Legal Profession Tribunal’s costs provision explained

Buxey’s Case [2006] VCAT 173

The decision is a simple illustration of three things:

  • a tribunal is not functus officio in relation to costs upon deciding a dispute;
  • a client can only have an order for costs if the Legal Practitioner behaved unreasonably in relation to the hearing, whereas the Legal Practitioner can have costs for unreasonableness in relation to a hearing of the Client or on the basis that the dispute is misconceived, frivolous, vexatious, or lacking in substance;
  • “costs of a hearing” extend to preparation for the hearing but not to the pre-Tribunal phase and not to settlement attempts (including the costs of conciliation) during the Tribunal phase.

Marcia Hausler, a costs consultant, appeared for the applicant in a hearing confined to the costs of the previous hearing at which the Tribunal had dismisseed a pecuniary loss dispute on the basis of the Client’s advice by letter that she would not be pursuing the dispute.

Mr Howell observed that the following costs are not available under s. 134 of the Legal Profession Act, 1996 (Vic.):

  • the costs of participating in Professional Standards’ attempts to settle the dispute;
  • costs of making an offer of compromise or of attending the Tribunal’s conciliation conference.

Mr Howell explained the second point was “because the general thrust of the [old Act] is to encourage settlement by negotiation rather than to encourage resolution by determination at a hearing”, though it is by no means clear that the justification works: surely awarding costs of genuine attempts at settlement if adjudication demonstrates the unreasonableness of one party’s negotiating position acts as an incentive to genuine negotiation. The courts think such costs are desirable; what makes the Tribunal different?

Mr Howell rejected the ambitious submission that having dismissed the dispute, he was functus officio and had no further jurisdiction, including to entertain an application for costs. He cited State of Victoria v McKenna at [273]ff, which says:

  1. On the question whether the Tribunal was functus officio on the question of costs he stated that he did not consider that this was so once it had handed down its decision. He stated:
  2. “Section 67 (a) stands as a discrete head of power. It empowers the Tribunal to award costs where it makes a decision coming within the terms of the sub-section. The sub section contemplates that the decision will be given before the occasion to exercise the power arises. The power can only be exercised after a decision has been made which varies or sets aside a reviewable decision. Until the power is exercised the functions of the Tribunal are not complete.”

    His view was that, however inconvenient it might be, the Tribunal was required to reconvene to consider an applications for costs on the request of the applicant.

  3. The provisions in the Equal Opportunity Act 1995 did not mirror those considered by Von Doussa, J. in that they do not expressly refer to the discretion to order costs arising on the making of a decision. Nonetheless, that must be the reality of the discretion conferred by the Equal Opportunity Act 1995. There could be no basis for ordering costs of the proceedings until the decision has been made as to the outcome of the proceedings. In this instance, the decision and reasons were sent to the parties and there was no physical opportunity to seek a hearing on the question of costs before the orders were made.
  4. The Tribunal in making the order may on the face of it be said to have completed its task but the question arises as to whether the making of that order was made in denial of natural justice and therefore should be set aside. In my view it was so made. It was open to the Tribunal to foreshadow to the parties that it would make such an order unless it heard to the contrary from the parties. This would have meet any need for administrative convenience. It did not, however, have any basis for concluding that any of the parties would not wish to make a costs application.”
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