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[2019] VSC 649
General information, not legal advice.
Supreme Court of Victoria
2019-09-26
Wood AsJ
Original judgment source is linked above.
COSTS COURT - Assessment under Legal Profession Uniform Law 2014 - Review of Cost Registrar's decision - Refusal of adjournment application - Alleged bias - Fixed sum Costs Agreement - Bell Lawyers Pty Ltd v Pentelow (2019) HCA 29 considered.
For the Applicant (and Judgement Debtor in the Garnishee Summons)
For the Respondent (and Plaintiff/Judgement Creditor in the Garnishee Summons)
1 This proceeding was initiated on 15 August 2018 in the Costs Court to assess legal costs claimed by the respondent for representing the applicant in his capacity as a plaintiff in a County Court proceeding relating to a failed joint venture partnership involving six apartments. The defendant to that proceeding was Guletkin Dolas ('the defendant').[1] The Summons seeks an assessment pursuant to section 198 of the Legal Profession Uniform Law 2014 ('Uniform Law'). The subject matter is the respondent's bill of costs for $44,304 which comprised $35,000 for costs, $4,367.26 for disbursements, and $3,936.74 for GST.
2 The assessment of those costs was completed on 26 April 2019 by a Costs Registrar. The costs were assessed at $44,304 being the sum claimed in the bill[2], but then reduced by $10,000 to $33,304 in recognition of a sum having already been paid by the applicant.[3] There was therefore in effect no reduction on the assessment. An order for costs of the proceeding in the respondent's favour was also made with the sum fixed at $13,500.[4] A total of $46,804 was therefore assessed as being owed by the applicant to the respondent. This comprised $33,304 plus $13,500.
3 The result of that assessment is now the subject of the applicant's 'Notice of Application for Review by a Costs Judge' filed on 9 May 2019 ('Review') relying on Rule 63.56.2 of the Supreme Court (General Civil Procedure Rules) 2015 ('Rules'). The Review was the principal subject matter of the hearing that took place on 29 August 2019. The applicant has incorrectly named Andrew Blogg as the respondent in that document. Mr Blogg was the responsible practitioner within the respondent who performed the work for the applicant in the County Court proceeding.
4 On 2 July 2019, leave was given by a Judicial Registrar for the respondent to issue a Summons ('Garnishee Proceeding') against Guletkin Dolas (garnishee) in relation to a judgement sum owing to the applicant (judgement debtor) arising from the County Court proceeding. The applicant is therefore a judgement debtor in this current proceeding and in the Garnishee proceeding as a result of the order of the Costs Registrar, and a judgement creditor in the County Court proceeding as a result of an order of Judge Macnamara made 1 May 2019 in the sum of $65,261.64.[5] The Garnishee Proceeding was also listed for hearing on 29 August 2019. An affidavit of Andrew Collis Blogg sworn 21 June 2019 has been filed in support. The applicant told the Court at the hearing that Mr Dolas had not paid the sum owing to him.[6]
5 On 8 August 2019, the applicant issued a Summons to stop/revoke/dismiss the Garnishee Proceeding and that was also listed for hearing on 29 August 2019. An affidavit of the applicant sworn 1 August 2019 has been filed in support. At the hearing on 29 August 2019 the respondent advised that they were unaware of the existence of this Summons.[7]
6 At the conclusion of the hearing on 29 August 2019, the decisions in relation to the Review, Garnishee Proceeding and Summons were reserved and I now publish the decisions and reasons. I will deal with the Review first.
7 Amendments to the Rules have repealed Rule 63.56.2 effective from 1 October 2018. However, the Transitional Provisions to those Rules make it clear that the Rules in force immediately prior to that time continue to operate for a Cost Court proceeding initiated prior to that date.[8] This is such a proceeding.
8 As a consequence the applicable Rule for the Review remains the former Rule 63.56.2 which deals with the review of a Costs Registrar by a Judicial Registrar. Rule 63.56.3(c) however enables a Costs Judge to exercise power under Rule 63.56.2 in appropriate circumstances. Even if there has been no determination made in relation to specific items in a bill as contemplated by that Rule, section 17H(3) of the Supreme Court Act 1985 provides that a determination of a Costs Registrar can be reviewed by a Costs Judge and I can treat the Review as such.[9]
9 The Costs Registrar produced fifteen pages of comprehensive reasons for his decision on 26 April 2019 ('Reasons'). Before addressing the merits of the Review (including grounds and relief sought) it is worth summarising some key facts and stages in the proceeding so far.
10 The applicant signed a Costs Agreement on 2 March 2018 with the respondent to obtain representation in the County Court proceeding. The respondent in fact had commenced work for the applicant from mid February 2018 and continued to do so in parallel with ongoing negotiations between the parties in relation to the terms of the Costs Agreement covering the retainer.[10]
11 The final version of this Costs Agreement was therefore the culmination of a series of communications and negotiations between the parties commencing around 14 February 2018. The respondent had proposed a Costs Agreement on conventional arrangements with hourly rates divided into 6 minute units. On 19 February 2018, the applicant requested a fixed fee arrangement. He wrote 'I have a limited budget and cannot enter into open costs agreement. Therefore (I) ask you to provide (a) fixed costs agreement for yourself in this matter.' The final version was settled after the applicant suggested further major amendments in an email dated 28 February 2018.
12 At that time the County Court trial of the matter was set down for 5 days commencing on 29 May 2018 and the respondent replaced former solicitors engaged by the applicant who had their retainer terminated as the applicant was dissatisfied with their performance. The Costs Agreement with the respondent was for a fixed sum of $55,000 plus GST and disbursements. The Cost Agreement contained a payment schedule of $10,000 on signing, $20,000 on or before 30 April 2018 and $25,000 on or before 21 May 2018. However, the respondent's retainer was terminated on 9 April 2018 by the applicant, that is, prior to the second scheduled payment.
13 The final version of the Costs Agreement signed by the applicant contained clauses that stated as follows:
14 It is of note at this point that there is no qualification around the applicant's option and right to terminate the engagement. It could be with or without justification. The applicant did not address the validity of the agreement in written submissions or at the hearing even though the respondent pointed this out in oral submssions[11] and the respondent was encouraged to listen carefully to those oral submissions before they were made,[12] and then reminded to address what had been said immediately before he made his oral reply.[13]
15 As things transpired the applicant took the view that there was justification to terminate the retainer and the respondent took the position that it was not justified. Given the wording of the Costs Agreement there was little utility in spending much time on whether termination of the retainer was justified. The applicant's focus has been, and is still now, principally on what the respondent failed to do rather than what work the respondent did perform. The latter is an essential element in determining what amounts to a fair and reasonable allowance for the respondent's efforts with or without a fixed costs agreement.[14]
16 At the time the applicant terminated the engagement only the sum of $10,000 had been paid. A considerable balance remained owing under the Costs Agreement, together with any outstanding disbursements as per paragraph 3 of the Costs Agreement.
17 The bill, which is the subject matter of this proceeding, was produced on 7 May 2018 and only included the sum of $35,000 plus GST, that is $38,500. This represented a $20,000 discount from the entitement under the Costs Agreement of $55,000 plus GST. Counsel fees of $4,620 and other disbursements of $184 were added to make a total of $43,304. After setting off the $10,000 paid, the net sum of $33,304 was claimed in the bill.
18 The applicant was legally represented by Mr Michael Helman when the current proceeding was commenced. During the period the applicant was legally represented there was an unsuccessful mediation of this proceeding on 22 October 2018. The applicant was represented by counsel (Ms S Cherry) at the mediation. The applicant advised the Court immediately after the mediation that he was no longer legally represented although Mr Helman did not formally file a Notice of Ceasing to Act until 4 December 2018. Mr Helman continued to assist the applicant as a 'McKenzie friend' in the County Court proceeding. The retainer of Ms Cherry was terminated on the day of the mediation.[15]
19 The parties were in dispute as to the validity, meaning and effect of the Costs Agreement and this issue was identified in an order made by consent on 22 October 2018. The order identified this as a preliminary issue to be determined 'on the papers' (aided by written submissions) on or after 18 December 2018.
20 The applicant subsequently requested that the matter be dealt with by way of an oral hearing. On or about 16 January 2019, the applicant requested that the oral hearing take place in April 2019. The matter was listed for 5 February 2019 given the period of the delay proposed. The applicant reiterated his request in correspondence and advised that the County Court proceeding was listed for 12 February 2019. The respondent opposed such an adjournment in correspondence and the oral hearing, confined to just the preliminary issue identified, remained listed for 5 February 2019.
21 The applicant failed to appear on 5 February 2019 to prosecute the discrete argument as to the effect of the Costs Agreement. The applicant had effectively abandoned the argument. The Costs Registrar adjourned that hearing to 26 February 2019 but gave the applicant an opportunity to reinstate the argument by way of an application and affidavit 'deposing to the circumstances of his failure to appear this day to prosecute his application.' That material was to be filed and served by 19 February 2019.
22 A series of emails from the applicant were sent on 5, 11 and 18 February 2019. The contents escalated from conveying information about the pressure of the ongoing County Court case and an apology for non-appearance on 5 February 2019, to allegations of bias and a 'joint decision' having been made by the respondent and the Costs Registrar in his absence. The email of 11 February 2019 requested that the Costs Registrar no longer deal with the case and that he '...must identify relationship and or conflict of interests in regards to Andrew Blogg. Religious/political/ economic/other relation.' Mr Blogg is a principal of the respondent.
23 The applicant complied with the 19 February 2019 deadline and filed an affidavit which repeated the allegations of bias, requested disqualification and outlined his difficulties arising from the fact that the County Court proceeding was heard on 12, 13 and 14 February 2019 with a further hearing scheduled for 27 February 2019.
24 The applicant did not appear on 26 February 2019, being the date set in the order of 5 February 2019 referred to in paragraph 21 above. The respondent argued that the matter should be finalised but the Costs Registrar refused that application and adjourned the matter to 5 March 2019 on the basis that the order of 5 February 2019 'might be construed in a manner differently to what was intended.'[16] The date of 5 March 2019 was the next available date and the matter was adourned to that date.
25 On 27 February 2019, the applicant wrote objecting to 5 March 2019 on the basis that the County Court proceeding was listed on 4 March 2019 with a 1 to 2 day estimate. The hearing was therefore relisted by the Costs Registrar for the next available date being 15 March 2019.
26 This led to more correspondence from the parties on 7 March 2019 surrounding the fact that the applicant was required to provide written closing submissions in the County Court by 15 March 2019. However, the matter remained listed in this Court for 15 March 2019. There was therefore no clash of hearing dates. The date of the hearing in this matter merely coincided with the deadline for submissions in the County Court proceeding where the applicant had the assistance of a legally qualified 'McKenzie friend.'
27 At the hearing on 15 March 2019, the applicant appeared and ran his argument in relation to bias and disqualification. The Costs Registrar refused the application on the basis articulated in his Reasons.[17] What then followed was a refusal by the applicant to participate further in the hearing with him adopting a horizontal position on the floor. In the Review the applicant describes this action as 'peacefully protesting.'[18] In spite of a temporary adjournment and numerous invitations to the applicant to address his application for reinstatement of the 'validity argument', the 'validity argument' itself and the quantum of any cost entitlement in the event that the agreement was valid, the applicant maintained his refusal to participate in the process.[19] At the hearing on 29 August 2019 the applicant readily conceded that he did refuse to participate.[20]
28 The Reasons outline the Cost Registrar's basis for concluding there was no justification for his disqualification on the ground of bias,[21] or basis to question the validity of the Costs Agreement or the respondent's entitlement to the reduced quantum sought.[22] The respondent applied for costs of the proceeding at the hearing on 15 March 2019 on the basis of their success and the applicant was provided with a copy of the itemised bill prepared in anticipation of that argument being successful.[23] The applicant continued to remain lying on the floor and the Court eventually rose,[24] with the Costs Registrar having reserved his decision in relation to the costs of the proceeding.
29 Further correspondence followed in relation to a Calderbank offer made previously by the respondent on 25 October 2018. The further hearing in relation to the issue of costs was relisted in Court on 1 April 2019. The applicant wrote on 27 March 2019 objecting to the hearing on that date. The matter remained listed for 1 April 2019 and the applicant appeared anyway. The applicant raised the issue of recusal again but did address the issue of costs of the proceeding by contending for Supreme Court scale costs rather than indemnity costs which were sought by the respondent for the period after the applicant's failure to accept the offer.[25] The applicant was specifically given the opportunity to address the question of whether it was unreasonable to not accept the Calderbank offer. He declined to address the issue.[26]
30 The Costs Registrar elected to fix costs as a gross sum[27] representing costs on a standard basis up to 25 October 2018, with indemnity costs thereafter. This was on the basis of a conclusion that the offer was favourable and the applicant's failure to accept was unreasonable.[28] It should be noted that the bill of costs produced by the respondent to reflect their costs for the proceeding claimed $21,335.65. The sum fixed by the Costs Registrar was the reduced sum of $13,500.
31 The applicant had failed to take advantage of the opportunities to present arguments on the validity of the Costs Agreement, quantum of costs to be allowed and the costs of the proceeding. Refusing to participate in a proceeding that he initiated was counter productive and against his interests. Lying on the floor might be an effective form of protest in a different setting but it is an inappropriate strategy where the focus should be upon advancing arguments to protect your interests in a self-initiated Supreme Court proceeding.
32 The Civil Procedure Act 2010 places obligations on the parties and the Court to deal with matters efficiently with minimal delay.[29] A litigant also has an obligation to cooperate with the court in connection with the conduct of a proceeding.[30] This did not occur.
33 In the Review the applicant stated 'I request from the Costs Court Supreme Court that I be allowed to find legal representation and present my case in a hearing to a Judge of the Supreme Court'. At the callover of the Review on 18 June 2019, the matter was set down on 29 August 2019 before a Costs Judge to accommodate those requests.
34 The applicant's Review document sought relief in the form of two options outlined under the heading 'Conclusion - Remedy'.
35 Option 1 was a letter of apology from Andrew Blogg which states 'he has no links to genocide of Indo Europeans namely Kurds (Yezidis) and Armenians.' The applicant also seeks a refund of the $10,000 paid and an acknowledgment that he owes 'zero dollars'. The applicant also required a written undertaking from Mr Blogg that 'he would stop bullying and harassing me'. Option 1 also included a requirement for the Costs Registrar to write a letter of apology for 'abusing his power and causing hardship'.
36 Option 2 was 'I as citizen in a democratic country protect and defend my rights to the very end.'
37 Rule 63.56.2(6) sets out the Court's limited options on review. They are to review the cost assesment, confirm, set aside or vary the assessment result, and make such further order as may be necessary or the case requires. Ordinarily this would be to confirm, vary or set aside the decisions made in relation to what sum (if any) is owed for the substantive costs sought to be assessed in the proceeding, the costs of the proceeding itself, and in the event of a setting aside or variation, an order to pay any amended sum if that was the result.
38 The applicant's Review document is eight pages. The document raises a number of issues. Importantly and unfortunately, none of them address the findings made by the Costs Registrar about the validity of the Costs Agreement, the quantum allowed for costs on a fair and reasonable basis, and the exercise of his discretion in relation to the costs of the proceeding. The issues raised in the Review document can be summarised into topics as follows:
39 At the callover of the Review before a Judicial Registrar on 18 June 2019, an order was made for the respondent to file and serve a response to the Notice of Review by 16 July 2019. The applicant then had the option to file and serve any response by 6 August 2019. The respondent did not file a response by 16 July 2019 but instead filed the Garnishee Proceeding referred to in paragraph 4 above and 85 below, a written submission dated 27 August 2019 in relation to the Review and a written submission dated 28 August 2019 in relation to the Garnishee Proceeding.
40 On 5 August 2019, the applicant filed a thirty-five page document headed 'Written Legal Submissions for Appeal Dated Hearing on 29 August 2019 at 10 am' ('applicant's written submissions'). At the conclusion of the document the applicant claims relief which is different to that sought in the Review document (outlined in paragraphs 35 and 36 above). The relief is stated to be 'Damages in the sum of $50,000 for mental and nervous shock losses for County Court matter prolonged for another unnecessary five months and seven days'[38] or, in the alternative, 'damages in a sum determined by the Court.'[39] A claim is also made for 10% interest, legal costs of $20,186.50 and a refund of the $10,000 paid, making a total of $80,186.50.[40]
41 There is no power in this proceeding to order damages for mental and nervous shock. The current proceeding is confined to a review of the respondent's legal costs under the Uniform Law. Any refund of the $10,000 paid, and a claim for what is said to be the applicant's legal costs of $20,186.50 incurred in this proceeding, are matters that are tied up in the outcome of the Review.
42 At the hearing of the Review the applicant was encouraged on five separate occasions[41] to focus on the real issues, namely, what errors had been made by the Costs Registrar in relation to the validity and effect of the Costs Agreement, the quantum of costs allowed and the costs orders made in relation to the proceeding. At the hearing the applicant made submissions that the respondent had breached the Civil Procedure Act 2010,[42] had breached the principles enunciated by Goldberg J in White Industries (Qld) Pty Ltd v Flower& Hart,[43] was negligent[44] and had adopted a deliberate strategy to obstruct and delay the progress of the County Court case.[45] I am unable to conclude that there is merit in these submissions.
43 The applicant's written submissions focus on a number of criticisms of the respondent's conduct of the County Court proceeding. They are not relevant if the Costs Agreement is valid for the reasons referred to in paragraph 14 above. The most significant of these submissions can be distilled and summarised into three broad categories. The respondent's position in relation to these criticisms can be gleaned from correspondence between the parties and the applicant's own written submissions.
44 1. FAILURE TO ALLEGE IVO - the failure of the respondent to include in the County Court Amended Statement of Claim the details of an IVO taken out against the defendant in the County Court matter (Guletkin Dolas) in relation to threats made.[46] As distressing as this might have been for the applicant, this was not relevant to the litigation about the financial arrangements arising from the failed joint venture partnership. The respondent in fact advised the applicant of that reasoning and advised him that it was a potential matter for cross examination in relation to the defendant's credit.[47]
45 2. FAILURE TO COMPLY WITH ORDERS - the alleged failure of the respondent to comply with orders made in the County Court in relation to subpoenas and expert reports.[48] This relates to an order made on 20 December 2017 by Judge Woodward in the County Court proceeding. The trial date was set for 29 May 2018. The order provided for 'expert reports as to damages and liability upon which they intend to rely' to be filed and served by 6 April 2017 (sic).[49] The order provided further that 'By 17 April 2018, each party must have issued any subpoenas'.[50]
46 In relation to subpoenas, the respondent's retainer was terminated on 9 April 2018 prior to the deadline of 17 April 2018 for issuing subpoenas. The respondent made the point to the applicant that they should await completion of discovery before issuing subpoenas in relation to the defendant's financial position as to do so prematurely could expose the applicant to adverse costs consequences.[51] For example, the respondent advised that they would issue a subpoena to NAB in relation to the defendant's applications for finance and financial history.[52]
47 In relation to an expert forensic accountant the applicant relies in part on the fact that the respondent's Disclosure Statement dated 1 March 2018 included the words 'attend any necessary experts' as part of the scope of the retainer. The respondent was of the view that the defendant's financial position was unlikely to be relevant given the wording of the joint venture partnership agreement which provided a formula for fixing the applicant's entitlement in the event that there was a termination of the joint venture partnership agreement.[53] The respondent also communicated that the terms of the relevant clause were clear in this regard[54] and that it was 'unlikely that an expert would be required.'[55] The respondent confirmed that the applicant accepted this position.[56] Further, the respondent stated in a letter dated 10 April 2018 that 'our view is that to obtain such a report would have been expensive, time consuming and not necessary to your case'.[57] The order of Judge Woodward in relation to any expert was in fact confined to 'damages and liability' so the defendant's financial position was not within that description in any event. The thrust of the applicant's dissatisfaction with the absence of a report is confined to the defendant's financial position. The respondent's position was that, to the extent that this was relevant, evidence could also be elicited via discovery and at trial.[58] The Amended Statement of Claim also provided details of loss based on a valuation of the subject property from James Dennis.[59] The respondent advised the applicant that they were contacting Mr Dennis in relation to an updated valuation.[60]
48 3. FAILURE TO AMEND THE STATEMENT OF CLAIM - an Amended Statement of Claim was settled by counsel and sent to the defendant's solicitors in the County Court proceeding seeking their consent. The applicant took exception to the Defence filed in that proceeding alleging the applicant spoke Turkish and was a member of the same community as the defendant. The applicant wanted it corrected that he was Kurdish and Alewite from Kurdistan.[61] This would have been a matter for a Reply to the Defence and not an amendment to the Statement of Claim. This was pointed out to the applicant by the respondent.[62]
49 In any event, an Amended Statement of Claim was prepared but the leave of the County Court would have been required before it could be relied upon. The respondent briefed counsel to draw the document, it was sent to the applicant, and comments were received from him on 22 March 2018. The respondent sought urgent approval of the final version from the applicant and emails on 5 and 6 April 2018 demonstrate comments were still being made by the applicant. A proposed draft was then sent to the solicitors for the defendant in the County Court proceeding on 6 April 2018 seeking their consent. However, the respondent's retainer was terminated on 9 April 2018, prior to the response from the defendant's solicitors on 16 April 2018.
50 The situation in relation to the Amended Statement of Claim is illustrative of the applicant's steadfast defence of positions adopted in spite of cogent justification for concessions being made and that position to be modified.[63] He placed great store in the fact that the respondent wrote a letter to him on 20 March 2018 which contained the words 'we anticipate being in a position to serve the amended Statement of Claim by close of business this Friday'. A letter the next day on 21 March 2018 stated 'We intend to file and serve the amended Statement of Claim on Friday and as such would be grateful for your urgent review of the same'. That did not occur for the reasons outlined in paragraph 49 above. The Amended Statement of Claim could not have been filed by 23 March 2018 as the applicant was still making comments in relation to it and the defendant's solicitors had not advised their consent or otherwise to the applicant being able to rely upon it. In spite of this obvious flaw in his position the applicant's position at the hearing on 29 August 2019 was that the respondent was not entitled to anything due to this and the other 'failures' outlined in paragraphs 44 to 48 above.[64] That position is untenable.
51 The applicant has not identified any specific error in relation to the validity of the Costs Agreement, the quantum charged or the costs order made in relation to the proceeding. At the hearing and in their written submissions the respondent relied upon the fact that the Costs Registrar had exercised a discretion when determining fair and reasonable costs. A clear error in relation to the exercise of a discretion had to be demonstrated by the applicant on any review. The respondent relied upon relevant passages from House v The King[65] and Schweppes Limited v Archer.[66]
52 The focus in the Review document and applicant's written submissions has centered around allegations of bias and allegations about the standard of work performed by the respondent. At the hearing, when pressed in relation to errors made by the Costs Registrar, none were forthcoming even though this was clearly flagged by the respondent's written submissions dated 27 August 2019 and several times in their oral submissions at the hearing.[67] The respondent also highlighted the failure of the applicant to address the validity of the Costs Agreement.[68] The applicant was encouraged to listen carefully and then given an opportunity to reply at the hearing but did not address the issue. The applicant's focus in reply was on Mr Atlas (who represented the defendant in the County Court),[69] the respondent's alleged deliberate strategy to obstruct the progress of that proceeding, their failure to obey his instructions,[70] and the Costs Registrar's error to not adjourn the hearing on 26 April 2019.[71]
53 In relation to the allegation by the applicant that the respondent refused to obey instructions it is worth stating that the Legal Profession Uniform Law Australian Solicitors' Conduct Rules 2015 provide that a solicitor is not a mere 'mouthpiece' for the client and is not bound to do everything he or she is instructed to do.[72] Those same Rules also state that the duty to a client is not breached if a course is adopted contrary to instuctions if the issues are confined to what a solicitor believes to be the real issues, and the case is presented as 'quickly and simply as may be consistent with its robust advancement'.[73]
54 The applicant advanced no argument in relation to the validity of the Costs Agreement other than to say that it was for a fixed sum to the conclusion of the trial and the respondent did not complete the retainer.[74] This ignores that they were prevented from doing so by the applicant's decision to terminate the retainer and the wording of the Costs Agreement reproduced at paragraph 13 above.
55 There was no basis for the Costs Registrar to disqualify himself for the reasons set out by him.[75] The granting or refusal of an adjournment and the choice of first available hearing dates on adjournments are insufficient to amount to actual or apprehended bias in this matter. Coincidentally, the applicant had unsuccessfully advanced the same argument on a previous occasion. In Guneser v Magistrates' Court of Victoria[76] Habersberger J stated at [37] :
... The mere fact that the Magistrate had rejected Mr Guneser's application for an adjournment was no evidence of either actual or apprehended bias on his part. In my opinion, no fair-minded lay observer with knowledge of the material objective facts could entertain a reasonable apprehension or suspicion that the Magistrate might not bring an impartial and unprejudiced mind to the resolution of the remainder of the hearing.
56 The applicant sought another adjournment of the hearing before the Costs Registrar because the date coincided with the final date he was due to file a document in the County Court. This was an insufficient reason given the history of the matter.
57 It is very unfortunate that the applicant has not obtained legal advice or representation in relation to these matters since October 2018. A long period of time was set between the callover and the hearing date to accommodate the applicant's request to enable this to happen. The respondent urged the applicant to do so in a letter dated 17 May 2019 when the Review was first issued.[77] The hearing date of the Review was set by the Judicial Registrar two months after the callover in the hope that this occurred.
58 The real issues underpinning the findings and conclusions of the Costs Registrar in relation to proceeding are the validity of the Costs Agreement, the assessed quantum of the respondent's costs on a 'fair and reasonable' basis, and the costs of this proceeding. The applicant missed, and then refused, numerous opportunities to participate in hearings about those issues before the Costs Registrar. They were strategic decisions he made. He has now had another opportunity to participate and has done so.
59 Irrespective of what has occurred in the process, the substantive decision made by the Cost Registrar was clearly correct. The Costs Agreement makes it clear that irrespective of any basis to terminate the retainer the applicant was liable for the sum of $55,000 plus GST in relation to the costs component.
60 In relation to the work actually performed, the respondent replaced previous solicitors acting for the applicant in mid-February 2018 and was faced with a trial date already set for May 2018. From the Amended Statement of Claim prepared it is apparent that there was some considerable work involved in coming up to speed in relation to the matter generally, and collating the additional details comprising the amendments. The respondent arranged the briefing of counsel, attended conferences with counsel and the applicant, considered the defendant's and the applicant's discovery, and worked on a request for Further and Better Particulars of the Defendant's Defence and Counterclaim.[78] At the hearing the applicant handed up a folder containing a large number of documents and emails which confirm the extent of the amount of work performed by the respondent.
61 It is worth bearing in mind that the retainer was terminated only two weeks before the $20,000 progress payment was due which would have taken the amount paid up to $30,000. The work amending the Statement of Claim was not insignificant and the Costs Agreement specifically excludes this work from falling within the fixed price figure. After describing some of the tasks included in the scope of works it is stated 'However, if this matter requires further work outside the above scope, such as drawing an amended statement of claim....we reserve the right to charge you additional fees'.[79]
62 The Costs Registrar concluded that the discounted figure of $35,000 was fair and reasonable.[80] Having considered the respondent's initial written submissions dated 25 January 2019 that were before the Costs Registrar the discounted figure of $35,000 plus GST was clearly reasonable, and less than the respondent was entitled to recover under the Costs Agreement.
63 Section 172(4) of the Uniform Law provides that a Costs Agreement is prima facie evidence that the legal costs disclosed in it are fair and reasonable if the Costs Agreement and Disclosure are compliant with the Act. The Costs Agreement and Disclosure material complied with the Act as analysed by the Costs Registrar in his reasons and the respondent discharged its obligations.[81] The applicant bears the onus to demonstrate that the legal costs claimed are not fair and reasonable for the work performed. This has not occurred. In fact the discount offered by the respondent occurred in circumstances where there was no obligation to do so under the Costs Agreement.
64 In relation to the costs of the proceeding the Calderbank offer dated 25 October 2018 states that '...as a show of good faith we only charged $35,000 for our fees, being a $20,000 reduction from the amount we are entitled to charge for our fees pursuant to the Costs Agreement'. The offer was for the respondent to accept a total of $25,000 in addition to the $10,000 already paid. Settlement of Magistrates' Court proceeding J11759632 was included and the respondent offered to relinquish any entitlement to costs of the current proceeding. As matters transpired that offer was very favourable to the applicant and it was unreasonable for the applicant not to have accepted it.
65 Six days after the conclusion of the hearing when this decision was reserved, the High Court published their judgment in Bell Lawyers Pty Ltd v Pentelow ('Bell Lawyers').[82] The parties were therefore given the opportunity to file and exchange any further material on the potential impact of that case by 19 September 2019. The case is significant as it has determined that what was known as the Chorley[83] exception was never part of the common law in Australia even though up to that point cases had been decided on the assumption that it was. A number of cases had been determined up to that point that allowed a solicitor to recover costs for the work they performed when they acted for themselves. The case of Bell Lawyers involved a barrister performing work on their own behalf and the New South Wales Court of Appeal had extended the exception to barristers. On appeal the High Court removed the exception altogether for both barristers and solicitors. The effect of the decision was potentially relevant to the issue of costs of the proceeding, the Review, the Garnishee Proceeding and Summons.
66 The applicant filed supplementary material on 19 September 2019. This included numerous documents relating to the County Court proceeding which were not relevant to the potential impact of Bell Lawyers. The applicant also filed an eight page document headed 'Further Applicant's Submissions'. These submissions merely repeated the criticisms of the respondent's handling of the County Court proceeding and reiterated the applicant's belief that Mr Blogg acted 'out of racist and religious fundamentalist beliefs'.[84] Again, none of this was relevant to the impact of Bell Lawyers which was the only issue that the parties were invited to comment further on_._ At the conclusion of the document the applicant repeated the relief sought in his written submission (outlined in paragraph 40 above), namely $50,000 damages for mental and nervous shock, legal costs and interest. The only reference to Bell Lawyers was in support of the submission that the respondent should not be entitled to recover any costs at all, even for the work performed on the applicant's behalf in the County Court proceeding.
67 On 19 September 2019 the respondent filed supplementary written submissions that did address the impact of Bell Lawyers. In summary, the respondent's position is that two conclusions ought to be reached.[85] They are :
68 In Bell Lawyers the High Court was considering a definition of 'costs' in the Civil Procedure Act 2005 (NSW). That term was defined as 'costs payable in or in relation to the proceedings, and includes fees disbursements, expenses and remuneration.'[86] There is no definition of costs in the equivalent Victorian Act.[87] The Rules only define 'costs' to include 'disbursements, and reasonable costs of recording and transcript'.[88] The entitlement to an order for costs arises from section 24 of the Supreme Court Act 1986 which contains the discretion to award costs_._ The definition section in that Act states 'costs includes fees, charges and disbursements'.[89]
69 There is a definition of legal costs in the Uniform Law which defines 'legal costs' to include 'amounts that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services.'[90] The respondent was correct to point out that this definition is in the context of the Uniform Law.[91] Strictly speaking it is not relevant to party party costs in a proceeding.
70 The respondent relies on a passage from Maher v Commonwealth Bank of Australia where the Court of Appeal made comment[92] about costs relating to an employee solicitor employed by a bank. Here, the incorporated entity is a legal practice acting for itself.
71 It is trite law that the purpose of an order for costs is a partial indemnity for costs actually incurred.[93] The majority in Bell Lawyers[94] stated 'The courts have long regarded the statutory power to make an order for costs as confined by the concern to provide the successful party with a measure of indemnity against the expense of professional legal costs actually incurred in the litigation'.[95] They also observed 'A self-representing solicitor, lacking impartial and independent advice that the court expects its officers to provide to the litigants they represent, may also lack objectivity due to self-interest.[96]
72 The majority also cited[97] Brereton J in McIlwraith v Ilkin (Costs) where this was developed further when his Honour stated '....this is in principle a strong reason for holding that a solicitor litigant should not be entitled to costs of acting for him or herself.'[98] It is also worth observing at this point that the Legal Profession Uniform Conduct (Barristers) Rules 2015 prevent a barrister from accepting or retaining a brief 'on the assessment of costs which include a dispute as to the propriety of the fee paid or payable to the barrister, or is for the recovery from a former client of costs in relation to a case in which the barrister appeared for the client.'[99]
73 Clearly the majority in Bell Lawyers were concerned to remove the dichotomy in treatment that had developed between solictors and barristers under the Chorley exception. Where a lawyer is admitted to practice as both in the Supreme Court of Victoria there is no justification for the distinction. The question could be posed - how is it that a solicitor can act for themselves when the assessment of their entitlement to their own costs is the subject matter of a proceeding, but a barrister cannot hold a brief where their fees are to be similarly scrutinised ?
75 Affidavits filed on behalf of the respondent have been sworn by two individuals who both describe themselves as a 'Principal' of the firm.[102] The respondent's written supplementary submissions made references to scenarios where the work was performed by employee solicitors.[103] Such a distinction may not be significant. As stated above, the majority in Bell Lawyers concluded that in-house lawyers employed by governments and others were not affected by their decision. However they made the following statement in relation to an incorporated legal practice :
76 In a separate judgment Gageler J, while agreeing with the conclusion of the majority, made reference to the situation in New Zealand where their Supreme Court[104] recently chose not to abandon the Chorley exception. His Honour stated 'That was in part because the rules of court which the Supreme Court was concerned with construing and applying were seen to have been framed on the basis of the continued operation of the exception.'[105]
77 The conclusion to be drawn is therefore that the Chorley exception is not part of the common law and clear legislative provisions would be needed to reverse that situation. It emerges from the judgment of Gageler J there is no such provision in any Australian jurisdiction. His Honour stated as follows:
78 In fact there are provisions in the Uniform Law that are relevant. The notion of an incorporated legal practice is clearly permissible. Section 32 states that 'Legal services may be provided under any business structure...' The combined effect of sub-sections 33(1) and (2) however is that both a legal practitioner and a law practice must comply with the Uniform Law, Uniform Rules and 'other professional obligations regardless of the structure' (emphasis added).
79 The majority in Bell Lawyers stated 'Importantly, the view that solicitors should be encouraged to act for themselves is contrary to the modern orthodoxy that it is undesirable, as a matter of professional ethics, for a solicitor to act for himself or herself in litigation.'[106] Given that these professional ethical considerations underpin Bell Lawyers, and the abolition of the Chorley exception, it is clear that a business structure cannot be used as a basis to avoid the underlying rationale. The Uniform Law governing the practice of law in Victoria makes that clear.
80 The respondent argued in the supplementary written submissions[107] that the Costs Registrar was exercising a discretion in relation to costs and the usual principles are at play when the exercise of the discretion is challenged. There is no doubt about the correctness of the decision to make an order that the applicant pay the costs of the proceeding having regard to the matters outlined in paragraph 64 above.
81 However, the relevance of Bell Lawyers goes to the quantum of the respondent's entitlement flowing from that order. The sum of $13,500 was a sum fixed for costs where the respondent was acting for itself. This sum included sums referrable to legal costs and disbursements on the understanding that the legal costs component was in play under the Chorley exception. The effect of Bell is that it was never in play.
82 It is clear from the majority in Bell Lawyers that the effect of their conclusion does not just operate prospectively. Their Honours stated 'To hold that the Chorley exception is not part of the common law is to hold that there was no basis in law for the decision of the Court of Appeal'.[108] This means there was no basis in law for the Costs Registrar to fix an amount payable in respect of the proceeding to 26 April 2019 for an amount other than disbursements. In practical terms that also means that extant costs orders in favour of lawyers acting for themselves in other proceedings that have not been taxed or the costs have not been settled might be more restricted in quantum than what was envisaged when the order was made.
83 The part of the order of the Costs Registrar that quantified the respondent's costs to 26 April 2019 needs to be set aside. This does not affect the respondent's entitlement to costs, or the applicant's liability to pay costs, represented by reasonable disbursements incurred in the proceeding to that point.
84 The order of the Costs Registrar made 26 April 2019 is confirmed as to the sum of $33,304 owing as per paragraphs 1 and 2 of his order. The order for the additional sum of $13,500 as provided for in paragraph 3 of his order is set aside and needs to be replaced by an order to reflect that the respondent is entitled to reasonable disbursements incurred in relation to the proceeding to that point. The quantum of that sum and the question of costs of the Review before me are matters to be determined on written submissions without the necessity for a further oral hearing. The respondent is to file and serve written submissions within 21 days. The applicant is to file and serve a written submission in response within 21 days of receipt.
85 Turning now to the Garnishee Proceeding. The respondent acted for a period on behalf of the applicant in the County Court proceeding (CI-17-02754) referred to in paragraph 1 above. The applicant is favoured by a judgement on 1 May 2019 in that proceeding against Guletkin Dolas in the sum of $65,261.64.[109] The Garnishee Proceeding filed on 3 July 2019 is against Mr Dolas (Garnishee) pursuant to leave granted by a Judicial Registrar on 2 July 2019. Mr Dolas failed to appear at the hearing on 29 August 2019. That proceeding seeks an order that Mr Dolas pay some of that money to the respondent, in lieu of the applicant, in order to satisfy what is owing by the applicant to the respondent in this proceeding. The sum sought from Mr Dolas is $53,403.31, being $46,804 (quantified by the Costs Registrar on 26 April 2019, and so far not paid by the applicant) together with interest ($730.91 to the date of the initiation of the Garnishee Proceeding and accruing) and costs of the Garnishee Proceeding ($5,868.40). A revised document seeking $10,210.90 for those costs was produced at the hearing.
86 The applicant is taken to have opposed the Garnishee Proceeding by filing the Summons which sought to 'stop/rewoke (sic)/dismiss the unlawful placement of Garnishee Summons'. Although not a party to the Garnishee Proceeding he had a right to be heard. The objection was that this was issued before the finalisation of the Review and this amounted to contempt for the appeal process, and constituited conduct that was, bullying, racist, plain thuggery, invalid, illegal, discriminatory and predatory behaviour. On that basis it was said that the outcome of the Garnishee Proceeding should therefore await the outcome of the Review.
87 Now the Review is concluded there is no basis to not grant the relief sought in the Garnishee Proceeding. In relation to the respondent's costs of the Garnishee Proceeding the Bell Lawyers case also has impact. I propose to only allow the sum of $2,442.80.
88 I have modified counsel fees which were claimed at the maximum figure in the Supreme Court scale. The sum of $2,442.80 comprises the filing fee on the Garnishee Proceeding at $1,122.80, $990 for the submissions drawn by counsel for three hours at $330 per hour (per item 19(f) in the Supreme Court Scale), and one hour for advice of counsel at $330 (per item 19(c) of the Supreme Court Scale). Counsel's fees for the appearance on 29 August 2019 are to be treated as costs of the Review as in reality that occupied the entire hearing_._
89 Interest is claimed by the respondent. This was claimed on the judgement sum of $46,804 at $12.82 per day from 26 April 2019. Interest is a discretionary matter. Under the Supreme Court Act the Penalty Interest Rate Act can apply and the rate is 10% but there is another option available to be considered.
90 The Costs Agreement and Disclosure material stated that interest would run on unpaid costs from 30 days after the invoice was delivered. The date of the relevant invoice was 7 May 2018 so interest would run from 7 June 2018. The rate was stated to be the Reserve Bank Cash rate plus 2%.[110] That is the rate authorised by the Act.[111] The rate would therefore be 3.5% on $33,304, that is $3.19 per day for 445 days up to day. A total of $1,419.55.
91 Utilising the Penalty Interest Rate on $33,304 from 26 April 2019 to date for 153 days at $9.12 per day the interest to date is $1,395.36. I will adopt that formula and sum.
92 The orders are as follows in relation to the Review:
(i) Paragraphs 1 and 2 of the order made by the Costs Registrar on 26 April 2019 are confirmed, the combined effect of which is that the that the applicant has owed the respondent the sum of $33,304 since 26 April 2019.
(ii) The applicant is to pay the respondent the additional sum of $1,395.36 representing interest on the sum of $33,304 from 26 April 2019 to date.
(iii) Paragraphs 3 and 4 of the order of the Costs Registrar made 26 April 2019 are set aside and in substitution thereof the applicant pay the respondent's costs of the proceeding up to 26 April 2019, with such costs to be restricted to reasonable disbursements.
(iv) The Review filed by the applicant on 9 May 2019 be otherwise dismissed with the question of costs of the Review, and the amount to be allowed pursuant to paragraph 3 of this order, to be determined on written submissions. The respondent is to file and serve writtem submissions within 21 days and the applicant is to file and serve written submissions in response within 21 days of receipt.
93 The orders are as follows in relation to the Garnishee Proceeding as per Rule 71(09) of the Rules.
(i) The Garnishee, Guletkin Dolas, do forthwith pay to the respondent/judgement creditor, Aitken Partners Pty Ltd (ACN 128 769 602) trading as Aitken Partners, $37,142.16 being so much of the debt due from him to the applicant/judgment debtor, Genco Guneser, as is sufficient to satisfy the judgement debt ($33,304), the interest accrued thereon ($1,395.36) and the costs of the respondent/judgement creditor of the Garnishee Proceeding ($2,442.80), and that in default of payment execution may issue against the Garnishee.
94 The respondent is not entitled to costs in relation to the Summons as they were unaware of its existence. The order referred to in paragraph 92 above will also deal with the Summons filed 8 August 2019 as follows:
[5] An order for an additional sum of $279,445.69 was made on 26 June 2019 against Guletkin Dolas.
[6] Transcript - 29 August 2019 - page 3, lines 11 to 18.
[7] Transcript - 29 August 2019 - page 2, lines 5 to 19.
[9] AJH Lawyers v Mathieson Nominees Pty Ltd & Anor (2015) VSC 37 at [36].
[10] Paragraph 21 of the Respondent's submissions 30 January 2019.
[11] Transcript - 29 August 2019 - page 64, lines 10 to 14.
[12] Transcript - 29 August 2019 - page 55, lines 9 to 16.
[13] Transcript - 29 August - page 69, lines 9 to 14.
[14] Section 199(2)(b) of the Uniform Law.
[17] Paragraphs 43 to 49 of the Reasons.
[19] Paragraphs 50 & 51 of the Reasons.
[20] Transcript - 29 August 2019 - page 50, lines 5 to 8.
[21] Paragraphs 43 to 49 of the Reasons.
[22] Paragraghs 52 to 56 of the Reasons.
[26] Paragraphs 76 & 77 of the Reasons.
[28] Paragraphs 64 to 81 of the Reasons.
[29] Section 9 Civil Procedure Act 2010.
[34] Pages 4, 6 & Table 3 of the Review.
[36] Pages 5, 6 & Table 3 of the Review.
[41] Transcript - 29 August 2019 - page 9, line 1 to page 10, line 15; page 43, lines 23 to 25; page 47, line 20 to page 48, line 23; page 69, lines 9 to 14.
[42] Transcript - 29 August 2019 - page 8, lines 18 to 25.
[43] [1998] FCA 806; (1998) 156 ALR 169 and transcript - 29 August 2019 - page 7, lines 13 to 17.
[44] Transcript - 29 August 2019 - page 6 - lines 30 to 31; page 8, lines 15 to 16; page 50 - line 15, page 54, lines 12 to 13.
[45] Transcript - 29 August 2019 - page 7 - lines 13 to 23; page 70 - lines 25 to 26; page 74 - lines 24 to 26.
[46] Page 2 of the Applicant's written submissions.
[47] Respondent's letter to the Applicant dated 10 April 2018 and page 12 of the Applicant's written submissions.
[48] Pages 2 and 3 of the Applicant's written submissions.
[49] Paragraph 13 of the order made 20 December 2017.
[50] Paragraph 15 of the order made 20 December 2017.
[51] Page 11 of the Applicant's written submissions.
[52] Page 12 of the Applicant's written submissions.
[53] Clause 27 in the Joint Venture Partnership Agreement and letter of 10 April 2018 to the Applicant.
[54] Letter of 20 March 2018 to the Applicant.
[55] Letter of 1 March 2018 to the Applicant.
[56] Page 11 of the Applicant's written submission.
[57] Page 10 of the Applicant's written submissions.
[58] Respondent's letter to the Applicant dated 10 April 2018.
[59] Paragraphs 52 to 56 of the Amended Statement of Claim.
[60] Respondent's letter of 20 March 2018 to the Applicant.
[61] Page 9 of the Applicant's written submissions.
[62] Page 12 of the Applicant's written submission.
[63] Transcript - 29 August 2019 - page 13, line 14 to page 24, line 11.
[64] Transcript - 29 August 2019 - page 74 - lines 4 to 5.
[65] (1936) 55 CLR 499 at 505.
[66] (1934) SR(NSW) 178 cited in Australian Coal and Shale Employees' Federation v The Commonwealth (1953) CLR 621 at 628 to 629 (paragraphs 30 to 32 of the Respondent's written submissions dated 27 August 2019).
[67] Transcript - 29 August 2019 - page 55, line 27 to page 56, line 5; page 63, lines 3 to 18; page 66, lines 17 to 20.
[68] Transcript - 29 August 2019 - page 64, lines 10 to 14.
[69] Transcript - 29 August 2019 - page 69, line 15 to page 70, line 19.
[70] Transcript - 29 August 2019 - page 74, line 15.
[71] Transcript - 29 August 2019 - page 68, line 7 to page 69, line 2; page 71, line 28 to page 72, line 30.
[74] Transcript - 29 August 2019 - page 73 , lines 1 to 7.
[75] Paragraphs 43 to 49 of the Reasons.
[77] Exhibit 'ECV 2' to the affidavit of Edwin Vaughan Clark sworn 29 August 2019.
[78] Respondent's letter of 25 October 2018.
[79] Page 1 of both the Costs Agreement and Disclosure Statement dated 1 March 2018.
[81] Paragraph 54 of the Reasons and section 199(2) of the Uniform Law.
[82] [2019] HCA 29 (4 September 2019).
[83] London Scottish Benefit Society v Chorley (1884) 13 QBD 872.
[85] Respondent's supplementary written submissions dated 19 September 2019.
[91] Paragraph 21 of the supplementary written submissions.
[93] Cachia v Hanes (1994) 179 CLR 403 at 414.
[94] Kiefel CJ, Bell, Keane & Gordon JJ.
[101] [2001] NSWSC 60; (2001) 51 NSWLR 333 at [21] quoted at paragraph 26 of the supplementary written submissions.
[102] E.g. affidavits of Andrew Collis Blogg (sworn 21 June 2019) & Edwin Vaughan Clark (sworn 29 August 2019).
[104] McGuire v Secretary for Justice [2018] NZSC 116.
[109] Paragraph 5 of the order made by Judge Macnamara on 1 May 2019.
[110] Paragraph 2 in the Costs Agreement and paragraph 5 in the Disclosure material.
Guneser
Aitken Partners [2019] VSC 649
(1998) 156 ALR 169
(1936) 55 CLR 499
(1994) 179 CLR 403
(2001) 51 NSWLR 333