Abraham, Romaine --- "Costs column: Case study: A percentage award of costs" [2022] PrecedentAULA 23; (2022) 169 Precedent 47

---

CASE STUDY

A PERCENTAGE AWARD OF COSTS

By Romaine Abraham

The decision of Davey v Costanzo Lawyers Ltd^[1] is instructive for many reasons. In this matter, a plaintiff in a judicial review proceeding was successful in setting aside a default judgment made against them, on the basis of irregularity. It was determined that the judgment, entered irregularly in favour of the plaintiff’s former lawyers, could not remain on the record, and the review application was allowed. However, the unsuccessful first defendant was ordered to pay only 80 per cent of the successful plaintiff’s legal costs.

BACKGROUND

The first defendant, a law practice, had been retained by the plaintiff between February 2018 and August 2018 approximately, to act on the plaintiff’s behalf in family law proceedings. The plaintiff had initially engaged a different law practice to act on her behalf in the proceedings but had become dissatisfied with that practice.

The plaintiff, in transferring carriage of the matter to the first defendant, had intended to retain counsel to be briefed by her former solicitors throughout the proceedings, up to that point. However, counsel to be briefed was unavailable and was not willing to accept payment of fees at the conclusion of proceedings from the proceeds of the sale of shared property, as had been requested by the plaintiff. Alternate counsel was ultimately briefed, albeit at a much higher rate than had been anticipated by the plaintiff.

Final orders made by the Family Court were appealed against by the other party and at first the plaintiff was reticent to engage representation for the hearing of the appeal. Nevertheless, the plaintiff decided to retain the first defendant and obtained counsel for the appeal. In the end, the plaintiff succeeded in the appeal.

THE DEBT PROCEEDINGS AND SUBSEQUENT REVIEWS

The first defendant claimed it had rendered to the plaintiff on 28 August 2018 a memorandum of professional fees and disbursements for work performed under the scope of the retainer. A judgment of $40,351.87 plus interest and costs was entered against the plaintiff on 17 June 2019 in favour of the first defendant, and in default of the plaintiff filing a defence in the Magistrates’ Court of Victoria. The plaintiff would later claim she had never received any material regarding the debt proceedings and, unrepresented at the time, made an application to set aside the default judgment. However, on 30 July 2019 a judicial registrar refused the application. On 19 August 2019 a magistrate upheld this decision on review.

The plaintiff retained counsel and applied to set aside the default judgment again; however, on 15 May 2020 this application was also refused. The plaintiff then sought judicial review in the Supreme Court of Victoria.

Justice Quigley of the Supreme Court accepted the plaintiff’s argument that performance of the contract between the plaintiff and defendant had not been sufficiently pleaded. Justice Quigley was also not satisfied that the contract terms had been sufficiently identified in order to establish the calculation of the debt owed by the plaintiff to the first defendant; her Honour further accepted that the magistrate, in denying the plaintiff’s application, had formed an adverse view of the plaintiff’s ‘credit, candour and motivation’^[2] and had therefore gone beyond the scope of the required task. Accordingly, it was determined that the default judgment should be set aside on the basis that it was entered irregularly.

COSTS OF THE REVIEW APPLICATION

Placing reliance on the general rule that costs should follow the event, the plaintiff sought her costs of the proceeding on the standard basis. The first defendant countered that a substantial reduction should be applied to the costs payable to the plaintiff in an exercise of the Court’s unfettered discretion as to costs, notwithstanding the plaintiff’s success. Only two of the 21 grounds contained in the amended Originating Motion were pursued and argued by the plaintiff. As such, the first defendant submitted that the plaintiff had caused the proceeding to be conducted in such a manner that costs were needlessly expended. The first defendant further argued that it was apparent the plaintiff was responsible for the Court Book, which was described by the Court as ‘voluminous, repetitive and difficult to follow’, hence requiring the first defendant to undertake unnecessary work to defend the application for review.^[3]

Although it was conceded that it is not uncommon for a smaller number of grounds to be maintained at the hearing of a matter, and Quigley J commended counsel for both parties for narrowing the matters to be determined at hearing, the renunciation of 19 grounds of appeal resulted in a ‘substantial amount’ of wasted work for the first defendant.^[4] Accordingly, her Honour determined that it was ‘not fair and just in the circumstances for all of the plaintiff’s costs to be paid by the first defendant’,^[5] and made an order that 80 per cent of the plaintiff’s costs be paid by the first defendant.^[6] This was despite the Court acknowledging ‘the obvious effort that counsel for the plaintiff made in the preparation of the matter for hearing and the expeditious way in which the proceeding was argued at the trial’.^[7]

Even where a party is successful, it is important to remember that there are costs implications where the conduct of the successful party results in a substantial amount of wasted costs for the unsuccessful party.

Romaine Abraham is a costs lawyer based in Melbourne, Victoria.

---

^[1] (ACN 158 282 163) [2021] VSC 449.

^[2] Ibid, [84].

^[3] Davey v Costanzo Lawyers Ltd (ACN 158 282 163) (Costs) [2021] VSC 474, [12].

^[4] Ibid.

^[5] Ibid.

^[6] Ibid, [14].

^[7] Ibid, [11].