146 Bell Street Pty Ltd (ACN 601 377 557) v Aoyin Finance Pty Ltd (ACN 609 915 488)
[2019] VSC 846
•20 December 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2017 00209
| 146 BELL STREET PTY LTD (ACN 601 377 557) & ORS (according to the Schedule attached) | Plaintiff |
| v | |
| AOYIN FINANCE PTY LTD (ACN 609 915 488) | Defendant |
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JUDGE: | McDonald J |
WHERE HELD: | Melbourne |
WRITTEN SUBMISSIONS FILED: | 6 and 18 December 2019 |
DATE OF JUDGMENT: | 20 December 2019 |
CASE MAY BE CITED AS: | 146 Bell Street Pty Ltd (ACN 601 377 557) & Ors v Aoyin Finance Pty Ltd (ACN 609 915 488) |
MEDIUM NEUTRAL CITATION: | [2019] VSC 846 |
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COSTS – proceeding dismissed by reason of plaintiffs’ breach of self-executing orders – Whether defendant’s costs should be paid on an indemnity basis – Persistent failure by plaintiffs to comply with Court orders – Conduct of plaintiffs inconsistent with efficient conduct of proceedings - Indemnity costs ordered.
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HIS HONOUR:
On 26 April 2019 this proceeding was set down for a seven day trial to commence 21 October 2019. On 4 October 2019 Riordan J made orders by consent requiring the second and third plaintiffs to pay $120,000 by way of security for costs in two instalments of $60,000, on 7 October and 18 October 2019.[1] The order provided that, in the event of non–payment, the proceeding would be stayed. Neither instalment was paid.
[1]Orders of the Honourable Justice Riordan dated 4 October 2019.
By summons filed 15 October 2019 the defendant sought orders that the plaintiffs’ claims be dismissed with costs. The application was heard on 21 October 2019. The court did not grant the application dismissing the proceeding. Rather, the court adjourned the trial to a date to be fixed. The court also made several self–executing orders, which would result in the dismissal of the proceeding in the event of non–compliance.[2]
[2]Orders of the Honourable Justice McDonald dated 21 October 2019.
Order 2 of the orders made on 21 October 2019 required the second and third plaintiffs to pay $120,000 by way of security for costs by 4.00pm on 29 November 2019. This order was not complied with. As a result the proceeding is dismissed.
The defendant now seeks orders that the plaintiffs pay its costs on an indemnity basis. The usual order as to costs requires an unsuccessful party to pay the successful party’s costs on a standard basis. To justify departure from the usual order there must be some special feature of the case justifying an order of costs other than on a standard basis.[3]
[3]Colgate-Palmolive Company & Anor v Cussons Pty Ltd (1993) 46 FCR 225, 232-3.
I am satisfied that the plaintiffs’ persistent failure to comply with Court orders has undermined the efficient conduct of the proceeding and caused a loss of Court time. This conduct justifies an award of indemnity costs. Throughout the proceedings the plaintiffs have engaged in the following conduct:
(a) The plaintiffs failed to pay security for costs, resulting in a stay of the proceedings;[4]
[4]Affidavit of Jonathan Milner sworn 15 October 2019 at [9].
(b) The plaintiffs failed to serve witness statements;[5]
[5]Ibid [8].
(c) The plaintiffs’ solicitors (at an earlier time) ceased to act, and the plaintiffs failed to attend a directions hearing;[6]
[6]Ibid [14]-[15].
(d) The plaintiffs reappointed their earlier solicitors,[7] and then changed their solicitors some two months later;[8]
[7]Ibid [18].
[8]Ibid [21].
(e) The plaintiffs failed to serve expert evidence in accordance with Court directions, (including deadlines extended to permit the plaintiffs to have extra time);[9]
(f) The plaintiffs failed to file and serve a Court book and outline of argument,[10] even after the time to do so was extended;[11] and
(g) The second and third plaintiffs, at a directions hearing on 16 September 2019 accepted that the trial could proceed.[12] Following the directions hearing, consent orders were filed on 1 October pursuant to which the second and third plaintiffs agreed to provide further security for costs. [13] However, within a week of having agreed to do so, they failed to make the first payment.
[9]Ibid [19], [22] and [24]-[25].
[10]Ibid [30].
[11]Ibid [42] and [52].
[12]Transcript of Proceedings 16 September 2019 T 8 l 10 - 18.
[13]Order of the Honourable Justice Riordan made 4 October 2019.
The manner in which the plaintiffs have conducted this litigation is deserving of criticism.[14] The plaintiffs’ failure to comply with Court orders has resulted in a loss of time.[15] The plaintiffs’ conduct has undermined the efficient conduct of the proceeding. The second and third plaintiff submit that any departure by them from the standards required in the conduct of litigation (which they deny) “was due to the impecuniosity of the plaintiffs’ [sic] rather than unwillingness or contumaciousness that prevented them from otherwise prosecuting their case.”[16]
[14]Re Smith; ex parte Rundle (No 2) [1991] 6 WAR 299 at 301, cited with approval in Oshlack v Richmond River Council (1998) 193 CLR 72 at [44].
[15]Pandolfo v Findari (Costs) [2018] VSC 655 at [16].
[16]Plaintiffs’ written submissions filed 18 December 2019 at paragraph [7].
The discretion to order indemnity costs must be exercised judicially. A party’s circumstances, including their financial position, may be relevant to the exercise of the discretion. All parties to legal proceedings, irrespective of their financial resources, are required to comply with Court orders and the overarching obligations prescribed by the Civil Procedure Act 2010 (Vic). A party’s impecuniosity does not provide a shield from an indemnity costs order.
An impecunious plaintiff has the option of discontinuing proceedings. The plaintiffs, despite their claimed impecuniosity, did not do so. Rather, notwithstanding their claimed financial difficulties, they pressed on with the litigation. As a result, the defendant has been put to significant expense. I infer that the decision to continue with the proceeding was made in circumstances where the plaintiffs were aware that their financial circumstances would hamper their ability to comply with Court orders and co-operate in the efficient conduct of the proceeding. The plaintiffs’ failure to comply with Court orders may not have been due to a deliberate unwillingness to do so. However, it occurred in circumstances where the plaintiffs made a deliberate decision to press on with the litigation over an extended period of time during which their capacity to comply with Court orders and to co-operate in the efficient conduct of the litigation was hampered by lack of funds.
I am satisfied that, notwithstanding any financial difficulties which hampered the plaintiffs’ conduct of the litigation, it is appropriate to order that they pay the defendant’s costs on an indemnity basis.
There will be an order that the plaintiffs pay the defendant’s costs on an indemnity basis, to be taxed in default of agreement. As regards the first plaintiff, the order will be limited to costs incurred by the defendant until 17 May 2019, being the relevant date for the purposes s 553 of the Corporations Act 2001 (Cth).
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SCHEDULE OF PARTIES
| No. S ECI 2017 00209 | |
| BETWEEN: | |
| 146 BELL ST PTY LTD (ACN 601 377 557) | First Plaintiff |
| 80 COLLINS ST THORNBURY PTY LTD (ACN 607 878 026) | Second Plaintiff |
| 73 PLENTY ROAD PTY LTD (ACN 605 640 588) | Third Plaintiff |
| - and - | |
| AOYIN FINANCE PTY LTD (ACN 609 915 588) | Defendant |
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