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.

Establishment of Costs Court

The Costs Court is created by the Courts Legislation (Costs Court and Other Matters) Act, 2008 (no. 78), which inserted a new Division 2B (‘Costs Court’) into the Supreme Court Act, 1986. Transitional matters are to be found in ss. 145-148 of the Supreme Court Act, 1986 (see s. 9 of the amending Act). Section 17C sets up the Court. It is comprised of an Associate Justice (formerly ‘Master’) allocated as the Costs Judge, who has some supervisory power to direct Costs Registrars.

The Costs Court may refer to a Supreme Court judge ‘for directions any question arising on a taxation’: r. 63.51.

Applications for Taxation

Applications for taxation are to be made by summons, not by writ or originating motion, even in respect of costs orders made in another court (weird!).  There is a special form:  no. 63A.  See new r. 63.38, and new County Court Rule 46.04(2)(c). Such summons is to be filed with the Prothonotary, not the Costs Judge’s Associate.  The costs order is to be attached.  Service is to occur at least 14 days before the ‘day for hearing named in the summons’.

The heading should read:

IN THE SUPREME COURT OF VICTORIA
AT MELBOURNE
COSTS COURT

The parties are to be described as ‘Applicant’ and ‘Respondent’, and the court heading is to bear the court reference of the matter in another court if the costs to be taxed do not relate to a Supreme Court matter.

The fees for filing a summons for taxation depend on which Court dealt with the matter to which the costs relate: Supreme: $319.10; Magistrates’ and County: $233.80; VCAT: $150.80.  There is no fee for filing an application for a solicitor-client taxation.

‘Appeals’

The Costs Judge may review decisions of Registrars either of his own motion (weird!) or on the application of a party: s. 17H (and see new r. 63.56.1(2)).  And the Costs Judge may review his own decision: r. 63.56.1, though the Taxing Master had that unusual (possibly unique) power years ago.  The requirements of the application for review of either kind are specified in new r. 63.56.1(4).  There is a 14 day time limit.  On a review, the Costs Judge:

‘(a)  shall reconsider and review the taxation upon the objections stated in the notice;

(b) shall make an order confirming, setting aside or varying the taxation or make such further or other order as may be necessary; and

(c) may make any other order the case requires.’ See r. 63.56.1(6).

New evidence may be admitted in respect of any objection which is the subject of the review by the Costs Judge: r. 63.56.1(7), so it is more like a hearing de novo than an appeal, consistently with its description as a ‘review’.

In addition, decisions of the Costs Judge may be reviewed by a single judge of the trial division, just like in the old days: s. 17I, and r. 63.57, which governs the procedure and says that:

‘(6)  On the review, unless the Judge of the Court otherwise orders–

(a)  further evidence shall not be received;

(b) the party giving notice shall not raise any ground of objection not stated in the notice.’

A Supreme Court judge has the same powers on review as does the Costs Judge under r. 63.56.1(6), above, except that he or she has an additional power to remit any item in the bill to the Costs Court.

Taxations of costs under other courts’ and VCAT’s orders

The Supreme Court Rules have been amended by the Supreme Court (Costs Court Amendments) Rules 2009 and the County Court’s by the County Court (Costs Court Amendments) Rules 2009.  Bear in mind in what follows that the Supreme Court order dealing with costs is Order 63, while the County Court counterpart is Order 63A.  In drafting this post, I have concentrated on the interrelationship of the County and Supreme Court’s rules.  The Magistrates’ Court’s and VCAT’s I am yet to unravel.

Many provisions dealing with taxations by the County Court have been repealed, e.g. Order 63A, Part 4 (‘Costs of Taxation’), formerly comprised of r. 63A.36.  So too most of Part 5 (‘Procedure on Party and Party Taxation’), including former rules 63A.39 – 63A.50 (except sub-rule 48) and 63A.55 – 63A.57, which dealt with reviews of decisions in taxations.  So too bits of Part 6 (‘Costs of a Solicitor’) and Part 7 (‘Allowances on Taxation Generally’), including former rules 63A.66 – 63A.67, and former rules 63A.66 – 85 (except sub-rules 72 and 82).

Taxations of party-party costs orders in the County Court, Magistrates’ Court and VCAT may be carried on in the Costs Court, whereas previously they would be carried on by the taxing officers of VCAT or the County Courts, if not fixed by the judge or Magistrate summarily at the end of the hearing.  In the cases of these courts and VCAT, it may do so if their Rules so provide or the Court or VCAT orders that the Costs Court tax the costs: s. 17D, Supreme Court Act, 1986.  (The County Court’s power to so order is found in new s. 78A(2) of the County Court Act, 1958; the Magistrates’ Court’s is in new s. 131A of the Magistrates’ Court Act, 1989, and VCAT’s in new s. 111 of the VCAT Act, 1998.)  County Court Rules, new r. 63A.05 directs that unless the County Court otherwise orders, costs taxed in accordance with Order 63A (the County Court’s order about taxations) shall be taxed by the Costs Court, and see also amended r. 63A.10, which provides for taxation as of right in the Costs Court wherever the Court makes an order for costs, or an application is dismissed with costs, or the rules provide an entitlement to costs (as on an amendment), amongst other situations.

When an order is made by the Costs Court in such a case, the order is taken to be an order of the other Court, and the procedure is regulated by the Supreme Court Rules or ‘the Rules, including any scales of costs, of the court in which the proceeding to which the costs relate originated or of VCAT, as the case requires’: s. 17J(2).  But even if the Supreme Court were to choose to apply the County Court Rules in a taxation of costs in a County Court proceeding, r. 63A.38 of the County Court Rules now says that ‘An application to the Costs Court for costs to be taxed shall be made in accordance with the Supreme Court Rules,’ and r. 63A.63 says ‘Subject to these Rules and to any Act or order of the Court, costs under this Part shall be taxed as provided by the Supreme Court Rules’.