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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”

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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”

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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.

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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”

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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”

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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”

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“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.)

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Unbettered Calderbank offer gives rise to no presumption of solicitor-client costs

Stipanov v GCFM [2006] VSC 258, in which a professional negligence claim against a solicitor failed on causation, was posted on here. The costs decision, Stipanov v GCFM (No. 2) [2006] VSC 424 has only recently come to my attention. Despite the complete failure of the plaintiff’s claim and an early substantial offer from the defendant which had gone unaccepted, the defendant was awarded costs only on a party and party basis. I think it is a curious decision for two reasons.

First, the Supreme Court interpreted the rules relating to rules of court offers of compromise as not applying to the case where a plaintiff loses altogether as opposed to the case where the plaintiff wins but gets less than what was offered, and reasoned according to the principles applicable to Calderbank offers of compromise. Calderbank offers are those not made under the procedure specifically provided by the rules of court, but made by a letter headed “Without prejudice save as to costs”. (The Court held, in this regard, that there is ‘no rule, predisposition, presumption or guideline to the effect that a failure to obtain a judgment more favourable than a rejected Calderbank offer will, in the absence of persuasion to the contrary, lead to a special costs order.’ That proposition would come as a shock to most solicitors, but it comes from a thorough decision of Justice Redlich in Richfield Investments Pty Ltd v Oversea–Chinese Banking Corporation Ltd [2004] VSC 351.)

Second, despite having canned the reliability of the plaintiff and the honesty of her solicitor husband in the principal judgment, the Court decided that it was not unreasonable for the plaintiff to have rejected a substantial offer made early in the proceedings for the following reason: Continue reading “Unbettered Calderbank offer gives rise to no presumption of solicitor-client costs”