Switch from party-party to standard basis not retrospective per SCV

Update, 23 September 2013:  See also, to similar effect, but in relation to the Federal Court’s Rules: Territory Realty Pty Ltd v Garraway (No 3) [2013] FCA 914.  And in Metlife Insurance Ltd v Montclare, 4 September 2013, the Costs Judge, Wood AsJ, found that interlocutory orders made prior to 1 April 2013 may still be taxed forthwith even in the absence of a direction to that effect by the Court making the interlocutory order, despite the introduction of r. 63.20.1 which says that such costs shall not be taxed until after the completion of the proceeding unless the Court otherwise orders.

Original post: The rules in civil proceedings in the Supreme Court of Victoria changed not so long ago.  Whereas the usual order in favour of a successful party was that the unsuccessful party pay the successful party’s costs on a party and party basis,  but now the usual order is that such costs be paid on a new basis, the ‘standard basis’ the test for which is much the same as the test for the old ‘solicitor and client’ basis against which costs were ordered to be quantified in special circumstances, essentially misconduct during the litigation and not beating offers of compromises.

Sifris J has ruled authoritatively that for work before the commencement of the rule change, costs of a successful party are presumptively to be quantified on the old basis; the new rules in this regard do not have retrospective effect: Jane v Bob Jane Corporation Pty Ltd (No 2) [2013] VSC 467.  His Honour’s reasoning is reproduced below.  Before I get to it though, may I suggest that solicitors review their costs disclosures to ensure that any adjustments to estimates of costs recoverable from the other side in litigation are brought up to date.  More might now be recoverable than before, and certainly it would not hurt to substitute ‘standard basis’ for ‘party party basis’ if that language appears in solicitors’ precedents.What Sifris J said was:

‘2                     The defendants seek indemnity costs.  They contend that there are special circumstances that justify such an award.  The plaintiff submits that there should be no order as to costs.

3                     The Court has a wide and unfettered discretion in relation to costs.  In my opinion having regard to the issues in the case, the evidence and the conduct of the case the defendants should recover their costs but not on an indemnity basis.  There will be an order that the plaintiff pay the defendants’ costs, including reserved costs, according to the Supreme Court scale on a party and party basis up to 31 March 2013, and on the standard basis with effect from 1 April 2013.[2]  I do not propose to make any adjustment for the fact that the case commenced in the County Court and was transferred to the Supreme Court on 6 August 2012.[3]

4                     In the event that I decline to make an order for indemnity costs Senior Counsel for the defendants submitted that I should simply order costs on the standard basis for the whole of the proceeding, notwithstanding that part of the proceeding related to a period prior to 1 April 2013.  Costs on the standard basis are higher than party and party costs.  I do not accept the submission.

5                     Rule 63.28 of the Supreme Court Rules came into operation on 1 April 2013.  Rule 63.90 is headed ‘Transitional provisions’ and is in the following terms:

63.90 Transitional provisions – Supreme Court (Chapter 1 New Scale of Costs and Other Costs Amendments) Rules 2012

For the avoidance of doubt, these Rules, as amended by the Supreme Court (Chapter 1 New Scale of Costs and Other Costs Amendments) Rules 2012, apply to all things done or required to be done or omitted to be done on or after 1 April 2013 in, or in relation to, any proceeding in the Court, including the Costs Court (including all work and all amendments, applications and orders), regardless of the date of commencement of the proceeding.

6                     I do not regard the fact that the wording refers to all things done after 1 April 2013, regardless of the date of commencement of the proceedings, as rendering the new scale of costs applicable prior to 1 April 2013.  In my opinion there is no ambiguity.  Everything done after 1 April 2013 is to be dealt with on the new scale.  The fact that an order for costs is being made after 1 April 2013 is not sufficient to include or capture costs prior to 1 April 2013.

7                     On the defendants’ construction, the new scale of costs alters the pre-existing rights and obligations of the parties and thus has a retrospective operation.  Clear wording is required to enable a statute or rules to operate retrospectively.[4]  The words are sufficiently clear but to the opposite effect.  It could not be otherwise.  Parties have conducted themselves on the basis of the old costs regime and assessed risks, made offers of compromise and Calderbank letters on this basis.  The suggested construction would interfere with what parties understood to be their substantive rights and could lead to unjust and anomalous results.  In other words it attaches ‘new legal consequences to facts, or events which occurred before its commencement’.[5]

8                     Finally it follows that I do not regard the introduction of the new scale of costs as being simply a procedural matter that on some of the authorities escapes the general rule against retrospectivity.[6]

9                     If I am wrong in the above approach, I would nevertheless, in the exercise of my discretion, only order costs commensurate with the party and party scale as it existed prior to 1 April 2013.  This in my judgment is the appropriate scale.  Rule 63.28(c) of the Supreme Court Rules specifically permits the Court to order costs on such other basis as it may direct.

[2] Supreme Court (General Civil Procedure) Rules 2005 (‘Supreme Court Rules’) Rule 63.28 which came into effect on 1 April 2013 provides for the standard basis.

[3] The case was transferred from the County Court pursuant to s 21 of the Courts (Case Transfer) Act 1991 (Vic) (‘the Act’). Ordinarily costs prior to the transfer are payable on the County Court Scale (s 22(f) of the Act) unless otherwise ordered. To the extent necessary I make such an order.

[4] Maxwell v Murphy [1957] HCA 7; (1957) 96 CLR 261, 267 (Dixon CJ) (‘Maxwell’); Fisher v Hebburn Ltd [1960] HCA 80; (1960) 105 CLR 188, 194 (Fullagar J) (‘Fisher’); Geraldton Building Co Pty Ltd v May [1977] HCA 17; (1977) 136 CLR 379.

[5] Fullagar J in Fisher, 194.

[6] Fullagar J in Maxwell. 286; Victrawl Pty Ltd v Telstra Corp Ltd [1995] HCA 51; (1995), 183 CLR 595, 615.’

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