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SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2012 0167

YARA AUSTRALIA PTY LTD (ACN 076 301 221) Applicant

RADHIKA PANKAJ OSWAL Respondent

S APCI 2012 0168

IAN MENZIES CARSON First Applicant

DAVID LAURENCE MCEVOY Second Applicant
SIMON GUY THEOBOLD Third Applicant

PANKAJ OSWAL Respondent

S APCI 2012 0169

ANZ BANKING GROUP LTD (ACN 005 357 522) First Applicant
IAN MENZIES CARSON Second Applicant
DAVID LAURENCE MCEVOY Third Applicant
SIMON GUY THEOBOLD Fourth Applicant

RADHIKA PANKAJ OSWAL Respondent

S APCI 2012 0170

APACHE FERTILISERS PTY LTD (ACN 153 344 248) Applicant

RADHIKA PANKAJ OSWAL Respondent

________________________________________________________________________________
Court of Appeal
459 Lonsdale Street, Melbourne, Vic, 3000
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JUDGES REDLICH and PRIEST JJA and MACAULAY AJA

WHERE HELD MELBOURNE

DATE OF HEARING 24 April 2013

DATE OF JUDGMENT 27 November 2013

MEDIUM NEUTRAL CITATION [2013] VSCA 337 1 st Revision 27 November 2013

[61]

JUDGMENT APPEALED FROM [2012] VSC 356 (Whelan J)

---

COSTS Civil Procedure Act 2010 Statutory regime Overarching obligations of parties and legal
practitioners Application for leave to appeal against refusal to order security for costs Whether
failure by legal practitioners to use reasonable endeavours to ensure that the costs incurred in the
proceeding were reasonable and proportionate Section 24 Whether parties over represented by
counsel Whether application books unnecessarily voluminous Whether Indemnity costs order
appropriate Sanctions for breach of obligations Nature of costs orders that may be made.

---

Appearances: Counsel Solicitors

For Yara Australia Pty Ltd Mr R W Douglas with Clayton Utz

Mr D M Benson

For ANZ Banking Group Ltd Mr A C Archibald QC and Herbert Smith Freehills
Mr M N Connock SC with
Dr M D Rush

For Apache Fertilisers Pty Ltd Mr D J OCallaghan SC with K & L Gates

Mr G P Harris

For Radhika Pankaj Oswal Mr P Durack SC Jones Day

For Ian Menzies Carson & Ors Mr A C Archibald QC and Herbert Smith Freehills
Mr M N Connock SC with
Dr M D Rush

For Pankaj Oswal Mr A J L Bannon SC with Watson Mangioni Lawyers

Mr J M Ross

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Court of Appeal
459 Lonsdale Street, Melbourne, Vic, 3000
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REDLICH JA
PRIEST JA
MACAULAY AJA:

1 Following the publication of our reasons refusing an application for leave to

appeal from orders of Whelan J in which he had set aside the order of an Associate

Justice for security for costs, we requested the parties to address the question

whether in the conduct of the leave application there had been a breach by any party

of their overarching obligation under the Civil Procedure Act 2010 (the Act) to use

reasonable endeavours to ensure that the costs incurred in the proceeding were

reasonable and proportionate to the complexity and importance of the issues and the

sums in dispute.1 These reasons are concerned with that question. It has been

necessary to consider the nature and extent of that obligation within the structure

and purposes of the Act and the sanctions available to the Court in the event of non-

compliance. Two factual questions have been addressed in order to determi ne

whether the obligation was breached by any party or their legal practitioners. First,

whether there was any over representation of a party by counsel and second,

whether the material produced on the hearing of the application for leave to appe al

was unnecessary or excessive.

Background

2 The applicants sought leave to appeal, and if leave was granted, the

determination of the appeal, from the orders of Whelan J (as his Honour then was)

made 31 August 2012. His Honour had granted leave and allowed the appeal setting

aside the orders of Efthim AsJ that the respondents provide security for the costs of

the applicants in proceedings that had been commenced in the Commercial and

Equity Division of the Supreme Court. The application for leave to appeal was heard

in one day, there being five senior counsel, six junior counsel and five firms of

solicitors representing the parties. The applicants, ANZ and the receivers, were

represented by two senior counsel and one junior, Yara by two junior counsel,

1 Section 24(a) and (b).

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Apache by senior and junior counsel, Mr Oswal by senior and junior counsel and

Mrs Oswal by senior counsel. Different firms of solicitors represented each party. 2

In addition to the notices of appeal and the parties written cases, the parties between

them filed six lever arch folders of material (the application books).

3 The applicants ANZ and the receivers had sought security for their costs in

the amount of $86,361.00; and the applicants Apache and Yara, security in the

amount of $31,808.20 from the first respondent. The receivers, who are also

defendants in separate proceedings commenced by the second respondent, sought

further security from the second respondent in the sum of $22,810.80.

4 Having regard to the nature of the application, the amount of security sought,

the volume of material filed on the application and the degree to which the parties

were represented, and in pursuance of the courts obligation to give effect to the

overarching purpose of the Act,3 the Court sought submissions from the parties

pursuant to s 29(2)(b) of the Act directed to the question whether any of them had

failed to meet their obligations under the Act to use reasonable endeavours to ensure

that the costs incurred were reasonable and proportionate.

The Civil Procedure Act 2010

5 The statutory regime and the obligations that are imposed by the statute have

not previously been considered in any detail at an appellate level. As the

enforcement of the overarching obligations under the Act has been so little traversed,

there is presently little to guide judicial officers as to the extent of the Courts powers

and the means by which parties or their legal representatives can be pe nalised for

any contravention. We have thus addressed some of these issues at greater length

than would ordinarily be necessary when a contravention of the Act is under

consideration.

2 At the hearings before Whelan J and Efthim AsJ there was a very similar, though not
identical, level of representation.
3 Section 8 of the Act.

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6 The reforms introduced by the Act are described in Williams Civil Procedure as

breaking new ground in Australia and putting Victoria at the forefront of civil

justice reform throughout the common law world.4 The Acts purpose was to

reform and modernise the laws, practice, procedure and processes relating to civil

proceedings in Victorian courts. The need to ensure that costs were reasonable and

proportionate was a core objective of these civil procedure reforms. In respect of the

overarching obligation provisions discussed below, the Act largely adopted the

recommendations of the Victorian Law Reform Commission in its Civil Justice Report,

published in May 2008.5 That Report was itself heavily influenced by Lord Woolfs

review of the civil justice system in England and Wales, in which he concluded that

an unacceptable situation had arisen out of unmanaged adversarial procedure.6

7 In the second reading speech to the Act, the Attorney-General stated that the

purpose of the reforms was to make the essential goals of the civil justice system

accessibility, affordability, proportionality, timeliness and getting to the truth

quickly and easily ... once again more achievable.7 The Attorney-General went on to

say:

At the core of these reforms is the concept of proportionality. Participants in

litigation will be required to use reasonable endeavours to ensure that legal
and other costs spent in the proceeding are reasonable and proportionate to
the complexity or importance of the issues in dispute, and the amount in
dispute. The courts will also be required to deal with a civil proceeding in the
same manner.

These provisions are designed to cure unnecessary expenditure on litigation

and the inappropriate use of the courts as a public resource, a matter that has
been highlighted in several recent decisions.

I note recent judicial statements criticising the costs charged by some lawyers
as being disproportionately high in comparison to the amounts in dispute, as
well as urging lawyers to focus on resolving disputes, rather than attempting
to win at all costs. Under the civil procedure reforms, these kinds of
behaviours will need to change.

4 LexisNexis Butterworths, Civil Procedure: Victoria, vol 2 (at Service 273) [C 1.01.0].
5 Victorian Law Reform Commission, Civil Justice Review, Report No 14 (2008).
6 Lord Woolf, Access to Justice: Interim Report to the Lord Chancellor on the Civil Justice System in
England and Wales (1995), 13.
7 Victoria, Parliamentary Debates, Legislative Assembly, 24 June 2010, 2607 (Attorney-General
Rob Hulls).

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When the courts are used by litigants and lawyers in this way, the public
loses faith in the justice system and the courts are unavailable to hear
meritorious claims. This package of reforms will require all participants in
the civil justice system to lift the standards of conduct in civil litigation and to
work together to achieve a positive change in the civil justice system.8

8 One of the main purposes of the Act is to provide for an overarching purpose

in relation to the conduct of civil proceedings to facilitate the just, efficient, timely

and cost-effective resolution of the real issues in dispute.9 The Act provides for

overarching obligations for participants in civil proceedings to improve standards of

conduct in litigation, and expanding the powers of the courts in relation to costs in

relation to civil proceedings. 10

9 The court is obliged to give effect to the overarching purpose of the Act to

facilitate the just, efficient, timely and cost effective resolution of the real issues in

dispute.11 The court is directed to further the overarching purpose by having regard

to the objects and matters articulated in s 9 of the Act which include the efficient use

of judicial and administrative resources and dealing with the proceeding in a

manner proportionate to the complexity and importance of the issues and amount in

dispute.

10 The overarching obligations apply to any person who is a party, any legal

practitioner, legal representative or law practice acting for or on behalf of a party. 12

The overarching obligations do not override any duty or obligation of a legal

practitioner arising under common law or statute to the extent that such duties and

obligations and the overarching obligations can operate consistently. 13 But a legal

practitioner or law practice engaged by or on behalf of a client in connection with a

civil proceeding must comply with the overarching obligations despite any

8 Ibid.
9 Section 1(1)(c).
10 Section 1(2)(a) and (b).
11 Section 7.
12 Section 10.
13 Section 13(1).

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obligation to act in accordance with the instructions or wishes of the client. 14

A legal practitioner is not required to comply with any instruction or wish of a client

which is inconsistent with the overarching obligations,15 and must not cause the

client to contravene the overarching obligations. 16 To the extent that there is an

inconsistency between a legal practitioners duty to a client and their overarching

obligations, the obligation prevails. 17

11 Part 2.3 outlines the overarching obligations. The duty stated in s 16 is that

each person to whom the overarching obligations apply has a paramount duty to

further the administration of justice. The overarching obligations include the

obligation to only take steps that are considered to be necessary to resolve or

determine the dispute.18

The obligation to ensure costs are reasonable and proportionate

12 The overarching obligation in issue is the obligation of the parties and their

practitioners to ensure that legal costs are reasonable and proportionate. Section 24

imposes a positive obligation to take steps to ensure that costs are not excessive and

empowers courts to sanction those who breach their obligations. Section 24

provides:

24 Overarching obligation to ensure costs are reasonable and

proportionate

A person to whom the overarching obligations apply must use

reasonable endeavours to ensure that legal costs and other costs
incurred in connection with the civil proceeding are reasonable and
proportionate to -

(a) the complexity or importance of the issues in dispute; and

(b) the amount in dispute.

14 Section 13(2).
15 Section 13(3)(b).
16 Section 14.
17 Section 13(3).
18 Section 19.

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13 Section 24 adopts a flexible test. There is plainly no costs matrix or formula

that can be applied in determining whether the parties have met their obligations.

Rather, the court must weigh the legal costs expended against the complexity and

importance of the issues and the amount in dispute, in order to determine whether

the parties used reasonable endeavours to ensure those costs were proportionate.

14 Each party and their solicitor and counsel have an obligation to comply with

the overarching obligation. Whether any of them have breached that overarching

obligation is to be determined by an objective evaluation of their conduct having

regard to the issues and the amount in dispute in the proceeding. The legal

practitioners duty is non-delegable. The obligation will override their duty to their

client where the discharge of that duty would be inconsistent with the overarching

obligation.19 The legal practitioner will not be relieved of this overarching

responsibility because of the instructions of their client. 20

15 Legal practitioners, whether solicitor or counsel, involved in the preparation

of pleadings, affidavits or other materials that are to be used in the proceeding or

who provide advice as to such matters, have individual responsibilities to comply

with the overarching obligation. Both solicitor and counsel also have an overarching

responsibility with respect to the extent and level of their clients representation.

Each must ensure that, having regard to the issues, the extent and level of

representation proposed is reasonable and proportionate. Advice or instructions

given or received by legal practitioners, and instructions given by the client may

inform but will not be determinative of the question whether, viewed objectively,

there has been a breach of the obligation.

The power to issue sanctions under the Civil Procedure Act

16 Part 2.4 of the Act governs the Courts power to issue sanctions for

19 Section 13(1).
20 Section 13(2) and (3).

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contraventions of the overarching obligations. Sections 28 and 29 provide:

28 Court may take contravention of overarching obligations into

account

(1) In exercising any power in relation to a civil proceeding, a

court may take into account any contravention of the
overarching obligations.

(2) Without limiting subsection (1), in exercising its discretion as

to costs, a court may take into account any contravention of the
overarching obligations.

29 Court may make certain orders

(1) If a court is satisfied that, on the balance of probabilities, a

person has contravened any overarching obligation, the court
may make any order it considers appropriate in the interests of
justice including, but not limited to

(a) an order that the person pay some or all of the legal
costs or other costs or expenses of any person arising
from the contravention of the overarching obligation;

(b) an order that the legal costs or other costs or expenses

of any person be payable immediately and be
enforceable immediately;

(c) an order that the person compensate any person for

any financial loss or other loss which was materially
contributed to by the contravention of the overarching
obligation, including

(i) an order for penalty interest in accordance with

the penalty interest rate in respect of any delay
in the payment of an amount claimed in the
civil proceeding; or

(ii) an order for no interest or reduced interest;

(d) an order that the person take any steps specified in the
order which are reasonably necessary to remedy any
contravention of the overarching obligations by the
person;

(e) an order that the person not be permitted to take

specified steps in the civil proceeding;

(f) any other order that the court considers to be in the

interests of any person who has been prejudicially
affected by the contravention of the overarching
obligations.

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17 Section 29 in particular is a unique provision, conferring powers broader than

those in any other jurisdiction in Australia, to sanction legal practitioners and parties

who fail to meet their overarching obligations. For example, the Civil Procedure Act

2005 (NSW) provides that the overriding purpose of the Act is to facilitate the just,

quick and cheap resolution of the real issues in the proceedings.21 Although there

are also provisions relating to more specific obligations such as effective case

management, delay and proportionality of costs,22 the NSW provisions remain more

aspirational than obligatory. The Courts powers as to costs are still governed by the

Rules of the Court. There are no broad powers to issue sanctions for contravention

of the obligations. Similarly, the Federal Court provisions merely empower the

Court to take into account a failure to comply with the duty to act consistently with

the overarching purpose when exercising the discretion as to costs. 23

18 Section 29 of the Act provides the Court with broader and more flexible

powers than under the Supreme Court (General Civil Procedure) Rules 2005 (the Rules)

or under its inherent jurisdiction. Rule 63.23(1) enables the Court to make orders for

costs against a legal practitioner who has caused costs to be incurred improperly by

a failure to act with reasonable competence and expedition. However, the primary

object of r 63.23(1) is not punitive or disciplinary but compensatory, enabling

reimbursement of a partys costs incurred because of the default of the solicitor.24

The primary object of the Rule is not to punish the solicitor, but to protect the client

who has suffered and to indemnify the party who has been injured. 25 Rule 63.23(1)

also protects solicitors from the negligence or incompetence of counsel.

19 Hargrave J observed in Director of Consumer Affairs v Scully (No 2),26 that

obligations of this kind set out in the Act did not only arise upon its commencement,

21 Section 56(1).
22 See ss 57, 59 and 60.
23 Section 37N(4) of the Federal Court of Australia Act 1976 (Cth).
24 White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169, 229.
25 Myers v Ellman [1940] AC 282, 289 (Viscount Maugham).
26 [2011] VSC 239.

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but in fact have always existed. 27 His Honour referred to the joint judgment of

Redlich JA and Beach AJA (as he then was) in A Team Diamond Headquarters Pty Ltd v

Main Road Property Group Pty Ltd & Ors,28 in which their Honours said:

There is a significant public interest in the timely resolution of disputes and

the most efficient utilisation of scarce court resources. We doubt whether the
legal representatives of the applicants, as officers of the Court, gave any
sufficient consideration in preparing or presenting their case as to how they
might best assist the Court in the use of its limited resources. Because of the
complexity and increased length of litigation in this age, the obligation which
rests upon legal practitioners to give the courts such assistance has become
increasingly important. Practitioners must ensure that the course chosen in
the interests of the client is compatible with this overarching duty. It is a
responsibility which should be at the forefront of every practitioners
considerations throughout the pre-trial and trial process. Without such
assistance from the legal profession, the courts are unlikely to succeed in their
endeavour to administer justice in a timely and efficient manner. 29

20 The Courts powers under s 29 of the Act include the power to sanction legal

practitioners and parties for a contravention of their obligations as the heading to

Part 2.4 indicates.30 In our view, these powers are intended to make all those

involved in the conduct of litigation parties and practitioners accountable for

the just, efficient, timely and cost effective resolution of disputes. Through them,

Parliament has given the courts flexible means of distributing the cost burden upon

and across those who fail to comply with their overarching obligations. A sanction

which redistributes that burden may have the effect of compensating a party. It may

take the form of a costs order against a practitioner, an order that requires the

practitioner to share the burden of a costs order made against their client or an order

which deprives the practitioner of costs to which they would otherwise be entitled.

The Act is clearly designed to influence the culture of litigation through the

imposition of sanctions on those who do not observe their obligations. Moreover,

the power to sanction is not confined to cases of incompetence or improper conduct

27 Ibid [22].
28 (2009) 25 VR 189.
29 Ibid 193-4 [15] (citations omitted).
30 As per s 36(1)(a) of the Interpretation of Legislation Act 1984, s 36(1)(a), headings form part of
the Act. Any heading must give way to clear and unambiguous words in the provision, but it
nonetheless forms part of the interpretative process. See Silk Bros Pty Ltd v State Electricity
Commission (Vic) (1943) 67 CLR 1, 16.

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by a legal practitioner. Where there is a failure by the practitioner, whether solicitor

or counsel, to use reasonable endeavours to comply with the overarching

obligations, it will be no answer that the practitioner acted upon the explicit and

informed instructions of the client. A sanction may be imposed where, contrary to

s 13(3)(b), the legal practitioner acts on the instruction of his or her client in breach of

the overarching obligations.

21 Section 28(2) enables a court, in exercising its discretion as to costs, to take into

account any contravention of the overarching obligations. In our view, the

enactment of s 29 together with s 28(2) imbues the Court with broad disciplinary

powers that may be reflected in the costs orders that are made. The Court is given a

powerful mechanism to exert greater control over the conduct of parties and their

legal representatives, and thus over the process of civil litigation and the use of its

own limited resources.

22 The Act does not merely reaffirm the existing inherent powers of the court but

provides a powerful indication of the will of the Parliament about the values sought

to be achieved by the way in which cases are managed in the courts and the balances

that have to be struck. Writing extra-judicially, Chief Justice Black said:

[L]egislation imposing positive duties upon litigants and practitioners, will

help to change attitudes and, within constitutionally permissible limits, will
confirm that judges do have the power they need to require parties to
cooperate to bring about the just resolution of disputes as quickly,
inexpensively and efficiently as possible. 31

23 It is therefore somewhat surprising that despite the length of time the Act has

been in force, the scope of the sanction provisions in the Act for a failure to comply

with the overarching obligations has been under-utilised.

24 Section 29 was considered by Dixon J in Hudspeth and Scholastic Cleaning and

Consultancy Services (No 4),32 His Honour concluding that the jurisdiction has both

31 Chief Justice Black (as his Honour then was), The role of the judge in attacking endemic
delays: Some lessons from Fast Track (2009) 19 Journal of Judicial Administration 88, 923 .
32 [2013] VSC 14.

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compensatory and punitive elements where there is a finding of a contravention of

an obligation.33 A number of judges at first instance have emphasised that the Act

requires the Court to be proactive and innovative in its approach to achieve its

objects.34 This approach led Derham AsJ to justify the exercise of the Courts power

to order the production of documents in Matthews v SPI Electricity Pty Ltd & Anor

(No 3).35 A failure to act promptly and minimise delay in contravention of s 25 of the

Act was relied upon to support the striking out of proceedings by Digby J in Chan &

Ors v Chen & Ors.36 J Forrest J in Matthews v SPI Electricity Pty Ltd & Anor (No 2)37

accepted that s 29 authorises the Court to order a person who the Court is satisfied

on the balance of probabilities has contravened an overarching obligation, to pay the

costs of any other person arising from the contravention of the overarching

obligation but refused to make the order sought. In Bare v Small,38 Hansen and

Tate JJA recently gave effect to the Courts discretionary power to fix or cap a partys

liability for costs in advance of an appeal, as it considered such an order appropriate

to further the overarching purpose identified in s 7 of the Act, namely to facilitate

the just, efficient, timely and cost-effective resolution of the real issues in dispute. In

Sunland Waterfront (BVI) Ltd & Anor v Prudentia Investments Pty Ltd & Ors,39

Warren CJ, Osborn JA and Macaulay AJA approved the approach of Croft J in taking

the nature and extent of contraventions of the overarching obligations of the Act into

account in making an order as to costs. 40

25 The explanation for the under-utilisation of the provisions of the Act lies in

part in a false perception that these provisions and the overarching obligations do

33 Ibid [5][7].
34 Hodgson v Amcor Ltd; Amcor Ltd & Ors v Barnes & Ors (2011) 32 VR 495, 504 [26]; Thomas v
Powercor Australia Ltd [2010] VSC 489, [41] (Forrest J); Crowe v Trevor Roller Shutter Services
Pty Ltd [2010] VSC 536, [19][20] (Beach J).
35 [2013] VSC 116.
36 [2013] VSC 538.
37 [2013] VSC 86.
38 [2013] VSCA 204.
39 [2013] VSCA 237.
40 Ibid [553][554].

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not effect any material change to the Rules and the inherent jurisdiction of the

Court.41 Sackville J, writing extra-judicially, referred to the misconception that

specific legislative intervention is unnecessary, since the rules or the inherent powers

of the court confer ample authority on the judges to manage litigation in a manner

that minimises delays and ensures that costs are proportionate to the matters in

dispute, concluding that such a view underestimates the significance of legislation. 42

The Act creates obligations which extend beyond those in the Rules and confers

upon the courts a panoply of powers not found in the Rules.

26 The Act prescribes that parties to a civil proceeding are under a strict,

positive duty to ensure that they comply with each of the overarching obligations

and the court is obliged to enforce these duties. The statutory sanctions provide a

valuable tool for improving case management, reducing waste and delay and

enhancing the accessibility and proportionality of civil litigation. Judicial officers

must actively hold the parties to account.

27 Yet as we have observed, sanctions imposed for a breach of any overarching

provisions have been a rarity at first instance. When no party invites the court to

determine whether there has been a breach of the Act, there may be a judicial

disinclination to embark upon such an own-motion inquiry for fear that inquiry as to

a potential breach may be time consuming and may require the introduction of

material that was not before the court as part of the proceeding. Such fears cannot

relieve judges of their responsibilities. But we would not wish it to be thought that a

judicial officer at first instance must undertake a substantial inquiry whe n

considering whether there has been a contravention of the Act. As the sanction for a

breach will usually lie in an appropriate costs order, a judge may at the conclusion of

the reasons for judgment immediately invite oral submissions as to why there should

41 See for example Octagon Inc v Hewitt & Anor (No 2) [2011] VSC 373, [48]. See also r 63.23 of the
Rules and s 24 of the Supreme Court Act 1986 (Vic). As to the Courts inherent jurisdiction, see
White Industries (Qld) Pty Ltd v Flower & Hart (a firm) (1998) 156 ALR 169; Myers v Elman [1940
AC 282; and Knight v FP Special Assets (1992) 174 CLR 178.
42 Justice Sackville, The future of case management in litigation, (2009) 18 Journal of Judicial
Administration 211, 217.

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not be a finding that the Act was contravened. The judge may in a relatively brief

way deal with that issue in providing succinct reasons for a finding that there has

been a breach of the Act and how that finding affects the orders for costs that are to

be pronounced.

The submissions

28 ANZ and the receivers, Yara and Apache each filed submissions contending

that they had complied with their obligations under s 24. They submitted that the

legal questions raised by the application were complicated, involving a number of

legal and factual issues, including the questions as to whether the Holdback Amount

was an adequate security for costs, the right of indemnity of Apache and Yara to the

fund and a point of general principle about the test for leave when appealing from

the decision of an Associate Justice under r 77.06.2(1). The applicants noted that

Whelan J considered the applications to raise an important issue. As the recovery of

costs was a matter of serious concern, seeking security for costs was important.

Although the sums at stake during the present application for security for costs were

not substantial, it was said that there was common ground between the parties that

huge costs were likely to be incurred in the remainder of the proceeding. Matters

such as discovery and the preparation of lay and expert evidence were likely to be

immensely expensive. Thus the applicants contended that the true issue was in fact

not the quantum of security presently sought, but their ongoing entitlement to seek

security for future costs arising in the litigation. Furthermore, the sums at stake in

the underlying litigation are said to be extraordinary. The applicants refer to the

substantial damages claims which, though not yet quantified, may run to hundreds

of millions of dollars.

29 As to the materials filed, the applicants submitted that the application books

comprising six lever arch volumes contained all the documents necessary for the

purposes of the application for leave to appeal and the appeal if leave was granted.

It was submitted that only a relatively small volume of material was filed in the

proceeding before Efthim AsJ, which was met by a large volume of material by

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Mrs Oswal. The applicants then filed all relevant material that was available. They

noted that they had annotated the material and provided extensive footnote

references to make navigating it less difficult than otherwise.

30 In respect of the representation of the applicants by counsel, they submit that

each of the applicants, who had interests that were separate and distinct from each

other, should be separately represented. Given the nature of the application and the

significant sums of money at stake in the underlying litigation, they submit that it

was responsible, sensible and appropriate for the applicants to each be represented

by junior and senior counsel. 43 Thus the applicants submit that each of them at all

times complied with their s 24 obligations.

31 The orders sought on all of the applications for leave to appeal were

substantially the same. Each applicant sought security for costs and a stay of

proceedings until security was provided. Yara and Apache adopted the submissions

of ANZ and the Receivers. 44 The issues in this Court were confined. There were

three main questions requiring determination: first, whether Whelan J acted on

wrong principles in granting leave to appeal; second, whether he erred in finding

that the Holdback Amount provided sufficient security for costs; and, third,

whether he was wrong to hold that Apaches and Yaras right of indemnity was

different from that of an insured defendant. The submissions of the applicants

largely overlapped in addressing these issues.

32 Both before Whelan J and in this court the applicants failed to make out their

primary claim that the Holdback Amount was insufficient to constitute adequate

security in the absence of any evidence of any claim that would deplete it. The other

issues were also decided adversely to the applicants, the Court refusing leave on

each ground.

43 Yara noted in its further submissions that it was represented only by senior counsel and the
instructing solicitor as second junior counsel.
44 [2013] VSCA 156, [80], [84].

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Was there any unnecessary representation of the parties?

33 The scope of s 24 is not rigidly defined, but it plainly includes an obligation to

ensure that parties are not over-represented. The applicants and their legal

practitioners had an obligation to use reasonable endeavours to ensure that the costs

of the applicants legal representation were reasonable and proportionate.

34 The second reading speech to the Act identifies the practice of unnecessarily

briefing two barristers as a procedural issue that needs redress. The Attorney-

General, in discussing s 24 said:

In relation to the duty to ensure costs are reasonable and proportionate, an

example of a possible breach may be the practice of briefing two barristers (senior
counsel and junior counsel) where the complexity of the case does not warrant it.
I note that the obligation is worded so that resources are not unreasonably
constrained for cases that might in themselves be for a small amount, but that
have significant precedent or public interest value. 45

35 Each of the applicants was seeking security for costs, supported by

submissions that were to a large extent in the same terms. The appearance of seven

counsel for the applicants, three of them senior counsel, and two of them appearing

for the same party on an application for leave to appeal on a security for costs

application, in conjunction with the voluminous content of the application books ,

compelled the Court to inquire as to whether there had been any contravention of

the Act.

36 In order to comply with the particular overarching obligation in s 24, the legal

practitioners solicitors and counsel who act for or on behalf of a party or who

are asked to so act, must always give careful consideration to the level and the extent

of the representation that is necessary for a party in a proceeding. Even where a

party provides informed instructions to their legal practitioners that they wish

particular counsel to be briefed, the legal practitioners who act on thei r behalf have

an overriding duty to consider whether, having regard to the matters set out in s 24

and any other relevant circumstances, the engagement of particular counsel will

45 Victoria, Parliamentary Debates, Legislative Assembly, 24 June 2010, 2609 (Attorney-General

Rob Hulls).

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contravene the Act. There will be proceedings in which the complexity or

importance of the issues and the amount in dispute will not justify the engagement

of counsel of particular seniority or will not justify the engagement of more than one

counsel.

37 Despite the applicants submissions being substantially the same, ANZ and

the receivers, who were represented by two senior counsel and a junior counsel,

explained in their written submissions that because lead counsel overseeing the

litigation, and who had appeared before Efthim AsJ and Whelan J, was unavailable

for the preparation of the written submissions, other senior counsel was briefed to

draft the written submissions with junior counsel. As the availability of lead seni or

counsel and junior counsel for the hearing was also uncertain, senior counsel who

had prepared the submissions was briefed to appear. Lead counsel became available

shortly before the hearing. Having regard to the importance and complexity of the

issues, the likely costs of the proceedings, the amount in dispute and the fact that the

oral submissions of lead senior counsel succinctly narrowed the focus of the

application, it cannot be said that the engagement of three counsel, and the costs

thereby incurred were not reasonable and proportionate.

38 Although counsel who appeared for Apache and Yara adopted the

submissions of ANZ and the receivers, their counsel also made discrete and brief but

important submissions which were relevant to their clients position.

39 Each of the applicants, whose interests were separate and distinct, was

entitled to separate representation. Section 24 is not to be construed as requiring a

party to forfeit that right. In the context of the broader litigation, which is li kely to be

immensely complex and expensive, it was appropriate that each party be

represented at this application by the counsel that were engaged. It is not without

significance that neither respondent contends that there was any contravention of the

Act in this regard. As a result of the explanations proffered by the parties as to the

reasons for the unusual degree of legal representation in the proceedings , and

having regard to the issues and the manner in which the hearing was conducted, we

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are satisfied that there was no breach of the overarching obligation in that regard.

Material in the application books

40 The Act is designed to protect litigants from incurring excessive costs, but it is

also designed to protect against the inappropriate use of the courts as a public

resource. Overly voluminous application material strains the administrative

resources of the Court and the time of judges themselves. Where a large volume of

material is provided to a court that is unnecessary and excessive, there wi ll be a

prima facie case that the overriding obligation has been breached. The court was

provided with six application folders, comprising submissions, affidavit material,

transcript and authorities running to over 2700 pages. Two folders pertained to the

Mr Oswal application and four folders related to the application of Mrs Oswal. The

affidavit material from the parties solicitors contained a variety of largely

extraneous materials, included old statements of claim, swathes of email

correspondence, materials from related proceedings in Western Australia, and

transcripts from related hearings in the Supreme Court of Victoria. Much of this

material was either peripheral to the application or entirely unnecessary.

41 The application books in the Mrs Oswal application include all of the

evidence filed by the parties before Efthim AsJ, and all written submissions filed by

the parties before Efthim AsJ and Whelan J. Transcript and, in particular, written

submissions from the proceeding below, are not generally to be included in an

application book.46 The transcript and submissions in the proceeding before

Efthim AsJ were entirely otiose.

42 The affidavit dated 4 May 2012, filed on behalf of ANZ and the receivers, ran

for 369 pages and contained a number of unnecessary documents, mostly concerning

related but not directly relevant proceedings in other courts and jurisdictions. This

included a writ and statement of claim dated 2 September 2011; Radhika Oswals

46 Contrary to the contents of the Supreme Court of Victorias Registrars Notes on the Preparation
of Appeal Books, October 2000, 4.

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application for an interlocutory injunction; the reasons for judgment of Davies J in

respect of that interlocutory injunction and the transcript of that hearing; bills of

costs in respect of that application; the judgment of the Western Australian Court of

Appeal in Oswal v Yara Australia Pty Ltd;47 the transcript of a hearing before

Ferguson J in the Supreme Court of Victoria in the matter No. S CI 2011 785; copies

of freezing orders made by the Western Australian District Court; and letters from

Freehills, Jones Day and Middletons in respect of these interlocutory applications.

The proceedings in Western Australia and before Davies and Ferguson JJ in the

Supreme Court of Victoria were not referred to at all in the applicants submissions,

aside from an indirect reference to orders made in other proceedings.

43 The affidavit dated 7 May 2012, filed on behalf of Yara, ran for 77 pages. It

contained correspondence between the firms regarding the receipt of documents in

respect of the statement of claim and the orders of Davies J that Mrs Oswal provide

further and better particulars. The Table to clauses 10 and 11 of the Legal Practitioners

(Supreme Court) (Contentious Business) Determination 2010 (WA) was also included in

the affidavit. None of this material was relevant to the application before this Court.

44 The affidavit dated 21 May 2012, filed on behalf of Apache, ran for 198 pages.

The affidavit contained correspondence seeking advice from a cost consultant on the

quantum of the security for costs application. The letter contains a copy of the

amended writ and statement of claim, dated 24 April 2012, which runs for 170 pages

and duplicates the copy already provided in the application book.

45 The affidavit dated 29 May 2012, filed on behalf of Mrs Oswal, mostly

comprises material that was relevant and relied upon during the application,

including copies of the guarantees and indemnities between the parties; the Apache

and Yara Share Sale Deeds; and the Share Mortgage between Mrs Oswal and ANZ.

This affidavit runs for 391 pages. The only unnecessary document is the Report from

Grace Costs Consultants, estimating the total application costs to be $149,977.70.

47 [2011] WASCA 121.

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This report is duplicated in the affidavit of Margaret Vine from Grace Costs.

46 The Mr Oswal application books were also excessive and contained

extraneous material. The application books again contained all of the submissions

and some transcript material from the hearings before Efthim AsJ and Whelan J. The

affidavit filed on behalf of ANZ and the Receivers ran for 139 pages and included

copies of judgments involving the parties from the Federal Court and the Supreme

Court of Western Australia. These decisions were not relevant to this application.

The only material of relevance to this application was the bundle of correspondence

between the parties regarding the security for costs application and the six page costs

report.

47 The affidavit filed on behalf of Mr Oswal, ran for 492 pages. It contained

copies of the Share Mortgage between Mr Oswal and ANZ and the Share Sale Deed

between ANZ, Mrs Oswal and Yara. Superfluous material was also included, such

as the prospectus for Yara Pilbara Holdings, 20 pages of Reserve Bank data on the

daily price of the $US and judgment in the matter of Tap (Harriet) v Burrup Fertilisers

Pty Ltd.48

48 The application books also contained a substantial amount of duplicated

material. The Mr Oswal application books and the Mrs Oswal application books

both contain 81 pages of transcript from the proceedings before Efthim AsJ on

12 June 2012, and 118 pages of transcript from proceedings before Whelan J (as his

Honour was then) on 9 August 2012. The reasons of Whelan J are reproduced in

each of the applications.

49 In their supplementary submissions, both respondents contended that most of

the material contained within the application books and which was produced by the

applicants was unnecessary to the resolution of the issues we have identified or any

other matter relevant to the applications. That contention is made out. The

respondents identified the evidence that was referred to in the parties written

48 [2011] WASC 264.

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submissions before Whelan J, which comprised only a small proportion of the

material now contained in the application books. The application books contained

voluminous unnecessary material which increased the costs for all parties and the

burden on the court. Very little of it was the subject of any reference in oral

argument. In all, significantly more than half of the material in the application books

was entirely unnecessary to the questions raised by the notice of appeal.

50 The first issue we have identified required analysis of the principles attending

the grant or refusal of leave from an Associate Justice. The second issue principally

involved construction of the relevant share sale deeds and the contingencies related

thereto. There was little need to have regard to any documents beyond the share

sale deeds themselves. The third issue also called for a consideration of principle

without the need to consider any evidentiary material. None of the issues required

production of the evidence filed by the parties before Efthim AsJ, the written

submissions filed by the parties before Efthim AsJ or Whelan J or a transcript of

those hearings.

51 We are unpersuaded by the applicants contention that the expenses incurred

in respect of this applications must be seen in the context of the litigation as a whole,

which will require both parties to incur very substantial legal fees. Such expenditure

as is incurred on an interlocutory application must be proportionate to the

proceeding in question. We are satisfied on the balance of probabilities that the

overarching obligation under s 24 to ensure that costs were reasonable and

proportionate has been breached by the filing of excessive material.

52 The Acts objective is the reform of the culture of unnecessary expenditure on

civil litigation. Parliament has intended that this reform can only be achieved by

holding parties to account for undesirable civil litigation practices that are

unfortunately too common. The court was burdened with excessive material. The

applicants and the respondents were burdened with the costs of that material. There

has been a breach of the overarching obligation to ensure the costs are reasonable

and proportionate by including in the application books voluminous material that

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was extraneous or repetitious and excessive.

The application for a special costs order

53 Mrs Oswal sought indemnity costs from Apache and Yara on the basis that

the very making of the applications was inconsistent with the overarching

obligation in s 24 of the Act. This argument rested upon the assertion that no

substantial injustice was shown to arise from the decision of Whelan J as the

applicants Apache and Yara would be able to recover costs from the Holdback

Amount being property owned by the respondents, and over which they had

granted the applicants security.

54 The applications of Yara and Apache were not inconsistent with the

overarching obligation under s 24 of the Act. Had the applications been bound to

fail, the obligations under ss 18 and 19 of the Act may have been relevant. As Yara

submitted in reply, it had always maintained that the Holdback Amount was not

part of the respondents property and could not provide security for any costs. Had

that submission been made out substantial injustice would arise.

55 Mr Oswal, in a more restrained submission, said that it was open to the court

to make an order for costs on a higher basis but relied only upon the inclusion of

unnecessary and voluminous material in the application books to justify such an

order.

56 The breach of the overarching obligation under the Act is a matter that may be

taken into account in making an order for costs. There will be cases where a breach

of an obligation under the Act may support an order for indemnity costs. The breach

may well reflect an already well-recognised basis for the making of such a costs

order. We do not need to consider whether there may be contraventions which give

rise to any new bases for the making of such orders.

57 In this case the respondents have not demonstrated that any special costs

order should be made in their favour. The applicants have not engaged in

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unmeritorious or deliberate improper conduct such as would warrant the court

showing its disapproval and at the same time preventing the respondents being left

out of pocket.49 If it is appropriate that the usual costs orders following the outcome

of the proceeding are made in the respondents favour, any additional costs in the

preparation for hearing that they have incurred as a result of the breach of the

obligation will be recoverable from the applicants.

Orders that may be made

58 The applicants have requested that they be given an opportunity to make

further submissions as to the nature of any order that we may make in the event that

we find a contravention of the Act to have been made out. One applicant has

foreshadowed an argument that if the application books are found to be

inappropriately voluminous, they are not responsible for its content.

59 An order that may be appropriate is that the solicitor-client costs which each

legal practitioner may seek to recover from their client not include a percentage of

the costs of the preparation of the application books. A further order that could also

be made is that the legal practitioners for the applicants pay a portion of the

respondents costs of the applications that are related to the preparation for the

hearing. We will hear from the parties as to what orders we should pronounce as to

costs in light of the breach of the overarching obligation of the Act.

60 We will direct that the solicitors for each of the applicants provide their clients

with a copy of the reasons of the Court, and its orders.

Orders

61 After hearing from the parties following the delivery of judgment the Court

pronounced orders to the following effect:

49 Hazeldenes Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435;
Aljade and Malaysian Kuwaiti Investment Co v Oversea-Chinese Banking Corp Ltd [2004] VSC 351.

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(1) Each application for leave to appeal is dismissed.

(2) Each applicant pay the respondents costs of the application.

(3) Each applicants solicitor indemnify the applicant for 50% of the

respondents costs incurred as a consequence of the excessive or

unnecessary content of the application books.

(4) The applicants solicitor be disallowed recovery from the applicant of

50% of the costs relating to the preparation of the application books, and

costs incidental thereto.

(5) For the purpose of determining the appropriate amounts that the

applicants solicitor should bear under order 3, the applicants solicitors

responsibility for the preparation of the application books be referred to

the Costs Court to be assessed according to the extent of the contribution

made by each applicant to the application books in proceedings 2012

numbered 167, 169 and 170, in default of agreement between the

applicants.

(6) Each applicants solicitors provide the applicant with a copy of these

orders, and the Courts reasons for orders 3, 4 and 5.

(7) The costs ordered by these orders may be taxed immediately.

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