Artistic Builders Pty Ltd & Anor v Nash & Ors

[2007] NSWSC 1279

CITATION:	Artistic Builders Pty Ltd & Anor v Nash & Ors [2007] NSWSC 1279
HEARING DATE(S):	9 November 2007
JUDGMENT DATE :	13 November 2007
JUDGMENT OF:	Hoeben J at 1
DECISION:	The plaintiffs are to pay the first – fourth defendants’ costs thrown away as a result of the filing and service of the second further amended statement of claim and the third further amended statement of claim; The plaintiffs are to pay the first – fourth defendants’ costs of this application.
CATCHWORDS:	Costs - filing of further amended statement of claim - whether costs thrown away as a result of the amendments should be paid by plaintiffs - whether application for costs made too late - whether UCPR 42.7(1) was applicable to application for costs - prima facie - if costs wasted as a result of amendment - amending party should pay.
LEGISLATION CITED:	UCPR 42.7(1)
PARTIES:	Artistic Builders Pty Limited - First Plaintiff ABC Plumbing Service Pty Limited - Second Plaintiff Gregory Nash - First Defendant Michael O'Neill - Second Defendant John Tomko - Third Defendant Alexander Koroknay - Fourth Defendant
FILE NUMBER(S):	SC 20353/2002
COUNSEL:	Ms PA Horvath - First and Second Plaintiffs Mr N Kabilafkas - First to Fourth Defendants
SOLICITORS:	Home Wilkinson Lwory - First and Second Plaintiffs Henry Davis York - First to Fourth Defendants

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HOEBEN J

Tuesday 13 November 2007

20353/2002 – ARTISTIC BUILDERS PTY LIMITED & Anor v Gregory NASH & Ors

JUDGMENT

1 HIS HONOUR:

Nature of proceedings
The first – fourth defendants move by way of notice of motion filed 11 September 2007 for an order that the plaintiffs pay their costs thrown away as a result of the filing and service of the second and third further amended statements of claim. They also seek the costs of the motion.

Factual background

2 These proceedings were commenced by statement of claim filed on 11 July 2001. The proceedings were brought by the first plaintiff. On 8 May 2003 a further amended statement of claim was filed and served. That document reflected various notices of discontinuance that had been filed by the first plaintiff in relation to its claim against the fifth – tenth defendants by removing their names as defendants. No substantive amendments were made to the claim against the first – fourth defendants.

3 The first – fourth defendants had been the first plaintiff’s solicitors in relation to a development at Bankstown. Proceedings were brought against them primarily on the basis that they were in breach of their retainer in failing to ensure that the first plaintiff had adequate security for the transfer of land which formed part of the development. There was also a particular of negligence that the first – fourth defendants failed to warn the first plaintiff not to enter into the transaction.

4 On 10 November 2006 the matter was listed for hearing with an estimate of 5 days commencing 14 May 2007. On 28 February 2007 a proposed second further amended statement of claim was received by the first – fourth defendants from the first plaintiff. That document sought to join ABC Plumbing Service Pty Limited as a second plaintiff. The thrust of the case by the second plaintiff against the first – fourth defendants was that the second plaintiff would not have sold its interest in certain Bankstown property if the first – fourth defendants had fulfilled their retainer to it.

5 On 20 March 2007 the first plaintiff filed a motion returnable on 23 March 2007 seeking orders that ABC Plumbing Service Pty Limited be joined as a second defendant and seeking leave to file the second further amended statement of claim. Bell J heard that motion which was opposed by the first – fourth defendants. Her Honour granted the orders sought and because the plaintiffs had been successful, ordered that the first – fourth defendants pay the plaintiffs’ costs of the motion.

6 On 29 March 2007 the plaintiffs applied by way of motion to have the hearing date of 14 May 2007 vacated. The matter came before me as List Judge. That order and a number of others were consented to by the first – fourth defendants. The first – fourth defendants also consented to an order that the costs thrown away as a result of the vacation of the hearing date be reserved for decision by the trial judge. I ordered that the plaintiffs pay the costs of that motion.

7 The matter came before me again on 15 May and 12 June 2007. Consent orders were made on those occasions including leave to the plaintiffs to file a third further amended statement of claim. That document became necessary because following upon a change of solicitor for the plaintiffs, the solicitors previously acting for the plaintiffs were joined as defendants. The claim against the first – fourth defendants remained substantially the same as in the second further amended statement of claim. The present motion has been brought against that background.

Submissions

8 The first – fourth defendants submitted that the second and third further amended statements of claim raised the following new matters:

(a) A second plaintiff, ABC Plumbing Service Pty Limited, and a further claim by that plaintiff.
(b) A further particular of breach.

9 It was submitted that the second and third further amended statements of claim involved a significant reformulation of the claims brought by both plaintiffs. It was submitted that those documents included the following alterations and additions to the original claim:

(a) A retainer with the second plaintiff.
(b) A significantly expanded scope of the retainer.
(c) A new claim for misleading and deceptive conduct.
(d) New instructions allegedly given by the plaintiffs.
(e) New advice allegedly given by the first – fourth defendants.
(f) Significantly reformulated and additional particulars of breach of retainer.
(g) An additional theory of causation based on a “no transaction case” rather than the original “inadequate securities” case.

10 They submitted that the original “inadequate securities” case had been largely abandoned.

11 They submitted that much of the work already done by the first – fourth defendants with respect to causation and damages had been thrown away, either because much of the “inadequate securities” case has been abandoned or because what remained had been reformulated on a different basis. It was submitted that the changes would require further discovery and further subpoenas to be issued and the preparation of further evidence. This would involve not only additional costs but a duplication of work already performed and thus a duplication of costs already incurred.

12 The plaintiffs’ dispute the submission that the second and third further amended statements of claim involve a reformulation of the previous claims and raise a new issue, ie the “no transaction” claim which was not previously agitated. The Court was taken to the particular of negligence in the original pleading to which I have already referred.

13 In opposing the motion the plaintiffs made two submissions. The first was that the costs orders already made included any costs thrown away by the filing of the second and third further amended statements of claim.

14 In the alternative, the plaintiffs submitted that in the exercise of its discretion the Court would not grant the orders sought in the motion since the application for costs had been made too late. They drew the Court’s attention to UCPR 42.7(1) which provides that any costs not the subject of specific orders became costs in the general proceedings. They submitted that the rationale behind that rule was that applications for costs should be made promptly otherwise that rule would apply. Support was also sought from ss 56 and 57 of the CPA which require the Court to give effect to the overriding purpose of the Act, ie to facilitate the just, quick and cheap resolution of the real issues in proceedings.

Consideration

15 The question whether or to what extent there has been a reformulation of the plaintiffs’ claim in the second and third further amended statements of claim is not relevant to this motion. What this motion is concerned with is the extent to which costs have been wasted or thrown away by the first – fourth defendants as a result of the filing and service of those documents. Whether that has happened will not be known until the matter has been litigated or otherwise concluded. The detail of the costs so wasted (if that be the case) is a matter for a costs assessor not for this Court.

16 I propose to approach the matter on the basis that the filing and service of the second and third further amended statements of claim will involve the throwing away of costs already incurred by the first – fourth defendants. If that is so the only question is whether the plaintiffs should pay any such costs.

17 Since the plaintiffs were the parties who extensively redrafted the statement of claim, and were granted leave to do so by the Court (such leave being in the nature of an indulgence), it seems to me only fair that such costs on the part of the first – fourth defendants as have been lost or thrown away as a result of those amendments should, prima facie, be paid by the plaintiffs. Apart from anything else the amendments were made at a very late stage in the proceedings when a hearing date had already been allocated.

18 If the first – fourth defendants have a prima facie entitlement to such costs has that entitlement been lost for the two reasons advanced by the plaintiffs?

19 I am not persuaded that the costs orders already made by Bell J and by myself in this matter include the costs thrown away or lost by the filing and service of the second and third further amended statements of claim. A perusal of the transcript where her Honour and I gave our reasons for making the costs orders, makes it clear that those costs orders covered discrete issues, ie the costs of two specific notices of motion and the costs thrown away by the vacation of the hearing dates in May 2007. Nothing was said in any of those applications about the costs thrown away by the filing and service of the second and third further amended statements of claim.

20 In relation to the plaintiffs’ second argument I am not persuaded that the motion seeking these costs involved undue delay on the part of the first – fourth defendants so as to disentitle them to such costs if they are otherwise payable. The contested motion in relation to the second further amended statement of claim was heard in March. There was inevitable delay in May, June and July 2007 because of the change in solicitors for the plaintiffs. It would have been quite inappropriate for the first – fourth defendants to have pressed for costs orders at a time when new solicitors were familiarising themselves with the plaintiffs’ case. As it turned out, the third further amended statement of claim was not filed until 26 September 2007.

21 I am also not persuaded that UCPR 42.7(1) provides support for this submissions by the plaintiffs. I do not read that rule to have as one of its purposes an intention that costs orders be sought as soon as possible after an entitlement to same might arise. It seems to me that the purpose of the sub-rule is to ensure that in the absence of a specific order in respect of particular costs, there is a mechanism which provides for the payment of all outstanding costs at the conclusion of a matter without there being a necessity to come back before the Court.

22 Since the plaintiffs have put forward no convincing reasons why I should not make the orders sought in the motion and since the first – fourth defendants have a prima facie entitlement to those orders, I propose to make the orders sought.

23 In relation to the costs of this motion I am of the opinion that costs should follow the event. The first – fourth defendants have been successful and should have their costs.

24 It was submitted on behalf of the plaintiffs that the delay in bringing this motion should disentitle the first – fourth defendants to their costs. For the reasons already given, I am not persuaded that any such delay should affect the exercise of my discretion in that way.

25 The orders which I make are as follows:

(1) The plaintiffs are to pay the first – fourth defendants’ costs thrown away as a result of the filing and service of the second further amended statement of claim and the third further amended statement of claim.

(2) The plaintiffs are to pay the first – fourth defendants’ costs of this application.

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