Plaintiff v Defendant

Supreme Court of Victoria|2014-04-28|Before: WILLIAMS J

COSTS - Application for leave to appeal out of time - Order of Costs Court - Non-appearance by plaintiff.

1 The plaintiff, Ms Owens, seeks leave to appeal under s 17A(2)(b) of the Supreme Court Act 1986 against an 18 December 2013 order of the Costs Court made in relation to a taxation proceeding commenced by her summons for taxation on 18 June 2013. In the Costs Court, Wood AsJ ordered that she pay the costs of the defendant ('OT'), her former solicitors, fixed in a sum of $16,000 and calculated on an indemnity basis. OT had acted for Ms Owens from in or about March 2011 to on or about 17 May 2013 in relation to her claims in the County Court against her former trustee in bankruptcy, former barristers and a former solicitor.

2 I accept the evidence of Jeremy Scott Broadbent, the solicitor employed by OT with the general conduct of Ms Owens' litigation, that he viewed her claims were as 'substantive and complex' and involving the assessment of a great number of documents. There had been a six-day trial in the County Court and judgment had been handed down on 1 February 2013. Ms Owens largely failed to establish her case.[1] OT acted for Ms Owens in commencing an appeal against the judgment. The firm ceased to act with leave of the Court of Appeal in the context of Ms Owens' alleged breach of funding commitments made to it.

3 OT claims to be owed approximately $150,000 which includes transcript costs incurred on Ms Owens' behalf. Accounts for legal services were rendered to Ms Owens approximately every one to three months. She did not voice any concerns about the accounts during the period of the OT retainer.

4 Ms Owens is a former solicitor, admitted to practise in about 1971. She became a sole practitioner in about 1981. In 2005, she was made bankrupt and her bankruptcy was annulled in 2010. Mr Broadbent is of the belief that her practising certificate was revoked during her bankruptcy or shortly thereafter, and is unaware as to whether she was re-admitted to practise.

5 Ms Owens issued her summons for taxation in this proceeding on 18 June 2013, after OT had demanded payment of outstanding legal fees and disbursements.

6 On 3 July 2013, OT served an offer of compromise in the taxation proceeding. The firm then sought the sum of $209,084.19 and it offered to accept $196,650 in full and final satisfaction of the amount claimed. The offer of compromise acknowledged part payment of the costs by Ms Owens.

7 The order of the Costs Court of $221,178.79 exceeds the amount OT agreed to accept under the offer of compromise.

8 In the lead up to the taxation proceeding, Ms Owens had failed to comply with various orders, including that she provide a notice of her objections to the amounts sought by OT. She only subsequently appointed a costs consultant, Mr Ray De La Rue.

9 Shortly after his appointment , Mr De La Rue sought to contest the disclosure OT made to Ms Owens under Division 3 of Part 3.4 of the Legal Profession Act 200.,. To fully address the issue raised, Mr Broadbent was required to spend considerable effort and time reviewing all communications to Ms Owens during the course of OT's retainer. Extensive affidavit material was prepared and filed.[2] 28 November 2013 was allocated as the date for hearing of the preliminary issue in relation to the extent of disclosure. It was only on the preceding day, 27 November 2013, that Ms Owens conceded that OT's disclosure to her had been appropriate and that she effectively abandoned that part of her claim.

10 On 11 December 2013, Mr De La Rue telephoned Mr Broadbent and said that Ms Owens wanted to settle the matter. He also served upon Mr Broadbent notice that he was ceasing to act for her.

11 On 16 December 2013, Mr Broadbent emailed Ms Owens, offering to settle the taxation proceeding on the basis that she agreed to the amount of costs and disbursements being taxed and to payment of OT's costs of the taxation fixed in the sum of $9,000. The email went on to say this:

In the event that no settlement agreement can be reached we will be proceeding with the taxation hearing on 18 & 19 December 2013. If the taxation were to run for the whole 2 days I estimate that, including our costs to date, our total costs would approximate $18,000 - $20,000. All such costs would be claimed against you as part of the taxation.

The email also noted that Ms Owens' objections to the bill of costs due on 13 December 2013 had not been provided.

12 In response to the email, Ms Owens replied that she was prepared to agree to payment of OT's costs and the costs of taxation but not to the sum of $9,000. She required a detailed account of that amount before agreeing.

13 Mr Broadbent responded on 17 December at 12.50pm, confirming the agreement to settle the taxation on the basis of all OT's accounts and all disbursements being taxed in full. He attached a matter-time report, detailing OT's costs of the taxation. The attached account applied the rate of $350 an hour (fixed under the costs agreement in relation to the prosecution of the County Court proceeding) and sought a total amount of $15,050.

14 At 4.36pm that day, Mr Broadbent again emailed Ms Owens, referring to the offer of compromise and the offer to settle on the basis that OT's costs were fixed in the amount of $9,000, provided agreement was reached by 5.30pm. The email went on to say:

Otherwise we shall attend tomorrow and, provided you consent to the assessment in full of our costs and disbursements, shall then argue for a full costs recovery. Alternatively, if no agreement is reached at all, we shall proceed with the taxation hearing. And I expect we shall incur, and seek costs of, a further 2 - 3 hours works preparing for the taxation hearing.

15 At 6.38pm, Mr Broadbent emailed Ms Owens once more to say that he had not received a response to either of his emails of that day. He told her that he would proceed on the basis that there was no settlement and that the taxation hearing would be held on the following day. He noted that he expected to do at least two hours preparation during the following morning and that this could be avoided if OT's offer to settle on the basis of $9,000 for its costs were accepted.

17 On the following day, Wood AsJ ordered that Ms Owens pay $207,450.37, being the total of the billed amounts, together with the disbursements of $13,728.42. The Court went on to order that Ms Owens pay OT's costs on an indemnity basis, fixed in the sum of $16,000.

18 Ms Owens submits that she should be granted to leave to appeal because:

(1) her delay in seeking leave was explicable in terms of her mental ill health and inability to cope with the proceeding;

(2) Wood AsJ erred in awarding indemnity costs against her in the circumstances;

(3) Wood AsJ erred in failing to apply the Supreme Court scale of costs when calculating the amount of in the indemnity costs; and

(4) Wood AsJ erred by awarding costs without analysing the bill in sufficient detail.

19 OT resists any grant of leave, relying upon the expertise of the Costs Court and, in particular, Wood AsJ, in terms of the assessment of costs in relation to the preparation of a taxation and submitting that Ms Owens has failed to establish the allowance of any unreasonable costs . OT refers to and relies upon Wood AsJ's statement in 'Other Matters' of the reasons for the orders.

20 In Spotless Group Ltd v Premier Building & Consulting Pty Ltd,[3] Redlich JA (with whom Dodds-Streeton JA agreed) said this of an application for leave to appeal from a costs judgment:

It is well established that an appellate court will not, in the absence of strong reasons, interfere with the exercise of discretion by the Court below with respect to the question of costs. As Callaway JA said in Hanlon v Brookes:

It is almost invariably the case that the judge at first instance is better placed to deal with the costs after a long trial and counsel seeking leave ordinarily has a difficult task. The test is not whether we should have exercised the discretion in the same way as his Honour did but whether there was or were a ground or grounds on which he could reasonably do so.

This Court may disturb the costs orders made below where an error in principle is identified, where the judge acted on a manifestly erroneous view of the facts, or where the award is manifestly unreasonable. But the applicant must satisfy a high threshold for the grant of such leave. The test to be applied is not whether the Court of Appeal would have made the same order but whether there is a ground upon which the order by his Honour could reasonably be made. Some manifest error must be exposed to take the case out of the ordinary situation in which, wherever a discretion is to be exercised, minds may differ on the result. Ormiston JA recognised this high threshold in Transport Accident Commissioner v O'Reilly observing that:

It is extraordinarily difficult to show that a court of first instance or a tribunal with wide discretionary powers has erred in the exercise of its powers to award costs, if there be some basis for making an order other than the conventional order in favour of the successful party. (Footnotes omitted)[4]

In 'Other Matters', Wood AsJ noted that the Court had directed OT to file and serve a numbered matter-time bill of costs, which had been filed on 25 November 2013. On 17 December 2013, Ms Owens had indicated that she was prepared to resolve the taxation on the basis that all bills and disbursements in relation to the substantive proceeding in the County Court be agreed and taxed in full. Ms Owens had failed to appear before him on 18 December 2013 but that counsel who had previously represented her had appeared as a courtesy to the Court. Counsel had confirmed that his instructors had ceased to act from 16 December 2013 and that Ms Owens had been on notice about this aspect and, significantly, about the hearing date of 18 December 2013.

5. The Respondent produced various e-mails dated 16 and 17 December passing between the Applicant and the Respondent. The Court is satisfied that the correspondence discloses that the Applicant was aware of the hearing, that there was no longer a dispute in relation to the Respondent's costs being the subject matter of the proceedings and that the Applicant agreed to pay the Respondent's costs as billed in full, with the exception of any costs in relation to a mortgage or the enforcement of the same.

6. There being no agreement about the costs of the proceeding, the Respondent put the Applicant on notice of their intention to seek the costs of the proceeding on a full recovery basis.

7. The Court is satisfied that there is an overwhelming justification for the Applicant to pay the Respondent's costs of the proceedings on an indemnity basis. There is also justification for these costs to be fixed rather than taxed which would involve further cost and delay. The relevant reasons are as follows:

8. The Applicant acted unreasonably in not accepting an Offer of Compromise made on 3 July 2013.

9. The Applicant appeared in person on 16 July 2013 when an order was made for her to file and serve a Notice of Objection by 1 October 2013. The Applicant failed to comply with this order and no explanation was put on her behalf when the matter was before the Court on 14 November 2013. Hearing dates for the final hearing of 28 and 29 November 2013 were vacated and the 28 November 2013 fixed as the hearing date for a preliminary argument.

10. The Applicant failed to comply with an order made on 28 November 2013 for the filing and serving of a Notice of Objection by 13 December 2013. There was no appearance by the Applicant on 18 December 2013 so no explanation was offered.

11. Failure to comply with two orders without explanation is in breach of the Civil Procedure Act 2010.

12. The Applicant appeared in person on 16 July 2013 and did not raise any issue in relation to the Costs Agreement between the parties or the Respondent's compliance with their disclosure obligations under the Legal Profession Act 2004.

13. On 14 November 2013, counsel for the Applicant identified these issues for dispute and determination at a preliminary hearing. The Respondent was ordered to provide affidavit material in relation to these matters and the resulting affidavit established that all these documents had previously been provided to the Applicant at the relevant times in compliance with the Act.

14. The order provided the Applicant with an opportunity to produce affidavit material in response but no affidavit in response was prepared. It was conceded on her behalf on 28 November 2013 that these was no dispute in relation to these matters. There was clearly not a proper basis to dispute these matters in breach of the Civil Procedure Act 2010.

15. The total capitulation communicated by the Applicant in the e-mail of 17 December 2013 in relation to the review and quantum of the bills of costs being the subject matter of the proceedings also suggests there were no legitimate reasons for initiating the proceedings in the first place.

16. The Respondent is entitled to indemnity costs for the entire proceedings ... In view of the history of the matter it is appropriate to fix the costs.

22 Ms Owens' argument that the indemnity costs are above those which might have been awarded applying the Supreme Court scale has no force. If an order for indemnity costs is considered warranted, as it was in this case, r 63.30.1(1) provides that on an indemnity basis all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred.

23 Ms Owens relies upon a list of objections annexed to her affidavit in the appeal. She argues variously that the amount of time taken to do the work listed on particular dates is excessive or that the work was unnecessary. She had been provided with the bill in the form ordered by the Costs Court on 17 December 2013. She did not raise any such objection to any amount in the bill then or at the hearing. She now maintains that Wood AsJ did not give the matter the detailed analysis it required in terms of examination of the file to determine the reasonableness of each and every item listed in that bill.

24 I am not persuaded by Ms Owens' arguments. The order for indemnity costs fixed in the sum of $16,000 was reasonably open to the Costs Court in all the circumstances. In my view, there are ample grounds for each of the orders made in the reasons recorded in 'Other Matters'.

25 Ms Owens did not attend the hearing and does not give any evidence in support of her allegation that Wood AsJ did not give the matter the proper attention it deserved. As Mr Broadbent points out, Wood AsJ has the expertise and experience to examine bills such as that presented in relation to the claimed costs of in excess of $17,000 and there is no evidence to suggest that he did not form the view that $16,000 was a more appropriate amount after having properly considered the matter.

26 Ms Owens has failed to establish error on the part of Wood AsJ. There is no basis for her claims that his Honour erred in awarding indemnity costs without specific reference to the Supreme Court scale of costs or the manner in which they were calculated.

[1] See Owens v Galvin [2013] VCC 22.

[2] See affidavit of Jeremy Scott Broadbent sworn on 25 November 2013, (Exhibit JSB 7 to the affidavit of Jeremy Scott Broadbent sworn on 22 April 2014).

[4] Ibid, citing Hanlon v Brookes (1997) 15 ACLR 1626, 1632; McCauley v McCauley [1910] HCA 16; (1910) 10 CLR 434, 455 (Isaacs J); Whiteman v Johnson [1995] VicRp 81; [1995] 2 VR 637, 639-40 (Phillips JA); ETNA v ARIF [1999] VSCA 99; [1999] 2 VR 353, 378 (Batt JA); Garrard (t/as Arthur Anderson & Co) v Email Furniture Pty Ltd (1993) 32 NSWLR 662, 668 (Kirby ACJ); Wentworth v Rogers [No 3] (1986) 6 NSWLR 642, 644 (Kirby P); Transport Accident Commission v O'Reilly [1998] VSCA 106; [1999] 2 VR 436, 457 .

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