Voss v Ipkendanz

Proceedings in this Court 12Mr Voss sought leave to appeal originally against the whole of the decision but subsequently (by amended summons) only against the order for separate assessment of damages (those appeal proceedings are the present proceedings) in this Court. 13On 12 December 2008, Latham J granted Mr Voss' application for a stay of the Local Court proceedings pending determination of Mr Voss' application for leave to appeal. Her Honour made an order that costs be reserved. 14On 19 June 2009, Simpson J delivered judgment in the appeal proceedings. Her Honour granted leave to appeal. Her Honour set aside the Local Court order for separate determination of damages and ordered that the matter be remitted to the Local Court to determine whether to make such an order for a separate determination of damages. Her Honour did not make any orders in relation to costs.

Back in the Local Court 15On 9 October 2009, after giving the parties an opportunity to be heard, the Local Court ordered that there be a separate hearing on damages. 16On 18 December 2009, the Local Court gave judgment in favour of Mr Ipkendanz, assessed damages at $15,351 and ordered that Mr Voss pay Mr Ipkendanz's costs as agreed or assessed. 17On 10 May 2010, the Local Court heard the submissions by the parties on the issue of costs. 18On 8 June 2010, the costs order was varied so that Mr Voss was ordered to pay the costs of Mr Ipkendanz on an ordinary basis, except in relation to the costs of 10 and 12 March 2008 where Mr Ipkendanz was ordered to pay the costs of Mr Voss on an ordinary basis. The costs were to be assessed in accordance with the Legal Profession Act 2004. 19On 2 July 2012, the costs were assessed and a determination and reasons were issued. Costs of the Local Court were to be paid by Mr Voss to Mr Ipkendanz in the sum of $115,443.40. 20On 26 October 2012, on the application of Mr Voss, the costs assessor's determination was reviewed by the appeal panel. There was no change to the original determination.

Back in this Court - the current applications 21On 6 December 2012, Mr Voss filed a notice of motion seeking his costs of the stay application before Latham J. 22On 13 February 2013, Mr Ipkendanz filed his motion seeking costs. 23On 21 March 2013, Mr Voss filed his amended motion seeking costs for both the motion seeking the stay of proceedings and the amended summons seeking leave to appeal. He also seeks punitive damages. 24There are four issues to be determined in this judgment. They are firstly, costs in relation to the motion for the stay of proceedings; secondly, the costs of the hearing of the amended summons before Simpson J; thirdly, punitive damages; and finally, the costs of these motions.

Costs - the relevant principles 25Mr Voss drew this Court's attention to s 60 of the Civil Procedure Act 2005. It reads: "60 Proportionality of costs In any proceedings, the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the cost to the parties is proportionate to the importance and complexity of the subject-matter in dispute." 26Section 98 of the Civil Procedure Act 2005 relevantly reads: "98 Courts powers as to costs (1) Subject to rules of court and to this or any other Act: (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis. (2) Subject to rules of court and to this or any other Act, a party to proceedings may not recover costs from any other party otherwise than pursuant to an order of the court. (3) An order as to costs may be made by the court at any stage of the proceedings or after the conclusion of the proceedings. (4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount. ... (6) In this section, costs include: ... (b) in the case of an appeal to the court, the costs of the proceedings giving rise to the appeal, ..." 27The power to awards costs is discretionary: see Oshlack v Richmond River Counsel [1998] HCA 11; (1998) 193 CLR 72 at 84. 28And Uniform Civil Procedure Rules 2005, 42.1, 42.2 and 42.4 read: "42.1 General Rule that costs follow the event Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs. 42.2 General rule as to assessment of costs Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis. 42.4 Power to order maximum costs (1) The court may by order, of its own motion or on the application of a party, specify the maximum costs that may be recovered by one party from another. (2) A maximum amount specified in an order under subrule (1) may not include an amount that a party is ordered to pay because the party: ... (d) has otherwise caused another party to incur costs that were not necessary for the just, quick and cheap: (i) progress of the proceedings to trial or hearing, or (ii) trial or hearing of the proceedings. ..."

Submissions of Mr Voss on costs 29Mr Voss submitted that this Court should take into account Local Court Practice Note 2 of 2007 (amended 1 June 2008) which indicates the strong prima facie position for claims of $20,000 or less, namely that a successful plaintiff's costs do not exceed 20% of the verdict. Mr Voss submitted that it is true that the claim exceeded $20,000, but the verdict did not. He says that by analogy with that Practice Note, and by applying the principles in s 60 when exercising its powers under the Rules, this Court should order that the plaintiff should not be liable for the costs determination of $115,443.30 by off setting those costs with the orders sought by him.

Submissions of Mr Ipkendanz on costs 30Mr Ipkendanz submitted that both orders seeking costs sought by Mr Voss should be refused because firstly, the stay application was heard more than four years ago; secondly, both parties were legally represented at the hearings before Latham J and Simpson J; and finally, the issues in the proceedings were finally determined by the orders made by Simpson J on 19 June 2009 when her Honour did not make any costs orders. 31According to Mr Ipkendanz, as Simpson J did not reserve the question of costs, the question of costs must also be taken to have been finally determined by her Honour and that the final disposition of the appeal proceedings was that the parties were to bear their own costs of the appeal proceedings (including the stay application as an interlocutory step in those proceedings). Counsel submitted that one can only assume that counsel for the two parties had good reasons for not seeking any orders for costs at the time. I do not agree that this assumption should be made in the light of Mr Voss' statement to the contrary. 32Mr Ipkendanz submitted that as the real issues in dispute were resolved almost four years ago, the agitation of costs questions now is not in the interests of the just, quick and cheap determination of those real issues. In those circumstances, Mr Ipkendanz says that the Court should exercise its discretion under s 98 to refuse to make the costs orders sought, such that the parties bear their own costs of the stay application and appeal. 33When this Court asked Mr Voss to explain the delay in seeking costs in this Court, he explained that he awaited the outcome of the costs assessment and the review panel in relation to the Local Court proceedings before filing the motion seeking his costs. On 26 October 2012, the costs determination relating to Mr Ipkendanz's costs of the Local Court proceedings was finalised. On 6 December 2012, Mr Voss filed his notice of motion. In both his written and oral submissions, Mr Voss seems to regard the entire Court proceedings as a continuum, notwithstanding that there are two distinct sets of proceedings in different courts, one in the Local Court and one in this Court. 34While Mr Voss should have made his application for costs at an earlier stage, I accept that he holds a firm belief that the correct procedure was to come back to this Court only after the outcome of the costs application in relation to the Local Court proceedings were known.

The motion for stay of proceedings before Latham J 35On 12 December 2008, at the hearing of the notice of motion for a stay of proceedings, Mr Horowitz of counsel appeared for Mr Voss. Mr Dick of counsel appeared for Mr Ipkendanz. 36Latham J relevantly stated (at T22-23): "...I think I should just indicate that my view is that the Magistrate has fundamentally misunderstood the role of r 30.1. He's fundamentally misunderstood the requirement on any Court of trial to hear all of the issues unless there is some good reason for not doing so and unless the just, quick and cheap resolution of the matter is advanced by such an application, namely, to separate the trial of the issues at an appropriately early time so that when the parties come to the proceedings and put on their evidence they do so in the knowledge that they are not incurring the costs of responding to evidence on damages and that they are confining themselves to one issue or the other. Now that wasn't what happened in this case. What happened in this case was the plaintiff chose to fight the proceedings on all issues. The plaintiff alleged that there were significant damages flowing from the alleged nuisance and negligence. The plaintiff put on evidence in this respect, much of that evidence was rejected and once it was rejected what the Magistrate was really obliged to do was to assess damages on the basis of the admissible evidence that was before him. He didn't do that. He effectively allowed the plaintiff to repair its case on damages. There was no notice effectively given to the defendant that that was the course that he proposed to take until judgment was delivered and by then the defendant was not in a position to gainsay it. So I think that encapsulates the reasons that I make the orders sought by the defendant in the Notice of Motion that was filed on 4 December 2008." 37It is common ground that Mr Ipkendanz did not consent to the application for a stay of proceedings. The application was contested before Latham J and Mr Ipkendanz was unsuccessful. Costs were reserved. Other than the earlier submissions that I have recorded and taken into account, Mr Ipkendanz does not have any further grounds as to why the Court should not order him to pay Mr Voss' costs of the stay application. In these circumstances, it is my view that costs should follow the event. Mr Ipkendanz should pay Mr Voss' costs in relation to the stay of proceedings motion, including the hearing before Latham J, on an ordinary basis.

The appeal before Simpson J 38Both parties were represented by counsel. On 10 June 2009, the morning of the hearing, Mr Voss was granted leave to file an amended summons. This amendment had been foreshadowed to the solicitor for Mr Ipkendanz about one month prior to the hearing. The amended summons sought that damages to be assessed in accordance with UCPR 30.1 and to permit further evidence to be adduced in relation to damages. The orders Mr Voss sought were firstly, leave to appeal from the decision below; and secondly, that the appeal be allowed with costs. Mr Ipkendanz filed a cross summons seeking to overturn the Magistrate's rulings rejecting some of his evidence. There was no separate argument directed to the cross summons: see Simpson J, Voss v Ipkendanz [2009] NSWSC 562 at [9]. 39In Voss v Ipkendanz [2009] NSWSC 562, her Honour stated at [45] to [49]: "[45] Given the quantum of damages claimed, it would appear that the costs, involving a six day hearing, and a stay application in this court, are already out of proportion to the amount in dispute. It is troublesome that the costs of resolution have escalated, and I do not overlook the importance of s 60 of the Civil Procedure Act, requiring an eye to proportionality. However, that does not mean that this Court, or the Local Court, ought to lend its support to injustice. [46] I am also conscious that Mr Voss was denied procedural fairness by the Magistrate's proceeding, in the absence of any indication of his intention to do so, to make the order that he did. That will inevitably involve Mr Voss in the added costs of dealing with whatever additional evidence Mr Ipkendanz proposes to tender, and of a further hearing. [47] But it is also true that Mr Ipkendanz was denied procedural fairness, in that the Magistrate failed to deal with a clearly made application to reconsider the tender (at a time when its relevance or admissibility could more clearly be perceived) of his damages evidence. [48] Nor is the firmly expressed view of Latham J conclusive. It may well be that the Magistrate misconceived the effect of the statutory provisions, but that does not of itself mean that his ultimate decision was wrong. [49] I have reached that conclusion that justice, in this appeal, is best served by an order under s 75(1)(c) of the Local Courts Act, setting aside the order made by the Magistrate, remitting the matter to the Local Court with a direction that the Magistrate give the parties an opportunity to be heard on the future progress of the matter, and in particular on whether he ought to proceed as he has indicated he intends to do. It may be that the cheapest and quickest resolution would be (if rules of evidence permit it, and it is appropriate to do so) to admit the disputed evidence. That is entirely a matter for the Magistrate and one on which I cannot comment." 40Simpson J granted leave to appeal. The order of the Local Court of 3 October 2008, that there be a further hearing for the assessment of damages was set aside; the matter was remitted to the Local Court for determination in accordance with her Honour's reasons; and the Local Court was to provide the parties with an opportunity to be heard as to the future progress of the matter, and in particular the manner in which damages ought to be assessed. 41I accept that Simpson J considered the Local Court had failed to accord procedural fairness to both parties not merely to Mr Voss alone and that her Honour did not make any order in relation to costs. Mr Voss stated at the hearing before me that he had instructed his counsel to make an application for costs before Simpson J. I accept that he did so. There is no transcript of that hearing on file. 42Mr Ipkendanz submitted he is entitled to have his costs of the balance of the appeal. Mr Ipkendanz also submitted that if a costs order is to be made, the appropriate order is that the costs of the appeal proceedings abide the outcome of the Local Court proceedings. Counsel for Mr Ipkendanz pointed out that when the matter was remitted to the Local Court, Mr Ipkendanz was successful in having an assessment of damages and also successful in that he obtained an award of damages and costs. Hence, he submitted he should have his costs of the appeal proceedings. In my view this is not an appropriate order for costs as Mr Voss was successful on appeal. Mr Ipkendanz has been awarded costs by the Magistrate in the Local Court after it was remitted for determination. Those costs have been assessed at $115,351 although the verdict amount was only $15,351. 43The issue of costs of the appeal have not been dealt with. That issue can still be determined. Although unusual, I accept that Mr Voss believed that he should approach this Court after the costs in the Local Court had been finalised. 44It is my view that Mr Voss sought and obtained leave to appeal. A party can still apply for the costs issue to be determined. The order he sought namely that the decision of the Magistrate was set aside and the matter was remitted to the Local Court to determine whether to make such an order for a separate determination of damages should be made. As the order appealed was an interlocutory one in the Local Court, leave to appeal was required. Once granted there was no need to make any further orders in relation to the appeal. Hence, Mr Voss was successful in being granted the relief he sought. Costs should follow the event. Mr Ipkendanz should pay Mr Voss' costs of the amended summons dated 10 June 2009 including the hearing before Simpson J.

Mr Voss' punitive costs order 45By paragraph 3 of his amended motion Mr Voss seeks further costs orders including punitive damages to offset the certificate of determination of costs by the costs review panel and the costs incurred by him to defend the claim make by Mr Ipkendanz. 46Mr Voss submitted that Mr Ipkendanz's solicitor certified pursuant to s 347 of the Legal Profession Act 2004 that there were reasonable grounds for believing, on the basis of provable facts and a reasonably arguable view of the law, that the claim for damages in these proceedings had reasonable prospects of success. I accept that the statement of claim (filed 4 August 2006) pleaded at [21] that Mr Ipkendanz was entitled to legal fees and expenses in the sum of $40,644.02 and that the sum of damages for legal fees awarded by the Local Court was $5,4426.19. While Mr Ipkendanz may not have been awarded the entire sum he claimed it does not follow that the solicitor should not have certified that there were reasonable grounds for believing, on the basis of provable facts and a reasonably arguable view of the law, that the claim for damages in these proceedings had reasonable prospect of success. 47Mr Voss further submitted that these proceedings were defended and prolonged by Mr Ipkendanz and therefore he [Mr Voss] should be compensated by punitive damages for the costs incurred in defending the claim. Mr Voss further says that he has already spent in excess of $235,000 on these proceedings and seeks punitive damages of $200,000 in compensation. 48Mr Voss further submitted that the Court should note s 60 of the Civil Procedure Act, by analogy with Local Court Practice No 2 of 2007 and pursuant to UCPR 42.2, and take into account that costs should be proportional to the sum of damages awarded which was $15,351.30. 49Costs have already been assessed and determined in the Local Court in favour of Mr Ipkendanz in the sum of $115,443.40. I accept that the amount of the verdict in the Local Court is not proportional to the amount of legal costs that Mr Voss is obliged to pay. However, the arguments as to proportionality (see ss 60 and 98(4)(d) of the Act) should have been ventilated in the Local Court during the submissions as to costs. There is no appeal from that Local Court decision. In my view, there is no basis upon which to award Mr Voss punitive costs. Paragraph 3 of the amended motion should be dismissed.

Costs of these current motions 50Both parties seek their costs in relation to the motions. The parties exchanged letters in relation to the costs of these motions. 51On 21 December 2012 Mr Voss, by letter to Mr Ipkendanz's solicitor (Ex A), made a without prejudice offer save as to costs. The letter read: "... To avoid the time and additional costs of seeking the above Order/s, we will settle the sum of costs that will be awarded to us for $15,000. This amount can be deducted from the Determination of Costs in the Local Court." 52On 7 February 2013, the solicitor for Mr Ipkendanz made a without prejudice offer save as to costs to Mr Voss (Ex 2). It is: "... we are instructed to make the following offer of settlement ...the Court dismisses your notice of motion with no order as to costs on the basis that the parties agree that each party bears its own costs of the stay application, the appeal and your motion. If you agree to this proposal, Mr Ipkendanz will not file any motion seeking costs of the appeal and neither party will pay the other any costs in relation to the present proceedings (being Supreme Court proceedings 2008//288098)." 53Mr Voss has been largely successful in his motion and did better than the offer contained in his letter. Mr Ipkendanz was unsuccessful with his motion. Costs are discretionary. Costs should follow the event. Mr Ipkendanz is to pay Mr Voss' costs of the motions.

The Court orders that: (1) Mr Ipkendanz is to pay Mr Voss' costs in relation to the notice of motion filed 4 December 2008 including the hearing before Latham J (the stay proceedings) and the amended summons filed 10 June 2009 including the hearing before Simpson J on an ordinary basis. (2) Paragraph 3 of Mr Voss' amended notice of motion dated 21 March 2013 is refused. (3) Mr Ipkendanz's notice of motion filed 13 February 2013 is dismissed. (4) Mr Ipkendanz is to pay Mr Voss' costs of the amended motion dated 21 March 2013 and the notice of motion filed 13 February 2013.

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