OXENBOULD, Michele Kaye (as trustee of the Trust No 1)

BURLEY, Victoria Rose (as trustee of the Trust No 2)

Professions and Trades - Lawyers - Fiduciary and guarantee funds - Claims against fund - Tasmania - Costs of claims - Special circumstances warranting non-payment - Costs of appeal - Whether order should be made in the interests of justice.

Legal Profession Act 2007 (Tas), ss381, 388(6).

Hunter Development Brokerage Pty Ltd v Cessnock City Council (No 2) [2006] NSWCA 292; (2006) 68 NSWLR 177, referred to.

Judgment Number: [2011] TASSC 63

MICHELE KAYE OXENBOULD (as trustee of THE TRUST NO 1)

VICTORIA ROSE BURLEY (as trustee of THE TRUST NO 2)

1 The appellants in these proceedings, having been substantially successful, wish to recover from the Solicitors' Trust their costs of and incidental to their appeals, and also their costs in relation to the claims, rejected by the Solicitors' Trust, that were the subject of the appeals.

2 I gave judgment in relation to the appeals on 3 November 2011: Oxenbould v The Solicitors' Trust [2011] TASSC 57. On that day Mr Wallace appeared for both successful appellants, and sought orders for costs in relation to both the appeals and the claims that preceded the appeals. Counsel for the respondent made no submissions as to the costs of the appeals. Without any hesitation, I made an order in respect of each appeal that the respondent pay the appellant's costs. At the request of counsel for the respondent, I adjourned the applications in relation to the costs of the claims. Subsequently, counsel considered the provisions of the Legal Profession Act 2007 ("the 2007 Act"), particularly s388(6), which relates to appeal costs, and s381, which relates to the costs of claims. Counsel have provided written submissions as to what orders I should make. Although I made costs orders orally on 3 November, no formal orders have been entered and filed as contemplated by the Supreme Court Rules 2000, Pt33. It is therefore possible for me to recall, ie set aside, my costs orders, if that course is appropriate, in accordance with the principles and cases discussed by Underwood J (as he then was) in Electrolytic Zinc Company of Australasia Ltd v Fisher (unreported 31/1989). The respondent contends that I should do that, and that I should not make orders enabling the appellants to recover their costs of the claims.

Effect of s388(6) in relation to costs of appeals

"(6) No order for costs is to be made on an appeal under this section unless the Supreme Court is satisfied that an order for costs should be made in the interests of justice."

4 As Basten JA, with whom Santow and Bryson JJA agreed, pointed out in Hunter Development Brokerage Pty Ltd v Cessnock City Council (No 2) [2006] NSWCA 292; (2006) 68 NSWLR 177, there are three different types of statutory powers to make orders for costs. In that case at pars[16] - [19] his Honour said the following:

"16 Statutory powers to award costs may be found in one of three forms. The first is an unconstrained conferral of power without direction or limitation. ... As was explained by Gaudron J and Gummow J in Oshlack [v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72], adapting the words of Dixon J in Water Conservation and Irrigation Commission (NSW) v Browning [1947] HCA 21; (1947) 74 CLR 492 at 505 the power is 'unconfined except in so far as "the subject matter and the scope and purpose" of the legislation may enable an appellate court to pronounce the reasons given by the primary judge to be "definitely extraneous to any objects the legislature could have had in view"': Oshlack (at 81 [22]).

17 As identified in Latoudis v Casey [(1990) 170 CLR 532], the primary and generally the only relevant consideration is that the power is conferred 'to compensate the successful party against the expense to which that party has been put by reason of the legal proceedings': Oshlack (at 82 [25]); see also Ruddock v Vadarlis (2001) 115 FCR 229 at 235 [12] (Black CJ and French J).

18 The second category of cases covers those which expressly identify the principle that the power to award costs is intended to permit the successful party to be compensated or indemnified for costs incurred in the litigation, by providing that 'the court is to order that the costs follow the event unless it appears to the court that some other order should be made': Uniform Civil Procedure Rules 2005, r 42.1.

19 The third category of cases encompasses those, like Pt 16, r 4(2) [of the Land and Environment Court Rules 1996 (NSW)], which provide as a general rule that there shall be no order as to costs, with a discretionary power to depart from that rule in particular circumstances, including where the Court considers that it is fair and reasonable."

5 The statutory power conferred by our s388(6) is one that falls within his Honour's third category. The subsection provides that, as a general rule, there is to be no order as to costs. It confers a discretionary power to depart from that rule in particular circumstances, namely when "the Supreme Court is satisfied that an order for costs should be made in the interests of justice".

6 Similar provisions that have been identified and discussed by various courts in earlier cases include the following:

•

The Family Law Act 1975 (Cth), s117, as originally enacted, whereby each party was to "bear his own costs", subject to a power to order costs if "the court is of opinion in a particular case that there are circumstances that justify it in doing so": Penfold v Penfold [1980] HCA 4; (1980) 144 CLR 311.

•

The Anti-Discrimination Act 1977 (NSW), s114, whereby each party to an inquiry before a tribunal was to "pay his own costs", subject to an exception whereby the tribunal had power to make an order for costs if it was "of the opinion in a particular case that there are circumstances that justify it doing so": Australian Postal Commission v Dao (No 2) (1986) 6 NSWLR 497.

•

The Land and Environment Court Rules 1996 (NSW), Pt16, r4(2), whereby no order was to be made "unless the Court considers that the making of a costs order is, in the circumstances of the particular case, fair and reasonable": Hunter Development Brokerage Pty Ltd v Cessnock City Council (No 2) (above).

•

The Victorian Civil and Administrative Appeal Tribunal Act 1998 (Vic), s109, under which "each party is to bear their [sic] own costs", subject to the tribunal having the power to make an order "only if satisfied that it is fair to do so" having regard to certain listed considerations: Vero Insurance Ltd v Gombac Group Pty Ltd [2007] VSC 117 (Gillard J).

•

The Anti-Discrimination Act 1998 (Tas), ss95 and 99A, whereby "each party to an inquiry is to pay his or her own costs", subject to a power of the relevant tribunal to order costs if it "considers circumstances justify the order": State of Tasmania v Anti-Discrimination Tribunal [2008] TASSC 23; (2008) 17 Tas R 227 (Evans J).

7 There is nothing in the 2007 Act that requires particular considerations to be taken into account or limits the considerations that may be taken into account. It was made clear in the High Court in Penfold v Penfold (above) that, in that situation, there is no principle that an order for costs may only be made in a "clear case". All relevant considerations may be taken into account.

8 Before the commencement of the 2007 Act, the Legal Profession Act 1993 ("the 1993 Act"), s115, allowed disappointed claimants to apply to this Court for the review of decisions made by the Solicitors' Trust. An unfettered discretion to make orders for costs in relation to such review proceedings was conferred by s115(4), which read as follows:

"A judge, in determining an application, may make such order for costs as the judge considers just."

9 That power to award costs fell within the first category discussed by Basten JA in Hunter Development Brokerage Pty Ltd v Cessnock City Council (No 2) (above). It was "an unconstrained conferral of power without direction or limitation". When the power to award costs is in that form, courts should ordinarily apply the general rule that "costs follow the event": Latoudis v Casey (1990) 170 CLR 532; Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72.

10 Counsel for the appellants submitted to me that, insofar as s388 of the 2007 Act makes it more difficult for a successful appellant to obtain an order for costs than under s115 of the 1993 Act, it must be modified so as to disregard that limitation. That submission was based on a transitional provision in the 2007 Act, namely Sch9, cl 38(3). That subclause provides as follows:

"... if a provision of the old Act [ie the 1993 Act] that corresponds to a provision of this Act would, but for its repeal, have applied in relation to any thing done or being done or in existence before the commencement of this Schedule, the provision of this Act applies (with the necessary modifications) in relation to the thing."

11 In my reasons for allowing these appeals (above, at par[39]), I concluded that the "necessary modifications" were those that were needed in order to give effect to the Acts Interpretation Act 1931, s16(1), which provides for the preservation of accrued rights and the continuation of legal proceedings. However the appellants did not have any accrued right relating to costs when the 2007 Act commenced. At the time of that commencement, the Solicitors' Trust had not made any determinations in relation to the appellants' claims and, consequently, no review proceedings had been commenced under s115. It was only after the repeal of the 1993 Act and the commencement of the 2007 Act that the relevant determinations were made, and the two appeals were subsequently instituted. There is therefore no merit in the submission that s388(6) should apply in some sort of modified way because of cl 38(3). I reject that submission.

The costs of the appeals and the interests of justice

12 The circumstances relied upon by counsel for the appellants as justifying an order for costs can be summarised as follows:

•

The appellants were successful in the litigation.

•

The appellants conducted themselves properly in pursuing their claims and prosecuting their appeals.

•

Public policy considerations warrant costs orders being made in favour of individuals more readily than in favour of statutory authorities.

•

This has been the first case in which this Court has been asked to determine difficult questions of law concerning the repeal of the 1993 Act and the effect of the relevant transitional provisions.

•

The relevant legislative provisions constitute beneficial legislation.

13 I can reject the submission as to the beneficial nature of the legislation immediately. It is true that the compensation provisions of the relevant Acts amount to beneficial legislation. However that fact is significant only for the purposes of ascertaining the meaning of the legislation. Section 388(6) makes it quite clear that, despite the legislation being beneficial in nature, the usual rule as to costs following the event is not to be applied.

14 Counsel for the Solicitors' Trust identified the following as factors said to weigh against the making of orders for costs:

•

This case concerns losses resulting from imprudent investments, not thefts or similar acts of dishonesty.

•

The difficult questions of law resulting from the repeal of the 1993 Act and the transitional provisions in the 2007 Act confronted the Solicitors' Trust, just as they confronted the appellants.

•

The Solicitors' Trust acted properly in determining the claims and resisting the appeals.

•

It is in the public interest that the Guarantee Fund be conserved for the benefit of future claimants.

15 If s388(6) had not been enacted, the Court would have had an unfettered discretion to make orders as to costs in relation to these appeals under the Supreme Court Civil Procedure Act 1932, s12, and the Supreme Court Rules, r57(1). If that had been the position, costs would ordinarily have followed the event. It seems highly likely that Parliament chose a less generous costs regime in order to protect the Guarantee Fund, to a degree, from depletion. It may be that the current state of the Guarantee Fund and the size of pending and anticipated claims would be matters relevant to the exercise of the discretion conferred by s388(6), but I was not provided with any evidence as to such matters. I accept that it is relevant that the prima facie rule requiring no order for costs to be made on a s388 appeal has the effect of preserving the Guarantee Fund against depletion.

16 There is nothing unusual in appellants being victorious in appeal proceedings, nor in them conducting their litigation reasonably and properly. Some appeals involve questions of law. Other appeals involve questions of fact. Some appeals involve questions of both fact and law. The facts in this case were complex, but substantially uncontroversial. The questions of law were difficult and new, but they involved the not uncommon task of having to apply established rules of statutory interpretation to new legislation. There has been no suggestion that the appellants' costs have been out of proportion to the size of the claims. Having regard to all the relevant circumstances, and particularly to those I have just discussed, I do not think that it was in the interests of justice to make an order for costs in relation to either of these appeals. I should not have made the orders for costs.

17 I overlooked the existence of s388(6) when I gave judgment on 3 November. It seems clear that counsel for the respondent did the same. It is quite clear that, until a formal order has been entered and filed, a judge has the power, to be exercised sparingly and only in appropriate cases, to recall or vary that order: In re Australian Direct Steam Navigation; Miller's Case (1876) 3 Ch D 661 at 667; Re St Nazaire Co (1879) 12 Ch D 88 at 91; In re Suffield and Watts; ex parte Brown (1888) 20 QBD 693; In re Harrison's Share Under a Settlement [1955] Ch 260 at 276; Driver v Driver [1950] SASR 8; Carroll v Price [1960] VicRp 101; [1960] VR 651; R v Billington [1980] VicRp 58; [1980] VR 625 at 628; Electrolytic Zinc Company of Australasia Ltd v Fisher (above). In my view this is an appropriate case for the power to recall an order to be exercised. Counsel for the appellants did not suggest that I should take any other course if I concluded that the costs orders should not have been made. I have therefore decided to set them aside.

Costs of claims lodged with the Solicitors' Trust

18 The appellants are seeking to recover the costs of the work done by their solicitors in relation to the making and prosecution of the claims that led to the determinations to which these appeals related. Those costs are not costs of or incidental to the appeals. They are not costs of any other litigation in this Court. Under the 1993 Act, s112(3), the Court was given a discretion to give directions requiring the payment of such costs. Under the 2007 Act, such costs are the subject of s381, which provides as follows:

"(1) If the Trust wholly or partly allows a claim, the Trust must order payment of the claimant's reasonable legal costs involved in making and proving the claim, unless the Trust considers that special circumstances exist warranting a reduction in the amount of costs or warranting a determination that no amount should be paid for costs.

(2) If the Trust wholly disallows a claim, the Trust may order payment of the whole or part of the claimant's reasonable legal costs involved in making and attempting to prove the claim, where the Trust considers it is appropriate to make the order.

(3) The costs are payable from the Guarantee Fund."

That section now applies in respect of the appellants' claims by virtue of the 2007 Act, Sch9, cls 23(2) and 38(3).

19 When I decided on 3 November to allow the appeals, I decided also to remit the relevant matters, ie the appellants' claims, to the Solicitors' Trust for reconsideration in accordance with directions under the 2007 Act, s388(5)(b)(iii). My directions included nothing as to the costs of the claims since no submissions had been made to me in relation to such costs. The only power that I have in relation to such costs is the power to give a further direction under s388(5)(b)(iii) as to the payment of such costs or part thereof.

20 Ordinarily any question as to the payment of such costs would be a matter to be determined by the Solicitors' Trust. However the Trust has made it extremely clear that, in its view, there are special circumstances warranting a determination that nothing should be paid to the appellants by way of such costs. It argues that none of the other investor clients of Piggott Wood & Baker who made claims under the 1993 Act were awarded costs, and that that state of affairs amounts to special circumstances warranting such a determination. Given that the Solicitors' Trust has obviously made up its mind in relation to the question, it is appropriate that I decide on the merits whether such a determination is warranted.

21 Counsel for the appellants submitted that the relevant circumstances are not special circumstances that warrant a determination that no such costs should be paid. He relied on the following circumstances:

•

The costs of making a claim are different in nature from the losses suffered by investors as a result of not receiving interest payments. That is because the costs of making the claim will vary according to the complexity of the claimant's dealings with the Solicitors' Trust.

•

The work done for the appellants in relation to their claims was complex, involving much correspondence over a long time.

•

The appellants and their lawyers acted reasonably in prosecuting the claims.

•

Attempts to accelerate the process were resisted vigorously by the Solicitors' Trust.

•

The other claimants affected by the collapse of the mortgage practice of Piggott Wood & Baker are unlikely to have incurred such significant costs. The fact that their claims were finalised much earlier suggests that.

•

In comparison to the other claimants, there has been a substantial delay in the determination of the appellants' claims and the consequent return of the capital sums claimed. (I infer that this is arguably significant because of the interest income that could have been generated if the sums in question had been paid to the appellants earlier.)

22 The words "special circumstances" have been used in a great many statutes, and there are so many reported cases as to their meaning that it would be impractical to try to list or summarise them. That task has been undertaken by many judges. I am content to rely on the judgment of Hamilton J in Expile Pty Ltd v Jabb's Excavations Pty Ltd [2002] NSWSC 851; (2002) 194 ALR 138. Special circumstances are distinguished or different from what is ordinary, usual or common.

23 Dozens of claimants made claims following the collapse of the mortgage practice of Piggott Wood & Baker. All of those claimants other than these two appellants had their claims finalised under the 1993 Act. No orders as to their costs were ever made under that Act. Those facts alone take the appellants outside the ordinary, usual or common run of cases under the 2007 Act. The critical question is whether, having regard to all the circumstances to which my attention has been directed, those special circumstances warrant a determination that no amount should be paid by the Solicitors' Trust to the appellants in respect of the costs of their claims. I accept that their claims have been unusually slow and complex; that they have been subjected to greater scrutiny than most; and that significant legal costs have been incurred as a result. However I have no reason to think that the costs incurred are out of proportion to the size of the claims. Having regard to all the relevant circumstances, particularly the fact that the other claimants recovered no such costs, I think there are special circumstances that warrant a determination under s381 that no amount should be paid to the appellants for their costs. It remains possible that costs orders could be made in favour of the other claimants. If that were to occur, the special circumstances would cease to exist.

24 Although I have concluded that special circumstances within the scope of s381 exist, I see no need to give the Solicitors' Trust a further direction as to that point under s388(5)(b)(iii).

25 For these reasons, the orders for costs that I made on 3 November 2011 are set aside, but I make no order relating to the costs involved in making and proving the appellants' claims prior to the making of the respondent's determinations of 7 April 2009.