Victorian Civil and Administrative Tribunal|2008-10-07

Naylor v Oakley Thompson & Co Pty Ltd & Ors (Legal Practice) [2008] VCAT 2074 (7 October 2008)

CIVIL DIVISION - LEGAL PRACTICE LIST VCAT REF: J199/2006

Victorian Civil and Administrative Tribunal Act 1998 - jurisdiction to award costs in unsuccessful dismissal/strike out applications - s 75(2) does not deal with such a circumstance - approach does not apply - power available - costs awarded.

Naylor v Oakley Thompson & Co Pty Ltd & Ors (Legal Practice) [2008] VCAT 2074

The Respondents are ordered to pay the Applicant's costs in respect of the s 75 applications dismissed by the Tribunal on 18 August 2008, to be taxed on County Court Scale 'D' in default of agreement.
The following certificates are granted to Counsel for the Applicant:
- 2.1 Appearance at the Directions Hearing on 31 March 2008, Total: $750.00.
- 2.2 Preparation including drafting and settling written submission: 3 days at $2000 per day, Total: $6000.00.
- 2.3 Appearance on 23 April 2008, Total: $2000.00.
- 2.4 Drafting and settling additional supplementary submissions: 1 day at $2000 per day, Total: $2000.00.
Liberty to apply.

Mr Richard Antill of Counsel, instructed by Kliger Partners.

Mr Naylor has instituted proceedings against his former solicitors (Oakley Thompson & Co. or OTC) and barristers (Messrs Phillips and Southall) regarding their provision of legal services in two Supreme Court proceedings in 2001 and 2002 (the substantive VCAT proceedings).
Mr Naylor's claims in the substantive VCAT proceeding allege negligence, breach of contract and breaches of the Fair Trading Act 1999.
Earlier this year the Respondents made two applications under s 75 of the Victorian Civil and Administrative Tribunal Act 1998 (the VCAT Act). The application by OTC sought an order that paragraphs 77 to 79 and 86 to 88 of the Applicant's Amended Points of Claim be dismissed. The application by Messrs Phillips and Southall sought an order that the proceedings brought against them be dismissed.
Both s 75 applications were grounded on the proposition that the claims sought to be dismissed relate to matters involving decisions made and work done (by OTC, Phillips and Southall) which were intimately connected with the conduct of the Supreme Court proceedings such that OTC and Messrs Phillips and Southall were immune from suit on the basis of advocates' immunity.
In relation to the Fair Trading Act 1999 claim it was submitted that none of the conduct alleged against Messrs Phillips and Southall constituted conduct 'in trade or commerce'.
On 18 August 2008 I dismissed both s 75 applications because I was not persuaded that the challenged claims were manifestly unsustainable in law or bound to fail.
The matter presently before me is an application by Mr Naylor for his costs in respect of the two s 75 applications.
Mr Antill, counsel for the Applicant, submitted that ss 103(4) and 162 of the Legal Practice Act 1996 (the 1996 Act) applied to the present application and accordingly costs were at the discretion of the Tribunal and they should simply follow the event. In the alternative it was submitted that if the application was to be determined in accordance with s 109 of the VCAT Act then, the exceptions in s 109(3)(b), (c), (d) and (e) applied.
In reply Mr O'Bryan, on behalf of Messrs Phillips and Southall, submitted, in essence, that s 75(2) codifies the Tribunal's powers to order costs in respect of s 75 applications and as it is a specific provision it prevails over the general costs power in s 109. In short, the power in s 109 to award costs did not apply to s 75 proceedings. In the event that I rejected Mr O'Bryan's primary submission and decided that s 109 did apply, then he accepted that it was clearly a complex matter but contended that the s 75 application had a real prospect of success. In this context Mr O'Bryan pointed to the fact that in Giannarelli[1] advocate immunity successfully provided the basis for a strike out application.
Ms Dew, on behalf of OTC, adopted Mr O'Bryan's submissions and advanced two additional points:
- OTC had not advanced any submissions in respect of the Fair Trading Act in the s 75 proceeding and hence the Applicant's contentions in respect of s 109 (3)(b) do not apply to OTC; and
- OTC's strike out application was not directed to the application to cancel the costs agreement. OTC was simply seeking to strike out the Applicant's negligence claim, and in particular paragraphs 77 to 79 and 86 to 88 of the Applicant's Amended Points of Claim.
I propose to deal with the jurisdictional issues first.
I am not persuaded that ss 103(4) and 162 of the 1996 Act apply in the circumstances of this case. The application in the substantive VCAT proceeding is not simply an application to cancel a costs agreement pursuant to s 103 of the 1996 Act. It is primarily a negligence case and also includes claims pursuant to the Fair Trading Act 1999.
I now turn to deal with Mr O'Bryan's contention that s 109 does not apply in the present matter.
The relevant parts of s 75 of the VCAT Act state:

75. Summary dismissal of unjustified proceedings

(1) At any time, the Tribunal may make an order summarily dismissing or striking out all, or any part, of a proceeding that, in its opinion -

(a) is frivolous, vexatious, misconceived or lacking in substance; or

(2) If the Tribunal makes an order under sub-section (1), it may order the applicant to pay any other party an amount to compensate that party for any costs, expenses, loss, inconvenience and embarrassment resulting from the proceeding.

Mr O'Bryan's argument invokes the application of a rule of statutory construction reflected in the maxim generalia specialibus non derogant. The Privy Council stated the rule in Barker v Edger, in these terms:

"The general maxim is 'Generalia specialibus non derogant'. When the legislature has given its attention to a separate subject, and made provision for it, the presumption is that a subsequent general enactment is not intended to interfere with the special provision unless it manifests that intention very clearly. Each enactment must be construed in that respect according to its own subject matter and its own terms."[2]

The principle that provisions of general application give way to specific provisions when in conflict usually arises in the context of repealing acts, however it also applies to the resolution of internal conflicts between sections within an Act[3].
But the generalia specialibus approach can only be called in aid 'where there are two inconsistent provisions which cannot be reconciled as a matter of ordinary interpretation'[4]. His Honour Kirby P expressed this limitation in the following way:

"Respectful of the law made by Parliament, courts will not readily assume that words of apparent general application are to be narrowly confined ... It is for the party seeking to confine such words to show that this is necessary to avoid an irreconcilable inconsistency or repugnancy between the statutory duties said to be in conflict."[5]

It is contended that s 75(2) is a specific provision dealing with costs in the context of a s 75 application and that the general power to award costs in s 109 cannot derogate from a specific provision.
To succeed in invoking the generalia specialibus approach the Respondents must show irreconcilable inconsistency between ss 75(2) and 109.
To determine whether such inconsistency exists it is necessary to look at the scope and purpose of the two provisions.
Four points may be made about the power in s 75(2):
- (i) The power can only be exercised in circumstances where the Tribunal has made an order summarily dismissing or striking out all or any part of a proceeding.
- (ii) The provision confers a discretion, in wide terms.
- (iii) An order pursuant to s 75(2) can only be made in favour of a party other than the applicant to the proceeding which has been dismissed or struck out.
- (iv) A s 75(2) order provides that the applicant must pay another party 'an amount to compensate that party for any costs, expenses, loss, inconvenience and embarrassment resulting from the proceeding'. It is apparent that the purpose of such an order is to provide compensation and that such compensation is referable to the party's 'costs, expenses, loss ...' etc.
Relevantly s 75(2) makes no provision for the payment of amount to compensate the applicant to the substantive proceeding in circumstances where a dismissal or strike out application was unsuccessful.
Subsection 75(2) and s 109 may be said to conflict in circumstances where a dismissal or strike out application is successful. In such circumstances the scope of a s 75(2) order for compensation is broader than an order for costs under s 109.
But I am not persuaded that the provisions conflict where a strike out application is unsuccessful; s 75(2) simply does not deal with such a circumstance.
The Respondents contend, in effect, that s 75(2) provides a code as to the circumstances in which costs may be ordered in respect of a s 75 application. As s 75(2) makes no provision for an order against an unsuccessful applicant for a strike out order it is said that there is no power to make such an order under s 109.
In reply Mr Antill pointed to the undesirable consequence that would flow from such an interpretation and submitted that the scope of s 75(2) is explicable on the basis that it is intended to cover the situation where a proceeding is dismissed or struck out because the Tribunal lacks jurisdiction. In such circumstances the Tribunal would have no power to award costs under s 109 absent a specific provision such as that in s 75(2).
I agree with Mr Antill's submissions. A similar situation arises where a party is given leave to withdraw a proceeding pursuant to s 74 of the VCAT Act. Subsection 75(2)(b) makes specific provision for making a costs order in circumstances where an application or referral is withdrawn, in these terms:

"(2) If an applicant withdraws an application or referral -

... (b) the Tribunal may make an order that the applicant pay all, or any part of, the costs of the other parties to the proceeding; ..."

Such a provision is necessary because after an application has been withdrawn the Tribunal would have no jurisdiction to order costs under s 109. As Batt JA observed in Transport Accident Commission v Coyle:

"... it seems to me that s 74(2)(b), rather than dealing with the content of a costs order, it is an empowering provision, authorising the Tribunal to award costs against an applicant after an application has been withdrawn, an order the authority for which might otherwise have been in doubt."[6]

In my view ss 75(2) and s 109 can be read together and when so read they disclose a coherent and sensible scheme. Subsection 75(2) makes specific provision for an award of compensation in circumstances where a dismissal or strike out application is successful because absent such a provision the power to award costs would be in doubt. The scope of an award of compensation is broader than the costs which may be ordered under s 109 in order to discourage unmeritorious claims.
But there is no warrant to interpret s 75(2) as impliedly limiting the operation of s 109 in circumstances where a strike out application is unsuccessful. A provision of general application, such as s 109, will not be readily read down[7].
If Parliament had intended to remove the power to award costs against an unsuccessful applicant in a strike out application it would have done so expressly and not, as the Respondents contend, by implication. This is evident from the express exclusion of s 109 in certain circumstances. For example, clause 46 of Schedule 1 of the VCAT Act provides:

Nothing in section 109 applies to a proceeding under the Land Acquisition and Compensation Act 1986."

There are a number of similar provisions in Schedule 1 which expressly exclude the operation of s 109:
- - clause 28GG: in respect of small claims under the Fair Trading Act 1999;
- - clause 46D(4): in respect of proceedings under Divisions 4 or 5 of Part 4.4 of the Legal Profession Act 2004;
- - clause 51: in respect of a proceeding under the Mineral Resources Development Act 1990;
- - clause 91: in respect of a proceeding under a taxing act;
- - clause 92: in respect of a proceeding under the Transport Accident Act 1987; and
- - clause 99: in respect of a proceeding under the Valuation of Land Act 1960.
It is also appropriate to consider the consequences of the construing s 75(2) in the manner contended for by the Respondents. If the construction advocated were adopted it would be open to respondents to a VCAT proceeding to bring any number of s 75 applications at no risk of exposing themselves to a costs order. It seems unlikely that Parliament would have intended that unmeritorious strike out applications would be immune from any power to award costs.
For completeness I note that I have also considered whether the maxim _expressum facit cessar_e applies in the circumstances of this matter. The essence of the maxim is expressed by Dixon J in these terms:

"... the proposition that an enactment in affirmative words appointing a course to be followed usually may be understood as importing a negative, namely, that the same subject matter is not to be done according to some other course."[8]

But in my view the maxim does not apply in this case. Section 75(2) does not appoint a course to be followed in circumstances where a dismissal or strike out application is unsuccessful. It is silent on the matter.
For the reasons given I am satisfied that s 109 of the VCAT Act provides a jurisdictional basis for the costs order sought in these proceedings.
The general rule in the Tribunal, as reflected in s 109(1), is that each party bears their own costs.
Section 109(2) provides that the Tribunal may order a party to pay the costs of another party in a proceeding if satisfied that it is 'fair to do so' having regard to the matters set out in s 109(3).
Mr Antill contends that four particular matters in s 109(3) are relevant in the circumstances of this case:
- the Respondents have been responsible for prolonging unreasonably the time taken to complete the proceeding (s109(3)(b));
- the relative strengths of the claims made by each of the parties (s 109(3)(c);
- the complexity of the proceeding (s 109(3)(d)); and
- other relevant matters (s 109(3)(e))
I am persuaded to grant an order for costs in favour of the applicant. I am satisfied that it is fair to do so having regard to:
- the complexity of the proceeding;
- the relative strength of the respondents' applications; and
- the fact that the application was conducted in an adversarial fashion.
The complexity of the issues advanced in the s 75 application is evident from my decision of 18 August 2008. In the circumstances the decision by the parties to retain very competent counsel to represent their interests was perfectly understandable.
As to the relative strength of the positions put, the Respondents chose to bring the applications in the knowledge of the substantial hurdle they needed to overcome in order to succeed. The principles relevant to an application to dismiss or strike out a proceeding pursuant to s 75 are set out in my decision of 18 August 2008 and may be shortly stated:
- The power should be exercised with great care and only if it is clear that there is no real question to be tried[9] or, to put it another way, where the Tribunal is satisfied that the proceeding is undoubtedly hopeless, obviously unsustainable in fact or in law or be bound to fail.[10]
- It is an interlocutory application and the Tribunal is obliged to proceed on the assumption that the Applicant will be able to prove each fact alleged in the claim.
- A proceeding should not be dismissed or struck out under s 75 if the ultimate fate of the proceeding depends upon contested questions of fact.
I am unable to agree with Mr O'Bryan's submission that the Respondents' applications had a reasonable prospect of success. It must be remembered that the submissions in respect of advocate immunity were put in the context of a strike out application. To succeed the Tribunal had to be persuaded that the Applicant's proceeding was obviously unsustainable in law.
There was a conflict of authority as to whether or not the immunity applied where the controversy had been resolved without a judicial determination of the case on its merits. To succeed the Respondents were asking the Tribunal to decide that the recent decision of Lasry J in Frances v Bunnett[11] was plainly wrong. In such circumstances, in the context of a strike out application, the Respondents' applications could best be described as optimistic, but unlikely to succeed.
The relative strength of the submissions made in the strike out proceeding favours an order for costs.
In terms of the appropriate scale Mr Antill submits that it would be appropriate to award costs on the Supreme Court Scale, but he acknowledges that the Tribunal usually awards costs on the County Court Scale.
I propose to award costs to the applicant, to be taxed on County Court Scale D in default of agreement.
The certificates sought by Counsel for the Applicant were not opposed by the Respondents and I propose to grant the certificates in the form sought.

[1] Giannarelli v Wraith (1988) 165 CLR 543

[3] Perpetual Executors and Trustees Association of Australia Ltd v FCT [1948] HCA 24; (1948) 77 CLR 1 at 29; White v Mason [1958] VicRp 16; [1958] VR 79

[4] Purcell v Electricity Commission of New South Wales [1975] HCA 38; (1975) 133 CLR 45 at 53; Fonteio v Morando Bros. Pty Ltd [1971] VicRp 81; [1971] VR 658 at 663

[5] Royal Automobile Club of Australia Incorporating Imperial Service Club v Sydney City Council (1992) 27 NSWLR 282 at 293.

[7] Fullager J in Butler v Attorney General for the State of Victoria [1961] HCA 32; (1961) 106 CLR 268 at 276

[8] R v Wallis; Ex parte Employers Association of Wool Selling Brokers [1949] HCA 30; (1949) 78 CLR 529 at 550; Anthony Horden and Sones Ltd v The Amalgamated Clothing and Allied Trades Union of Australia [1932] HCA 9; (1932) 47 CLR 1

[9] Fancourt v Mercantile Credits Pty Ltd [1983] HCA 25; (1983) 154 CLR 87 at 99; Lay v Alliswell Pty Ltd [2001] VSC 385 at [14]

[10] State Electricity Commission of Victoria v Rabel [1998] IVR 102; Forrester v Aims Corporation [204] VSC 506 (8 December 2004)

Civil and Administrative Tribunal Act 1998

Acquisition and Compensation Act 1986

Fair Trading Act 1999

Resources Development Act 1990

Transport Accident Act 1987

Naylor v Oakley Thompson & Co Pty Ltd & Ors

At a glance

Court

Decision date

Source

Judgment (35 paragraphs)

Naylor v Oakley Thompson & Co Pty Ltd & Ors (Legal Practice) [2008] VCAT 2074 (7 October 2008)

Parties

Legislation Cited (9)

Cases Cited (9)