Adsm Logistics Group Australia Pty Ltd v Zhang (No 2)
[2022] VCC 993
•1 July 2022
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-22-01336
| ADSM Logistics Group Australia Pty Ltd (ACN 634 585 050) | First plaintiff |
| and | |
| The Legand Family Pty Ltd (ACN 166 722 694) as trustee for the Legand Family Trust | Second plaintiff |
| v | |
| Yucheng Zhang & Ors (according to the Schedule attached) | Defendants |
---
JUDGE: | HER HONOUR JUDGE A RYAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers, written submissions filed 24 June 2022, reply submissions filed 29 June 2022 | |
DATE OF RULING: | 1 July 2022 | |
CASE MAY BE CITED AS: | ADSM Logistics Group Australia Pty Ltd & Anor v Zhang & Ors (No 2) | |
MEDIUM NEUTRAL CITATION: | [2022] VCC 993 | |
RULING
---
Subject:PRACTICE AND PROCEDURE – COSTS
Catchwords: Indemnity costs – whether costs be taxed immediately
Legislation Cited: County Court Civil Procedure Rules 2018; Civil Procedure Act 2010
Cases Cited:Colgate Palmolive v Cussons Pty Ltd (1993) 118 ALR 248; European Window Co Pty Ltd v Day & Anor [2021] VCC 1607; Oshlack v Richmond River Council (1998) 193 CLR 72; Setka v Abbott (No 2) [2013] VSCA 376
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr T Scotter | Robinson Gill Lawyers |
| For the Defendants | Mr N Andreou | Apex Lawyers Pty Ltd |
HER HONOUR:
1On 21 June 2022, I delivered a ruling in this matter (‘the principal reasons’). I dismissed the plaintiffs’ application for an interlocutory injunction restraining the first, second and third defendants from being involved in any way in a business in competition with the first plaintiff in New South Wales, and directly or indirectly soliciting or servicing the first plaintiff’s clients. I further dismissed the defendants’ applications to strike out the plaintiffs’ statement of claim and to stay the proceeding. These reasons assume familiarity with the principal reasons and adopt the same terminology.
2The parties were directed to confer and file a minute of proposed orders, or failing agreement, to file and serve submissions on the orders to be made, including costs. The parties did not reach agreement and filed submissions on 24 June 2022. Reply submissions were received on 29 June 2022.
Costs of the injunction application
3The plaintiffs submit that the court should make the orders proposed in the principal reasons; that costs of the injunction application be costs in the cause.
4The defendants seek their costs in respect of the injunction application on an indemnity basis. They submit that although costs are in the discretion of the court, the proper exercise of this discretion is embedded in the usual rule that costs follow the event unless “a different order was specially warranted”,[1] noting that in matters where each litigant has enjoyed some success, a court may make separate or discrete orders as to costs on issues as to fact or law.[2]
[1] Oshlack v Richmond River Council (1998) 193 CLR 72, 97 (Kirby J) (‘Oshlack’)
[2]See, e.g., Keet v Ward (as executors of the estate of the late Lukin) [2011] WASCA 139, [15] (Pullin, Buss and Newnes JJA)
5The defendants submit that the plaintiffs’ “lax behaviour” in relation to the injunction application caused them to bring the subsequent strike out and stay applications. They submit that this entire interlocutory proceeding was brought on solely by the plaintiffs’ application, which they say was bound to fail, suggesting that the plaintiffs’ injunction application was misconceived from its inception and that indemnity costs ought therefore be awarded.
6Noting my finding that damages would be an adequate remedy for the plaintiffs in the circumstances, the defendants emphasise the equitable principle that an injunction will only be granted where damages are inadequate to compensate the loss suffered. They submit that an injunction must be the only satisfactory remedy in the circumstances, not one of several competing and available remedies.[3] The defendants refer to provision for liquidated damages and an estimate of the plaintiffs’ quantifiable loss in the first Cheng affidavit,[4] along with my finding that the parties had agreed on a fixed sum in the event of a breach,[5] as evidence that damages were always an adequate remedy for the plaintiffs in this application.
[3]The defendant cites Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148, 153 (Mason ACJ) and Donnelly v Amalgamated TV Services (1998) 45 NSWLR 570 in support of this statement.
[4] At paragraphs [18], [27], and [32]
[5] Principal reasons, [82]
Analysis
7As Justice Kirby notes in Oshlack v Richmond River Council (1998) 193 CLR 72, the court will only exercise its discretion to make an order for indemnity costs in circumstances where such an order is “specially warranted”.[6] Notably, it has variously been held that indemnity costs “are not available merely for the asking”,[7] that the “threshold for departing from the ordinary rule in relation to costs is high”,[8] and that “[g]reat care must be taken in reaching a conclusion at the urging of a victorious litigant that the losing litigant somehow conducted itself delinquently as litigant so as to attract an indemnity order, as if it were an expression of the court’s admonition.”[9]
[6] Oshlack v Richmond River Council (1998) 193 CLR 72, 97 (Kirby J)
[7]V & V Properties Pty Ltd v CSR Building Products Ltd (No 2) [2009] QSC 240, [9] (Dutney J)
[8]Almond Investors Ltd v Emanouel [2012] VSC 479, [14] (Sifris J)
[9]Han v Australian Kung Fu (Wu Shu) Federation Inc [2011] VSC 498, [31] (Mukhtar AsJ)
8Although there is “no closed or rigid category of reasons for, or circumstances that justify, a special costs order”,[10] ordinarily the court will make such an order on the basis of some “relevant delinquency, abuse of process, ulterior purpose or unreasonableness” on the part of the party the order is made against.[11] In this matter, while the plaintiffs’ application was not successful, there is no basis to suggest that the injunction application was brought unreasonably, was an abuse of process, or belied any ulterior motive.
[10]Dal Pont, Law of Costs 4ed (2018), 581, citing Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (FCA, French J, 3 May 1991, unreported), [8]
[11]Dal Pont, Law of Costs 4ed (2018), 581, citing Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359, 362 (Powell J); New South Wales Medical Defence Union Ltd v Crawford (1993) 31 NSWLR 469, 494 (Kirby P); MGICA (1992) Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236, 240–1(Lindgren J)
9As the plaintiffs observe in their reply submissions, the mere fact that the application was not successful is an insufficient basis on which to award indemnity costs. What is relevantly required is that “…the proceedings were commenced in wilful disregard of known facts or clearly established law.”[12] In the circumstances, I am not persuaded by the defendants’ submissions that I should order indemnity costs in their favour. I remain of the view that the costs of the injunction should be costs in the cause. Further, I was not persuaded by the defendants’ other submission that the costs of the injunction application be taxed immediately merely because the plaintiffs sought this order in respect of the defendants unsuccessful applications.
[12] Colgate Palmolive v Cussons Pty Ltd (1993) 118 ALR 248
Costs of the stay application
10The plaintiffs submit that the defendants ought pay the plaintiffs’ costs of the stay application on a standard basis, to be taxed and paid immediately in default of agreement. They claim that immediate payment is warranted because the summons had very poor prospects, was filed late, and was served unsealed on the afternoon of Friday 3 June 2022 before the hearing on the morning of 6 June 2022. The defendants accept that they should pay the costs of this application but dispute that the costs should be taxed immediately.
Analysis
11In determining whether the plaintiffs’ costs of the defendants’ summonses ought be taxed and paid immediately, County Court Civil Procedure Rules r 63A.20.1 provides:
“If an order for costs is made on an interlocutory application or hearing, the party in whose favour the order is made shall not tax those costs until the proceeding in which the order is made is completed, unless the Court orders that the costs may be taxed immediately.”
12Civil Procedure Act s 29(1) also relevantly provides:
“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…
(b) an order that the legal costs or other costs of expenses of any person be payable immediately and be enforceable immediately;”
13The Court of Appeal in Setka v Abbott (No 2) [2013] VSCA 376 at [27] listed factors that may warrant an order for immediate taxation of costs:
“… where — (1) there is prospect of considerable delay in completion of the proceeding; (2) the issue the subject of the interlocutory order was discrete from what will finally require determinations; (3) the party against whom the substantive order was made was guilty of unsatisfactory conduct.”
14Although pleadings have not closed and a trial date is yet to be set, I am not satisfied that there will be considerable delay in completion of the proceeding. Unlike, for example, in European Window Co Pty Ltd v Day & Anor [2021] VCC 1607, there is no evidence of delay caused by the defendants’ failure to comply with court orders or correspond promptly with the plaintiffs.
15I am also not satisfied that the defendants’ application is discrete from what will finally require determination. The defendants’ stay application pertained, inter alia, to the factual circumstances of the entry into the English shareholders agreement and its construction. Many of the issues considered in my ruling will fall to be considered at trial. Accordingly, I am not persuaded that I should make an order for immediate taxation of costs of the stay application.
Costs of the strike out application.
16The plaintiffs submit the defendants should pay their costs of the strike out application on a standard basis, once again to be taxed and paid immediately in default of agreement. The plaintiffs contend that, because they had already agreed to make the necessary amendments to their statement of claim when the strike out application was filed, the defendants’ pursuit of the application was unnecessary and in breach of section 19 of the Civil Procedure Act 2010. It is submitted that the defendants’ actions appear to have been motivated by their desire to seek more time for the filing of a defence.
17The defendants submit the plaintiffs ought pay their costs in respect of their strike out application on the standard basis. They request that I reconsider my preliminary finding that there was no need to bring the strike out application, given the plaintiffs had already agreed to make the necessary amendments to the statement of claim such that their application was unnecessary.[13] This submission is brought on two interrelated bases:
(a) first, that the timeframe surrounding the issue of the injunction application created a sense of urgency. The defendants note the amended statement of claim was filed only one day before the hearing of the injunction application on 31 May 2022, and suggest that the plaintiffs’ persistence with an application that was “bound to fail” meant that the defendants could only ventilate their concern within a tight timeframe.
(b) secondly, the defendants submit that by failing to address the Court’s own concerns regarding their statement of claim the plaintiffs’ conduct was “lax or recalcitrant”. The defendants suggest that the plaintiffs effectively invited the strike out application by their own conduct, in circumstances where the jurisdictional issue had been a live question between the parties since 6 May 2022.
[13] Principal reasons, [87]
18This submission is misconceived in my view. The defendants, by their own timeline, were aware that the plaintiffs intended to amend their statement of claim as of right for at least several days before the interlocutory hearing.[14] Counsel for the defendants conceded during the 31 May 2022 hearing that the amended statement of claim had dealt with the issues in the strike out application other than as to costs, that the substance of the strike out application had not (at that time) been served on the plaintiffs, and that the strike out application had effectively been dismissed during the hearing.[15] The defendants have persisted in making submissions in relation to this application despite the fact that the amended statement of claim cured the jurisdictional issue originally raised by the court.[16]
[14]See Principal reasons, [42]
[15] Principal reasons, [41](g)
[16] Principal reasons, [43]
19I am also not persuaded by the plaintiffs’ argument that the defendants engaged in unsatisfactory conduct, nor that they breached their overarching obligation under section 19 of the Civil Procedure Act. Similarly, while the summons was filed late, I do not consider that pursuit of the application amounted to unsatisfactory conduct on the defendants’ behalf.
20I remain of the view that costs of the strike out application should follow the event. Similarly, having regard to the factors discussed above at paragraph 13, I am also not persuaded that those costs should be taxed immediately.
Conclusion
21I will make the following orders:
(1) The plaintiffs’ summons dated 14 April 2022 is dismissed.
(2) The defendants’ summons dated 26 May 2022 is dismissed.
(3) The defendants’ summons dated 3 June 2022 is dismissed.
(4) The costs of the plaintiffs’ summons dated 14 April 2022 are costs in the cause.
(5) The defendants pay the plaintiffs’ costs of and incidental to the defendants’ summonses dated 26 May 2022 and 3 June 2022 to be taxed on a standard basis in default of agreement.
(6) Reserve liberty to the parties to apply by email to the Commercial Registry ([email protected]) for further directions upon giving reasonable notice to all other parties.
---
Certificate
I certify that these 7 pages are a true copy of the Reasons for Ruling of Her Honour Judge A Ryan delivered on 1 July 2022.
Dated: 1 July 2022
Associate to Her Honour Judge A Ryan
SCHEDULE OF PARTIES
BETWEEN
ADSM LOGISTICS GROUP AUSTRALIA PTY. LTD. (ACN 634 585 050)
First plaintiff
and
THE LEGAND FAMILY PTY. LTD. (ACN 166 722 694) ATF THE LEGAND
FAMILY TRUST
Second plaintiff
and
YUCHENG ZHANG
First defendant
and
HUAIGEN WEI
Second defendant
and
JIAMING CHEN
Third defendant
and
JINXIN GLOBAL PTY. LTD. (ACN 640 074 102)
Fourth defendant
0
15
0