Plaintiff v Defendants

Supreme Court of Victoria|2010-12-06|Before: WILLIAMS J

COSTS - Counsel's fees certified by court order at amount other than scale amount - Review of decision of Associate Justice under 63.57 Supreme Court (General Civil Procedure) Rules 2005 - Whether in a taxation certified counsel's fees could be reduced under s 134AG Accident Compensation Act 1985 and WorkCover Legal Costs Order 2006.

(1) (By consent) the defendant (sic) is to pay the plaintiff's costs, including any reserved costs, to be taxed in default of agreement on County Court Scale 'D'

(a) (By consent) Senior Counsel's fee on brief fixed at $5500 with 2 hours of conferences at $550 per hour.

(b) Junior Counsel's fee on brief fixed at $2750 with 2 hours of conferences at $275 per hour.

2 On taxation on 5 August 2010, a Costs Registrar made an order for taxed costs including counsel's fees reduced by 20%, purportedly in accordance with s 134AB(29) of the Act.

3 On review of the taxation, an Associate Justice confirmed the registrar's order. His Honour determined that the certified fees should have been reduced on taxation by 20%, under s 134AG of the Act and the WorkCover Legal Costs Order 2006 ('the Costs Order') published under it rather than under s 134AB(29). It is common ground that s 134AG and the Costs Order were and are the applicable provisions.

4 The plaintiff has applied under r 63.57 of the Supreme Court (General Civil Procedure) Rules 2005 ('the Rules') for a review of the Associate Justice's order. He objects to the order requiring a reduction of counsel's fees certified at an amount other than the scale amount. He seeks orders that the amounts for those fees included in his solicitors' 11 October 2010 taxed bill be allowed on taxation at the certified figures.

5 The plaintiff maintains that counsel's fees certified at an amount other than that provided for in the scale in Appendix A to the County Court (Civil Procedure) Rules 2008 are not subject to a 20% reduction under s 134AG of the Act and the Costs Order. The defendants respond that the Associate Justice was correct to confirm the registrar's decision.

6 On the review under r 63.57(7)(a) of the Rules, the Court may exercise the powers and discretions of the Costs Court and may confirm, set aside or vary its order or make any other necessary order.

7 Section 134AG of the Act provides for a legal costs order to be made specifying the legal costs recoverable by a legal practitioner acting on behalf of a worker in respect of any claim under s 134AB. Section 134AG(5) provides that the Costs Order has full force and effect notwithstanding anything to the contrary in the County Court Act 1958.

8 The Associate Justice decided that the registrar was correct to reduce counsel's fees, given para 4E of the Costs Order and the footnote to it which stated that:

... where proceedings are instituted by a worker pursuant to section 134AB(16)(b) of the Act, and costs are awarded to the worker, the worker's legal practitioner shall be entitled to legal practitioner's professional costs on a party and party basis of the proceeding (including counsel's fees), calculated in accordance with the Scale of Costs that would in the absence of this Order have applied (but as if the amounts in the scale were reduced by 20 per cent) plus disbursements ...

Footnote

The entitlement to costs and disbursements under this Order replaces any other entitlement of a worker to be awarded legal practitioner's professional costs and disbursements for and incidental to an application, a section 134AB(12) conference or proceedings commenced in accordance with section 134AB(12) or section 134AB(16) of the Act, and has full force and effect notwithstanding anything to the contrary in the Legal Profession Act 2004, the Supreme Court Act 1986 or the County Court Act 1958 or in any regulation, rules, order or other document made under any of those Acts.

9 The Associate Justice noted that the preamble to the scale of costs in Appendix A to the County Court Civil Procedure Rules 2008 ('the County Court Rules') contained a wide discretion to increase or decrease amounts in the scale. Scale items 31(h)(iii) and (iv) contained discretions for a judge to certify for two counsel and to allow a higher than scale fee. He noted that there was no dispute that the Judge was exercising the discretions in the scale when making the costs orders.

10 The Associate Justice noted that the plaintiff relied upon Arthur v McLeish[1] for the proposition that, once a sum was fixed by a judge for counsel's fees, the registrar had no ability to reduce it by reference to anything in the Act or the associated regime. He agreed with the defendants that the registrar had simply applied the legislation and had not altered the Judge's order.

11 The Associate Justice rejected the plaintiff's argument that para 4E of the Costs Order should be interpreted to mean that any above-scale amount was not 'calculated in accordance with the scale'. He thought such a construction too narrow and artificial. He concluded that a figure arrived at in the exercise of a discretion which was provided for in the scale was a figure calculated by reference to the scale amount that was considered insufficient.

12 The Associate Justice referred to the statutory purpose of capping legal costs at 80%. He considered that the intention of the legislature would be defeated if any amount allowed which was smaller or larger than that in the scale were not to be reduced. He cited his decision in Pavlikovski v A Koprulu & Co Pty Ltd[2] that even allowances made in the exercise of discretions founded in the scale were made in accordance with the scale and that a narrow reading of the para 4E reference to a calculation 'in accordance with the Scale' was not justified.[3]

13 The Associate Justice noted the fused nature of the Victorian legal profession and concluded that the legislation was intended to cover legal costs, without differentiation; there was nothing to suggest that counsel's fees were to be immune from the impact of the statutory reduction or in a privileged position. He thought that the amounts fixed by the Judge in this case represented approximate market rates and there was no indication that the parties had agreed to a built-in reduction of 20% or that the Judge had done other than make orders in the agreed terms.

14 The Associate Justice pointed out that the Costs Court could not consider the legality of orders and could only attempt to construe their meaning correctly. He thought it desirable, therefore, that court orders should indicate whether certified fees were being allowed in the exercise of a discretion under a scale and whether any legislation restricting the amount of legal costs was relevant or applicable.

15 The plaintiff disputes the Associate Justice's conclusion that the amounts fixed in the exercise of the court's broad discretionary power to make orders for costs were 'calculated in accordance with the scale of costs' under para 4E of the Costs Order. The sums certified by the Judge were not 'amounts in the scale' to be reduced by 20%. The amounts fixed were rather set by reference to what was appropriate and a 20% reduction in the scale amount would, as a matter of logic, have no impact upon them. That discretion having been properly exercised, the fees were not reducible upon taxation.

16 It does not matter, according to the plaintiff, whether the Judge was exercising a discretionary power under the County Court Act 1958 or under Appendix A to the County Court Rules because there is no challenge to the propriety of the exercise of discretion. The issue is as to whether the 20% reduction applies to a fee which has been fixed at an amount higher than that in the scale under a provision which specifically allows for that to occur. The plaintiff argues that the words in parenthesis in para 4E do not apply to the fees fixed by the Judge. It is not to the point that the exemption of counsel's fees might appear anomalous.[4] The plaintiff points out that the applicability of para 4E to other items dealt with in the taxation is not before the Court.

17 The plaintiff also relies upon the remedial nature of the Accident Compensation (Common Law and Benefits) Act 2000 which inserted s 134AB into the Act to restore seriously injured workers' common law rights. Whilst he contends that para 4E of the Costs Order is not ambiguous, he argues that, even if it were, it should not be construed in a way which would act as a disincentive to the exercise of those restored rights.[5] There would be significant ramifications for plaintiffs if they could only recover from defendants 80% of counsel's fees for which a judge had certified.

18 The defendants contend that the plaintiff's only entitlement to costs is that under the Costs Order. It is a right to costs 'calculated in accordance with the Scale' under para 4E. This follows from the wording of the footnote to para 4.

19 The defendants argue that the Associate Justice's conclusion was correct because, although fees fixed by the court were not able to be altered on taxation, the total amount of fees, including the taxed amounts, were to be reduced by the operation of the Act and the Costs Order. Any amount allowed by the scale (even if discretionary) was calculated 'in accordance with the scale' for the purposes of para 4E. The Judge did not make an 'independent order' but, rather, the effect of her order was to prevent any submissions in the taxation as to the appropriateness of the amounts fixed. She had 'taxed' the amounts herself because to 'fix' them was to 'assess' them and an assessment was a 'taxation' under the definition in r 63A.01. Those fixed amounts were covered by the words in parenthesis in para 4E which should be read as if 'counsel's fees' were followed by the additional words 'however determined'.

20 The defendants submit that the review did not relate to the taxation of costs; rather it dealt with what was to happen after costs were taxed. The fixed fees were included in the bill to be taxed. The registrar and the Costs Court found that it was the total amount of the bill which was to be reduced under para 4E and not the individual items allowed.

21 The plaintiff responds that the Costs Order did not create a two stage process, despite the fact that it could easily have done so by specifically requiring a 20% reduction of the total amount of taxed costs. The Costs Order refers instead to the reduction of the amounts in the scale.

22 The registrar taxed the bill prepared by the plaintiff's solicitors which included amounts for fees paid to counsel '(as certified)'. On the taxation, the registrar reduced those amounts for counsel's fees by 20%.

23 In Arthur v McLeish,[6] the Appeal Division of the Court held that a registrar was not permitted to enlarge or reduce the ambit of a costs order on taxation and had no jurisdiction to make an order for costs of the proceeding, despite having certain discretions resulting from or recognised in Appendix A.[7] In Arthur v McLeish, the judge who had approved a compromise in a proceeding had made an order that the defendant should pay the plaintiff's costs to be taxed on scale. The Court held that neither the taxing officer nor the judge reviewing the taxation had the power to allow fees for two counsel or to fix fees higher than those in the scale. It was common ground in this review that neither the registrar on taxation nor the Associate Justice on the review of that taxation had power to add to, alter or vary the Judge's order fixing the amount of counsel's fees.

24 The defendants did not persuade me that the registrar correctly deducted 20% from the total costs in a two stage process which applied para 4E to the Judge's order, but did not alter that order in the taxation stage. The registrar's notations on the bill appear to indicate that he did reduce counsel's fees by 20% in the taxation. Even if the 20% reduction was made after the registrar had determined the allowable amounts for all items, allowing 100% of the certified counsel's fees, he would still have been applying the Costs Order within the taxation because that is the function he was carrying out. In my view, he erred because the effect of what he did was to alter or vary the Judge's order by reducing the amount fixed for counsel's fees.

25 Nothing turns on whether or not the Judge should be regarded as having taxed counsels' fees or having fixed them in her order. The registrar had no power to alter the amount fixed by order of the Judge by way of taxation or otherwise.

26 I agree with the Associate Justice that the Costs Court cannot consider the legality of orders.[8] Even if, for the reasons articulated by the Associate Justice, the Judge did not comply with para 4E when she calculated the amounts fixed 'in accordance with the scale', within the meaning of para 4E, her Honour's order could not be corrected in the taxation or in any review of the taxation.

27 The Associate Justice erred in confirming the registrar's decision.

28 The issue which has arisen in Wandel is on all fours with that in Jury.

29 Consent orders were made in County Court proceeding No CI-09-01061 between the parties. The consent orders provided for the plaintiff's costs to be taxed on County Court Scale 'D' in default of agreement and certified for counsel's fees in fixed amounts. The consent orders were made by a registrar under r 59.06 of the County Court Rules.

30 Once again, on taxation, the Costs Registrar reduced the amounts fixed under the court order by 20%, purportedly again under s 134AB (29) of the Act.

31 On review of the Costs Registrar's decision, the Associate Justice held that the applicable principle was that which he had applied in Jury which had been heard at the same time. The reasons for his decision in Wandel were relevantly the same as those for his decision in Jury. In the review, his Honour confirmed the Registrar's determination and quoted the relevant parts of his Jury reasons, including that the applicable provisions were s 134AG of the Act and the Costs Order.

32 No point is taken in this review that there is any significance in the orders having been made by the Registrar under r 59.06 of the County Court Rules and the grounds of objection are relevantly in identical terms to those in Jury. It is common ground that the same issue arises in all three applications for review before the Court. The plaintiff again seeks orders allowing counsel's fees in the amounts certified in the court order.

33 For the reasons I have given in relation to the review in Jury, I find that the Costs Registrar erred in the taxation and that the Associate Justice erred by confirming that decision on review.

Sava Ristevski v Toyota Motor Corporation (Australia) Ltd & VWA

34 In Ristevski the same County Court Judge made orders in proceeding CI-08-03828 between the plaintiff and the defendants. Her Honour ordered that the 'defendant' (sic) pay the plaintiff's costs to be taxed on Scale 'D' in default of agreement and certified for two counsel and for counsel's fees in specific amounts.

35 In the taxation, the Costs Registrar deducted 20% from the certified amounts. On review of the taxation, the Associate Justice confirmed the Registrar's decision. The grounds of objection were in the same form as those in Jury. The Associate Justice gave reasons for his decision which were once again relevantly in the same form as those in Jury.

36 For the reasons I have given in Jury I consider that both the Associate Justice and the Registrar erred.

37 I will hear the parties as to the form of orders and in relation to costs.

[4] The plaintiff cites Mandie AJA's references to the recognised drafting deficiencies in the Accident Compensation Act 1985 and the anomalous results from its interpretation in Spotless Services Australia Ltd v Herbath & Anor [2008] VSCA 285 [45] (Buchanan JA and Byrne AJA agreeing).

[7] Arthur v McLeish [1996] VicRp 28; [1996] 1 VR 411 415-6, 418 (Tadgell J, Brooking and Teague JJ agreeing).

[8] Reasons on Review, (28 September 2010), [17].

Court (General Civil Procedure) Rules 2005

Compensation Act 1985

County Court (Civil [Procedure) Rules 2008

Court Civil Procedure Rules 2008

Accident Compensation (Common Law and Benefits) Act 2000

At a glance

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Judgment (50 paragraphs)

Legislation Cited (8)