Federal Court of Australia

Treasury Wine Estates Limited v Maurice Blackburn Pty Ltd (No 2) [2021] FCAFC 38

ORDERS

THE COURT ORDERS THAT:

1.    Order 4 made on 17 December 2020 be varied such that to the extent the appellant is required to pay the first and second respondents’ costs of the appeal, as agreed or taxed, those costs are limited to the costs of their counsel.

2.    The first and second respondents pay the appellant’s costs of its interlocutory application filed on 17 February 2021, as agreed or taxed.

3.    The interlocutory application filed by the appellant on 21 December 2020 be dismissed.

4.    The appellant pay the first, second and third respondents’ costs, as agreed or taxed, of the interlocutory application referred to in Order 3 above.

5.    The interlocutory application filed by the first and second respondents on 30 December 2020 be dismissed.

6.    The first and second respondents pay the appellant’s costs, as agreed or taxed, of the interlocutory application referred to in Order 5 above.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    On 17 December 2020 we made orders dismissing an appeal brought by Treasury Wine Estates Limited (TWE) and for TWE to pay the respondents’ costs of the appeal as agreed or taxed: see Treasury Wine Estates Limited v Maurice Blackburn Pty Ltd [2020] FCAFC 226 (TWE Appeal). Although there are four named respondents, only the first, second and third respondents, Maurice Blackburn Pty Ltd (MB), Steven Napier and Guy Donnellan (collectively Respondents), participated in the appeal.

2    At the hearing of the appeal no submissions were made by any party in relation to the costs of the appeal and no party requested the Court to reserve on that issue until after making orders and publishing reasons in relation to the substantive issues raised for determination in the appeal. Notwithstanding that, after making the orders referred to at [1] above, the following applications were made:

(1)    by interlocutory application filed on 21 December 2020 TWE seeks an order that it is to pay the Respondents’ costs of the appeal as agreed or taxed on the basis that they are to be treated as having been represented by the same counsel and the same solicitors, with the intent that they be allowed a single set of costs;

(2)    by interlocutory application filed on 30 December 2020 MB and Mr Napier seek an order supplementing or varying the costs order made on 17 December 2020 such that TWE is to pay their costs of the appeal as agreed or taxed, on a party-party basis from 20 August 2020 until 10.59 am on 31 August 2020 and on an indemnity basis from 11.00 am on 31 August 2020; and

(3)    by interlocutory application filed on 17 February 2021 TWE seeks an order that the costs recoverable by MB and Mr Napier be limited to the costs of their counsel and, to the extent necessary, the costs order made on 17 December 2021 be varied accordingly.

The parties have requested that these applications be dealt with on the papers.

3    Before turning to address each of these applications we pause to observe that, thereafter, the matter proceeded in an unsatisfactory way. Putting Mr Donnellan to one side, TWE, MB and Mr Napier made submissions to the Court in a piecemeal and undisciplined fashion and seemingly at will. In all, nine sets of submissions were provided by those parties with the final set filed by TWE, apparently in reply, in circumstances where MB and Mr Napier had indicated that they did not intend to file further submissions. That is not the way that matters should proceed before the Court.

4    The background to and the issues raised for resolution in the appeal are set out in TWE Appeal at [1]-[12]. It is not necessary to repeat those matters here save to note the following.

5    MB and Mr Donnellan, who is a barrister, acted for Brian Jones, the fourth respondent, and others in a class action proceeding commenced in this Court against TWE as defendant (Jones Proceeding). Several years after resolution of the Jones Proceeding, MB and Mr Donnellan were retained to act, as solicitors and counsel respectively, in a class action proceeding commenced on 1 May 2020 in the Supreme Court of Victoria in which Mr Napier is the lead plaintiff (Napier Proceeding). As explained in TWE Appeal at [7] the Napier Proceeding relies to an extent on the same facts as the Jones Proceeding but alleges loss to shareholders who purchased shares in TWE in a different period.

6    The issue at the heart of the appeal was whether, in using pleadings filed in the Jones Proceeding to prepare the statement of claim in the Napier Proceeding, MB and Mr Donnellan breached the obligation imposed on a person not to use a document or information for any purpose other than the proceeding in which it was produced where the person knows that the document or information was obtained because another party to the proceeding disclosed it under compulsion, whether by court order, a rule of court or otherwise (referred to as the Hearne v Street obligation): see TWE Appeal at [1].

7    The pleadings that were alleged to have been used contrary to the Hearne v Street obligation in the Napier Proceeding were the third further amended statement of claim (Jones 3 FASOC) and the second further amended defence (Jones 2 FAD) filed in the Jones Proceeding. TWE contended that:

(1)    in using the Jones 3 FASOC and the Jones 2 FAD, which were obtained from the Court’s website using the Google search engine, to prepare the statement of claim filed in the Napier Proceeding MB and Mr Donnellan breached the Hearne v Street obligation; and

(2)    by filing a defence to a counterclaim filed by TWE in the Napier Proceeding alleging breach of confidence MB and Mr Napier breached the Hearne v Street obligation.

8    Both before the primary judge and on appeal, MB and Mr Napier were represented by the same solicitors, MB, and same counsel and Mr Donnellan was represented by a different firm of solicitors, Moray & Agnew, and different counsel.

TWE’s applIcation to only pay a single set of costs

9    TWE filed its application for leave to appeal and notice of appeal on 20 August 2020. By letter dated 2 September 2020 from its solicitors, TWE notified the Respondents that if they elected to have separate representation on the appeal, it would not bear the costs consequences should it be unsuccessful on the appeal. The letter set out in detail why, in TWE’s opinion, if the Respondents achieved any measure of success on the appeal they would not each be entitled to a separate costs order. The reasons recorded in that letter form the basis of TWE’s submissions on the present application.

10    MB and Mr Napier, on the one hand, and Mr Donnellan, on the other, each responded to that correspondence contending that it was reasonable for each of them to maintain separate representation on the appeal.

11    In support of its application TWE makes the following submissions:

(1)    there is a general principle that, where multiple plaintiffs or defendants with the same interest are separately represented against the same defendant or plaintiff, it will generally be proper for the defendant or plaintiff, as the case may be, if unsuccessful to be burdened with only one set of adverse costs;

(2)    MB and Mr Napier, on the one hand, and Mr Donnellan, on the other, elected to be separately represented and to maintain that position after they were informed of the relevant authorities and TWE’s intention to make the present application if they were successful on appeal. There was never actual or possible conflict of interest in the Respondents’ position and even if it was somehow contended that a potential conflict was theoretically possible at first instance, which TWE denies, that was no longer the position on appeal. The Respondents put the same case below and were bound by that case on appeal. In the circumstances, by the time of the appeal, there was no theoretical or even a remote prospect of a divergence of interests;

(3)    the real question is whether the Respondents’ interests prevented the same legal team from acting for each of them. It is not relevant that the Respondents may in some respects have had a different interest in the outcome of the litigation, that on the question of retrospective leave each of them may have sought to rely on different evidence and that the appeal involved allegations that, if established, may have had serious consequences; and

(4)    the same legal team could have made submissions on behalf of all of the Respondents. There was no conflict or divergence of interest which would have prevented such a course; so much is clear from the conduct of the appeal.

12    In summary the Respondents submit that the nature of the allegations in issue in the proceeding before the primary judge and on appeal, being allegations of breach of the Hearne v Street obligation and thus possible contempt by legal practitioners and through them a party, creates the possibility of conflict between them and provides good reason for separate representation.

13    In making its application TWE relies on what it describes as a general principle. In HP Mercantile Pty Ltd v Hartnett [2017] NSWCA 79 (HP Mercantile) the New South Wales Court of Appeal considered a similar application to that now brought by TWE. In that case there were more than 100 respondents to the appeal. Approximately 68 were represented by one firm of solicitors, and the balance of approximately 36 were represented by two sole practitioners between whom there was a costs sharing arrangement. The issues on the appeal, which was dismissed, concerned the construction of a contract. The unsuccessful appellant applied for a variation of the costs order that had been made in the respondents’ favour so that it would provide that it pay the respondents’ costs of the appeal with “such costs to be assessed on the basis that all respondents are to be treated as having been represented by the same counsel and the same solicitors”.

14    At [8], in identifying the relevant principles upon which the application should be determined, the Court of Appeal observed that:

All parties were content to rely upon principles stated by Woodward J in Statham v Shephard (No 2) (1974) 23 FLR 244 and applied in numerous decisions in this Court, including in Taylor v Owners — Strata Plan No 11564 (No 2) [2013] NSWCA 153 at [6] (McColl, Basten, Hoeben JJA):

In Statham v Shephard (No 2) (1974) 23 FLR 244 at 246, Woodward J stated the general principle that, subject to three provisos, ‘the court will not normally allow two sets of costs to defendants where there is no possible conflict of interest between them in the presentation of their cases’. The first proviso reduced the severity of the ‘no possible conflict’ test, saying that the defendants should make enquiries from the plaintiff if a conflict appeared possible but unlikely. The second proviso was that the defendants might be acting reasonably in remaining at arm’s length despite their united opposition to the plaintiff, even, apparently, in the case of ‘no possible conflict of interest’. Whether that proviso was added from an abundance of caution and would generally have no operation need not be determined. It was limited by the third proviso which stated that even if the defendants were acting reasonably in maintaining separate representation ‘for some time or for some purposes, they may still be deprived of part of their costs if they act unreasonably by duplicating costs on any particular matter or at any particular time’. It might be added that, even if they did not duplicate costs, they would not necessarily obtain separate costs orders if the expense incurred was not one which should reasonably have been borne by the plaintiff.

15    In HP Mercantile it was common ground that there was no possibility of conflict on the questions of construction which were the only issues on appeal. In those circumstances, at [13], the Court of Appeal identified the starting point to be “that it is reasonable for the unsuccessful appellant to bear only a single set of costs where the issues raised amongst the respondents to the unsuccessful appeal give rise to no possibility of conflict and can therefore be addressed by a single set of legal practitioners”. At [15] the Court of Appeal said that the question for it to address was whether the respondents had demonstrated a sufficient reason for the appellant to be burdened with more than one set of costs. It concluded they had not.

16    In Walker v New South Wales Bar Association (No 2) [2016] FCA 1051 the three successful respondents were represented by two sets of solicitors and counsel. The applicant contended that she should only have to pay one set of costs. In considering that issue at [15] Besanko J observed that the Court would not normally allow more than one set of costs to defendants where there is no possible conflict of interest between them in the presentation of their cases, referring to Staham v Shephard (No 2) (1974) 23 FLR 244. At [16]-[19] his Honour continued:

16    In South Sydney District Rugby League Football Club Ltd v News Ltd [2001] FCA 384 (“South Sydney”) at [7] Finn J considered the application of the principle identified by Woodward J in Statham v Shephard and said:

Even if it could be said that in the end no actual conflict of interests actually emerged at the hearing, the case was one in my view in which the respondents reasonably could have apprehended that possible conflicts could have arisen. In this I agree with the News and ARL submissions. It is not to the point that my findings in the end may have negatived the bases for such apprehensions.

I also refer to Professor Dal Pont’s discussion of the issue (Dal Pont GE, Law of Costs (3rd ed LexisNexis Butterworths, Australia, 2013) at 11.52 – 11.57).

17    The argument that the President and the Selection Committee were acting independently of the Association raised the possibility of a conflict between the position of Ms Needham and Mr Hutley on the one hand, and the Association on the other. Does it make any difference that the possibility of a conflict arises because of a matter raised by a respondent (i.e., the Association)? A judgment as to the reasonableness of the respondent’s conduct is required. Whilst the matter might have been difficult to argue as I said in my earlier reasons, I do not think it was unreasonable for the Association to raise the matter.

18    I see no reason to restrict the respondents to one set of costs. The point made by Finn J in South Sydney that it is the possibility of conflict at the relevant time not how the matter is finally determined is significant.

19    The fact that Ms Needham and Mr Hutley were entitled to be indemnified by the Association pursuant to cl. 21 of the Association’s Constitution and have had their costs paid by the Association does not mean that an order for costs should not be made in their favour. There is no suggestion that under no circumstances did they have an obligation to their solicitors to pay costs (Dal Pont (2013) at 7.11 – 7.14).

17    We turn to consider whether the Respondents have demonstrated a sufficient reason for TWE to be burdened with more than one set of costs. In our opinion, for the reasons that follow, they have.

18    TWE filed a summons in the Napier Proceeding seeking to stay that proceeding on the basis that the statement of claim filed in the Napier Proceeding had been prepared using the Jones 3 FASOC and the Jones 2 FAD. Upon that occurring Mr Donnellan returned his brief and ceased to act for Mr Napier. It was also the filing of that summons that necessitated the application to this Court: first MB and Mr Napier filed an interlocutory application in the Jones Proceeding relevantly seeking a declaration that the Hearne v Street obligation did not apply to the Jones 3 FASOC and the Jones 2 FAD and, subsequently, Mr Donnellan filed his application which was to similar effect.

19    Given the nature of the allegations made by TWE, there was a potential for conflict between the Respondents. First, having regard to the roles of the parties in preparing the statement of claim filed in the Napier Proceeding (see TWE Appeal at [8]), we accept that it is possible that, subject to the outcome of the applications before the primary judge and subsequently on appeal, MB and/or Mr Napier may have brought a claim against Mr Donnellan or made submissions about contribution as between MB and Mr Donnellan. In short there was the possibility of an argument about the extent to which the solicitors, on the one hand, and counsel, on the other, engaged in the allegedly contravening conduct. That possibility did not go away upon the primary judge making orders disposing of the interlocutory applications filed in the Jones Proceeding.

20    Secondly, the allegation made by TWE against MB and Mr Donnellan and their common client, Mr Napier, was, in effect, that they had engaged in a contempt of court. That is a serious allegation which was raised against a party and his solicitors and counsel and which, as against the solicitors and counsel, amounted to an allegation of wrongdoing in the course of discharging their professional duties. That being so, the outcome of the appeal had potentially serious professional and reputational repercussions for each of the Respondents but, in particular, for MB and Mr Donnellan. Given the possibility of those consequences the legal practitioners understandably sought to be separately represented. As Mr Donnellan submits, it was important that he be able to give instructions in relation to the allegations made against him in circumstances where his legal representatives were not obliged to pass those confidential communications to MB or Mr Napier who may, as set out above, have a claim against him.

21    As identified by Mr Donnellan, the case advanced by TWE against him was different from that advanced against MB and Mr Napier. TWE relied on two sets of conduct. The first was the filing in the Napier Proceeding of the statement of claim which was conduct said to be engaged in by all of the Respondents. The second was the filing in the Napier Proceeding of a defence to TWE’s counterclaim, alleging breach of confidence, which was conduct said to be engaged in only by MB and Mr Napier. In those circumstances, the claim against MB and Mr Napier, on the one hand, and Mr Donnellan, on the other, was different. It follows that they would prepare their cases differently having regard to this distinction and, as Mr Donnellan points out, it was in his interests alone that he emphasise the difference in the nature of the alleged conduct as against MB and Mr Napier and as against him.

22    It follows that TWE’s interlocutory application filed on 21 December 2020 must be dismissed with costs.

MB and MR NApier’s application for indemnity costs

23    On 27 August 2020 MB sent a letter to Herbert Smith Freehills, the solicitors for TWE, marked “without prejudice save as to costs” under cover of which MB and Mr Napier served a notice of offer to compromise under r 25.01 of the Federal Court Rules 2011 (Cth) (Rules) (Offer of Compromise) and, in the event that the “Offer of Compromise” was not effective, put an offer expressed to be made “in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333” (collectively, Offers).

24    The terms of the Offers are identical. MB and Mr Napier offered to settle the proceeding on the basis that TWE discontinue its application for leave to appeal and its appeal and that they each bear their own costs of the proceeding. The Offers were respectively expressed to be open for acceptance 14 days after service of the Offer of Compromise or the date of the letter. By letter dated 10 September 2020 TWE rejected the Offers.

25    Rule 25.01 of the Rules permits a party to make an offer of compromise by serving a notice in accordance with the prescribed form on another party. Rule 25.14 sets out the cost consequences where an offer made pursuant to r 25.01 is not accepted and relevantly provides:

…

(2)    If an offer is made by a respondent and an applicant unreasonably fails to accept the offer and the applicant’s proceeding is dismissed, the respondent is entitled to an order that the applicant pay the respondent’s costs:

(a)    before 11.00 am on the second business day after the offer was served—on a party and party basis; and

(b)    after the time mentioned in paragraph (a)—on an indemnity basis.

26    In Anchorage Capital Partners Pty Limited v ACPA Pty Ltd (No 2) [2018] FCAFC 112, at [6], a Full Court of this Court (Nicholas, Yates and Wigney JJ) observed that a well-established circumstance justifying an award of indemnity costs is the imprudent refusal of an offer of compromise and that the key question is whether the refusal of the offer was unreasonable having regard to the circumstances at the time of its refusal.

27    Contrary to TWE’s submissions we do not accept that the Offers were not operative because they did not contain an element of compromise. Clearly they did. Their acceptance would have resolved the appeal as against two of the Respondents, leaving the appeal as between TWE and Mr Donnellan before the Court. The appeal against Mr Donnellan alone was narrower in scope as some grounds of appeal were raised only as against MB and Mr Napier, namely those arising out of the filing of the defence to TWE’s counterclaim alleging breach of confidence. It follows that acceptance of the Offers would have narrowed the issues to be resolved as between TWE and the remaining respondent, Mr Donnellan.

28    Nor do we accept that the assumptions underpinning the Offers were not sound because MB and Mr Napier on the one hand and Mr Donnellan on the other chose to have separate representation. TWE’s submissions in relation to that issue are addressed at [11] above.

29    TWE’s contention that it enjoyed a measure of success on the appeal that justifies a small discount in its favour in respect of any costs order made against it is also rejected. The Court has a broad discretion in awarding costs, although it is one which must be exercised judicially. The Court made its order that TWE pay the Respondents’ costs as agreed or taxed having regard to the outcome of the appeal as a whole which was not displaced by the success that TWE enjoyed on some of the issues raised. To the extent they enjoyed any success it was de minimis and did not at the time, and does not now, warrant any different order.

30    Finally, we do not accept TWE’s submission based on the likely outcome of the appeal had the authorities it relied on been preferred by the Court. TWE contends that had that occurred, based on this Court's reasons, it appears it would have obtained costs relief but not an apology, which was the approach adopted in Slea Pty Ltd v Connective Services Pty Ltd [2017] VSC 706; (2017) 53 VR 161, a decision which this Court cited with approval. TWE’s submissions in this regard are speculative and cannot sustain the contention that it was not unreasonable for it to reject the Offers as acceptance of them would have resulted in it foregoing the ability to obtain indemnity costs on the grant of leave.

31    That said, while we do not accept all of TWE’s arguments, in our view it was not unreasonable for TWE to reject the Offers. That question is to be assessed without the benefit of hindsight: see Erskine as liquidator of North Shore Property Developments Pty Ltd (in liq) c 72-74 Gordon Crescent Lane Cove Pty Ltd (No 2) [2019] FCAFC 73 at [7].

32    True it is, as MB and Mr Napier contend, that to succeed TWE had to overturn a number of findings by the primary judge including his Honour’s exercise of discretion in the grant of nunc pro tunc relief. However, we do not accept MB and Mr Napier’s submission that TWE had low prospects of successfully changing the outcome on appeal or that the appeal, insofar as it challenged the primary judge’s exercise of discretion, was untenable. As TWE points out, resolution of the appeal required this Court to consider conflicting lines of authority and resolve tensions between them. That in pursuing the appeal TWE relied on first instance and appellate decisions, which this Court held were incorrectly decided to the extent it relied on them, and a construction of the decision in Hearne v Street [2008] HCA 36; (2008) 235 CLR 125 and Harman v Secretary of State for the Home Department [1983] 1 AC 280, which was rejected by this Court, does not lead to the conclusion that the appeal was hopeless or that its prospects of success were so low that its rejection of the Offers was unreasonable. On the contrary, given the differing lines of authority, TWE’s rejection of the Offers at the time was reasonable.

33    MB and Mr Napier submit that TWE’s continued prosecution of the appeal against lawyers acting against it in the Napier Proceeding involved distraction, delay of that proceeding and escalation of costs for no good reason such that the Offers afforded the parties a timely opportunity for “the distracting sideshow to be brought to an end”. Those contentions do not assist them and do not give any support to the contention that it was unreasonable for TWE to reject the Offers in the circumstances of this case. TWE was entitled to pursue its appeal and to consider the Offers in the context they were made.

34    For those reasons it was not unreasonable for TWE to reject the Offers. It follows that we do not consider that we should vary the order we made on 17 December 2020 that TWE pay, relevantly, MB and Mr Napier’s costs of the appeal as agreed or taxed. The interlocutory application filed on 30 December 2020 by MB and Mr Napier must be dismissed with costs.

TWE’s application that mb and mr napier’s costs be limited to their counsels’ costs

35    TWE seeks to vary the costs order made on 17 December 2020 so that MB and Mr Napier are limited to recovering their counsels’ costs and not those incurred by MB.

36    TWE submits that its interlocutory application is not necessary but that it has filed it to avoid any issue. It says that it was for MB to apply for its costs of acting for itself and Mr Napier and that, absent such an application, any extant order for costs in favour of MB and Mr Napier would exclude MB’s costs and be confined to their counsels’ costs.

37    TWE relies on Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29; (2019) 372 ALR 555 (Bell Lawyers) and R v Silverstein (No 2) [2020] VSCA 251 (Silverstein) and submits that MB and Mr Napier are not entitled to recover any costs incurred by MB. It relies on this as a complete answer to MB and Mr Napier’s application for indemnity costs and says, further, if consistently with those authorities Mr Donnellan’s solicitors are the only solicitors whose costs are recoverable, strictly speaking TWE’s application that it only pay a single set of the Respondents’ costs need only operate in respect of the over representation of counsel as between them.

38    MB and Mr Napier make two submissions. First, they say if this point is to be relied on by TWE it should have been raised at least during the course of the hearing, if not earlier in solicitor correspondence. They say that parties ordinarily address any costs orders for which they contend as part of their submissions on the appeal unless there are good reasons not to do so, such as where one party has made an offer and it would be inappropriate to bring that offer to the attention of the Court before the proceeding is decided. MB and Mr Napier say that there is no reason the issue could not have been raised earlier and every reason why it should have been, including because of the prejudice to Mr Napier and MB by it being raised at the heel of the hunt.

39    Secondly, MB and Mr Napier submit that if the point is to be entertained it is not an answer to the indemnity costs application. They submit that Bell Lawyers can be distinguished as it concerns a legal practitioner’s costs of acting only for herself and not representing another party and Silverstein can be distinguished because TWE raised allegations of breach of the Hearne v Street obligation in order to get the Napier Proceeding against it stayed, the allegations were made against Mr Napier as well as his solicitors and Mr Napier has incurred substantial solicitor costs in order to defeat allegations sought to be used by TWE to stay the further conduct of his claim and those of the group members he represents.

40    In Bell Lawyers the High Court considered whether the so called Chorley exception is good law in Australia. That “rule of practice”, referable to the decision in London Scottish Benefit Society v Chorley (1884) QBD 872, provided an exception to the general rule that self-represented litigants cannot recover recompense for their time spent in litigation where the self-represented litigant is a solicitor.

41    Relevantly in that case Ms Pentelow, a barrister, sued Bell Lawyers for her unpaid fees in the Local Court of New Court Wales (Local Court). She was unsuccessful in that proceeding but appealed successfully to the Supreme Court of New South Wales (Supreme Court). Bell Lawyers was ordered to pay Ms Pentelow her unpaid fees and costs orders were made in her favour in both the Local Court and the Supreme Court proceedings. Ms Pentelow was represented by a solicitor in the proceeding before the Local Court and by solicitors and senior counsel in the proceeding before the Supreme Court. In each proceeding Ms Pentelow undertook preparatory legal work as well as attending court in person on a number of occasions.

42    Pursuant to the costs orders made in her favour, Ms Pentelow claimed total costs of $144,425.45 which included a sum of $22,605 for “Costs incurred on her own behalf” in the Local Court Proceeding and $22,275 for the “Provision of Legal Services Provided by herself” in the Supreme Court proceeding. Bell Lawyers refused to pay the costs claimed for the work undertaken by Ms Pentelow.

43    The High Court held that the Chorley exception is not part of the common law of Australia. It followed that Ms Pentelow could not recover her costs claimed for work she had done in connection with the Local Court and Supreme Court proceedings.

44    In Silverstein the Victorian Court of Appeal considered an application made by two of three successful respondents who sought an order that the applicant pay their costs of an application for leave to appeal that had been dismissed. On the application for leave to appeal the first respondent, a legal practitioner, acted for himself and for the second and third respondents. Before the trial judge the applicant sought orders that each of the respondents be found guilty of seven charges of contempt of the Magistrates Court. The first respondent also acted for himself and the second and third respondents in that proceeding. It was alleged that the acts of contempt had occurred in a proceeding before the Magistrates Court in which the first respondent had also acted as the solicitor for the second and third respondents.

45    The Victorian Court of Appeal sought submissions as to whether it would be appropriate to order that each party bear its own costs on the basis that the submissions for the first respondent, made on behalf of each of the respondents, were, in effect, defending his own conduct. In response the first respondent filed submissions and provided the court with a costs agreement dated 17 July 2020 signed by and on behalf of the second and third respondents respectively. The first respondent accepted that he was not entitled to seek legal costs for acting for the second and third respondents before the date of the costs agreement and that, in accordance with the decision in Bell Lawyers, he was not entitled to recover legal costs for himself. However, he submitted that as the second and third respondents were successful on the application for leave to appeal they should be entitled to an order for their costs from 17 July 2020. Accordingly, he sought an order that the applicant pay two thirds of their costs from that date.

46    The Victorian Court of Appeal concluded that there should not be any order for costs because: the first respondent had a direct personal interest in resisting each of the grounds of the application for leave to appeal; if the applicant had succeeded on any of the grounds that would have adversely affected the first respondent’s position to the same extent as, if not more than, it would have affected the second and third respondents’ position; if the first respondent had only represented himself he would have presented the same arguments on his own behalf that were presented on behalf of each of the respondents; the first respondent did not make any additional argument on behalf of the second and third respondents which was not relevant to his own position; and each of the grounds of the application for leave to appeal concerned the first respondent’s conduct in the Magistrates Court proceeding which had given rise to the allegations and the charges in the contempt proceeding. Any liability of the second and third respondents was based on and derived entirely from the first respondent’s conduct. The Victorian Court of Appeal noted (at [10]) that the first respondent had a direct personal interest in resisting in the appeal and, while his arguments may have also been to the benefit of the second and third respondents, they were necessary to protect his own position. At [11] the Court said:

For those reasons, it would be quite inappropriate for the first respondent to seek fees from the second and third respondents for representing them on the application for leave to appeal. In effect, by doing so, he would be asking his clients to pay to him a fee for defending himself and for protecting his own position. We would therefore expect that the first respondent would not claim such fees from his clients.

47    MB cannot recover its legal costs for acting for themselves in the appeal. That this is so follows from the decision in Bell Lawyers; it is not a matter that is required to be the subject of any application, nor was it required to be raised during the course of the hearing or earlier correspondence.

48    The issue that arises is whether Mr Napier can recover his solicitors’ costs.

49    Insofar as that issue is concerned, the circumstances of this matter are analogous to those before the Victorian Court of Appeal in Silverstein. That is, while Mr Napier is a party to the appeal (and was a party to the proceeding below), the conduct which TWE sought to impugn and which was the subject of proceedings in this Court was, relevantly, that of his lawyers. His own position depended entirely on that of his lawyers. While the proceeding in this Court was not a contempt proceeding, had MB and Mr Napier been unsuccessful in this Court, the consequences for them would have been significant. Moreover, it is plain that, as was the case in Silverstein, MB had a direct personal interest in the outcome.

50    The submissions made on appeal on behalf of MB and Mr Napier were identical. While Mr Napier may have incurred “substantial solicitor costs” in order to be in a position ultimately to defend the stay of the Napier Proceeding, those costs, to the extent they were incurred in the appeal, were incurred in pursuing the same arguments as those pursued by MB on its own behalf. The observations of the Victorian Court of Appeal in Silverstein at [11] apply equally here; that is, MB would be expected not to claim costs from Mr Napier for defending itself and protecting its own position. There is no evidence before us on which we could conclude that, in permitting Mr Napier to recover his solicitor costs, MB would not be recovering its fees for protecting its own position.

51    Accordingly, in our view, MB and Mr Napier’s recoverable costs should be limited to those of their counsel. It follows that orders will be made in accordance with TWE’s interlocutory application filed on 17 February 2021 and costs should follow the event.

conclusion

52    In light of the matters set out above:

(1)    TWE’s application filed on 21 December 2020 that it pay the Respondents’ costs of the appeal as agreed or taxed on the basis that only a single set of costs be allowed for all Respondents will be dismissed with costs;

(2)    MB and Mr Napier’s application filed on 30 December 2020 that TWE should pay its costs of the appeal on an indemnity basis will be dismissed with costs; and

(3)    TWE’s interlocutory application filed on 17 February 2021 should be allowed with costs such that Order 4 made on 17 December 2020 should be varied so that the costs recoverable by MB and Mr Napier are limited to the costs of their counsel.

53    We will make orders accordingly.

Associate:

Dated:    19 March 2021

SCHEDULE OF PARTIES