Plaintiff v Defendants

1 On 21 September 2016 I published reasons[1] ('Reasons') for my determination of applications made by each of the parties in this proceeding - an application by the plaintiff for leave to further amend her statement of claim; and an application by the defendants that the interlocutory costs that I ordered in their favour against the plaintiff on 18 November 2013 be fixed by way of a gross costs order and that the proceeding be stayed until those costs were paid. In short summary, I held that I would not grant leave to the plaintiff to make the further amendments she sought to the extent that they were opposed, and, subject to one issue, would make the gross costs order sought. I also held that if such a gross costs order was made, then the proceeding should be stayed until it was met.

2 The issue that concerned me was whether it was necessary for a party seeking a gross costs order in respect of interlocutory costs to show that an order for taxation of those costs prior to the finalisation of the proceeding would also have been appropriate. I was concerned that if this was not shown then to allow a gross costs order in respect of interlocutory costs, i.e. to fix the costs without a taxation, could defeat the intention of r 63.20.1 of the Supreme Court (General Civil Procedure) Rules 2015.[2] That rule provides that, unless the Court otherwise orders, a party in whose favour an order for interlocutory costs is made may not tax those costs until the proceeding is completed. As taxation is the usual process by which costs are fixed and so enforceable, if they are not agreed, the effect of r 63.20.1 is that usually interlocutory costs are not recoverable until the end of the proceeding.

3 I expressed a preliminary view in the Reasons that:

a gross costs order should not be utilised if it would avoid the intent of r 63.20.1 and so is only appropriate in respect of interlocutory costs where an order for immediate taxation would otherwise be appropriate.[3]

4 As the question had not been addressed in detail at the hearing of the applications, I allowed further submissions prior to the making of orders. The parties later agreed on a timetable for those further submissions which allowed for the plaintiff's absence overseas for a period. The parties spoke to their further submissions on 18 November 2016 at which time I gave brief oral reasons and pronounced orders.

5 As those orders reflect a change to a preliminary view I expressed in a published judgment, I thought it appropriate to elaborate my brief oral reasons and publish them in revised form. What follows are those revised reasons.

Relationship between r 63.07(2)(c) and r 63.20.1

Supreme Court Act and Rules

6 The power to make costs orders is conferred on the Court by s 24 of the Supreme Court Act 1986 (Vic) ('Supreme Court Act'). That section provides as follows:

24 Costs to be in the discretion of Court

(1) Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.

(2) Nothing in this section alters the practice in any criminal proceeding.

7 Unusually s 24 provides that the discretion it confers is subject in its exercise to the 'Rules' (rather than the other way around) as well as being subject to any other Act. The relevant rules are found in Order 63 of the Supreme Court (General Civil Procedure) Rules 2015 ('the Rules'). The Civil Procedure Act 2010 (Vic) ('the CPA') is another Act that confers power on the Court to make orders for costs.

8 As I discussed in the Reasons[4], r 63.07 (1) of the Rules provides that normally where a party is to be paid costs, those costs are to be taxed, if not agreed. Rule 63.07(2) does confer power on the Court to order either at the time of making the costs order, or later, that instead of taxed costs, the party is entitled to costs calculated in other ways, including by a gross sum. That is the discretion the defendants sought that I exercise in their application.

9 The potential complication that I saw in the exercise of this discretion in relation to interlocutory costs arises from r 63.20.1 which provides as follows:

63.20.1 Taxation of c****osts on interlocutory application or hearing

If an order for costs is made on an interlocutory application or hearing, the party in whose favour the order is made shall not tax those costs until the proceeding in which the order is made is completed, unless the Court orders that the costs may be taxed immediately.

10 I was concerned that it may defeat the intention of this rule to make an order converting an order for interlocutory costs (which would require taxation) to an order for gross costs (which does not require taxation) unless the circumstances that would justify an order under r 63.20.1 were present. In forming this preliminary view, I was taking the conventional approach that provisions in the one statutory instrument should be read together if possible.[5]

11 The defendants make two submissions on this point in their written further submissions.[6] They first submit that a gross costs order under r 63.07(2) can be made 'even though the court has not made an order for immediate taxation pursuant to r 63.20.1'.[7] That is undoubtedly correct. A gross costs order is an alternative to taxation, and so the Court could not order both immediate taxation and a gross costs order in respect of the same interlocutory costs.

The broad discretion to make a gross costs order should not be fettered by reference to r 63.20.1. The Civil Procedure Act 2010 does not envisage that the discretion to make a gross costs order is dependent on an order for immediate taxation. Section 65C of the Civil Procedure Act 2010 provides that the Court may make an order as to costs it considers appropriate to further the overarching purpose and that a costs order may be made at any time in a proceeding, including but not limited to any interlocutory proceeding.

The discretion is to be exercised to further the overarching purpose of facilitating the just, efficient, timely and cost effective resolution of the real issues in dispute.[8]

13 In other words, the defendants submit, contrary to the preliminary view I expressed, that it is not necessary or appropriate to exercise the power to make a gross costs order in respect of interlocutory costs only as subject to the power to order immediate taxation of interlocutory costs i.e. to read r 63.07(2)(c) as subject to the intent of r 63.20.1. This is because the discretion is to be exercised pursuant to the CPA, and in particular to further the overarching purpose of that Act. The defendants refer to s 65C as being the relevant conferral of power. That section provides as follows:

65C Other costs orders

(1) In addition to any other power a court may have in relation to costs, a court may make any order as to costs it considers appropriate to further the overarching purpose.

(2) Without limiting subsection (1), the order may -

(a) make different awards of costs in relation to different parts of a proceeding or up to or from a specified stage of the proceeding;

(b) order that parties bear costs as specified proportions of costs;

(c) award a party costs in a specified sum or amount;

(d) fix or cap recoverable costs in advance.

(3) An order under subsection (1) may be made -

(a) at any time in a proceeding;

(b) in relation to any aspect of a proceeding, including, but not limited to, any interlocutory proceeding.

14 Section 65E of the CPA provides for the interaction between the power to award costs under s 24 of the Supreme Court Act, the Rules and the CPA as follows (my emphasis in italics added):

65E Interaction with other powers of court

(1) Nothing in this Part limits any power a court may have -

(a) to award costs in a proceeding -

(i) in the case of the Supreme Court, under section 24 of the Supreme Court Act 1986 or any rules of court; or

...

or

(b) to make any other order or give any other direction in relation to orders for costs or for the disclosure of costs; or

(c) to take any action that the court is empowered to take in relation to a contravention of an order made or a direction given by the court.

(2) Nothing in this Part limits -

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

... or

(c) any other powers of a court arising or derived from the common law or under any other Act (including any Commonwealth Act), rule of court, practice note or practice direction.

15 In other words, by virtue of s 65E of the CPA, s 65C of that Act does not limit the power that the Court otherwise has in relation to costs under the Supreme Court Act or the Rules. Section 65C confers a power- it does not compel its exercise. When a costs order is to be made, however, whether pursuant to s 65C or otherwise, the Court is compelled by ss 8 and 9 of the CPA to give effect to the 'overarching purpose'. Sections 7-9 of the CPA define the 'overarching purpose' and impose an obligation on the Court to give effect to it. Relevant portions of those sections provide as follows in relation to the overarching purpose (with my emphasis in italics added):

7 Overarching purpose

(1) The overarching purpose of this Act and the rules of court in relation to civil proceedings is to facilitate the just, efficient, timely and costeffective resolution of the real issues in dispute.

8 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.

9 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 the 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

(ii) the preparation of the case for trial;

(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.

16 The plaintiff in her further submissions has not engaged in a detailed analysis of the statutory provisions, or responded in detail to the Further Submissions of the defendants. She simply submits that a gross costs order should not be made in respect of the past interlocutory costs because of r 63.20.1.[9] The plaintiff otherwise reiterates aspects of the submissions that she made in the hearing of the applications. I made findings in respect of those matters in the Reasons, and am bound by them, as are the parties, subject to appeal.

17 My analysis of the interaction between the Supreme Court Act, the Rules and s 65C of the CPA is as follows.

18 Pursuant to s 8(1) of the CPA, the Court must seek to give effect to the overarching purpose whenever it makes a costs order. Section 8(2) of the CPA provides that that obligation overrides any other Act, other than the Charter. Section 24 of the Supreme Court Act also provides that the discretion it confers to order costs is subject to any other Act. It follows that the determining principle in the making of any costs order, including a gross costs order in respect of interlocutory costs, is not the content of the Rules, and their interrelationship, but the overarching purpose of the CPA. To that extent, the CPA overrides the costs provisions in the Supreme Court Act and the Rules if the exercise of a costs power under that Act or the Rules would be inconsistent with the CPA.

19 The central role that furtherance of the overarching purpose plays in the exercise of a court's powers in civil proceedings was emphasised by the Court of Appeal in Northern Health v Kuipers[10]. In that case, the Court of Appeal overturned an interlocutory ruling of the County Court on the basis that the judge had failed to properly consider the obligation to further the overarching purpose imposed by s 8 of the CPA or to have regard to the mandatory and relevant optional factors listed in s 9.[11]

20 Accordingly, on reflection and on consideration of the Defendants' Further Submissions I consider that they are correct. It is not necessary that the conditions for an order that interlocutory costs be taxed immediately be found before a gross costs order can be made in respect of those costs, because the determining principle is whether the order will further the overarching purpose of the CPA, having regard to the mandatory and relevant optional factors for consideration enumerated in s 9. That conclusion departs from the preliminary view I expressed in the Reasons. To the extent the interpretation that I adopted in my preliminary view might have been suggested by the Rules, that interpretation is overtaken by the CPA.

21 There is a further basis for my conclusion that the discretion to make a gross costs order is not confined by the usual rule that interlocutory costs are not to be taxed until the conclusion of the proceeding. This further basis is independent of the CPA, but not inconsistent with it, or the overarching purpose. It is simply that the discretions are distinct and are directed to different topics. The discretion to make a gross costs order is concerned with the mode by which the amount of costs is fixed. The discretion to allow immediate taxation is concerned not with the mode, which remains taxation, but with the timing of the taxation. Once the amount of the costs is fixed by a gross costs order or by taxation, there is a third discretion that the Court may be invited to exercise, as to the time for payment or consequences of non-payment. That discretion is conferred by r 63.03, which provides as follows:

63.03 Time for costs order and payment

(1) The Court may, in any proceeding, exercise its power and discretion as to costs -

(a) at any stage of the proceeding; or

(b) after the conclusion of the proceeding.

(2) Costs which a party is required to pay under any of these Rules or an order of the Court shall, unless the Court otherwise orders, be paid forthwith.

(2.1) Costs which a party is required to pay under an order of the Costs Court shall, unless the Costs Court otherwise orders, be paid forthwith.

(3) Where the Court makes an interlocutory order for costs, the Court may then or thereafter order that if the party liable to pay the costs fails to do so -

(a) if that party is the plaintiff, the proceeding shall be stayed or dismissed;

(b) if that party is a defendant, the defendant's defence shall be struck out.

(4) In paragraph (3) -

defendant includes any person against whom a claim is made in a proceeding;

plaintiff includes any person who makes a claim in a proceeding.

22 Rule 63.03(3) was relied on by the defendants for their stay application. I exercised the discretion under r 63.03(2) in the orders made on 18 November 2016 to give the plaintiff time to pay the gross costs order.

23 What this analysis shows is that while the rules should desirably be read as part of a whole, it is important to identify the topic with which each is concerned and not import into one rule considerations that arise under another rule. Having said that, of course it will often be the case that the same considerations that determine the proper exercise of one of the discretions will also apply to another. That is indeed the case here.

24 I think this conclusion can also supported by the reasoning of Hargrave J in Fanissa Pty Ltd and anor v Versace and anor[12] ('Fanissa'). In that case, Hargrave J held that an application for immediate taxation of interlocutory costs can be made at a later point in time than the original order. In reaching that conclusion, he rejected the contention, based on an earlier decision of mine, that an order for immediate taxation cannot be sought retrospectively, noting:

Rule 63.20.1 does not prescribe the time at which an application for immediate taxation can be made. Moreover, given that delay in the proceeding can be a ground for the exercise of the discretion to grant an order for immediate taxation, there is no reason why an application cannot be made after the relevant costs order has been made and authenticated without an attendant order for immediate taxation. A later order for immediate taxation operates independently, and does not involve any variation of the original costs order.[13]

25 To the extent that this is a caution against reading into a rule a limitation that is not expressly included, and is inconsistent with the intent of the rule, it may also caution against limiting the discretion conferred by r 63.07(2)(c) by r 63.20.1.

26 I now apply the determining principle, the furtherance of the overarching purpose, defined in the CPA as the 'just, efficient, timely and cost-effective resolution of the real issues in dispute', and consider the mandatory and relevant optional factors in s 9 of the CPA in the exercise of the discretion to make a gross costs order, having regard to the findings in the Reasons.

27 As set out in my Reasons I consider that the making of a gross costs order would be appropriate given that if taxation is required the costs of that process could approach the amount sought by way of gross costs, further delay would be occasioned and the costs as taxed may not be recoverable in any event.[14] These findings reflect consideration of the factors listed in s 9(1)(c), (d), (e), (f) and (g).

28 The factor listed as s 9(1)(b) requires the Court to consider the public interest in the early settlement of disputes by agreement between the parties. The plaintiff has emphasised throughout the determination of these applications that she is keen to settle the costs issues between her and the defendants. However, I found that her conduct in that regard verged on abuse of process, because in her endeavour to secure her release from a substantial costs obligation owed to the defendants and imposed on her as litigation guardian in her husband's proceeding she occasioned unnecessary cost and delay to the defendants in this proceeding. [15] For this reason, I consider that it is just to grant the application for a gross costs order, the factor I am required to consider by s 9(1)(a). I also concluded in the Reasons in my consideration of the stay aspect of the defendants' application that it was just to order a stay, given this aspect of the plaintiff's conduct.[16]

29 I also considered in the Reasons relevant optional factors stipulated in s 9(2) as follows. I considered the factors listed in paragraphs (b), (c), and (e) principally in relation to the plaintiff's failure to accept the defendants' legitimate objections to paragraphs 14,15 and 20 of her Proposed Further Amended Statement of Claim.[17] In my view, this failure was a breach by her of the overarching obligations imposed by ss 22, 23 and 25 of the CPA. This failure related in turn to my consideration of the defendants' application for a gross costs order. I also took into account the extent to which the plaintiff was responsible for delay in the proceeding, the factor identified in paragraph (d).[18] I took into account the prejudice the plaintiff would suffer if the gross costs order was made, in particular the absence of expert evidence and that the assessment provided by a taxation would not occur, and also took into account the potential prejudice to her if the stay was granted, and she was unable to pay the costs[19]. Prejudice is the factor identified in paragraph (f). Finally, I took into account that the plaintiff is not legally represented, the factor in paragraph (h)[20].

30 The combination of these findings means that the making of a gross costs order would further the overarching purpose of the CPA, and indeed to refuse it would not.

Was an order for immediate taxation here appropriate?

31 If my conclusion that r 63.07(2)(c) is not limited by r 63.20.1 is incorrect, then in the alternative this is a case where, in any event, I am satisfied that it would have been appropriate, at least at this point in time, to make an order allowing taxation of the past interlocutory costs before the determination of the proceeding. In Fanissa, Hargrave J summarised the authorities[21] that identify the principles that apply to the exercise of the Court's discretion to order immediate taxation,[22] and I respectively adopt that summary.

32 Three particular factors have been identified as reasons why the demands of justice may require departure from the usual rule that interlocutory costs are to be taxed only at the end of the proceeding- unsatisfactory conduct of the party liable to pay the costs; the likely delay before the completion of the proceeding; and that the interlocutory application concerns or concerned a separate or discrete issue. In my view, all three here apply. I discussed the conduct of the plaintiff in the proceeding at length in the Reasons. I concluded that, contrary to the submission of the defendants, the plaintiff was not responsible for substantial components of the very lengthy delay in the proceeding to date, but nevertheless she was responsible for some undue delay and consequent cost in the period since the judgment on appeal and the current applications. I also found that the plaintiff had a substantial motive for future delay.[23]

33 I did not discuss the third factor identified above in the Reasons, as it was not then relevant. The defendants submit that it applies because (with my emphasis):

The summons resulting in an order for costs on 18 November 2013 involved the dismissal of separate and distinct claims. The causes of action that remain to be determined have no relationship with any of the claims that have been dismissed.[24]

34 I think the final sentence puts the position too high. It is true that many of the plaintiff's proposed claims did not survive the combined effect of my earlier judgment and the judgment of the Court of Appeal on appeal.[25] However, some did survive. I concluded in the Reasons that four of the earlier claims survived my judgment and that of the Court of Appeal, although only one survived without re-pleading.[26] The plaintiff has now added further claims, with the consent of the defendants. All of the plaintiff's past and current claims in this proceeding do or did relate to alleged unlawful conduct by the police towards her, that began with police action directed towards her husband. For that reasons, I do not think it is accurate to say that the surviving claims have 'no' relationship with the dismissed claims. However, the survival of only one of the original 17 of the plaintiff's claims does mean that what remains of the proceeding is at least formulated differently and in some instances different in substance to the proceeding before my earlier judgment. To this extent, the earlier costs largely relate to discrete and concluded issues.

35 For these reasons, I think the correct view is that the making of a gross costs order in respect of interlocutory costs is not dependent on the applicability of an order for immediate taxation of those costs, although in many cases, as in this one, similar considerations will apply to the exercise of the discretion conferred by the respective rules. In any event, I consider that this would, at least now, be a suitable case for an order for immediate taxation of the past interlocutory costs, had the defendants sought that order.

36 The orders that I made following my brief oral reasons also reflected discussion about issues of timing and the costs of the parties' applications.

(As proposed by the plaintiff in her Proposed Further Amended Statement of Claim

[1] Angelevska v State of Victoria (No 3) [2016] VSC 568 ('Angelevska (No 3)').

[5] Pearce and Geddes, Statutory Interpretation in Australia 6th edn [4.2]-[4.4].

[6] Further Submissions on behalf of the Defendants dated 19 October 2016 ('Defendants' Further Submissions').

[7] Defendants' Further Submissions at [3].

[8] Defendants' Further Submissions at [6]-[7].

[9] Further Submissions on behalf of the Plaintiff dated 11 November 2016 at [6].

[10] [2015] VSCA 172.

[11] See in particular paras [88] and following.

[12] [2016] VSC 416.

[14] Angelevska (No 3) at [97]-[116].

[16] Angelevska (No 3) at [154]- [157].

[17] Angelevska (No 3) at [102]-[107], [112]-[115] and [137].

[18] Angelevska (No 3) at [108], [137].

[19] Angelevska (No 3) at [120]-[127]; [151].

[21] Dale v Clayton Utz (No 3) [2013] VSC 593 per Hollingworth J at [57]-[65]; adopted by the Court of Appeal in Setka v Abbott (No 2) [2013] VSCA 376.

[23] Angelevska (No 3) at [101]-[108], [110]-[115], [133]-[137] (as to the plaintiff's conduct, past delay and likely future delay)

[24] Defendants' Further Submissions at [12].

[25] Angelevska v State of Victoria and ors [2015] VSCA 140.

[26] Angelevska (No 3) at [10], [144].