Costs of prosecutor’s in-house lawyers

Law Institute of Victoria v SA [2006] VCAT 742

A solicitor’s prima facie sound argument — that the indemnity principle at the heart of the common law’s costs jurisprudence meant that the Law Institute should not be entitled to its in-house solicitor’s costs of the prosecution — failed. The reason: because the LIV was engaging in a statutory duty.

The Law Institute prosecuted a charge of misconduct in failing to meet a deadline in a demand by the Law Institute for information under the power of compulsion in s. 149 of the Legal Practice Act, 1996. The solicitor admitted the failure. It was the simplest prosecution in the world. The Law Institute briefed counsel, and sent a solicitor from its prosecution team along to instruct. Mr Butcher sanctioned that course by awarding costs not only of counsel but of the in-house solicitor.

The solicitor argued that the Law Institute was entitled to its legal costs but not its administrative costs of sending one of its salaried employees, Fiona Reading, along to instruct. Litigants are generally entitled to (i) the costs of independent legal representation (and such independence may on occasion be found in in-house counsel who are true advisers and not decision makers within the litigant) and (ii) to witness costs to the extent that they give evidence. As Mason CJ, Brennan, Deane, Dawson and McHugh JJ said in Cachia v Haines (1994) 179 CLR 403 of that which they described as “a general principle which has, as we have said, never been doubted and which has been affirmed in recent times”:

“18 … the accepted basis for an award of costs is that they are by way of indemnity. They are intended to reimburse a litigant for costs actually incurred; they are not intended to compensate for some other disadvantage or inconvenience suffered by the litigant.

19. If costs were to be awarded otherwise than by way of indemnity, there would be no logical reason for denying compensation to a litigant who was represented. That would in some cases dramatically increase the costs awarded to a successful litigant. In corporate litigation of complexity, for example, a litigant may expend considerable time and effort in preparing its case.”

Earlier, the High Court had said in that case:

“10. To use the Rules to compensate a litigant in person for time lost would cut across their clear intent. Costs, within the meaning of the Rules, are reimbursement for work done or expenses incurred by a practitioner or practitioner’s employee. Compensation for the loss of time of a litigant in person cannot be said to constitute costs within the meaning of the Rules.”

Mr Butcher rejected the solicitor’s argument:

“18 The principle [sic.] challenge to costs is in relation to costs claimed by the applicant itself in relation to the preparation of these matters and the preparation and serving of the Notices of Charge.

19 Ms Fiona Reading of the Law Institute gave evidence that files of this nature have in the past been costed and usually result in a cost figure of $1,200. Mr Angelatos’ argument is that these are not costs paid to a separate legal practitioner but are the costs of what might be described as the costs personal to the party.

23 … the question is whether the costs of the Law Institute are properly payable as they have been incurred by itself rather than by way of payment to a separate legal practitioner.

24 It should be pointed out that there is no scale of costs in this Tribunal or in its predecessor, the Legal Profession Tribunal. Costs are discretionary as is set out in Section 162 (2) of the Act.

25 The Tribunal, however, is entitled to inform itself in relation to the appropriate scale or level of costs payable and in doing so is entitled to take into account previous practice and awards of costs in such matters.

26 The Law Institute, the applicant in this matter, has brought the charges against the legal practitioner in the discharge of the duty which is imposed upon the Law Institute by the Act to investigate complaints brought against or made against legal practitioners. This is the case in relation to the matters before the Tribunal today.

27 In coming here today, the Law Institute is discharging that statutory duty. As submitted by Counsel on behalf of the Law Institute, there is also a public interest duty; however, the principle [sic.] duty is one of a statutory nature.

28 I find that in relation to the discharge of that duty, the Law Institute may be distinguished from what might be regarded as an ordinary self-represented party to civil litigation. The Law Institute has incurred costs and expenses in relation to the preparation of this matter and the bringing of it to hearing and I find that the sum of $1,000 in relation to each of these matters is a reasonable figure. This finding, whilst discretionary, is based upon previous experience.”

The reasoning seems to have been that such costs have been awarded in the past, and that the Law Institute can be distinguished from other entities on the basis that it was acting pursuant to a statutory duty. Another point of distinction not commented on is that the government pays the Law Institute millions of dollars a year to carry out these investigations. The fixing of the costs appears to have proceeded by reference not to the costs of the case but by reference to the untendered opinions of costs consultants in similar cases, leaving at the very least the nature of the “expenses” as distinct from the costs unclear.

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