time.
32 Turning now to the situation of Ms Hickey. The Minter Ellison Costs Agreement states at Part A - Paragraph 4.1 - 'we have also secured the services of Natalie Hickey of counsel on a pro bono basis'. Paragraph 4.1(b) states:
Where possible, we will use our best endeavours to identify barristers or other professionals who may be prepared to provide services to you at no charge.
33 Part B - Clause 2.9 states 'We will pass on to you expenses we incur from unrelated third parties, such as fees of barristers...' In Clause 2.10 it states:
...if we need to engage a barrister or other professional to provide specialist advice or services, we will consult you about their engagement and charges...
The respondent made the submission that there was no evidence of consultation. The issue to be determined is the issue of any breach of the indemnity principle in the context of an exploration of the charging arrangements. A breach of this Clause would not necessarily be fatal to recovery, particularly if the applicant was aware of the counsel involvement and acquiesced to their engagement or if there was a fresh oral agreement in relation to the engagement of counsel which post-dates the Minter Ellison agreement. In any event, this is not an issue properly before the Court as part of the issue to be determined. Further, it would also fall within the comments as to the requirement of a flexible approach to the indemnity principle. If the respondent has the onus to demonstrate there has been a breach of the indemnity principle then he should also bear the onus of demonstrating that it was likely there had been a breach of Clause 2.10. There is no evidence to suggest the applicant was not aware of counsel's involvement and any attempt to explore this would fall in to the 'fishing' exercise category.[21]
34 There are two Costs Agreements between Minter Ellison and Ms Hickey. The first was dated 23 March 2015,[22] and the basis for charging is both 'an order for costs in favour of the applicant' and the 'extent that the party against whom the order for costs is made in fact pays the costs'. Again this falls foul of the passage in Mainieri quoted at paragraph 20 above. This situation was obviously identified and rectified in the second Costs Agreement dated 18 June 2015[23] where the recovery was altered to a costs order in favour of the applicant or the case is settled and part of the settlement includes payment of costs. The Costs Agreement is also expressed to have retrospective effect from 8 December 2014 (in paragraph 4 of the second Costs Agreement). This overcame any defect in the first Costs Agreement and the second one is consistent with that of Dr Collins QC[24] which has the same events described as the triggers for liability, namely a costs order or case settlement where legal cost are included.
35 In spite of the reference to Ms Hickey as acting pro bono in the Minter Ellison Costs Agreement there is no evidence of its date. In any event the second one with Ms Hickey dated in June 2015 had retrospective effect from December 2014. The provisions in Part B - Clause 2.9 of the Minter Ellison Agreement are sufficient to make the applicant liable to indemnify Minter Ellison for all counsel fees.
36 Further, the use of the words 'such as' in Part A - Paragraph 4.1 which outlines expenses and disbursements and gives examples, means that the list is not exhaustive. In any event, an estimate of $1,000 was included in Part A - Paragraph 4.1 referrable to Part B - Clauses 2.9 - 2.10 which includes barristers' fees. There is nothing in the Costs Agreement to suggest there may not be liability for barristers fees in the future. In fact Part A - Paragraph 4.1(b) actually flags the possibility that there may be barristers engaged who charge when it states:
Where possible, we will use our best endeavours to identify barristers...who may be prepared to provide services to you at no charge.
37 There is no breach of the indemnity principle in relation to counsel fees as the applicant is liable to Minter Ellison and Minter Ellison is only liable to the counsel for what is the quantum of costs taxed as against the respondent. The ability of Minter Ellison to recover their professional costs as against the respondent is addressed in paragraph 31 above.
38 The parties can now address the question of costs of this preliminary issue by filing and exchanging written submissions within 21 days with the issue being dealt with on the papers, without the necessity for a further hearing.
39 In terms of the further conduct of the proceedings, a referral back to a Costs Registrar for a case conference is appropriate now the parties have the benefit of these reasons.
[1] 19 June 2015, 6 November 2015 and 11 April 2016.
[5] Earlier requests were made 22 July 2016 ('JNS 4') and 22 July 2016 ('JNS 3').
[6] Letter dated 11 August 2016 ('JNS 6').
[7] (2014) VSCA 227 at [52].
[8] (2014) VSCA 25 at [60].
[11] [2006] NSWCA 145 , 488 at [54].
[14] Section 3.4.27(3)(c)(iii) and (e).
[15] See Trevorrow v State of South Australia (No 7) [2008] SASC 5 at [17].
[16] [2003] VSC 212 at [123].
[19] These passages were cited by Beach J in Shaw v Yarranova Pty Ltd (2010) VSC 567. Affirmed by the Court of Appeal in [2011] VSCA 55.
[21] See Shaw v Yarranova Pty Ltd [2011] VSCA 55 at [11], [19],[20,[26] to [28].
Mourik
Von Marburg [2016] VSC 601