Plaintiffs v Defendants

2 Rule 63.23 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) authorises the Court to order that a solicitor pay costs which have been incurred by a party improperly or without reasonable cause or which have been wasted by a failure by the solicitor to act with reasonable competence and expedition. In this case I found that the plaintiffs' costs of the proceeding were occasioned by the acts or omissions of Mrs Todd's solicitors. Ms O'Connell has since added to the evidence by an affidavit affirmed on 17 October 2012 for the purpose of my decision on costs.

3 The evidence in the proceeding, before Ms O'Connell's recent affidavit, had left open the possibility that the contention maintained on behalf of Mrs Todd (namely, that the 60 day time period for referral to the Medical Panel had started to run around 16 August 2011) had deliberately not been raised until well after it was possible for the plaintiffs to take precautionary measures (assuming the argument had merit). The evidence of Ms O'Connell in her affidavit of 17 October 2012 indicates that not to be the case.

4 Ms O'Connell stated in her affidavit that it had been her intention in September 2011 to have provided the information as the plaintiffs had requested. She deposed that the firm had a significant backlog of work and that her department was unable to respond to the plaintiffs' correspondence in a timely manner. The evidence of Ms O'Connell in her affidavit of 17 October 2012 would suggest, however, that the assumption maintained by the plaintiffs (namely that the information required for the commencement of the 60 day period to start had not been provided by August 2011) was a common assumption made by both sets of solicitors. From Ms O'Connell's affidavit of 17 October 2012 it appears that the assumption only ceased to be a common assumption on 12 December 2011 when her draft letter, which was intended to provide the information that would trigger the start of the 60 day time period, was amended as a result of a conversation she had with her supervising partner. In that conversation the supervising partner advised her that he, in turn, had had "an informal discussion with a senior member of the Bar" and was advised to the effect that it was unclear that the prescribed information was to be provided with a Certificate of Assessment. It was as a result of that informal discussion that her supervising partner and Ms O'Connell formed the view that "it would be prudent not to accept the Plaintiffs' contention that the 60 day timeframe for referral to the Medical Panel" had not yet commenced "pending obtaining advice from Counsel on the issue".

5 Ms O'Connell's firm accepts, and have consented to, an order that they pay the plaintiffs' costs of the proceeding. They have done so, presumably, on the basis that it was the firm's failure to respond promptly to the plaintiffs' requests that occasioned the plaintiffs' need to institute the proceeding. The plaintiffs could have taken protective measures if Mrs Todd's solicitors had replied to the plaintiffs' letters promptly. It is not necessary, therefore, for me to consider an alternative basis upon which the costs should fall to be paid by the practitioners in circumstances where Mrs Todd's solicitors accept that they should pay the costs occasioned by the conduct of a solicitor for whose conduct they are responsible. In those circumstances it is also undesirable for me to make further findings about the conduct of Ms O'Connell. The firm's acceptance of an obligation to pay the costs make moot any further enquiry into culpability for the purposes of determining who should bear the costs. The firm and Ms O'Connell both ask that I make an express finding that Ms O'Connell's conduct is not consistent with there having been any misleading or deceptive conduct on her part or on the part of the firm, but in the circumstances of the firm's consent to pay the costs, and in the absence of a controvertor or the testing of evidence, it is both unnecessary and inappropriate for me to make any findings on the issue either way. The supervising partner has not given evidence about these matters and there has been no evidence about why the firm did not explain to the plaintiffs' solicitors that the firm's view had changed given the plaintiffs' contentions that the conduct of Mrs Todd's solicitors had encouraged the plaintiffs to adhere and rely upon the assumption that the time for requesting a referral had not started because all of the information which was required had not yet been provided (a claim met by Mrs Todd's solicitors in part by the assertion in their written submissions that the assumption "was a forensic decision made by Redline's legal advisors").

6 The plaintiffs' acceptance of costs on a party/party basis also makes it undesirable in this case for a consideration of whether costs should be imposed on an indemnity basis. Harper J (as his Honour then was) said in Ugly Tribe Co Pty Ltd v Sikola:[1]

In seeking costs on an indemnity basis, the first defendant is asking the Court to depart from its usual course: Spencer v Dowling. Special circumstances must be present to justify such a departure: Australian Electoral Commission v Towney (No. 2). These include:

(i) The making of an allegation, known to be false, that the opposite party is guilty of fraud: Fountain Selected Meats (Sales) Pty. Ltd. v International Produce Merchants Pty. Ltd.

(ii) The making of an irrelevant allegation of fraud: Thors v Weekes

(iii) Conduct which causes loss of time to the Court and to other parties: Tetijo Holdings Pty. Ltd. v Keeprite Australia Pty. Ltd.

(iv) The commencement or continuation of proceedings for an ulterior motive: Ragata Developments Pty. Ltd. v WestpacBanking Corporation

(v) Conduct which amounts to a contempt of court: EMI Records Ltd. v Ian Cameron Wallace Ltd.

(vi) The commencement or continuation of proceedings in wilful disregard of known facts or clearly established law: J-Corp. Pty. Ltd. v Australian Builders Labourers Federation Union of Workers (W.A.) Branch (No. 2)

(vii) The failure until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided, the trial: National Australia Bank v Petit-Breuilh (No. 2).

The categories of special circumstances are not closed: Tetijo Holdings, supra. The cases must not, therefore, be read "in an endeavour to establish a set of inflexible guidelines which should thereafter be determinative of the manner in which the Court's discretion is to be exercised [for this] would be to fetter the Court's discretion": National Australia Bank v. Petit-Breuilh, supra.[2]

To these considerations there must now be added the overarching obligations imposed by the Civil Procedure Act 2010 (Vic). The facts in this case may well have justified an order for costs on an indemnity basis. The case against the imposition of indemnity costs for Mrs Todd's solicitors, at its highest, was that any loss of the plaintiffs' right would not have been caused by wilful concealment: any loss, had it occurred, is said would have been an unintended consequence of the firm's limited resources and backlog. However, the overarching obligations in the Civil Procedure Act 2010 (Vic) are in part designed to ensure that the rights of an opposing party are not lost by inattention or lack of diligence. A failure to meet the obligations imposed by the Civil Procedure Act 2010 (Vic) may justify the court's imposition of a costs order against a legal practitioner on a higher scale than the usual one of party/party costs. However, the plaintiffs do not press for costs on a higher scale and, in those circumstances and in this case, I will make the orders that have been sought by consent.

[1] [2001] VSC 189.

[2] Ibid [7]-[8] (citations omitted).