Djordjevich v Rohrt [No 2] (Unreported, Supreme Court of Victoria, Delany J, 3 June 2021)

COSTS - Appeal - Indemnity costs - Whether hopeless case - Whether refusal of 'offers' in Calderbank letters unreasonable - Application for indemnity costs refused - Inappropriate to make order directing fees in excess of scale - Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2] (2005) 13 VR 435 applied.

1 On 10 May 2022, reasons for judgment ('Reasons') [1] were handed down in relation to two matters: the applicant's application for leave to appeal a trial judge's orders dismissing his proceeding (S EAPCI 2021 0053) (the 'principal matter'); and an application for leave to appeal the special costs orders made by the judge (S EAPCI 2021 0071) (the 'costs matter'). These reasons should be read together with those Reasons.

2 In the principal matter, we ordered that leave to appeal be granted in relation to grounds 3 and 4, but that the appeal on those grounds be dismissed. We otherwise refused leave to appeal. We also refused leave to appeal in relation to the costs matter. We further made orders timetabling submissions for the resolution of costs in respect of each matter in default of any agreement.

3 By written submissions dated 27 May 2022, the respondent sought an order that the applicant pay the respondent's costs of the application for leave to appeal and the appeal in the principal matter on the standard basis up to and including 4 June 2021, and on an indemnity basis thereafter. In respect of the costs matter, the respondent sought an order that the applicant pay the respondent's costs of the matter on the standard basis up to and including 20 July 2021, and on an indemnity basis thereafter. The respondent also sought orders that the Costs Court allow fees of senior counsel in excess of scale in relation to both matters.

4 By written submissions dated 9 June 2022, the applicant opposed the making of the order sought by the respondent. He contended that there was no proper basis to make an award of indemnity costs in the principal matter or the costs matter, nor any basis for making an award of costs for senior counsel above scale. He did not otherwise oppose an ordinary costs order being made (on the standard basis) in favour of the respondent by reason that costs should follow the event.

5 Two issues therefore arise: first, whether there is any basis for making a special costs order in respect of the principal matter or the costs matter; secondly, whether there should be a direction to allow fees of senior counsel above scale.

Whether appropriate to make a special costs order

6 In respect of the principal matter, the respondent relied on two primary matters: first, that the applicant ought to have known that the application had no prospects of success, and was 'hopeless'; secondly, that the applicant acted unreasonably in 'pressing on' with his application after receipt of a letter from Mills Oakley (the respondent's solicitors) dated 4 June 2021 (the 'June letter').

7 In relation to the first matter, it is true that leave to appeal was refused in respect of all grounds except grounds 3 and 4. However, the focus of the application was grounds 3 and 4. Although those grounds raised 'new' matters, they did raise a legal question of substance, being the construction of sch 2 of the Corporations Act 2001 (Cth). Viewed as a whole, it cannot be said that the application was thereby 'hopeless'.

8 In relation to the second mater, the June letter invited the applicant to withdraw his application (filed shortly before, on 27 May 2021). The letter informed the applicant that if he failed to do so and the liquidator was successful, he would seek an order that the applicant and/or his solicitors pay the respondent's costs on an indemnity basis from the date of the letter. The invitation was not accepted and the applicant pressed on with his application.

9 As identified by the respondent, the critical question was whether the rejection of the 'offer' was unreasonable having regard to a number of factors as outlined in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2).[2] In this case, the June letter simply invited the applicant to discontinue. If this had occurred, the effect of discontinuance under r 64.29(4) of the Supreme Court (General Civil Procedure) Rules 2015 would be that (subject to a contrary order), the applicant would pay the respondent's costs. There was no offer to avoid the operation of this rule, and, in reality, no compromise was offered at all. We are therefore not persuaded that it was unreasonable to reject the respondent's invitation.

10 The respondent again relied upon the fact that the applicant's case was hopeless, and that the applicant acted unreasonably in proceeding after receipt of a (further) letter from Mills Oakley dated 20 July 2021 (the 'July letter').

11 It is true that the application lacked merit, particularly given (as highlighted by the respondent), appeals from costs orders are treated as exceptional,[3] and are subject to the principles in House v the King.[4] However, given that the application raised no further issue of substance, and took a relatively insignificant amount of time, we are not satisfied that a special costs order is appropriate.

12 The July letter also does not provide a basis for an indemnity costs order. Again, it merely invited the applicant to withdraw the costs appeal, and offered no compromise at all.

Whether order should be made directing Costs Court to allow senior counsel fees in excess of scale

13 The court possesses an overriding discretion in relation to allowances for counsel's fees, and may take into account a number of matters, including the complexity of the matter.[5] In this case, the respondent submitted that the 'serious nature' of the subject matter of the application justified an order directing the Costs Court to allow senior counsel's fees in excess of scale.

14 We are not satisfied that it is appropriate for us to make the order sought. The 'serious nature' of the subject matter does not of itself justify such a course in this case, in circumstances where this Court frequently deals with matters that are serious. Rather, consistent with the usual practice of this Court, the matter should be left to the Costs Court.

15 In respect of the principal matter, the applicant will be ordered to pay the respondent's costs of the application for leave to appeal and the appeal on the standard basis.

16 In respect of the costs matter, the applicant will be ordered to pay the respondent's costs of the application for leave to appeal on the standard basis.

[1] Djordjevich v Rohrt [2022] VSCA 84 ('Reasons').

[2] (2005) 13 VR 435, 442 [23]-[29] (Warren CJ, Maxwell P and Harper AJA); [2005] VSCA 298.

[3] See, eg, PCCEF Pty Ltd v Geelong Football Club Ltd (No 2) [2019] VSCA 148, [38]-[41] (Whelan, McLeish and Emerton JJA); Etna v Arif [1999] VSCA 99; [1999] 2 VR 353, 378 [67] (Batt JA); [1999] VSCA 99; both cited recently in State of Victoria v Villan [2022] VSCA 105, [40] (Kennedy and Walker JJA).

[4] (1936) 55 CLR 499, 504-5 (Dixon, Evatt and McTiernan JJ); [1936] HCA 40.

[5] See, eg, factors cited in O'Brien v Greater Bendigo City Council; Lea v Fosterville Gold Mine (costs ruling) [2016] VSC 33, [13] (J Forrest J).