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[2018] VSC 720
Supreme Court of Victoria
2018-11-28
Daly AsJ
Original judgment source is linked above.
ADMINISTRATIVE LAW - Application for leave to appeal from VCAT decision with respect to costs - Crossapplication by the respondent seeking a summary dismissal of the application for leave to appeal - Whether proposed appeal has any 'real prospect of success'- Whether any material difference between the old test and the new test in VCAT Act s 148 regarding the threshold for leave to appeal - Ikosidekas v Karkanis [2015] VSCA 121, referred to - Grounds for challenging a tribunal's exercise of discretion with respect to costs - House v The King (1936) 55 CLR 499, applied - Default position that each party bearing its own costs under s 92 of the Retail Leases Act 2003 (Vic) - Exceptions such as where there is vexatious conduct by a party -what amounts to vexatious conduct - ; and , referred to - relevance of matters extraneous the proceeding not relevant to the question of costs - Leave to appeal refused.
1 In this proceeding, the applicant, Mr John Davey ('applicant') seeks leave to appeal from a decision made by Member Sweeney of the Victorian Civil and Administrative Tribunal ('VCAT') on 6 August 2018.[1] The decision sought to be overturned is the Member's decision to make an adverse costs order against the applicant with respect to applications made by him in a proceeding at VCAT seeking relief against forfeiture under the Retail Leases Act 2003 (Vic) ('Act') ('VCAT proceeding'). The VCAT proceeding was withdrawn in January 2018, after the applicant decided to vacate the respondent's premises ('premises'), rendering the relief sought by him nugatory. The question of the costs of the VCAT proceeding were reserved. However, another proceeding concerning substantially the same subject matter is ongoing in VCAT ('current VCAT proceeding'), where both the applicant and the respondent, Dessco Pty Ltd ('respondent') are seeking damages for breach of contract in relation to the applicant's occupation of the premises, and the respondent's alleged wrongful termination of the lease.
2 The current VCAT proceeding is not the only litigation under way between the applicant and respondent and their associates. As far as I am aware, four other proceedings have involved the parties to this proceeding, being:
(a) a debt recovery proceeding in the Magistrates' Court, where the applicant is seeking to recover unpaid legal fees said to be owed to him by the respondent ('debt recovery proceeding');[2]
(b) a defamation proceeding brought by the applicant in the County Court against Mr Ron Silverstein, the solicitor for the respondent in this proceeding (and other proceedings), and Mr Henry Kazar, the applicant's former trustee in bankruptcy, which has recently been transferred to his Court;
(c) a contempt proceeding brought in this Court by the applicant against the respondent, the principal of the respondent, Mr Patrick Dessman (who happens to be the applicant's cousin), and Mr Silverstein ('contempt proceeding');
(d) a defamation proceeding brought by Mr Silverstein against the applicant in this Court.[3]
3 Some of the allegations made in the contempt proceeding also relate to the alleged conduct of Mr Silverstein when acting for other family members of the applicant in a proceeding in the Supreme Court of the Australian Capital Territory ('ACT Supreme Court'), which was heard and determined in 2017.[4]
4 In the interests of expedition, I will not go into any detail about the allegations and counter allegations made by the various parties in the proceedings referred to above, except where necessary for the purpose of these reasons. The parties can assume that I am quite familiar with the scope and nature of the disputes between the parties, having managed the proceedings in this Court throughout the course of 2018.
5 Returning to the applications before me in this proceeding, the respondent's costs application in the VCAT proceeding was heard over two days in March and June 2018, with the Member making orders and delivering reasons on 6 August 2018 ('reasons'). The Notice of Appeal filed by the applicant on 5 September 2018 was two days out of time. It is also defective, in that paragraph 2 under the heading 'Question of Law' and the ground of appeal relied upon are incomplete. Given the (limited) explanation for the brief delay, the absence of any prejudice to the respondent of the delay, and the powers of this Court to allow an amendment to rectify any defects, these matters are not fatal. The real issue in these applications is whether the applicant's application for leave to appeal has any real prospect of success, however framed.
6 On 26 September 2018, the respondent, in part anticipating the applications it expected to be made by the applicant, issued a summons in the following terms:
7 On 5 November 2018 the applicant issued a summons seeking the following orders:
1. Stay of the Orders of VCAT dated 6 August 2018.
3. Extending time for filing the Notice of Appeal.
8 The evidence relied upon by the applicant to support the relief claimed by him in the summons is contained in the affidavit of Mr Derrick Ross Burgess, a law clerk in the employ of the applicant's legal practice, Herm Legal & Migration Services, sworn on 14 September 2018. In summary, Mr Burgess deposed as follows:
(a) the facts and circumstances underlying the Member's decision in the VCAT proceeding are connected with the contempt proceeding, where it was alleged that the director of the respondent and Mr Silverstein attempted to pervert the course of justice in the debt recovery proceeding;
(b) the VCAT proceeding concerned an attempt to interfere with the applicant's tenancy of the premises in order to stifle the debt recovery proceeding;
(c) the applicant contends that the Member failed to take into account the relevant facts in the contempt proceeding in determining the costs application before him, and thus erred in departing from the usual position that each party bear their own costs; and
(d) the applicant seeks a stay of the orders made by the Member on the grounds of 'irredeemable prejudice'.
9 Accordingly, the issues in this application are as follows:
(a) should the applicant be given leave to appeal the orders made by the Member out of time, or at all;
(b) if the applicant is to be granted leave, should there be a stay on the orders of the Member pending the final hearing and determination of the appeal;
(c) should this proceeding be consolidated with the contempt proceeding; and
(d) further, if the applicant is to be granted leave, should the applicant be ordered to give security for the respondent's costs of this proceeding?
10 As can be seen from the above, this proceeding has not followed the usual course of applications for leave to appeal from VCAT. Usually, an application for leave to appeal is listed to be heard with the appeal itself, if leave is granted. However, in the current case, the respondent seeks, in effect, summary dismissal of the application for leave to appeal. In his submissions, the applicant relied upon the usual principles governing summary dismissal of proceedings: that is, the court's power to summarily dismiss a proceeding should be exercised with extreme caution, and only in the clearest of cases. However, the applicant's position seems to be predicated on the assumption that leave would automatically be granted. That assumption is not well founded. First, the applicant, as he is out of time, is seeking an indulgence from the Court. In doing so, he must establish that the grant of an extension of time would not be futile. That is, he must be able to show that if time were extended to bring the application, the application for leave to appeal would have reasonable prospects of success. And to show that, the applicant must, under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ('VCAT Act'), establish that the appeal itself would have real prospects of success. Accordingly, the current case is one of the now relatively rare instances in this Court where there is a separate consideration of the threshold question under s 148 of the VCAT Act.
11 Since 1 May 2018, s 148 of the VCAT Act requires that, in order for the Court to grant leave to appeal, the applicant must show that the proposed appeal will have 'real prospects of success'.[5] This displaces the traditional test for the grant of leave laid down in the decision of the Court of Appeal in Secretary to the Department of Premier & Cabinet v Hulls,[6] which refers to a 'real or significant argument to be put' about the correctness of the decision of VCAT, or there being 'sufficient doubt' about the decision of VCAT. The new formulation of s 148 of the VCAT Act mirrors the test for the grant of leave by the Court of Appeal in civil matters. However, as observed by Warren CJ in Metricon Homes v Softley,[7] while there are material differences between the old test and the new test, such differences would not ordinarily arise in practice. Her Honour referred to the following statement of Mandie JA in Ikosidekas v Karkanis:[8]
the case of an appeal with a real prospect of success (that is, not a fanciful prospect of success) would usually be the same as a case in which the decision under appeal was attended by sufficient doubt as would justify a grant of leave.[9]
12 It may be that the material difference between the old test and the new test is that it is not necessary for an applicant to show that any error, if left uncorrected, would cause substantial injustice. Arguably, the new test is, in that respect, more generous to applicants.
13 Prior to turning to the application before the Member in the VCAT proceeding, and the question of whether any appeal from the orders made by the Member has any real prospects of success, I would make some general observations regarding applications for leave to appeal from orders made by VCAT with respect to costs. It is established law that the exercise of a discretion with respect to costs can only be challenged upon relatively limited grounds.
14 In his oral submissions during the course of the hearing, the applicant confirmed that his application for leave to appeal was based upon a contention that the Member's discretion with respect to costs miscarried. Accordingly, in order to establish a right to relief, the applicant must demonstrate one or more of certain kinds of error. In House v King,[10] the High Court stated as follows:
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. 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 materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of discretion is reviewed on the ground that a substantial wrong has in fact occurred.[11]
15 A reviewing court cannot overturn the exercise of a discretion with respect to costs simply because it would have taken a different view.[12] This is particularly pertinent in the case of decisions of VCAT, which may only be challenged on a question of law. The authorities make it clear that s 148 of the VCAT Act does not confer a general appellate function upon this Court, or to provide a rehearing on the merits of a decision of VCAT.[13] Further, as noted by the Court of Appeal in Commissioner of the Australian Federal Police v Opal Storm Pty Ltd and ors,[14] a decision handed down while judgment was reserved, 'there has long been reluctance to entertain appeals against costs orders.'[15]
16 I recently had the occasion to review the authorities concerning applications for leave to appeal against costs orders made by VCAT. In Mercuri v TCM Building Group Pty Ltd ('Mercuri'),[16] I accepted the submissions of the respondent in that case that 'the burden of establishing a legal error in relation to an order for costs is a heavy one',[17] and stated as follows (omitting citations):
The owner concedes that she bears a considerable burden in challenging the exercise of a discretion, especially a discretion with respect to costs. However, it should be noted for present purposes how onerous this burden is, as illustrated by the following principles which can be drawn from the authorities referred to in the builder's submissions:
(a) the relative weight to be given to relevant factors bearing on the exercise of a discretion does not raise a question of law unless the conclusion reached is not reasonably open;
(b) a clear error of law must be identified in the exercise by a tribunal of its statutory discretion;
(c) in the absence of an error of principle, an appeal with respect to costs orders can only succeed if the VCAT has acted on a clearly erroneous view of the facts or the order is clearly unreasonable;
(d) significant deference should be given to a trial judge's exercise of discretion with respect to costs, especially after a long trial; ...
17 Mercuri was concerned with the exercise of discretion under ss 109 and 112 of the VCAT Act, not s 92 of the Act, as was the case here. However, I see no reason why the principles referred to above should not apply with equal force to decisions of VCAT regarding costs under s 92 of the Act.
18 Turning now to the application before the Member, as noted above, the VCAT proceeding was brought by the applicant to seek relief from forfeiture with respect to the premises, from which the applicant operated his legal practice. It appears that a substantial (and possibly critical) issue in the proceeding was which of two documents was the operative lease for the premises. That issue was not determined at a full hearing, as the proceeding was withdrawn, and remains an issue in the current VCAT proceeding.
19 Following the withdrawal of the VCAT proceeding, which apparently occurred only a matter of days prior to the scheduled commencement of the substantive hearing, the respondent made an application to the Member that it be paid the entirety of its costs of the VCAT proceeding on an indemnity basis. Alternatively, the respondent submitted that it should have part of its costs, based upon twelve discrete events. The hearing of the application took place over two sitting days, on 28 March 2018 and 6 June 2018. The reasons were some 26 pages and 131 paragraphs in length. No complaint was made by the applicant concerning the adequacy of the Member's reasons, and indeed no such complaint could properly be made.
20 In the reasons, the Member noted that the question of costs was governed by s 92 of the Act. Section 92 of the Act provides as follows:
Each party bears its own costs
(1) Despite anything to the contrary in Division 8 of Part 4 of the Victorian Civil and Administrative Tribunal Act 1998 , each party to a proceeding before the Tribunal under this Part is to bear its own costs in the proceeding.
(2) However, at any time the Tribunal may make an order that a party pay all or a specified part of the costs of another party in the proceeding but only if the Tribunal is satisfied that it is fair to do so because -
(a) the party conducted the proceeding in a vexatious way that unnecessarily disadvantaged the other party to the proceeding; or
(b) the party refused to take part in or withdrew from mediation or other form of alternative dispute resolution under this Part.
(3) In this section, 'costs' includes fees, charges and disbursements.
The applicable principles in the interpretation and application of the costs exception under s 92(2) of [the Act] have been well considered. The authorities capturing the principles are not controversial and may be stated as follows.
If an order for costs under s 92(2) of [the Act] is to be made, the Tribunal must be satisfied that it is fair to do so because a party has conducted the proceeding in a vexatious way and that such conduct unnecessarily disadvantaged another party to the proceeding.[19]
The appropriate test adopted for what constitutes vexatious conduct is that stated by Deane J in Oceanic Sun Line Special Shipping Company Inc v Fay:[20]
If the plaintiff is not acting bona fide or in pursuit of a legitimate advantage in pursuing the proceedings in the legal system of this country, that will, of course, make it much easier for a continuation of the proceedings to be characterised as vexatious or oppressive. On that approach, 'oppressive', should, in this context, be understood as meaning seriously and unfairly burdensome, prejudicial or damaging, while 'vexatious' should be understood as meaning productive of serious and unjustified trouble and harassment.
In determining if a proceeding was conducted vexatiously under s 92(2) of [the Act], it is relevant to take into account that the claim was bound to fail. The Victorian Supreme Court of Appeal in 24 Hour Fitness Pty Ltd v W & B Investment Group Pty Ltd[21] held:
The strength the applicant's claim for damages was a relevant factor to take into account ... It would be artificial to attempt to evaluate the manner in which the proceeding was conducted by a party without having any regard to the strength of that party's case. In the present circumstances, it was relevant that the applicant pursued the damages claim, in circumstances where it was bound to fail.
In the context of Dessco seeking indemnity costs, the Court of Appeal in 24 Hour Fitness Pty Ltd v W & B Investment Group Pty Ltd (above), added that 'some of the circumstances relevant to whether costs should be awarded other than on a standard basis will overlap with the circumstances relevant to determining whether a proceeding has been conducted vexatiously and has unreasonably disadvantaged the other party.'[22]
The Tribunal has also decided that conduct may be regarded as causing unnecessary disadvantage by compelling the other party to attend the Tribunal. In Elijoy Investments Pty Ltd v Hart Brothers Pty Ltd,[23] Senior Member Davis said:
[The party] was compelled to come to the Tribunal and defend this proceeding and it was also compelled to employ expensive Counsel and solicitors in order to do so. This has cost them a considerable sum of money.
23 The Member rejected the respondent's submission that it should have the entirety of its costs of the VCAT proceeding, largely on the basis that, in the absence of a full hearing, the merits of the applicant's case, and in particular, the question of which document was the operative lease, had not been fully argued and finally determined. The Member found, without deciding the matter, that the contentions advanced by the applicant regarding the operative lease were contentions which were open to be made.
24 The Member then went on to consider the twelve separate 'events', or instances of conduct identified by the respondent in its submissions, as follows:[25]
(a) 9 December 2016: Application referring to an alleged Family Violence Intervention Order against Mr Patrick Dessman, a director of Dessco;
(b) 20 June 2017: Urgent injunction application to seek recognition that the 'wrong lease' is being used by Dessco in its letting of the relevant premises to Mr Davey;
(c) 22 June 2017: Improper issue of summons to appear served on Mr Silverstein, the current solicitor acting for Dessco;
(d) 26 June 2017: Unnecessary application made to maintain caveat AN116319K because Mr Davey already has proceedings on foot, the Tribunal does not have jurisdiction and Mr Davey as a solicitor ought to know that the Transfer of Land Act deals with the manner in which caveats are managed which does not engaged VACT's jurisdiction. Unnecessary also because the application was filed on the afternoon of the day, after all parties attended at VCAT for the interim relief from forfeiture hearing.
(e) 25 July 2017: Directions application seeking a restraining order against Dessco from entering the property when there was no evidence of Dessco seeking to enter the premises;
(f) 26 July 2017: Mr Davey's submissions containing numerous irrelevant considerations;
(g) 3 August 2017: Filing of irrelevant affidavit material (Michael Meehan affidavit) having the effect of prolonging the hearing;
(h) 15 August 2017: Letter seeking security for costs with no affidavit in support;
(i) 23 August 2017: Unnecessarily making an application for directions, thereby unnecessarily causing unfair and burdensome attendance of Dessco at a directions hearing, concerning the issuing of process in the nature of a subpoena, where the proper procedure for requesting production of documents is pursuant to s 104 of the VCAT Act;
(j) 28 August 2017: Application to amend an application for costs, security for costs, and further directions without any affidavit in support;
(k) 11 January 2018: Letter seeking security for costs raising irrelevant issues;
(l) 16 January 2018: Application for security for costs containing other irrelevant considerations including personal attack on Mr Silverstein, current solicitor acting for Dessco. The application for security for costs is flawed given that it is Dessco that is being sued by Mr Davey. The application was made at a time when Mr Davey had already determined to withdraw the proceedings. Dessco submits this conduct is unfairly burdensome, unjustifiable and prejudicial to Dessco.
25 The Member found, in three of the instances referred to above, that Mr Davey engaged in conduct which was vexatious within the meaning of s 92 of the Act, being:
(a) an application brought by Mr Davey to maintain his caveat over the premises, which was struck out for lack of jurisdiction;
(b) an application for a hearing for an order in the nature of a subpoena, instead of obtaining a registrar's direction for the issue of a summons to appear under s 104 of the VCAT Act, which is a purely administrative matter; and
(c) bringing an application for security for costs against the respondent (which was also the respondent below).
26 The Member found that the conduct of the applicant in the balance of the matters relied upon by the respondent did not justify an order for costs in favour of the respondent under s 92 of the Act.
27 In relation to the question of whether the costs awarded in favour of the respondent should be ordered on an indemnity basis, the Member noted the observations of the Court of Appeal in 24 Hours Fitness Pty Ltd v W & B Investment Group Pty Ltd,[26] to the effect that some of the circumstances relevant to whether costs should be awarded other than on a standard basis will overlap with the circumstances relevant to determining whether a proceeding has been conducted vexatiously and has unnecessarily disadvantaged the other party.[27] The Member considered that reasoning was applicable in the application before him, and noted that a special costs order was warranted where the conduct of the party ordered to pay costs included conduct which carries loss of time to the other party and was pursued with wilful disregard of known facts or clearly established law. He concluded that the respondent was entitled to indemnity costs on the County Court scale in respect of the three applications referred to above.
28 For the reasons which follow, I shall dismiss the proceeding, on the basis that the application for leave to appeal has no real prospects of success. First, as noted above, an applicant such as the applicant in the current proceeding has a very high bar to clear in establishing that a VCAT member's discretion with respect to costs has miscarried. In the current case, the reasons disclose no legal error on the part of the Member. Indeed, the reasons demonstrate that the Member took a very measured and fair approach to the question of costs. Despite being urged to do so by the respondent, the Member refused to order that the applicant pay all of the costs of the VCAT proceeding on the basis that the respondent had not established that the applicant's claims in the VCAT proceeding were vexatious, and, with respect to the twelve instances of 'conduct' identified by the respondent, made adverse costs orders with respect to only three discrete matters. While the discerning approach of the Member does not of itself demonstrate that there has been no error, it does indicate that the Member approached the task before him cautiously, carefully evaluating each of the instances of conduct relied upon by the respondent, before forming a view as to whether or not the applicant's conduct was vexatious.
29 While the applicant's proposed notice of appeal refers, under the heading 'Question of Law' to the operation of s 92 of the Act, it does not specify how he says that the Member erred in his construction of s 92 of the Act. However, it is apparent from the affidavit of Mr Burgess and the submissions of the applicant before me that the Member failed to take into account a mandatory relevant consideration, being the conduct of the respondent and its solicitors which has given rise to the allegations in the other proceedings referred to in paragraph 2 of these reasons.
30 There was no suggestion on the part of the applicant that the Member applied the wrong test in determining what amounted to vexatious conduct. Indeed, the test adopted by the Member has been expressly approved by the Court of Appeal. Rather, the applicant submitted that in reaching his decision, the Member should have taken into account the broader factual circumstances surrounding the VCAT proceeding. In particular, the Member should have recognised that the termination of the lease by the respondent amounted to retaliation in response to the claim made by the applicant against the respondent in the debt recovery proceeding. Further, the applicant maintains that the respondent and its solicitors have maintained an unrelenting and largely unsuccessful campaign against him on a number of fronts, which are the subject of a number of proceedings, and the Member ought to have taken those background circumstances into account when determining the question of costs. Further, the question of whether the version of the lease propounded by the applicant is the correct lease has not yet been determined by VCAT. He submitted that if that question is decided in his favour in the current VCAT proceeding, the question of the costs of the VCAT proceeding falls away.
31 The applicant also submitted that he should not be penalised for making errors arising out of his unfamiliarity with VCAT procedures, and the relevant law concerning caveats, given that he practices in a different field of law.[28]
32 As noted above, the Member made adverse orders for costs in relation to three discrete applications brought by the applicant in the VCAT proceeding, being:
(a) an application made on 26 June 2017 to 'maintain' a caveat lodged by him over the premises;
(b) an application made on 23 August 2017 for directions for the purpose of the issue of a subpoena; and
(c) an application made on 16 January 2018 for security for costs against the respondent.
33 In relation to (a) above, it is apparent from the reasons and the applicant's submissions at the hearing before me that at some stage the applicant lodged a caveat over the title of the premises, as he was entitled to do in the circumstances to protect his asserted leasehold interest in the premises. The respondent issued a notice under s 89A of the Transfer of Land Act 1958 (Vic), which caused the Registrar of Titles ('Registrar') to issue a notice to the applicant requiring that he notify the Registrar of any proceeding brought in a court or VCAT to substantiate the caveat. The applicant must have done so, as the caveat did not lapse, but he also issued an application in the VCAT proceeding to maintain the caveat. The application was made in the afternoon following a routine directions hearing, but was not foreshadowed at that hearing. The Member stated as follows:[29]
Mr Davey seeks to justify the making of the application and necessity for the hearing as part of his entitlement to defend against a purported invalid exercise of entry by Dessco. Such an application is unnecessary and in circumstances where the application is made by Mr Davey, as a practising solicitor, he ought reasonably to have known that such an application served no purpose. Further, the application seeks an order which, as the Tribunal found at the hearing on 21 July 2017, it did not have jurisdiction to deal with. Again, in my opinion, this is something that a solicitor should have been satisfied about before causing the issue of an application, if the issuing of the same was justified in the first place.
Taken together, I find that conduct of Mr Davey in this element of the proceeding was vexatious in that it caused serious unjustifiable trouble and harassment and was unnecessarily burdensome to Dessco. The costs of the hearing were ordered as reserved. I find that it is fair that the costs of responding to the application and attending the consequent hearing on 21 July 2017 should be paid by Mr Davey under s 92(2)(a) of the RL Act.
34 The applicant's application to 'maintain' the caveat was clearly misconceived. First, by reason of the procedure under s 89A of the Transfer of Land Act 1958 (Vic), all the applicant needed to do was to satisfy the Registrar that a proceeding capable of sustaining the interest claimed in the caveat was on foot. Secondly, VCAT has no jurisdiction with respect to caveats. While I accept that the applicant does not practise in this field, a review of the relevant part of the Transfer of Land Act 1958 (Vic) makes the position tolerably clear.
35 In relation to (b) above, there is a procedure available at VCAT to enable a party to a proceeding to request the principal registrar of VCAT to issue a witness summons to require a nonparty to produce documents and/or give evidence.[30] The procedure is similar to rule 42A subpoena procedure available to litigants in this Court. However, the applicant was apparently unaware of this procedure (which requires no attendance at VCAT by the other party unless the other party seeks to set aside the witness summons), the applicant made an application for directions and for an order in the nature of a subpoena. The Member stated as follows (citations omitted):[31]
In my opinion, Mr Davey, as a practising solicitor, ought reasonably to have known or informed himself of the appropriate procedure. Further, the causing of attendance at an unnecessary hearing, in all the circumstances including the opportunity to have made use of earlier interlocutory hearings, constitutes conduct that was vexatious conduct in the nature contemplated in Elijoy's case. These costs of the 25 August 2017 directions hearing were initially reserved and, by order of 29 August 2017, were ordered as costs in the cause. I find that it is fair that an order for costs of responding to the application and attendance at the consequent hearing on 25 August 2017 is appropriate under s 92(2)(a) of the RL Act.
36 Again, while the applicant does not regularly practice at VCAT, one might expect that the availability of a witness summons under s 104 of the VCAT Act would be discoverable by a simple enquiry.
37 In relation to (c) above, the applicant foreshadowed making an application for security for costs on 15 August 2017, made an application for security for costs on 28 August 2017,[32] and made a further application on 16 January 2018. On 18 January 2018 he informed VCAT that he did not want to proceed with his application for relief against forfeiture, and would vacate the premises on 31 January 2018. Accordingly, the hearing scheduled for 24 January 2018 was vacated.
Mr Davey's application for security of costs made by letter dated 15 August 2017, by application dated 28 August 2017 and by application dated 16 January 2018 are misconceived. Security for costs application are made under s 79 of the Victorian Civil and Administrative Tribunal Act 1998. Mr Davey seeks an order that Dessco not be allowed to proceed until security for costs is provided. In a directions application he states that he has 'now withdrawn our prayer for relief against forfeiture in these proceedings and will vacate the premises by 31st January 2018.' On the other hand, his later application of 16 January 2018 presses his application for security for costs.
To the extent that Mr Davey's submissions made in box number 2 is put as some defence against vexatious conduct of the proceeding, on the ground that Mr Davey had some well founded basis for seeking security for costs, it is misconceived. S 79 of the VCAT Act only has application in respect of the party bringing the proceeding in this case the substantive proceeding of Mr Davey for relief against forfeiture), not against the party defending against the proceeding brought against it. Red Earth Building Maintenance Service Pty Ltd v Dura (Australia) Constructions Pty Ltd. [1999] VCAT 54.
In all the circumstances, I consider that the conduct of Mr Davey in pursuing his applications for security for costs was vexatious in that it was productive of serious and unjustifiable trouble and harassment. There is simply no basis for him to have made such applications. I find that it is fair that an order for costs for responding to the applications for security for costs is appropriate under s 92(2)(a) of the RL Act.
39 Given my own experience and knowledge of the relevant law, the statement by the Member that the applications for security for costs had no proper basis, as it was brought against a respondent to the proceeding, is unremarkable.
40 The Member's findings that the three relevant applications were misconceived, and that, as a solicitor, the applicant should have done more to understand the correct procedures and acquaint himself with the relevant law is also unremarkable. I accept that the applicant practices in a different field of law, and that he has been preoccupied with the suite of legal proceedings he is involved in. However, one must be careful not to overstate the impact of these legal proceedings upon the applicant's time. In June 2017, when the applicant made the application to maintain the caveat, the proceeding in the ACT Supreme Court had been largely concluded, the debt recovery proceeding was in a hiatus pending the appeal to this Court, and the contempt proceedings had not yet been commenced. Indeed, it would not be until October 2017 that the other proceedings would come to occupy the applicant's attention.
41 Accordingly, it was open for the Member to find that the applicant had engaged in conduct which was productive of 'unjustifiable trouble and harassment'. I also accept the Member's finding that the existence of the other proceedings had 'insufficient causal connection to the costs application.'[34]
Whilst the matter of Mr Davey's debt recovery proceeding may be indicative of the considerable angst that appears to exist between the parties and may be some explanation for multiple proceedings between them, or other parties somehow connected, alleged retaliatory proceedings by Dessco seeking possession, would not be a justification for the complained of behaviour, being whether Mr Davey conducted his present proceeding in a vexatious way.
In sub section, 'Retaliation of the Respondent for the debt recovery proceedings', at paragraphs 12 to 19, Mr Davey submits that his conduct of the present proceeding seeking relief from forfeiture is not vexatious because of unconscionable conduct of Dessco, where Dessco, he submits, is seeking possession of the property as a retaliation against Mr Davey for having brought debt recovery proceedings against Dessco.
Similarly, the question of vexatious conduct of the substantive proceeding must be considered, as s 92(2) of [the Act] demands, in relation to the proceeding itself and not extraneous matters and allegations. The submission, so far as it relates to alleged retaliation of Dessco, without more, is not a relevant consideration in respect of whether the conduct of the substantive proceeding is vexatious.
43 Again, the Member's finding that his consideration of the issues in the costs application must be limited to the issues and the parties' conduct of the VCAT proceeding is unremarkable. While there are some (relatively rare) cases where factors not directly concerned with the conduct of a proceeding may be relevant to the question of costs (such as pre-action conduct) it is well established law that matters to the conduct of a proceeding are not relevant to the question of costs.
44 In Pioneer Park Pty Ltd (in liq) v Australia and New Zealand Banking Group Ltd,[35] Einstein J stated as follows:
The principled approach to dealing with costs requires the Court to focus upon and only upon, the conduct of the actual proceedings which have taken place. Conduct anterior to the commencement of the proceedings may be remediable if that conduct exposes a cause of action, in which event success on that cause of action is in general, the mode and the only mode, by which the innocent party receives redress from the Court. (emphasis in original)[36]
45 In Durham v Collins,[37] Debelle J held that a litigant's motivations for pursuing litigation are irrelevant to the question of costs, stating as follows:
Assuming that there had been ill feeling for a long time between the parties and that had caused the plaintiff to commence these proceedings, that is not a relevant factor for the purpose of depriving the plaintiff of his costs. It is a factor which is unrelated to the conduct of the litigation. It is, in fact, an inquiry into the motive of the plaintiff for bringing the action. That is an improper footing on which to proceed. It would be dangerous, indeed, for courts to examine and adjudicate upon the propriety of motives for bringing litigation.[38]
46 In the current case, the Member held that the conduct of the applicant in respect of three discrete applications justified an order for costs against the applicant applying the test set out in s 92 of the Act. However, in effect, the applicant contends that the respondent ought to be deprived of those costs because the respondents, in seeking to reenter the premises, was engaging in retaliatory conduct in response to the debt recovery proceeding, and that the propensity of the respondent to engage in such conduct is illustrated by the alleged conduct of the respondent and its solicitor which is the subject of the contempt proceeding. Setting aside the question of whether the applicant's contentions in that regard are correct, the authorities make it clear that an otherwise successful party should not be deprived of costs save where the alleged wrongful conduct was engaged in in the course of the relevant litigation. Here, the allegations made by the applicant were not only unconnected to the subject matter of the litigation, being which of the two documents was the operative lease,[39] but they were completely unconnected with the question of whether the applicant had made unmeritorious applications during the course of the proceeding which caused the respondent unnecessary costs.
47 I reject the submission advanced by the applicant to the effect that, because the question of the correct version of the lease is a live issue in the outstanding VCAT proceeding, the costs ordered by the Member may well 'fall away'. Section 92 of the Act provides that, save in certain limited circumstances, retail lease disputes are conducted in a 'no costs' environment. Accordingly, even if the applicant were to be successful in the current VCAT proceeding, that would not be sufficient to justify revisiting the costs in the VCAT proceeding. The position may have been different had the Member acceded to the respondent's submissions that the prosecution of the VCAT proceeding as a whole was vexatious, but he did not. Even if the applicant's position regarding the operative lease is vindicated in the current VCAT proceeding, it would not alter the fact that he made misconceived and/or unmeritorious applications in the VCAT proceeding which caused the respondent cost and expense. Even had he been successful in the VCAT proceeding, and obtained relief against forfeiture, it would have been open to the Member to make an adverse order for costs in relation to discrete applications which were plainly unmeritorious.
48 Finally, in dismissing the proceeding, I am conscious of the fact that while the Member did not hear and determine the substantive issues in the VCAT proceeding, it is apparent from the reasons that he was very familiar with the procedural history of the VCAT proceeding. While none of the parties' submissions in the costs applications are in evidence, and I have only part of the transcript of the hearing of the costs application, it is apparent from the reasons that both parties filed reasonably detailed written submissions, and the hearing of the costs application took place over two sitting days. As noted above, the reasons were detailed and comprehensive. In those circumstances, this Court would be very wary of interfering with the exercise of the Member's discretion with respect to costs, particularly where the main basis for asserting that the discretion miscarried was because the Member did not accept that matters extraneous to the VCAT proceeding were relevant to the question of costs.
49 Accordingly, the applicant has not established that his application for leave to appeal has any real prospect of success, as the appeal itself would have no real prospect of success. Strictly speaking, it is not necessary for me to deal with the other outstanding applications, but I will do so.
50 First, I would not order a stay of the Member's orders had I allowed the application for leave to appeal to proceed. As submitted by the respondent, apart from a statement to the effect that:
irredeemable prejudice will be visited on the applicant if the costs orders are enforced,
there is no other material before me which would justify a stay, which ought only be granted in exceptional circumstances.
51 In his oral submissions at the hearing, the applicant relied upon the current VCAT proceeding regarding the termination of the lease as being a relevant factor weighing in favour of granting a stay, as the current proceeding traverses substantially the same subject matter as this proceeding. However, once again, this submission would have more force had the Member made an order for costs against the applicant of the proceeding as a whole. This submission carries less weight when the orders sought to be impugned relate to discrete applications. Further, if I had granted leave, which of course I have not, the weight of authority against disturbing discretionary orders for costs means that the appeal itself would at best only have a limited prospect of success, which would weigh against granting a stay.
52 I also would have rejected the applicant's application for consolidation of this appeal with the contempt proceeding. The extensive and adversarial dealings between him and the respondent and its solicitors were relied upon to support the applicant's contention that this application for leave to appeal ought to be consolidated with the contempt proceeding.
53 In its written outline of submissions, counsel for the respondent identified matters to be taken into account in determining whether proceedings ought to be consolidated, being:[40]
1. Are the proceedings broadly of a similar nature?
2. Are there issues of fact and law common to each proceeding?
54 The contempt proceeding largely concerns communications made by Mr Silverstein to the applicant's trustee in bankruptcy in early 2017. The fact of the communications are now largely admitted. What will be in issue in the contempt proceeding is Mr Silverstein's motivation in making the communications, the respondent's motivations in instructing Mr Silverstein to make these communications, and the potential impact of those communications on the administration of justice in the debt recovery proceeding (and possibly the proceeding in the ACT Supreme Court). While the respondent is a party to the contempt proceeding, most of the communications were made by Mr Silverstein, who is not a party to this proceeding. The contempt proceeding is of a very different character to the current proceeding. It may well be that the fact of the VCAT proceeding may be relevant to the matters which will be canvassed in the contempt proceeding, but only by way of background. The matters alleged in the contempt proceeding have no direct relevance to the Member's decision to make adverse orders for costs in relation to three discrete applications in the VCAT proceeding. Mr Silverstein was not a party to the VCAT proceeding, and I cannot see how there will be a substantial saving of time should this application for leave to appeal be heard together with the contempt proceeding.
55 Finally, if this matter were to continue, I would not have ordered that the applicant give security for costs. While I accept that this Court has the jurisdiction to make an order that an individual give security for costs, I would not make such an order at this stage. I accept that there is some evidence that the applicant is having difficulty meeting his financial obligations, but that is as far as the evidence goes. On the other hand, I note that the debt recovery proceeding involves a reasonably substantial claim by the applicant against the respondent for unpaid legal fees, being for an amount greater than the security sought ($66,000 compared with $30,000). While it is apparent from these reasons that I do not consider that the application for leave to appeal has any real prospect of success, I may be wrong. I do not consider that there are special circumstances of the nature which would justify an order for security for costs against the applicant.
[1] Davey v Dessco Pty Ltd (Building and Property) [2018] VCAT 1217.
[2] In the debt recovery proceeding, the respondent in this proceeding was successful in striking out the proceeding on the basis that the applicant, as an undischarged bankrupt, lacked standing in the debt recovery proceeding. This was reversed upon appeal: see [2017] VSC 744. The trial of the debt recovery proceeding is scheduled to commence in February 2019.
[3] While judgment was reserved, the Court was informed that this proceeding, along with the claims made by the applicant against Mr Silverstein in the proceeding referred to at paragraph 2(b), have been or will be resolved.
[4] Australian Conservation Services v Liladel Holdings [2017] ACTSC 162.
[5] Justice Legislation Amendment (Court Security, Juries and other Matters) Act 2017, s 31(3).
[8] [2015] VSCA 121, [59].
[12] Daulizio v Trust Company of Australia & ors [2005] VSCA 215, [1].
[13] See Spilkin v Rosenberg [2011] VSCA 128, [42] and Patsuris v Gippsland and Southern Rural Water Corporation [2016] VSCA 109, [43].
[17] Ibid, [41]. See also Knight v State of Victoria and Wise [2003] VSC 459 and Country Endeavours Pty Ltd v Casacir [2013] VSC 22.
[19] State of Victoria v Bradto [2006] VCAT 1813 at [66].
[20] [1988] HCA 32; (1998) 165 CLR 197 at 247, per Deane J.
[21] [2015] VSCA 216 at [28], [29].
[22] [2015] VSCA 216, [32].
[23] [2014] VCAT 321 [17].
[24] [2015] VSC 216, [4].
[26] [2015] VSCA 216, [32].
[28] I can infer from the name of the applicant's legal practice that he practices primarily in the field of migration law.
[32] It is not clear from the reasons or the material before me as to the fate of this application.
[38] Ibid, [18]. See also Ritter v Godfrey [1920] 2 KB 47.
[39] Although that conduct may have been relevant to the relief sought, had the applicant been successful after a full hearing.
[40] Humphries v Newport Quays Stage 2A Pty Ltd [2009] FCA 699, [11].
Davey
Dessco Pty Ltd [2018] VSC 720
(1936) 55 CLR 499
(1998) 165 CLR 197
(1999) 3 VR 331
(2016) 49 VR 746