ACN 125 152 310 Pty Ltd v Joseph
[2018] TASSC 26
•28 May 2018
[2018] TASSC 26
COURT: SUPREME COURT OF TASMANIA
CITATION: ACN 125 152 310 Pty Ltd v Joseph [2018] TASSC 26
PARTIES: ACN 125 152 310 PTY LTD
PASS 2/3 PTY LTD
v
JOSEPH, Renjith
PATEL, Heena
R & R CORPORATE PTY LTD
FILE NO: 1187/2016
DELIVERED ON: 28 May 2018
DELIVERED AT: Hobart
HEARING DATE: 16 May 2018
JUDGMENT OF: Blow CJ
CATCHWORDS:
Procedure – Costs – Non-parties – Non-parties generally – Notice or warning – Sole director of plaintiff companies, one of them deregistered – Costs of interlocutory application of which director had notice – Unreasonable conduct.
Supreme Court Civil Procedure Act 1932 (Tas), s 12(2).
Symphony Group Plc v Hodgson [1994] QB 179; Forest Pty Ltd v Keen Bay Pty Ltd (1991) 4 ACSR 107; National Mutual Life Association of Australasia Ltd v Chris Poulson Insurance Agencies Pty Ltd (No 6) (1998) 8 Tas R 123; Clarence City Council v Howlin [2010] TASFC 2, 20 Tas R 136, referred to.
Aust Dig Procedure [1498]
REPRESENTATION:
Counsel:
Defendants/Applicants: G O'Rafferty
First Plaintiff and R Martin: P Lunn
Solicitors:
Defendants/Applicants: Alan Rigas Solicitors
First Plaintiff and R Martin: Simmons Wolfhagen
Judgment Number: [2018] TASSC 26
Number of paragraphs: 22
Serial No 26/2018
File No 1187/2016
ACN 125 152 310 PTY LTD and PASS 2/3 PTY LTD
v RENJITH JOSEPH, HEENA PATEL and R & R CORPORATE PTY LTD
REASONS FOR JUDGMENT BLOW CJ
28 May 2018
The defendants are seeking an order for the costs of an interlocutory application which they made successfully. They have applied for an order for costs on an indemnity basis against the first plaintiff, whose name is ACN 125 152 310 Pty Ltd, and a man named Robert William Martin, who is the sole director of that company. Mr Martin has not been named as a party to these proceedings.
The interlocutory application concerned the enforcement of a consent order that was made by Holt AsJ on 12 July 2017. His Honour made a number of orders by consent that day in relation to a complicated dispute concerning real estate. The interlocutory application in respect of which costs are now sought concerned the enforcement of his Honour's order no 6. That order read as follows:
The plaintiff [sic] will provide all consents and execute and provide all documents reasonably required by the defendants to sell and transfer lots within the Properties the subject of the contracts annexed to the affidavit of Avtar Singh sworn 11 July 2017 ('Contracts') or lots the subject of consents provided by the plaintiffs including, at the plaintiffs' election, provide complete and/partial withdrawal of caveats and complete and/or partial discharge of mortgage at time of sale of each lot."
There were two plaintiffs in these proceedings. Order no 6 was obviously meant to apply to both plaintiffs. The second plaintiff was deregistered on 15 October 2017. It has ceased to exist. The defendants are therefore able to seek an order for costs against the first plaintiff, but not the second.
I have heard and determined two interlocutory applications for the enforcement of order no 6. On 18 October 2017, after making a finding that the plaintiffs had refused or neglected to comply with that order, I made an order under s 169 of the Supreme Court Civil Procedure Act 1932 empowering the Registrar of the Court to execute a withdrawal or partial withdrawals of a caveat and a discharge or partial discharges of a mortgage in place of each of the plaintiffs. As it turned out, the second plaintiff had been deregistered three days previously, but I was not aware of that.
The second interlocutory application was filed on 11 April 2018. It came before me on 18 April 2018. It related to five caveats and two priority notices that Mr Martin had lodged or caused to be lodged at the Land Titles Office. Details of those instruments are as follows:
· Caveat E111649 dated 3 November 2017 was signed by Mr Martin. It purported to be a caveat by both plaintiffs, though the second plaintiff had been deregistered by then. It claimed an estate or interest as "MORTGAGE OF REGISTER MORTGAGE E19651 by virtue of BREACH OF CONSENT ORDERS 1187 of 2016". It was lodged in respect of land known to the parties as Lot 101.
· Caveat E111651 dated 4 November 2017 was signed by Mr Martin. It also purported to be a caveat by both plaintiffs, claiming an interest as mortgagees by virtue of a breach of the consent orders. It related to five properties, including a property known to the parties as Lot 3.
· Caveat E111652 dated 4 November 2017 was signed by Mr Martin. It purported to be a caveat by both plaintiffs, claiming an estate or interest as mortgagees by virtue of a registered mortgage E19650. It related to six properties, including those known to the parties as Lot 3 and Lot 101.
· Caveat E111963 dated 3 November 2017 was signed by Mr Martin. It did not specify the name of the caveator. It purported to be a caveat by "THE TRUSTEE OF 10131 INVESTMENT TRUST OF 10 VICTORIA ST HOBART". The unnamed caveator claimed an estate or interest as a purchaser of land by virtue of an agreement dated 16 February 2017. It related to Lot 101.
· Caveat E111974 dated 4 November 2017 was signed by Mr Martin. It purported to be a caveat by both plaintiffs, claiming an estate or interest as mortgagees by virtue of "CONTRACTS AND AGREEMENT AND DAMAGES". It related to six properties, including Lot 3 and Lot 101.
· Priority notice M681474 was lodged on 16 February 2018 on behalf of the first plaintiff by a firm of solicitors, Messrs Murdoch Clarke. It reserved priority for 60 days for the registration of a caveat in respect of Lot 101.
· Priority notice M688050 was lodged on 23 March 2018 on behalf of the first plaintiff by Murdoch Clarke. It also reserved priority for 60 days for a caveat in respect of Lot 101.
The second interlocutory application was filed by the defendants' solicitors on 11 April 2018. The defendants thereby sought an order under s 169 of the Supreme Court Civil Procedure Act for the Registrar to execute withdrawals or partial withdrawals of those instruments "in place of each of the plaintiffs and their sole director Robert Martin".
On 16 April 2018 the second interlocutory application and a supporting affidavit were served on the first plaintiff at its registered office by a process server. The process server handed the documents to Mr Martin at the registered office.
I heard the second interlocutory application on 18 April 2018. At the start of the hearing, Mr Lunn announced his appearance as counsel for both the first plaintiff and Mr Martin. He made no submissions in opposition to the application. Counsel for the defendants relied on a number of affidavits and made submissions. I made an order under s 169 authorising either the Registrar or the Deputy Registrar to execute withdrawals or partial withdrawals of the five caveats and the two priority notices "in the place of the plaintiffs and Robert Martin". The hearing took 80 minutes. The costs application was made at the conclusion of that hearing. I heard argument in relation to costs on 16 May 2018.
On that date Mr Lunn made no submissions in opposition to the making of an order for indemnity costs against the first plaintiff, but submitted that no costs order should be made against Mr Martin. He relied strongly on the fact, conceded by counsel for the defendants, that Mr Martin had not been told by the defendants or their solicitors prior to the making of the costs application that a costs order would or might be sought against him.
I no doubt have a discretionary power to make an order that a non-party pay the costs of proceedings: Supreme Court Civil Procedure Act, s 12(2); Knight v FP Special Assets Ltd (1992) 174 CLR 178; Clarence City Council v Howlin [2010] TASFC 2, 20 Tas R 136 at [116].
In s 3(1) of the Supreme Court Civil Procedure Act, "party" is defined to include "every person served with notice of or attending any proceeding although not named on the record or in the process". Although Mr Martin was not named as a party to the action, the counterclaim, or the second interlocutory application, his interests may have been affected by that interlocutory application, and he was represented by counsel at the hearing of it.
However he was given no warning of the costs application that was made against him. When a costs application is made against a person who has not been named as a party to the proceeding, that is a factor that can weigh heavily against the making of an order for costs, depending on the circumstances.
In Symphony Group Plc v Hodgson [1994] QB 179, Balcombe LJ, with whom Staughton and Waite LJJ agreed, listed a number of considerations that should be taken into account when an order for costs is sought against a non-party. The third consideration stated by his lordship, at 193, was as follows:
"(3) Even if the applicant can provide a good reason for not joining the non-party against whom he has a valid cause of action, he should warn the non-party at the earliest opportunity of the possibility that he may seek to apply for costs against him. At the very least this will give the non-party an opportunity to apply to be joined as a party to the action ...".
In a dissenting judgment in Forest Pty Ltd v Keen Bay Pty Ltd (1991) 4 ACSR 107, which concerned an order for costs against the receivers and managers of companies in liquidation, Dowsett J said at 123:
"As always in exercising a discretion as to costs, various aspects of the conduct of the litigation by the parties will be relevant to the exercise of the … discretion. In some cases, it may be that notice to a receiver at the outset of proceedings that the defendant, if successful, will seek an order for costs against him may be sufficient cause to justify an order of that kind."
In National Mutual Life Association of Australasia Ltd v Chris Poulson Insurance Agencies Pty Ltd (No 6) (1998) 8 Tas R 123 at 137-138, Slicer J took the failure to give a warning into account as a "significant factor" in rejecting an application for costs against a non-party.
In Clarence City Council v Howlin (above) at [125], Crawford CJ, with whom Tennent and Wood JJ agreed, in listing some material considerations relevant to costs applications against non-parties said:
"even if the applicant can provide a good reason for not joining the non-party against whom he has a valid cause of action, he should warn the non-party at the earliest opportunity of the possibility that he may seek to apply for costs against him."
In the light of those authorities, it is clear that the defendants or their solicitors should have warned Mr Martin that it was proposed that an order for costs would be sought against him. That warning should ideally have been given at the time of the service of the second interlocutory application. It should certainly have been given before the hearing of that application. However it does not necessarily follow that an order for costs against Mr Martin should be refused. A failure to give warning of a costs application may be decisive in some cases, but will not be decisive in every case.
In this case, I have no reason to think that warning Mr Martin about a possible costs application might have had any significant impact. He had it in his power to execute and lodge withdrawals of the five caveats and the two priority notices but, having regard to his conduct since the consent orders were made, there is no reason to think that a warning of a possible costs application might have resulted in him withdrawing them.
At all material times he was the sole director of the first plaintiff and, prior to its deregistration, the second plaintiff. I infer that he gave the solicitors for those companies instructions to consent to the making of the consent orders of 12 July 2017 whereby, amongst other things, the companies were to "provide all consents and execute and provide all documents reasonably required by the defendants" for the sale and transfer of certain properties that included Lot 3 and Lot 101. He obstructed those sales, first by not executing the instruments to which my order of 18 October 2017 related, and subsequently by lodging the five caveats and causing solicitors to lodge the two priority notices. I cannot imagine that he had any motive for any of that conduct other than a desire to obstruct sales that the consent order required his companies to facilitate. His companies were represented at the hearing of the first interlocutory application by counsel who made no submissions. Similarly, he and the first plaintiff were represented at the hearing of the second application by counsel who made no submissions. He should have been facilitating compliance with the consent orders, but went to surprising lengths to ensure that they were not complied with.
In those circumstances, despite the fact that the costs application against him was made without warning, I consider that it is in the interests of justice to depart from the ordinary rule that only parties to the proceedings are subject to costs orders. The deregistration of the second plaintiff, Mr Martin's conduct in lodging the five caveats and causing the two priority notices to be lodged, his awareness of the second interlocutory application, and his failure to facilitate compliance with the consent order by withdrawing the caveats and the priority notices, taken together, warrant the making of an order for costs against him.
The defendants have sought costs on an indemnity basis. Indemnity costs orders "serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs": Hamod v State of New South Wales [2002] FCA 524, 188 ALR 659 at [20]; Zhao v T R & K R Shipton Pty Ltd [2017] TASFC 5 at [5]. Having regard to the conduct of Mr Martin and his awareness of the second interlocutory application, it is clear that this is an appropriate case for him to be ordered to pay indemnity costs, and for that order to be enforceable immediately.
For these reasons, I order that the first plaintiff and Robert James Martin pay the costs of the defendants of and incidental to the interlocutory application filed on 11 April 2018 on an indemnity basis.
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