Gruma Oceania Pty Ltd v Bakar

1 On 16 October 2014, we published our reasons for dismissing the appeal of Gruma Oceania Pty Ltd ('Gruma') from an order made by a judge in the Trial Division which set aside an opinion of a medical panel.[1] On that day, we heard submissions from the parties as to whether Gruma should be required to pay the costs of the first respondent ('Ms Bakar') on a party and party basis rather than on the standard basis. We made an order that the costs be paid on the standard basis and stated that we would publish our reasons at a later time. These are our reasons for the costs order.

2 Section 24(1) of the Supreme Court Act 1986 relevantly provides:

Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court ... is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.

3 Rules 63.02, 63.28, 63.30 and 63.31 of the Supreme Court (General Civil Procedure) Rules 2005 ('Rules') provide:

63.02 General powers of Court

The power and discretion of the Court as to costs under section 24 of the [Supreme Court Act 1986] shall be exercised subject to and in accordance with this Order.

63.28 Bases of taxation

Subject to this Part, costs in a proceeding which are to be taxed shall be taxed on -

(a) a standard basis;

(b) an indemnity basis; or

(c) such other basis as the Court may direct.

63.30 Standard basis

On a taxation on a standard basis, all costs reasonably incurred and of reasonable amount shall be allowed.

63.31 Usual basis of taxation

Except as provided by these Rules or any order of the Court, including the Costs Court, costs shall be taxed on the standard basis.

4 Prior to 1 April 2013, rr 63.28, 63.29, 63.30 and 63.31 of the Rules provided:

63.28 Bases of taxation

Subject to this Part, costs in a proceeding which are to be taxed shall be taxed on -

(a) a party and party basis;

(b) a solicitor and client basis;

(c) an indemnity basis; or

(d) such other basis as the Court may direct.

63.29 Party and party basis

On a taxation on a party and party basis all costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed shall be allowed.

63.30 Solicitor and client basis

On a taxation on a solicitor and client basis all costs reasonably incurred and of reasonable amount shall be allowed.

63.31 General basis

Except as provided by these Rules or any order of the Court, including the Costs Court, costs shall be taxed on a party and party basis.

5 It can be seen from the above amendments to the Rules that from 1 April 2013: the usual basis of taxation became the standard basis; party and party costs and solicitor and client costs were deleted from r 63.28;[2] and the former definition of solicitor and client basis was adopted for the definition of the standard basis.

6 Gruma conceded that, as its appeal did not succeed, the Court should make an order that it pay Ms Bakar's costs of the appeal. However, Gruma submitted that there were two interrelated reasons why that order should provide that the costs be assessed on a party and party basis. First, such an order would reflect the fact that the underlying legal dispute related to a statutory benefits scheme and therefore costs are ultimately payable by taxpayers. Secondly, such an order would be consistent with provisions in the Accident Compensation Act 1985 ('Act') which provide for payment of costs on a party and party basis. Those provisions were said to reflect an underlying statutory policy that costs in respect of claims under the Act should be assessed on a party and party basis.

7 The provisions of the Act upon which Gruma relied were ss 50(2A) and 134AB(28). Section 50(2A), which has been repealed,[3] dealt with an award of costs in proceedings before the County Court under ss 98 (compensation for maims) or 98A (compensation for pain and suffering). Section 50(2A)(a) provided that if the compensation awarded to the claimant was not less than 90 per cent of the claimant's counter statutory offer but was greater than the statutory offer made by the respondent, the respondent was required to pay the claimant's party and party costs.

8 Section 134AB(28) of the Act deals with the costs of proceedings by a worker for damages for a workplace injury brought under s 134AB which are commenced after a statutory offer is made or deemed to have been made. Section 134AB(28)(b) is similar to s 50(2A)(a) of the Act.

9 Gruma submitted that, although the proceeding in the present case does not fall within either of the above types of proceeding, nevertheless the cost provisions governing those types of proceeding should be applied by analogy.

10 Gruma relied on a recent decision made by a judge in the Trial Division in which a worker who successfully challenged an opinion of a medical panel was awarded costs on a party and party basis. Although reasons for that costs decision have not been published,[4] Gruma's counsel informed us that the judge took into account the manner in which the worker's lawyers conducted the proceeding before that judge. Gruma's counsel disavowed any suggestion that there was any inappropriate conduct in the manner in which Ms Bakar's lawyers conducted the present proceeding.

11 Gruma also referred us to a decision of another judge in the Trial Division who dismissed an employer's challenge to an opinion of a medical panel and ordered the employer to pay the worker's costs on the standard basis. Although reasons for that costs decision have not been published,[5] Gruma's counsel informed us that it was her understanding that the judge was not referred to r 63.28(c) of the Rules, which confers a discretion on the Court to order that costs be taxed 'on such other basis as the Court may direct.'

12 Ms Bakar submitted that the fact that the Act continues to refer to the party and party basis simply reflects the historical fact that when the Act was enacted, the party and party basis was the usual basis. Ms Bakar contended that ss 50(2A) and 134AB(28) of the Act are inapplicable to the present case and the proceedings that are subject to those provisions are not analogous to the present proceeding. According to Ms Bakar, the Act is beneficial legislation whose underlying purpose is to provide compensation for injured workers and it would be contrary to that purpose for this Court to depart from the usual basis of taxation, namely the standard basis.

13 Ms Bakar relied upon Southage Pty Ltd v Vescovi[6] in which Macaulay J stated that it is 'well settled that a court ought not usually make a costs order on a basis other than a party and party basis (now, effectively, the 'standard' basis)' and that there should be 'some special or unusual feature to warrant departing from ordinary practice.'[7] However, the question in that case was whether the unsuccessful party should be required to pay the successful party's costs on an indemnity basis rather than on the standard basis.

14 In our opinion, Gruma's submissions must be rejected. Those submissions in effect invited the Court to adopt a policy that costs awarded in favour of a successful worker in a proceeding that arises out of a claim under the Act should be assessed on a party and party basis. Such a policy would run counter to s 24 of the Supreme Court Act 1986 and rr 63.02 and 63.31 of the Rules.

15 The provisions of the Act upon which Gruma relied apply only to the proceedings to which they relate and do not reflect an underlying statutory purpose that all proceedings arising out of a claim under the Act should be governed by the party and party basis of taxation. Ms Bakar's submission that the references to party and party costs in those provisions merely reflect the pre-1 April 2013 wording of rr 63.28 and 63.31 is incorrect insofar as it relates to s 50(2A) of the Act, as the cost provisions in that section have been re-enacted in s 278(3) of the Workplace Injury Rehabilitation and Compensation Act 2013 which took effect on 1 July 2014.

16 We were not assisted by the cases to which Gruma referred us. The costs decisions in those cases were made on the basis of their particular facts; they provide no guidance for this or any other proceeding.

17 The correct starting point is r 63.31 of the Rules, which provides that costs shall be taxed on the standard basis except where otherwise provided by the Rules or by any order of the Court. Although that rule and r 63.28(c) recognise that the Court has a discretion to order a taxation on a basis other than the standard basis, the Court would ordinarily not depart from that basis unless the circumstances of a particular case warrant this. The circumstances of the present case do not warrant a departure from the standard basis. There is nothing either in the nature of the appeal or the parties' conduct of the appeal that would justify depriving Ms Bakar of an order for costs on the usual basis set out in r 63.31.

18 We note that since 1 April 2013, the scale of costs set out in Appendix A to the Rules reflects the standard basis rather than the party and party basis. An order that costs be taxed on a party and party basis for legal work performed on or after 1 April 2013 may involve some practical difficulties because a scale that provides uptodate items for that work will not exist. As we have not heard any submissions on any such potential difficulties, we have not taken this matter into account in rejecting Gruma's submission that Ms Bakar's costs be taxed on a party and party basis.

19 Accordingly, Gruma must pay Ms Bakar's costs on the standard basis.

20 In passing, we observe that there is other legislation[8] which provides for payment of costs on a party and party basis rather than the standard basis. It might be useful for the government to consider whether that legislation should be amended to make it consistent with the usual basis for taxation of costs.

[1] Gruma Oceania Pty Ltd v Bakar [2014] VSCA 252.

[2] Under r 63.90 of the Rules the amendments to the bases of taxation apply only to legal work performed on or after 1 April 2013.

[3] Section 50(2A) has been re-enacted as s 278(3) of the Workplace Injury Rehabilitation and Compensation Act 2013 with effect from 1 July 2014.

[4] The substantive decision is North v Homolka [2014] VSC 478.

[5] The substantive decision is Maribyrnong City Council v Malios [2014] VSC 452.

[6] [2014] VSC 176 ('Southage').

[7] Southage [2014] VSC 176, [42] (citations omitted).

[8] See, eg, ss 5(1), 7(2), 8(2), 12(1) of the Appeal Costs Act 1998.