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Application for departure from usual costs orders

Rachael Hocking

Wales v Wales (No 2) [2015] VSCA 365

This judgment involved two proceedings. The Applicants in each proceeding were refused leave to appeal against costs orders.

The Respondents (the Trustees, being the same three parties in each proceeding), sought orders that the respective Applicants pay their costs of the application for leave to appeal, in which the Applicants were unsuccessful. The Respondents also sought orders that Senior Counsel’s fees be allowed in excess of the Supreme Court Scale of Costs, which sets out the amounts which ordinarily may be claimed for undertaking certain aspects of legal work in the proceedings.

The Applicants in the first proceeding (Persephone and Rohan Wales) accepted that they should pay the Respondents’ costs, but resisted the application to allow Senior Counsel’s fees in excess of the scale amount.

The Applicant in the second proceeding (Julian Wales) also accepted that he should pay the Respondents’ costs, but made an application that his costs of negotiating a joint summary of facts and amending his written case should be paid personally by the Respondents.

Their Honours in this case acknowledged three principles – (1) that the usual rule in an adversarial proceeding brought by a beneficiary against a Trustee is that costs follow the event (i.e. an unsuccessful party pays the successful party’s costs); (2) where a beneficiary unsuccessfully appeals against a decision in favour of a Trustee, the beneficiary will be ordered to pay the costs of the appeal; and (3) an unsuccessful appellant, including a Trustee, is not presumed to be entitled to have their costs of an appeal paid out of a trust estate even if those costs were so paid at first instance. However the Court retains its discretion.

The Joint Summary

Negotiations for the joint summary were unsuccessful, requiring the Registry to direct that no joint summary be filed.

The Court accepted Julian Wales’ reliance on the provisions of the Civil Procedure Act 2010 as being correct by emphasising the importance of cooperation between the parties in connection with the conduct of a proceeding and the use of reasonable endeavours to ensure that costs are reasonable and proportionate.

However, the Court found that the Respondents had not acted so unreasonably that they should be deprived of their costs.

The Registry had directed the parties, when negotiating the joint summary, to provide explanations for any proposed amendments, rather than just simply asserting that facts were argumentative, contentious or disputed. If the Respondents had failed to provide such explanations, potentially, this could amount to a breach of the Civil Procedure Act provisions. However, the Court found that was not the case in this proceeding.

The Court ordered that the usual order for costs should be made. That the unsuccessful Applicant pay the Respondents’ costs.

Senior Counsel’s Fees

The Scale provides for a maximum daily rate for Senior Counsel of $8,094 (excl GST).

Their Honours noted that it was apparent that the purpose of the maximum fee is to impose a general rule confining the discretion of the Costs Court to allow such fees, in the interests of limiting the costs allowed. Something in the circumstances of the case needs to be shown justifying an exercise of discretion to depart from this general rule. Their Honours gave examples such as, the nature and history of the proceeding, the legal and factual issues involved, the amount charged by Counsel and whether matters of public importance are in issue. Their Honours accepted that there may be other reasons.

The application to allow Senior Counsel’s fees in excess of the sale was refused and the Respondents were ordered to pay Persephone and Rohan Wales’ costs of their opposition to this application (as they had consented, save for this aspect).

This case is a good example of the exercise of the Court’s discretion in relation to the question of costs and some of the considerations applied.