Party-party recovery of pre-proceedings costs

Her Honour Davies J considered the recoverability of pre-action costs in the context of an application for security for costs.  The defendant sought security for $1 million already expended prior to the commencement of the proceedings against it, but after the plaintiffs gave media publicity to their intention to proceed them.  Her Honour decided that such costs could form part of the costs in respect of which security for costs may be ordered, and did include an allowance for such costs in her grant of security in the sum of $6 million.  My fellow blogger Liz Harris of Harris Costs Lawyers’ expert opinion as to the NAB’s likely costs was largely accepted. The decision is Pathway Investments Pty Ltd v National Australia Bank Limited [2012] VSC 97. In relation to the basic principle relating to the recoverability of pre-action costs, more usually claimed by plaintiffs, her Honour said: Continue reading “Party-party recovery of pre-proceedings costs”

Appeal rights against personal costs orders against lawyers

Arena Management Pty Ltd (Receiver & Manager Appointed) v Campbell Street Theatre Pty Ltd [2011] NSWCA 128 examines the nature of the appeal rights of non-parties against whom personal costs orders are made.  In that case, the unfortunate person against whom such an order was made was a liquidator.  But in the course of his analysis, Justice of Appeal Campbell considered the cases on appeals in relation to personal costs orders against lawyers, at [74] to [82] (despite the numbering below): Continue reading “Appeal rights against personal costs orders against lawyers”

Costs of proceedings commenced without a prior letter of demand

In PMCDG Investments Pty Ltd v Monash Gate Project Pty Ltd [2011] VSC 52, Associate Justice Daly accepted a referral from the trial judge, Justice Robson, to decide who should pay the costs of a proceeding the trial of which Justice Robson had presided over. That referral, it seems to me, is an interesting development in itself. Associate Justice Daly was asked to depart from the usual order that the winner get a partial indemnity for their actual legal costs from the losing party, and instead make no order as to costs. It was said that though the plaintiff had succeeded, litigation was not necessary, and that proceedings had been commenced precipitiously. Her Honour did not uphold the submission, but did usefully digest a number of authorities on point: Continue reading “Costs of proceedings commenced without a prior letter of demand”

Certification of expert witness expenses in the County Court

In the County Court, certification of costs above scale is often important.  The maximum fee specified in the scale of costs for expenses of an expert witness was about $1,800 at the time relevant to Astbury v Wood [2009] VSCA 126; 23 VR 302.  There, a senior neurosurgeon had given viva voce evidence on behalf of a plaintiff for about 2 hours in Warrnambool.  He had been driven to and from Melbourne as well on the same day.  He charged $8,800.  The trial judge certified the plaintiff’s party party costs, insofar as they related to witness expenses for this witness, at $8,800 on top of a generous travel allowance ($660).  The defendant appealed, contending that the County Court did not have a discretion to certify witness’s expenses above the amount provided for in the scale.  After a great deal of statutory interpretation, Justice of Appeal Ashley, with whom Justice of Appeal Redlich agreed, held that the County Court Act, 1958 and its rules of procedure, did allow the trial judge to certify for witness expenses above scale, and though certifications in such sums as was allowed in this case should not be commonplace, the Court of Appeal was not prepared to interfere with the trial judge’s discretion at first instance.

The 20% reduction in Worksafe case costs: what does it mean?

Section 134AB(29) of the Accident Compensation Act, 1985 means if injured workers win in proceedings under that Act, they get 20% less from the losing party towards the amount they have actually been charged by their lawyers than all other litigants. In Joaquim v FPI Vinyl Compounds Pty Ltd, Supreme Court of Victoria, unreported, 9 July 2010, Costs Judge Wood held that the provision means that whatever the taxed costs are, 20% is deducted.  It was argued by the losing party that the 20% deduction should apply only to scale items allowed as per the scale allowance, and not to items which were already allowed in the discretion granted by the preamble to the County Court scale in an amount less than provided for by the scale.  The provision says:

‘For the purposes of the taxing of costs in proceedings to which this section applies, any applicable scale of costs has effect as if amounts in the scale were reduced by 20%.’

Let me know if you would like a copy of the decision.

Applications to waive fees are not party party costs

In Joaquim v FPI Vinyl Compounds Pty Ltd, unreported, Supreme Court of Victoria, 9 July 2010, Costs Judge Wood held that solicitors’ assistance to poor clients in applying for waivers of court fees (filing fees, setting down fees and hearing fees in this case) are not fees which are properly claimed in a party-party bill of costs.  Clients are perfectly capable of filling them in themselves, his Honour held, and if the solicitor does it for them, it’s not something the other side should have to pay for if they lose.  This is an example of work done and billed for by the solicitor which may be allowed on a solicitor-client taxation, but not on a party party taxation.  That is, it is an illustration of the difference between solicitor-client and party-party costs.

Let me know if you would like a copy of the decision.

The Costs Court

I have been remiss in not bringing to your attention the creation of the Costs Court, which came into operation at the beginning of this year.  It is in fact not really a new Court, in the sense that it is just a revamped division of the Supreme Court.  But the development means that the number of dedicated costs decision makers in the Supreme Court has increased from one to three. It heralds a new era in the hitherto fragmented, inconsistent and arcane world of legal costs.  The air of change is enhanced by the relatively recent change of guard at the top from long-time and generally well-loved incumbent, Master Tom Bruce as Taxing Master to Associate Justice Jamie Wood as Costs Judge.

Greater consistency between decisions in relation to costs in the different state courts and VCAT will be promoted by all their taxations being conducted by the one new institution, in the same place, under the ultimate control of the Costs Judge.  The County Court’s former taxing officers have become Registrars.  They used to do taxations of Magistrates’ Court cost orders as well, and the new reality is that no more taxations will be conducted by officers of VCAT, the Magistrates’ Court, or the County Court.  That is not to say, of course, that VCAT members, Magistrates and County Court judges, will not fix costs summarily by reference to the appropriate scale at the end of a case though. But I can’t think of a decision maker who relishes fixing costs, and the temptation to leave it to the Costs Court may mean judges and Magistrates fix costs less.

There is an anomaly which should be cured. VCAT will continue to hear applications to set aside costs agreements, and ‘costs disputes’ under the Legal Profession Act, 2004, in relation to disputes over fees in matters where the total costs are not more than $25,000, whereas solicitor-client taxations (which are often stayed pending, for example, the result of applications to set aside costs agreements) are carried out by the Costs Court.  It would seem appropriate to me for those jurisdictions to be brought into the Costs Court, and re-built into one stand-alone system for the resolution of solicitor-client disputes over fees, to operate under one statute (e.g. the Legal Profession Act, 2004) rather than the present jumble of that Act, the Supreme Court Rules, 2005 the Supreme Court Act, 1986, the VCAT Act, 1998 and the Fair Trading Act, 1999.  The wealth of experience of the members of the old Legal Profession Tribunal, now VCAT’s Legal Practice List, could and should be brought into the Costs Court.

Here is Practice Note no. 7 of 2010, about the Costs Court.  The Costs Judge’s associate is Sean Linehan whose numbers are 9603 9324 and 9603 9320.

Section 17D(3) of the Supreme Court Act, 1986 now provides that the Costs Court ‘must exercise its jurisdiction with as little formality and technicality, and with as much expedition, as the requirements of this Act, the Rules and the proper consideration of the matters before the Court permit’.  Another innovation is that the Costs Court is newly empowered to give on the papers estimates of the amount a bill is likely to tax at, which may be made into an order if no objection is raised by either party within 21 days: see Part 8 of Order 63: new rules 63.86 – 63.89.  The Federal Court has been doing so for years, a service much appreciated by practitioners.

Continue reading “The Costs Court”

Reminder: you need very clear instructions before commencing proceedings on a person’s behalf

Updated, 23 June 2015: See Doulman v ACT Electronic Solutions Pty Limited (No 2) [2015] FCCA 1664

Updated, 16 July 2014: Brereton J summarised the authorities on this question in In the matter of HIH Insurance Limited (in liquidation); Smith v McGrath [2014] NSWSC 922 at [17], as follows:

‘Fundamentally, the extent of a lawyer’s authority depends on the construction of the retainer, in which terms can be implied as well as express [Hawkins Hill Gold Mining Co v Briscoe]. However, generally speaking, clear and specific words are required to authorise the institution of court proceedings Atkinson v Abbott; Wray v Kemp; Hawkins Hill Gold Mining Co v Briscoe]. This is because of the serious consequences, including in particular exposure to the possibility of adverse costs orders [City of Glenorchy v Addison]; and also because a solicitor ought not readily be implied to be authorised to decide whether or not to institute proceedings [Hawkins Hill Gold Mining Co v Briscoe; Atkinson v Abbott]. Where words to the effect of authorising “such further steps as may be necessary” follow the main object of the retainer, those words are not sufficient to authorise institution of proceedings where the specific words would not do so, the general words being restricted to what is necessary for the proper performance of the particular acts [Kemp v Wray; Knox Street Apartments v Flexman]. While authority to institute proceedings once given extends to final judgment and execution, it does not authorise institution of an appeal without further express instructions [James v Ricknell; In re Joseph Woolf; City of Glenorchy v Addison].’

Original post: Bray v Dye (No 2) [2010] VSC 152, a decision of Justice Judd, is a salutary reminder of the importance of solicitors getting very clear instructions from anyone on whose behalf they intend to commence or defend legal proceedings, and checking that they have capacity to engage in litigation (i.e. that they are of sound mind, and are not minors). In relation to this fundamental instruction in a retainer, it is more dangerous to rely on instructions through agents than it is to take instructions from agents in relation to steps in the litigation.  Get it wrong, and the lawyer will be ordered personally to pay adverse costs ordered against the phantom litigant, once the truth is ascertained, generally following an attempt at execution. That is what happened in this case: the solicitor and the barrister were substituted for the person on whose behalf they instituted proceedings, unbeknown to her, which failed and resulted in adverse costs orders.  According to the lawyers’ version of events, they did so on the basis of the second plaintiff’s oral instructions that he was authorised by the first plaintiff to instruct them to commence proceedings. Continue reading “Reminder: you need very clear instructions before commencing proceedings on a person’s behalf”

Interest on costs

In Victoria, you can enforce a judgment for up to 15 years: s. 5(4) Limitation of Actions Act, 1958 (Vic.).  During that time, the judgment debt earns interest at a nice little rate, the penalty interest rate: s. 101 Supreme Court Act, 1986.  As of yesterday, the penalty interest rate is 10.5%, while the cash target rate you hear about in the news and on bank statements for your mortgage is, as of today — surprise! — still 3.75%.  And there is no discretion involved, unlike the interest which accrues at the same rate between commencement of proceedings and judgment: Hartley Poynton Ltd v Ali [2005] VSCA 53.  Typically, in superior courts, judgment is given on the claim, and an order made for the winner to pay the loser’s costs.  Working out how much the loser has to pay, however, takes time. The process is known as ‘taxation’.  First a costs consultant usually draws up a bill of costs in taxable form.  Then there are negotiations, and if they do not succeed there is a trial of the question of how much costs the winner pays the loser, generally after a long wait for a court date.  At the end of that, the court gives another judgment of sorts.

From when does s. 101 interest run on that part of the judgment requiring the loser to pay the winner’s costs? Continue reading “Interest on costs”

‘Snapping on’ judgment in default

Update, 1 February 2012: Glen Wright of Tas Legal brought to my attention the case of Gavin Boyle Constructions Pty Ltd v Fabrok Pty Ltd [2011] QDC 214 in which the judge set aside a regularly entered default judgment, but declined to award costs in favour of the plaintiff because it knew, pre-commencement of the proceeding, that the defendant denied liability and failed to enquire of the defendant’s solicitor whether it intended to defend before signing judgment.  His Honour relied on Coburn v Brotchie and s. 5 of Queensland’s Uniform Civil Procedure Rules, which echo the overarching obligations in Victoria’s Civil Procedure Act, 2010.

Original post: I must say I was brought up believing that there was nothing at all wrong with rushing down to the court’s registry and entering default judgment if an appearance, or defence, was not filed by the due date.  Apart from anything else, you force the other side to set out enough on oath about their case to prove an arguable defence, plus you get the psychological advantage of an early interlocutory costs order, even if the judgment is set aside, as it usually is.  But where there is reason to believe that the defendant desires to defend, the practice is frowned upon, especially where the plaintiff is represented by a solicitor who knows who represents the defendant. The duty of professional courtesy comes into play.  The procedure is really there to provide a vehicle for the production of judgments in those many cases which pass quietly through the courts, particularly the Magistrates’ Court, without the defendant participating.  In fact ‘snapping on’ default judgment in bad faith, to use the strangely quaint language of some of the older cases,  is an irregularity entitling the defendant to have the judgment set aside ex debito justitiae as they say in the classics (as of right).  And it generally carries with it a costs sanction.  I was vaguely aware of these authorities, but thought they were less unanimous and less modern than in fact they turn out to be.  I have extracted the relevant bits below. Continue reading “‘Snapping on’ judgment in default”

A mistake not to make

University of Western Australia v Gray (No 25) [2009] FCA 1227 is a horror story.  Gray won and Justice French ordered the University to pay his costs.  It was a big case.  But the University contended that to the extent that Gray’s lawyers had not placed themselves on the roll of practitioners maintained by the Federal Court, Gray could not recover from the University party-party costs of those lawyers. Perth’s Justice Barker decided that the University did not have to pay those costs, by reference to ss. 55A, s 55B and s 55C of the Judiciary Act, 1903. That was so despite the fact that Gray had already paid his lawyers’ fees.  The consolation prize was that the relevant lawyers’ work, or some of it, could be assessed on a party-party basis at the rates allowable for managing clerks. But Justice Barker noted that the scale allowance for solicitors’ time was 4.5 times the allowance for clerks’ time.  The thing is, you see, when you get admitted and sign the roll of your Supreme Court, you do not automatically become enrolled on the rolls maintained by federal courts.  My employer at the time of admission was diligent enough to get me to go and sign the federal rolls at (from memory) the Melbourne Registry of the High Court, immediately after admission.

Settlements unapportioned between costs and damages

Morris v Riverwild Management Pty Ltd [2009] VSC 439 is a decision of Justice Pagone in an unusual dispute.  A developer built some apartments at Falls Creek.  Something obviously went wrong, because he and one of the purchasers of an apartment sued the architect, the builder, the structural engineer and his company, the supervising engineer and his company, and the building supervisor.  The claimants entered into the following settlements with the defendants at around the same time:

  • Architect: $1.4 million plus the claimants’ costs to be taxed on the Supreme Court scale (28%)
  • Certifying engineer: $1.5 million inclusive of costs (30%)
  • Builder: $175,000 all-in (3.5%)
  • Building surveyor: $1.85 million inclusive of interest and costs (37%)
  • Structural engineer: $79,000 inclusive of interest and costs (1.6%).

The claimants got a smidge over $5 million.  The percentage borne by each respondent is shown above in brackets.  The architect no doubt got a shock when the plaintiffs served a bill of costs for $2 million, including the costs of pursuing the other defendants.  ‘I don’t think so!’ he objected, and Justice Pagone agreed (though a litigation estoppel based on facts I have not included meant that this was a Pyrrhic victory).  The architect said if the claimants got all of their costs from him, they would get a part of their costs twice: first from him, and second from the other respondents who had paid settlements which included the costs of the claim against them.  The part of the costs they would get twice was the costs which were not referable exclusively to the claim against the architect. Continue reading “Settlements unapportioned between costs and damages”

Latest on claims for the other side’s lawyers to pay your costs personally instead of their client

Kelly v Jowett [2009] NSWCA 278 is the latest wasted costs case.  The lawyers against whom the order was made had tendered against them their own intra-office memorandum:

‘Your performance in the conduct of this matter has been pathetic. Your failure, given the recent transfer of these matters, to even have the courtesy to provide Hamad with a memo regarding the status of the file is totally inconsiderate of a colleague already burdened with some of your other similarly neglected files. This file is your mess, clean it up.’

Ooffa! Justice of Appeal McColl, with whom the other justices of appeal agreed, explained at [61] that: Continue reading “Latest on claims for the other side’s lawyers to pay your costs personally instead of their client”

Costs do not always follow the event

Generally, costs of a proceeding follow the event in the sense that the winner at trial is entitled to an order that the losing party pay its costs, calculated on a party-party basis. That the loser is poor, or only just lost, or lost on a technicality, is usually irrelevant. In Jones v Apps (No 2) [2009] VSC 366, however, the defendant’s unmeritorious conduct which led to the litigation which he won and sought the costs of, and the devastating financial losses suffered by the plaintiff, an ingenue, with which the defendant was associated (though not found legally liable for), were sufficient in combination to displace the usual order, with the result that in the exercise of his discretion in relation to costs, Justice Hansen ordered that neither party be liable to pay the other party’s costs. It is an exceptional case, but it is a useful reminder of the Court’s absolute discretion in relation to costs, regardless of how settled the application of the discretion often appears to be.

In relation to the discretion, see Supreme Court Act, 1986 (Vic.) s 24(1). In Latoudis v Casey (1990) 170 CLR 534, Justice Dawson described the discretion as ‘unqualified’, Justice McHugh J described it as ‘uncontrolled’, and Chief Justice Mason described it as ‘unconfined’. That may be so, but it is a discretion the unqualified exercise of which must be exercised judicially: Overton Investments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 [2001] NSWCA 137; (2001) LGERA 439 at 447 per Justice of Appeal Stein. See also Dal Pont’s Law of Costs (2008) pp 160ff from which these authorities are taken.

On splitting liability and quantum

In this post, I reproduce an extract from Justice Hoeben’s recent decision in Johnson v Trustees of the Roman Catholic Church [2009] NSWSC 309 which discusses the increasing willingness of courts (in NSW at least) to determine preliminary issues before the main trial. In this case, everything except for quantum was ordered to be determined in a first trial, with a second trial on quantum only if necessitated by the outcome of the first trial. It was a kind of professional negligence case in a sense: a pupil was suing her school for her teacher’s negligence while she was on school camp.

The only reform of civil justice I seem to hear about these days is an increasing emphasis on mediation. Well, that’s an exaggeration, since Victoria is about to join the uniform evidence legislation jurisdictions, and its Attorney-General proposes to unify the rules for all the courts (excellent idea), but I will put aside these promising developments for a moment. I suggest that rather than increasing the amount of mediation, civil justice reform should concentrate on increasing the level of judicial adjudication, which does not necessarily mean increasing the number of once and for all oral trials of all issues.  What there should be more mediation of is not the final outcome of cases, but the things which litigants at the moment typically go to court for: interlocutory battles.  Far better to outsource the adjudication of disputes about discovery and the parties’ articulation of their respective cases so that the trial is prepared quickly than to outsource the resolution of complaints. Continue reading “On splitting liability and quantum”

Costs of complex litigation in presumptively costs-free consumer tribunals

A Queensland District Court judgment (Saunders v Paragon Property Investments Pty Ltd [2009] QDC 19) about the costs provision in a Queensland consumer tribunal has alerted me to a passage from a decision of the Queensland Court of Appeal (Tamawood Limited v Paans [2005] 2 Qd R 101) which might be useful in arguing for costs if you are successful in a complex VCAT proceeding. It runs contrary to the tenor of certain decisions of VCAT’s President Morris noted in Pizer’s Annotated VCAT Act, (3rd ed.) at points 6 and 7 on pp 426-7 in para [4039.1D], e.g. Buttigieg v Melton SC [2006] VCAT 1058, Mornington Peninsula SC v Fox, unreported, 24 October 2003.

Also, Ballymont Pty Ltd v Ipswich City Council [2002] QCA 454 at [19] to [20] is said to be authority for the proposition that the costs provisions of the consumer tribunal should not be thought to infect the costs provisions of an appellate forum. That is, the costs of an appeal from a consumer tribunal will be dealt with consistently with the costs of appeals generally. The useful passage from Tamawood, and a comparison between the Queensland costs provisions and VCAT’s are set out below. Continue reading “Costs of complex litigation in presumptively costs-free consumer tribunals”

Victorian judges more amenable to sophisticated costs orders in cases of partial success only

Update, 4 May 2009: For an example of these principles in operation in a professional negligence case in which proportionate liability was given effect to (I posted about the main decision here), see Sali v Metzke & Allen (No. 2) [2009] VSC 169, where the successful plaintiff’s costs were reduced by 30% because they raised and failed on numerous issues (and also because, reading between the lines, Justice Whelan was not very impressed by one of the plaintiff’s witnesses).

Original post: Costs have traditionally followed the event. Put up 5 reasons why you should get damages and win on 1 of them, and the starting point has been that you get the costs of the whole proceeding, including of the 4 causes of action which failed. Recent decisions of a Full Federal Court constituted by Victorians and of the Supreme Court have clearly signposted a desire in eminent Victorian judges to get sophisticated about costs so that claimants who propound claims which fail do not get (and may have to pay) the costs of doing so, even if they ‘win the case’. (This might be a good time for solicitors to think about amending that part of their standard costs disclosure letters which deals with s. 3.4.9(1)(g) of the Legal Profession Act, 2004 — range of costs likely to be recovered from the other side if successful.) Justice Robson’s 13,000 word decision on costs in GT Corporation Pty Ltd v Amare Safety Pty Ltd (No 3) [2008] VSC 296 may set a record for such judgments. Certainly, I would be surprised if there were another costs ruling with a table of contents. This is one conscientious judge. At [56]ff, his Honour said:

Continue reading “Victorian judges more amenable to sophisticated costs orders in cases of partial success only”

“this letter will be used on the question of costs”

I came across a really bad interstate solicitor a while back. One of his peccadillos was to write, at the end of all of his letters to my instructor — his opponent — ‘We thank you for your cooperation, and if you have any queries please do not hesitate to contact us.’ The thing is we so weren’t cooperating. I just kept on objecting to the affidavits of merits put up in support of the application to set aside a default judgment until his client decided it was no longer worth the effort. His other favourite line was ‘This letter will be used on the question of costs’ to which I thought ‘Yeah, right.’ I don’t think I ever use that purported threat in correspondence. What’s the point? But it’s so commonplace a tic that I wonder whether there is in fact any good reason for it, whether it might be a hangover from the past and I’m too young to get it. So, my question: has anyone ever crashed and burned, unable to use a letter on the question of costs for want of such a sentence? Anyone want to defend the practice? (Of course, we’re not talking about Calderbank letters here. Putting ‘without prejudice save as to costs’ on a letter is useful, no doubt.)