Plaintiff v Defendant

2 In this part of both proceedings two issues arise for determination:

1. The first question (the 'the First Question') is whether a party to legal proceedings before this Court, being Gippsreal Ltd ('Gippsreal'), by reason of alleged delay in the making of applications for non-party cost orders against a barrister (the 'Barrister') and an instructing firm of solicitors (the 'Solicitors') in respect of proceedings conducted by them on behalf of Action Cycles Pty Ltd and others (the 'Action Cycles parties') against Gippsreal (the 'Non-Party Cost Application'), is entitled to pursue costs and/or compensation pursuant to r 63.23 of the of the Supreme Court (General Civil Procedure) Rules 2015 (the 'Rules'), where it is further alleged that the delay in making the applications results in a contravention of the overarching obligations prescribed by the Civil Procedure Act 2010 (Vic) (the 'CPA');

2. The second question (the 'Second Question') is whether the Non-Party Cost Application made by Gippsreal as against the Barrister should, in any event, be dismissed by reason of the construction of a Deed of Settlement executed by the parties on or about 1 March 2012 (the 'Deed of Settlement'), whereby Gippsreal allegedly released and discharged the Barrister, as agent of the defendant in that proceeding, from all claims, including any reasonably foreseeable future claims in any way arising out of the matters the subject of the release contained in the Deed of Settlement.

3 On 18 June 2015 I delivered Kenny & Anor v Gippsreal Ltd[1] (the 'First Judgment').

4 For convenience in this part of the proceedings, I set out below the factual background derived from the First Judgment.

5 I accept the following facts and documents relevant to the matters presently before the Court:

1. Between September 2011 and June 2012, The Barrister acted at various times for Darren Gellie, Lorelle Gellie and Action Cycles Pty Ltd (the 'Action Cycles parties') in the 2011 Proceeding and the 2012 Proceeding. Essentially, the proceedings centred upon allegations made by the Action Cycle parties that deeds of settlement which they had entered into with Gippsreal in settlement of other matters were unenforceable and should be set aside. The underlying causes of action in the 2011 Proceeding and the 2012 Proceeding are not relevant for present purposes.
2. Between 26 April 2012 and 10 July 2012, the Solicitors acted at various times the Action Cycles parties in both proceedings.
3. On 30 April 2012, Gippsreal's solicitors wrote directly to the Solicitors and the Barrister in the following terms:

Further, we must respectfully put the Respondents' legal representatives on notice that if it is determined that the respondents have no basis to oppose the entering of the Orders and that in all the circumstances their opposition had no reasonable prospect of success, we are instructed to seek an Order for indemnity costs against the Respondents' legal representatives personally and will produce this correspondence in support of that application.

6 On 7 August 2012, Proceeding Orders were made by consent in both the 2011 Proceeding (the '2011 Proceeding Orders') and the 2012 Proceeding (the '2012 Proceeding Orders') which effectively dismissed both proceedings. Relevant parts of the orders dated 7 August 2012 were made in the following terms:

2011 Proceeding Orders

THE COURT ORDERS BY CONSENT THAT:

1. The plaintiffs [i.e. the Action Cycles parties] pay the third defendant [i.e. Gippsreal] the sum of $2,336,782.74

...

9. The proceeding and the counterclaim otherwise be dismissed.

10. The third defendant has liberty to apply.

1. The plaintiffs pay the third defendant's costs of the proceeding and the counterclaim, from 27 April 2012 to the date of this order, including reserved costs, on an indemnity basis

2012 Proceeding Orders

THE COURT DECLARES BY CONSENT THAT:

1. The Deed of Settlement entered into between the parties on or about 1 March 2012 was valid and binding upon the parties

THE COURT ORDERS BY CONSENT THAT:

2. The counterclaim is dismissed.

1. The first to third defendants [i.e. the Action Cycles parties] pay the plaintiff's [i.e. Gippsreal's] and fourth and fifth defendants' costs of the proceeding and the counterclaim to the date of this order, including reserved costs, on an indemnity basis
2. The fourth and fifth defendants' costs of this proceeding and of the counterclaim to the date of this order are fixed at $114,817.35.
3. The question of whether any third parties may also be liable to pay any or all of the plaintiff's and fourth and fifth defendants' costs of this proceeding is reserved.

7 The Proceeding Orders made in both the 2011 Proceeding and the 2012 Proceeding were authenticated.

8 Gippsreal served its summonses on the Solicitors in early February 2015. I infer that it served its summonses on the Barrister sometime after 22 December 2014.

9 Prior to the issue of its summonses on 22 December 2014 Gippsreal did not make any application against the Solicitors or the Barrister for costs or compensation against either of them.

10 At the time of the making of the 2011 and 2012 Proceeding Orders on 7 August 2012, neither the Solicitors nor the Barrister were acting on behalf of the Action Cycles parties, and they were not recorded on the orders as acting or appearing on that occasion.

11 The Defendant Gippsreal has two applications before the Court in the proceedings:

1. Gippsreal's application made by Summons filed on 22 December 2014 in the 2011 Proceeding; and
2. Gippsreal's application made by Summons filed on 22 December 2014 in the 2012 Proceeding.

1. Pursuant to Rule 63.23 of the Rules, Ian Symonds & Associates [the Solicitors] and Caroline Kenny QC [the Barrister] pay the third defendant's costs of the proceeding, and the plaintiff's by counterclaim's cost of the counterclaim, in respect of the period between 30 April 2012 and 7 August 2012.
2. Further or in the alternative to paragraph 1, by reason of the contravention by (either or both of) them of section 18 of the Civil Procedure Act 2010 (Vic) with respect to the claims made by the plaintiffs in the proceeding during the period from 30 April 2012 and 10 July 2012, pursuant to section 29(1) of the Civil Procedure Act 2010 (Vic):
   1. Ian Symonds & Associates and Caroline Kenny QC pay the third defendant's costs of the proceeding, and the plaintiff's by counterclaim's cost of the counterclaim, in respect of the period between 30 April 2012 and 7 August 2012;
   2. Ian Symonds & Associates and Caroline Kenny QC compensate the plaintiff by counterclaim in respect of its loss incurred by its inability to obtain judgment against the defendants by counterclaim (in the terms of the judgment ultimately obtained on 7 August 2012) during the period from 30 April 2012 to 7 August 2012.
3. Ian Symonds & Associates and Caroline Kenny QC pay the third defendant's/plaintiff by counterclaim's costs of this application.

1. Pursuant to Rule 63.23 of the Rules, Ian Symonds & Associates [the Solicitors] and Caroline Kenny QC [the Barrister] pay the plaintiff's costs of the proceeding and counterclaim.
2. Further or in the alternative to paragraph 1, by reason of the contravention by (either or both of) them of section 18 of the Civil Procedure Act 2010 (Vic) with respect to the defence and counterclaim filed by the defendants in the proceeding (as amended from time to time), pursuant to section 29(1) of the Civil Procedure Act 2010 (Vic) Ian Symonds & Associates and Caroline Kenny QC pay the plaintiff's costs of the proceeding and counterclaim.
3. Ian Symonds & Associates and Caroline Kenny QC pay the plaintiff's costs of this application.

Barrister's Applications in the Present Proceedings

14 By Originating Motion filed in proceeding SCI 2015 1489 on 2 April 2015, the Barrister seeks:

(a) a declaration that Gippsreal's application made by its Summons filed on 22 December 2014 in the 2011 Proceeding is incompetent;

(b) a declaration that Gippsreal's application made by its Summons filed on 22 December 2014 in the 2012 Proceeding is incompetent;

(c) alternatively to paragraph 1(a) above, a declaration that Gippsreal's application made by Summons filed 22 December 2014 in the 2011 Proceeding that Ms Kenny pay costs and compensation pursuant to section 29(1) of the Civil Procedure Act 2010 (Vic) was, contrary to section 30(2) of the Civil Procedure Act 2010 (Vic), not made prior to the finalisation of the civil proceeding to which the application relates;

(d) alternatively to paragraph 1(b) above, a declaration that Gippsreal's application made by Summons filed 22 December 2014 in the 2012 Proceeding that Ms Kenny pay costs pursuant to section 29(1) of the Civil Procedure Act 2010 (Vic) was, contrary to section 30(2) of the Civil Procedure Act 2010 (Vic), not made prior to the finalisation of the civil proceeding to which the application relates;

(e) an order that Gippsreal's application made by Summons filed 22 December 2014 in the 2011 Proceeding be:

(f) like orders in the 2012 Proceeding;

(g) an order that the subpoena for production to the Prothonotary dated 3 February 2015 addressed to Ms Kenny and issued at the request of Gippsreal in the 2011 Proceeding is set aside;

(h) an order that the subpoena for production to the Prothonotary dated 3 February 2015 addressed to Ms Kenny and issued at the request of Gippsreal in the 2012 Proceeding is set aside.

15 The Barrister also issued summonses in the 2011 Proceeding and the 2012 Proceeding dated 27 July 2015 in which she claimed as her principal relief in both proceedings:

1. The plaintiff's ('Gippsreal') application by summons filed 22 December 2014 in Supreme Court of Victoria proceeding [SCI 2011/2626 and SCI 2012/2626] be dismissed on the ground that, pursuant to the Deed of Settlement executed by the parties on or about 1 March 2012, Gippsreal released and discharged Caroline Kenny, as agent of the defendant in that proceeding, from all claims, including any reasonably foreseeable future claims in any way arising out of the matters the subject of the release.

Solicitor's Applications in the Present Proceedings

16 By Originating Motion in proceeding SCI 2015 000120, also filed 2 April 2015, the Solicitors seek materially identical relief as is sought by the Barrister in proceeding SCI 2015 1489.

17 Mr Ian Symonds is the sole principal of the firm of Solicitors.

Applications Before the Court Dealt With in These Reasons

18 The Court has presently before it for determination:

1. Gippsreal's application made by Summonses filed on 22 December 2014 in the 2011 Proceeding and in the 2012 Proceeding in which Gippsreal essentially claims, pursuant to Rule 63.23 of the Supreme Court (General Civil Procedure) Rules 2015, that the Solicitors and the Barrister pay Gippsreal's costs of the proceeding and the counterclaim in respect of the period between 30 April 2012 and 7 August 2012; and
2. The Barrister's summonses in the 2011 Proceeding and the 2012 Proceeding dated 27 July 2015 in which she claimed as her principal relief in both proceedings on a summary basis that, pursuant to the Deed of Settlement executed by the parties on or about 1 March 2012, Gippsreal released and discharged the Barrister, as agent of the defendant in that proceeding, from all claims, including any reasonably foreseeable future claims in any way arising out of the matters the subject of the release.

19 However, I take it from the manner in which the parties presented their cases that I should deal with both applications on the basis of a summary hearing akin to determining an application commenced under s 63(1) of the CPA.

(1) Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.

(2) A court may give summary judgment in any civil proceeding under subsection (1) -

(a) on the application of a plaintiff in a civil proceeding;

(b) on the application of a defendant in a civil proceeding;

(c) on the court's own motion, if satisfied that it is desirable to summarily dispose of the civil proceeding.

21 A related provision, s 64 of the CPA provides that:

Despite anything to the contrary in this Part or any rules of court, a court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because -

(a) it is not in the interests of justice to do so; or

(b) the dispute is of such a nature that only a full hearing on the merits is appropriate.

22 In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd,[2] the Court of Appeal,[3] on a reference pursuant to s 17B(1) of the Supreme Court Act 1986 (Vic), analysed the test to be applied for summary judgment under s 63 of the CPA in the following terms:

1. the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a 'real' as opposed to a 'fanciful' chance of success;
2. the test is to be applied by reference to its own language and without paraphrase or comparison with the 'hopeless' or 'bound to fail test' essayed in General Steel;

1. it should be understood, however, that the test is to some degree a more liberal test than the 'hopeless' or 'bound to fail' test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent's case is not hopeless or bound to fail, it does not have a real prospect of success;

1. at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action **(**and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process [or] where the application is supported by evidence.

23 I will apply these terms in the consideration of these applications.

Relevant Provisions of the Civil Procedure Act

24 It is convenient to commence by setting out the key sections of the CPA which are relevant to the First Question.

25 The purposes of the CPA are provided for in s 1, as follows:

(a) to reform and modernise the laws, practice, procedure and processes relating to civil proceedings in the Supreme Court, the County Court and the Magistrates' Court and provide for uniformity;

(b) to simplify the language relating to civil procedure;

(c) to provide for an overarching purpose in relation to the conduct of civil proceedings to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute;

(d) to amend various Acts in relation to the conduct of civil proceedings to reflect the new procedures

(2) Without limiting subsection (1), this Act provides for -

(a) overarching obligations for participants in civil proceedings to improve standards of conduct in litigation;

(b) expanding the powers of the courts in relation to costs in relation to civil proceedings;

(c) the enhancement of case management powers of the courts, including in relation to discovery;

(d) further enhancement of appropriate dispute resolution processes;

(e) reform of the law relating to summary judgment;

(f) clarifying sanctions available to courts in relation to contravention of discovery obligations;

(g) the management and control of expert evidence in civil proceedings

26 The term 'civil proceeding' is defined in s 3 as: 'any proceeding in court other than a criminal proceeding or quasi-criminal proceeding;'

27 The overarching purpose of the CPA is stated in s 7 as follows:

Overarching purpose

The overarching purpose of this Act and the rules of court in relation to civil proceedings is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.

Without limiting how the overarching purpose is achieved, it may be achieved by -

(a) the determination of the proceeding by the court;

(b) agreement between the parties;

(c) any appropriate dispute resolution process -

i. agreed to by the parties; or

ii. ordered by the court.

28 Section 8 of the CPA provides that a Court is required to seek to give effect to the overarching purpose:

Court to give effect to overarching purpose

(1) A court must seek to give effect to the overarching purpose in the exercise of any of its powers, or in the interpretation of those powers, whether those powers -

(a) in the case of the Supreme Court, are part of the Court's inherent jurisdiction, implied jurisdiction or statutory jurisdiction; or

(b) in the case of a court other than the Supreme Court are part of the court's implied jurisdiction or statutory jurisdiction; or

(c) arise from or are derived from the common law or any procedural rules or practices of the court.

(2) Subsection (1) applies despite any other Act (other than the Charter of Human Rights and Responsibilities Act 2006) or law to the contrary.

29 The overarching obligations under the CPA are defined in Part 2.3 of the Act. These are extended to apply to a wide range of participants in civil litigation, including, for present purposes under s 10(1)(b), any legal practitioner or other representative acting for or on behalf of a party.

30 Section 9 of the CPA provides:

Court's powers to further the overarching purpose

(1) In making any order or giving any direction in a civil proceeding, a court shall further the overarching purpose by having regard to the following objects -

(a) the just determination of the civil proceeding;

(b) the public interest in the early settlement of disputes by agreement between parties;

(c) the efficient conduct of the business of the court;

(d) the efficient use of judicial and administrative resources;

(e) minimising any delay between the commencement of a civil proceeding and its listing for trial beyond that reasonably required for any interlocutory steps that are necessary for -

(i) the fair and just determination of the real issues in dispute; and

(f) the timely determination of the civil proceeding;

(g) dealing with a civil proceeding in a manner proportionate to -

(i) the complexity or importance of the issues in dispute; and

(ii) the amount in dispute.

(2) For the purposes of subsection (1), the court may have regard to the following matters -

(a) the extent to which the parties have complied with any mandatory or voluntary pre-litigation processes;

(b) the extent to which the parties have used reasonable endeavours to resolve the dispute by agreement or to limit the issues in dispute;

(c) the degree of promptness with which the parties have conducted the proceeding, including the degree to which each party has been timely in undertaking interlocutory steps in relation to the proceeding;

(d) the degree to which any lack of promptness by a party in undertaking the proceeding has arisen from circumstances beyond the control of that party;

(e) the degree to which each person to whom the overarching obligations apply has complied with the overarching obligations in relation to the proceeding;

(f) any prejudice that may be suffered by a party as a consequence of any order proposed to be made or direction proposed to be given by the court;

(g) the public importance of the issues in dispute and the desirability of a judicial determination of those issues;

(h) the extent to which the parties have had the benefit of legal advice and representation.

(3) This section does not -

(a) limit any other power of a court to make orders or give directions; or

(b) preclude the court from considering any other matters when making any order or giving any direction.

31 Section 10 of the CPA provides:

Application of overarching obligations - participants

(1) The overarching obligations apply to -

(a) Any person who is a party;

(b) Any legal practitioner or other representative acting for or on behalf of a party;

(c) Any law practice acting for or on behalf of a party;

(d) Any person who provides financial assistance or other assistance to any party in so far as that person exercises any direct control, indirect control or any influence over the conduct of the civil proceeding or of a party in respect of that civil proceeding, including, but not limited to -

i. an insurer;

1. a provider of funding or financial support, including any litigation funder.

(2) Subject to subsection (3), the overarching obligations do not apply to any witness in a civil proceeding.

(3) The overarching obligations (other than the overarching obligations specified in sections 18, 19, 22 and 26) apply to any expert witness in a civil proceeding.

(4) Subsection (3) is in addition to, and not in derogation of, any existing duties applying to expert witnesses.

32 Part 2.4 of the CPA then provides sanctions for the contravention of the overarching obligations. Sections 28-31 of the CPA were central to the applications determined in the First Judgment.

33 Rule 63.23 of the Rules relates to the costs liability of a lawyer and is in the following terms:

Costs liability of lawyer

(1) Where a solicitor for a party, whether personally or through a servant or agent, has caused costs to be incurred improperly or without reasonable cause or to be wasted by a failure to act with reasonable competence and expedition, the Court may make an order that -

1. all or any of the costs between the solicitor and the client be disallowed or that the solicitor repay to the client the whole or part of any money paid on account of costs;
2. the solicitor pay to the solicitor's client all or any of the costs which the client has been ordered to pay to any party;

1. the solicitor pay all or any of the costs payable by any party other than the client.

(2) Without limiting paragraph (1), a solicitor fails to act with reasonable competence and expedition for the purpose of that paragraph where any application in or trial of a proceeding cannot conveniently be heard or proceed, or fails or is adjourned without any useful progress being made, by reason of the failure of the solicitor to -

a) attend in person or by a proper representative;

b) file any document which ought to have been filed;

1. lodge or deliver any document for the use of the Court which ought to have been lodged or delivered;

d) be prepared with any proper evidence or account; or

e) otherwise proceed.

(3) The Court shall not make an order under paragraph (1) without giving the solicitor a reasonable opportunity to be heard.

(4) The Court may, before making an order under paragraph (1), refer the matter to a Costs Judge or another Associate Judge for inquiry and report.

...

(6) The Court may order that notice of any proceeding or order against a solicitor under this Rule be given to the client in such manner as the Court directs.

(7) This Rule shall, with any necessary modification, apply to a barrister as it applies to a solicitor.

34 Gippsreal seeks to proceed against the barrister and the solicitor pursuant to r 63.23(1)(c) in combination with r 63.23(7), seeking orders that these lawyers pay all or any of the costs payable by Gippsreal.

35 As this Court found in Kenny & Anor v Gippsreal Ltd,[4] r 63.23 may operate in circumstances where it is found that a solicitor or barrister for a party, whether personally or through a servant or agent, has caused costs to be incurred improperly or without reasonable cause or to be wasted by a failure to act with reasonable competence and expedition. If any of these circumstances is found to have arisen, a discretion is then enlivened for the Court to make any of the specified costs orders against the lawyer in question. The exercise of the discretion is left at large, however it would be required to be undertaken judicially and in the interests of justice.

36 In White Industries (Qld) Pty Ltd v Flower & Hart (a firm)[5] Goldberg J conducted an analysis of the cases relating to the Court's jurisdiction to order a solicitor to pay costs. His Honour concluded that the jurisdiction of the Court is enlivened when the solicitor has:[6]

unreasonably initiated or continued an action when it had no or substantially no prospects of success but such unreasonableness must relate to reasons unconnected with success in the litigation or to an otherwise ulterior purpose or to a serious dereliction of duty or serious misconduct in promoting the cause of and the proper administration of justice. Further, the cases establish the proposition that it is a relevant serious dereliction of duty or misconduct not to give reasonable or proper attention to the relevant law and facts in circumstances where if such attention had been given it would have been apparent that there were no worthwhile prospects of success.

37 As observed by this Court in Kenny & Anor v Gippsreal Ltd,[7] White Industries illustrates the potential breadth of circumstances where the jurisdiction of a court to order costs against a lawyer may arise.

38 As earlier stated, the First Question, is whether Gippsreal, by reason of alleged delay in the making its applications for non-party cost orders against the Barrister and the Solicitors in respect of proceedings conducted by them on behalf of the Action Cycles parties against Gippsreal is entitled to pursue costs and/or compensation pursuant to r 63.23 of the Rules, where it is further alleged that the delay in making the applications results in a contravention of the overarching obligations prescribed by the CPA.

39 In the light of the manner in which the parties proceeded, by the application of the test in s 63 of the CPA, the First Question is to be decided by applying the statutory test, as explained by the Court of Appeal in Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd,[8] namely whether the application made by Gippsreal for non-party costs against the Action Cycles lawyers has no real prospect of success.

40 The starting point to this determination is the outcome in the First Judgment.

41 In the First Judgement, Kenny & Anor v Gippsreal Ltd,[9] this Court dealt with a challenge to the competency of Gippsreal's summonses filed on 22 December 2014 in the 2011 and 2012 Proceeding, insofar as the summonses sought non-party cost orders against the respondent parties pursuant to s 29 of the CPA. The outcome of this issue turned upon whether the proceedings were finalised within the meaning of s 30(2) CPA on 7 August 2012 upon the making of the 2011 and 2012 Proceeding Orders.

42 I found that in both the 2011 and 2012 Proceeding, contrary to s 30(2) of the CPA, Gippsreal failed to make its applications for orders under s 29 of the CPA 'prior to the finalisation of the civil proceeding to which the application relates'. In a practical sense, both the 2011 and 2012 Proceeding were completed, concluded and brought to an end for the purposes of s 30(2) of the CPA on 7 August 2012, upon the making of the 2011 and 2012 Proceeding Orders.

43 Accordingly, Gippsreal's summonses filed 22 December 2014 in the 2011 and 2012 Proceeding, insofar as the summonses seek to rely upon s 29 of the CPA, were held in the First Judgment to be incompetent by reason of the failure to comply with the time limit specified by the CPA.

44 In this respect I said in the First Judgment:[10]

[51] The facility provided by s 29 of the CPA alters the balance in favour of litigants who would otherwise incur a costs burden or suffer loss which was materially contributed to by a contravention of an overarching obligation, and does so in a significant way. The CPA in this way gives very valuable, and commercially important advantages to litigants

[52] Further, and in the interests of justice, achieving finality in litigation is a clear and necessary objective.

[53] The availability of the rights conferred by s 29 of Act is therefore balanced and governed by due observance of the time limit found in s 30(2), which is expressed in mandatory terms.

[54] The legislative purpose of s 30(2), calls for the time limit to be observed, with the result that, if it is not, the rights of a party to a civil proceeding or any other person to make an application under s 29 are statute barred.

45 Rule 63.23 is subordinate legislation made under the Supreme Court Act 1986 (Vic).

46 Rule 63.23 of the Rules provides a power to the Court to make an order of the kind specified, provided that the defined circumstances are established to the satisfaction of the Court on the balance of probabilities. However, even if the circumstances are established, there remains a discretion for the Court as to whether the power will be exercised.

47 Further, r 63.23 of the Rules does not specify a time limit, either in the same terms as s 30 of the CPA or at all.

48 It is in this context that the operation of the suite of provisions found in Part 2.4 of the CPA,[11] when compared with r 63.23 of the Rules, calls to be examined.

49 In this case the central allegation relied upon by Gippsreal as to the conduct of the Barrister and the Solicitors, which was said to justify the making of an order under r 63.23 of the Rules, would also have amounted to a contravention of the overarching obligations of the CPA which, if made out, may have justified the exercise of the discretion to make an order under s 29 of the CPA, provided, of course, that the time limit provided by s 30 of the CPA had been complied with.

50 Having dismissed the application insofar as it was founded on s 29 of the CPA by reason of non-compliance with the statutory time limit under s 30, in my opinion, it would work to circumvent the very clear statutory requirements under the CPA if an applicant was, in effect, permitted to maintain the very same case to found a non-party costs order against lawyers, but do so under r 63.23 of the Rules.

51 To my mind, a powerful, and in this case an insurmountable, element in the exercise of the discretion under r 63.23, is the necessity to comply with statutory requirement of s 30 of the CPA and prevent the force and effect of that provision being undermined by application of a Rule of Court in the manner urged by the applicant. The proper administration of the CPA and the protection of the regime of checks and balances established in Part 2.4 calls for this approach.

52 A further matter which arises in the exercise of the discretion is the manifest and unexplained delay in instating the application for non-party cost orders against the Solicitors. The proceedings for all practical purposes came to an end on 7 August 2012 upon the making of the 2011 and 2012 Proceeding Orders.

53 As earlier found, on 30 April 2012, Gippsreal's solicitors wrote directly to the Solicitors and the Barrister in the following terms:

Further, we must respectfully put the Respondents' legal representatives on notice that if it is determined that the respondents have no basis to oppose the entering of the Orders and that in all the circumstances their opposition had no reasonable prospect of success, we are instructed to seek an Order for indemnity costs against the Respondents' legal representatives personally and will produce this correspondence in support of that application.

54 Accordingly, by 30 April 2012 Gippsreal and its lawyers were well aware of an entitlement to seek costs against the Solicitors and the Barrister, which I infer would have included knowledge of the necessary essential facts to found a potential claim for costs based on r 63.23 of the Rules.

55 However, Gippsreal did not issue its summonses in the 2011 Proceeding and the 2012 Proceeding against the lawyers for the Action Cycles parties until 22 December 2014. It then served its summonses on the Solicitors in early February 2015, and I infer, served its summonses on the Barrister sometime after 22 December 2014. Gippsreal waited nearly two years before prosecuting its claims for non-party costs against the Action Cycles lawyers.

56 It is fundamental to the proper administration of justice that finality in litigation is achieved. This important consideration is now underpinned by the CPA, particularly the overarching purpose expressed in s 7(1) and the overarching obligation to minimise delay under s 25, set out below.

57 Under s 25 of the CPA, an overarching obligation to minimise delay is prescribed in the following terms:

Overarching obligation to minimise delay

For the purpose of ensuring the prompt conduct of a civil proceeding, a person to whom the overarching obligations apply must use reasonable endeavours in connection with the civil proceeding to -

(a) act promptly; and

(b) minimise delay.

58 Further, under s 9(1) of the CPA, the Court is obliged to further the overarching purpose in the making of any order by having regard the statutory objects defined, which include, '(f) the timely determination of the civil proceeding.'

59 Matters of relevance to which the Court may have regard for the purposes of s 9 are set out in s 9(2) and include '(c) the degree of promptness with which the parties have conducted the proceeding, including the degree to which each party has been timely in undertaking interlocutory steps in relation to the proceeding'; and '(e) the degree to which each person to whom the overarching obligations apply has complied with the overarching obligations in relation to the proceeding.'

60 As the Court of Appeal noted in Yara Australia Pty Ltd v Oswal:[12]

The Act does not merely reaffirm the existing inherent powers of the court but provides a powerful indication of the will of the Parliament about the values sought to be achieved by the way in which cases are managed in the courts and the balances that have to be struck.

61 In the exercise of the Court's discretion under r 63.23, pursuant to s 8 of the CPA, the Court is obliged to give effect to the overarching purpose and, under s 9(1)(f), must further the overarching purpose, which I do in this case by refusing the relief sought by Gippsreal in its applications.

62 I find that the unexplained delay on the part of Gippsreal in the initiation of the non-party costs against the Action Cycles lawyers to be not only inordinate and conduct which in itself amounted to a contravention of the overarching purpose of the CPA, including the overarching purpose under s 7(1) to facilitate the 'just, efficient, timely and cost-effective resolution of the real issues in dispute', but was of such a degree as to also amount to a further and insurmountable barrier to the exercise of the discretion under r 63.23 in favour of Gippsreal.

63 For these reasons, and based upon the evidence before the Court, Gippsreal's applications have no real prospect of success. It is possible that when the subpoenas referred to in the First Judgment are returned, some evidence may be disclosed which could be relevant to the exercise of the discretion on the question of costs, such as the knowledge and expressed opinions of the Action Cycles lawyers as to the prospects of success in overturning the Deed of Settlement. However, no such evidence has been brought before the Court by Gippsreal, and the existence of any such evidence, its content and its weight, is a matter of speculation.

64 Further, even if evidence was to be unearthed which demonstrated that the Action Cycles lawyers appreciated that the prospects of success were as low as negligible to the point where, properly advised, the 2011 and 2012 Proceedings should not have been brought, by reason of the other factors discussed, which to my mind were insurmountable, the applications were bound to fail in any event.

65 Gippsreal had opportunity to put on such material as it may have been advised to challenge the summary judgment applications of the Solicitors and the Barrister, and to seek directions from the Court to facilitate this process. However, in seeking to controvert the applications, it rested its case on the material presently before the Court and sought no adjournment.

66 Upon the material before the Court, and for the reasons considered, bearing in mind that the power to terminate proceedings summarily should be exercised with caution, and thus should not be exercised unless it is clear that there is no real question to be tried, I am satisfied that to allow the applications to proceed beyond this point would permit an abuse of process.

67 The Court, being satisfied that there is no real prospect of success in relation to Gippsreal's applications, is not satisfied under s 64 of the CPA that the matters should not be disposed of summarily, either because it is not in the interests of justice to do so, or that only a full hearing on the merits is appropriate. A trial is not in the interests of justice in this case, nor is a trial appropriate, both on the ground of excessive delay in achieving finality in the proceeding to this point and on the ground of proportionality, which in all likelihood has already been stretched well beyond acceptable parameters.

68 For these reasons, Gippsreal's applications for non-party costs orders against both the Barrister and the Solicitor under r 63.23 or the Rules should be summarily dismissed.

69 On 1 March 2012 the parties to the 2011 Proceeding entered into a Deed of Settlement to resolve the 2011 Proceeding. At this time there was only one proceeding on foot.

70 The Deed of Settlement provided in clauses 18 and 19 as follows:

1. Subject to the terms of this Deed, and the rights of Gippsreal and the Receivers pursuant to it, Gippsreal and the Receivers hereby release and forever discharge the plaintiffs [i.e. the Action Cycles parties] and their servants and agents from any and all claims, suits, actions or demands (howsoever and whenever arising) which they may have against the plaintiffs and their servants and agents, including without limitation any claims, suits, actions or demands arising from the loan, the Security Documents, the Appointment, and the subject matter of the Proceeding and the Appeal.
2. All waivers, discharges and releases set out herein apply to any and all reasonably foreseeable future claims, suits, actions, demands, rights or entitlement but which may not yet have arisen or accrued.

71 On or about 27 April 2012, some two months after entry into the Deed of Settlement, and three days before due performance by the payment of money to Gippsreal, it was notified that there would be a challenge to the enforceability of the Deed. The notification came from the Solicitors and the Barrister. An application was then initially made on or about 30 April 2012 in the 2011 Proceeding to effectively set aside the Deed of Settlement. The 2012 Proceeding was subsequently issued to prosecute that application.

72 On 7 August 2012 final orders were made in the 2011 Proceeding, largely in accordance with the 'Consent Judgment' referred to in clause 3 of the Deed of Settlement and set out in Annexure 'A' to the Deed of Settlement. Thus, the Action Cycles parties were ordered, among other things, to pay Gippsreal the sum of $2,336,782.74.

73 On 7 August 2012, final orders were also made in the 2012 Proceeding.

74 A declaration was made in the 2012 Proceeding by consent that:

The Deed of Settlement entered into between the parties on or about 1 March 2012 was valid and binding upon the parties.

75 The claim for non-party costs made by Gippsreal against the Solicitors and the Barrister relate to the costs incurred by Gippsreal in the 2011 Proceeding and the 2012 Proceeding between 30 April 2012 and 7 August 2012 arising from the challenge to the enforceability of the Deed of Settlement.

76 Notwithstanding the scope of the releases set out in clauses 18 and 19 of the Deed of Settlement and the fact that the Court had, on 7 August 2012, declared the validity and binding effect of the Deed of Settlement, Gippsreal, on 22 December 2014, filed its summonses in the 2011 Proceeding and the 2012 Proceeding.

77 The following matters were submitted on behalf of the Barrister as to the scope of the release contained in clauses 18 and 19 of the Deed of Settlement:

(a) by their terms, the releases apply to the Action Cycles parties and their servants and agents. Accordingly, it is immaterial that the Barrister is not a signatory to the Deed of Settlement. If the Barrister can be characterised as a servant and agent of the Action Cycles parties, she will enjoy the benefit of the release.[13] There can be no doubt that the Barrister, as counsel for the Action Cycles parties, acted as their agent with respect to the conduct of the 2011 Proceedings and the 2012 Proceedings.[14] The release therefore extends to the Barrister;

(b) by their terms, the releases apply to all 'claims, suits, actions or demands'. Thus, the scope of the releases covers a claim for costs such as that now sought to be brought by Gippsreal against the Barrister;

(c) by their terms, the releases have no temporal limitation. They apply to 'any and all' claims, suits, actions or demands 'howsoever and whenever arising'. Thus, the releases apply whether or not the claims, suits, actions or demands have accrued or been made at the date of execution of the Deed of Settlement. This is reinforced by clause 19 of the Deed of Settlement which expressly states: 'All waivers, discharges and releases set out herein apply to any and all reasonably foreseeable future claims, suits, actions, demands, rights or entitlement but which may not yet have arisen or accrued.'

78 The orders of 7 August 2012 made in the 2012 Proceeding confirmed that the Deed of Settlement was valid and binding upon the parties. Thus, it was submitted, there is no question as to the enforceability or validity of the Deed of Settlement.

79 It was submitted on behalf of the Barrister that the current case bears similarities to the situation considered by Pagone J in Auss Metals Pty Ltd v Express Mobile Services Australia Pty Ltd.[15] In Auss Metals, Pagone J held that the compromise reached between the parties to the proceeding, which included 'mutual releases of all claims by our clients and your clients against each other (including the directors, officers, agents or employees of any of them)', prevented the respondents from later seeking their costs of the proceeding from the applicants' solicitors. In reaching this conclusion Pagone J held:[16]

In my view a reasonable person would understand the terms of the agreement as extending to any claims which any party might have to its costs. It might not include other sanctions which the Court might impose if persuaded that a practitioner had breached its duty in the conduct of a case, or in the performance of legal practice, but a reasonable person would see the agreement reached, by the terms of the offer, and of its acceptance, as including any entitlement of any party to seek costs incurred in the proceeding. What the parties had agreed to do was to dispose of all claims and disputes against each other and extended their resolution of the dispute to the claims any party had to the agent of the other party.

80 However, other matters of some significance arise in this case which serve to distinguish it from Auss Metals.

81 The clear objective intention of the Deed of Settlement was to resolve all issues between Gippsreal and the Action Cycles parties, and the release contained in clause 18 is best construed as relating only to past claims that may have arisen founded on events that had already occurred at the time of entry into the Deed.

82 As to 'all waivers, discharges and releases' referred to in Clause 19, these are expressed to apply to 'any and all reasonably foreseeable future claims, suits, actions, demands, rights or entitlement but which may not yet have arisen or accrued.' [Emphasis added]

83 Applying the words of the Deed of Settlement in its context, I do not accept that a challenge to the Deed itself and the releases contained within it, could properly fall within what would be a 'reasonably foreseeable' claim [etc.] which existed or could have been in reasonable contemplation at the time of entry into the Deed. Still less would it have been in reasonable contemplation that even if such a challenge had been undertaken or was open to have been made on the facts as known to the parties at that time, that a claim for non-party costs would be made against the lawyers for the challenging party in the event that such a challenge was pursued. This is particularly so given the highly unusual position here where the Barrister seeks immunity from a possible costs order against her, based on a clause in the very Deed which is said by the parties on behalf of whom she acted to be unenforceable.

84 Further, the Barrister was not a party to the Deed of Settlement. In these circumstances I am not satisfied that she is or was ever in a position to enforce the Deed as a bar to the cost claims made against her, or could have enforced the Deed with this effect.

85 For these reasons, in my opinion, the Deed of Settlement, and the releases contained therein, cannot operate to provide immunity to the Barrister from the claims for costs made against her by Gippsreal.

86 There is no application by the Solicitors based on the Deed of Release presently before the Court, but if there was, on the construction of the Deed I have found, I would have arrived at the same conclusion.

87 I will hear the parties on what further orders should be made, both substantively and as to costs.

[1] [2015] VSC 284.

[2] [2013] VSCA 158.

[4] [2015] VSC 284, [101].

[5] [1998] FCA 806; (1998) 156 ALR 169 ('White Industries ').

[6] White Industries [1998] FCA 806; (1998) 156 ALR 169, 239.

[7] [2015] VSC 284, [103].

[8] [2013] VSCA 158.

[9] [2015] VSC 284 at [82]-[85].

[11] Sections 28-31 of the CPA, together comprise Part 2.4.

[12] (2013) 41 VR 302, 310 [22].

[13] See Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1988) 165 CLR 107, 147 (Deane J).

[14] See G E Dal Pont, Law of Agency (3rd Ed, 2014) 1.40; See also Hansen v Marco Engineering (Aust) Pty Ltd [[1948] VicLawRp 37; 1948] VLR 198, 203 (Fullager J); Grummitt v Natalisio [1968] VicRp 14; [1968] VR 156, 159-160 (Gillard J); Auss Metals Pty Ltd v Express Mobile Services Australia Pty Ltd [2015] FCA 745, [9] (Pagone J).

[15] [2015] FCA 745 ('Auss Metals').

[16] Auss Metals Pty Ltd v Express Mobile Services Australia Pty Ltd [2015] FCA 745, [7].