Auguste v Nikolyn Pty Ltd and Anor (No.2)
[2016] FCCA 1558
•24 June 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| AUGUSTE v NIKOLYN PTY LTD & ANOR (No.2) | [2016] FCCA 1558 |
| Catchwords: COSTS – Whether assessed on indemnity or party and party basis – whether assessed pursuant to Federal Circuit Court Rules 2001 or Federal Court Rules 2011 – whether advocacy certificate pursuant to rule 21.15 of the Federal Circuit Court Rules 2001 appropriate – where applicant has suffered no loss or damage – whether cause of action hopeless or bound to fail. |
| Legislation: Civil Judgments Enforcement Act 2004 (WA), s.8(1)(a) Construction Contracts Act 2004 (WA), s.19 Federal Circuit Court of Australia Act 1999, s.76(3), 77(2) Federal Circuit Court Rules 2001, rr.1.05(3), 21.02(2), 21.15, 26.01 Federal Court Rules 2011 r. 25.14(3) |
| Cases cited: Colgate-Palmolive Co v Cussons Pty Ltd [1993] 118 ALR 248 Rumsley v Vegas Enterprises Pty Ltd [2016] FCAFC 84 |
| Applicant: | ROBERT STEPHEN AUGUSTE |
| First Respondent: | NIKOLYN PTY LTD |
| Second Respondent: | DONATO COLOSANTE |
| File Number: | PEG 324 of 2011 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 13 June 2016 |
| Date of Last Submission: | 13 June 2016 |
| Delivered at: | Brisbane |
| Delivered on: | 24 June 2016 |
REPRESENTATION
| Solicitors for the Applicant: | Alan Rumsley |
| Counsel for the Respondents: | Ms Breach |
| Solicitors for the Respondents: | D’Angelo Legal |
ORDERS
Pursuant to r.21.15 of the Federal Circuit Court Rules 2001, it is certified that it was reasonable for the Respondents to employ an advocate.
The Applicant pay the First and Second Respondents’ costs of and incidental to the Application filed on 11 November, 2011, including reserved costs if any, to be agreed between the parties and failing agreement to be taxed on an indemnity basis pursuant to the Federal Court Rules 2011.
The Applicant pay the First Respondent’s costs of and incidental to the Cross-Claim filed on 10 January, 2012:
(a)before 11.00am on 8 July, 2013, including reserved costs if any, to be agreed between the parties and failing agreement to be taxed on a party and party basis pursuant to Part 40 of the Federal Court Rules 2011; and
(b)after 11.00am on 8 July, 2013, including reserved costs if any, to be agreed between the parties and failing agreement to be taxed on an indemnity basis pursuant to Part 40 of the Federal Court Rules 2011.
For the purposes of order 4 made on 3 May, 2016 interest up to judgment be fixed in the sum of $32,902.40 and thereafter accrue at the rate specified from time to time by rule 26.01 of the Federal Circuit Court Rules 2001 on so much of the judgment sum as might from time to time be outstanding.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
PEG 324 of 2011
| ROBERT STEPHEN AUGUSTE |
Applicant
And
| NIKOLYN PTY LTD |
First Respondent
And
| DONATO COLOSANTE |
Second Respondent
REASONS FOR JUDGMENT
On 3 May, 2016 I delivered my judgment in proceedings in the above matter. In the proceedings I gave judgment for the first and second respondents on the application filed on 11 November, 2011. I gave judgment for the first respondent against the applicant on its cross-claim filed on 10 January, 2012 for $99,523.67 plus interest. I made an order that the applicant pay to the first respondent the sum of $99,523.67 together with interest in such sums as the parties might agree and failing agreement as fixed by the Court. I directed the parties to bring in short minutes of orders that dealt with the question of costs on both the application and the cross-claim and interest on the first respondents’ cross-claim. I directed that in the event the parties were not agreed on the orders for costs and interest then the application was to be listed for submissions. The parties were unable to agree about costs or interest.
Accordingly on 13 June, 2016 there was a hearing that concerned the question of costs and interest. The respondents seek the following:
a)certification pursuant to rule 21.15 of the Federal Circuit Court Rules 2001 that it was reasonable to appoint an advocate to appear at the trial of these proceedings;
b)an order that the applicant pay the respondents’ costs of the proceedings including costs reserved and that those costs be taxed on an indemnity basis.
In the alternative, the respondents seek an order that the applicant pay the respondents’ costs of and an incidental to the proceedings on a party and party basis, but to be assessed on the Federal Court Scale. As a further alternative, they seek their costs according to the scale in FCCR Schedule 1.
The first respondent seeks an order for interest in the sum of $32,902.40 and thereafter for interest to accrue at a daily rate of $20.45.
The applicant resists any order for costs other than an order for costs to be paid according to FCCR Schedule 1. As to interest, there is a dispute about the date from which interest should commence to accrue and a dispute about the rate to be applied to the judgment sum between judgment and payment.
The applicant has also sought an order for payment of the judgment sum by instalments, although no application or supporting affidavit has been filed in that respect.
No issue was taken with the request to certify for counsel. It was appropriate for counsel to be retained to appear at the trial and thereafter. I will make the requested certification.
Costs
There is no reason in these proceedings why costs ought not follow the event and the applicant does not argue that I should not apply the usual rule to that effect. The respondents are entitled to their costs against the applicant on the applicant’s claim and the first respondent is entitled to its costs of its cross-claim. The respondents argue that costs in both instances ought to be taxed and paid on an indemnity basis.
Ordinarily costs in this Court are assessed according to the scale of costs set out in FCCR Schedule 1. The Court has power, however, to depart from that scale: FCCR 21.02(2).
If the Court determines to depart from the schedule of costs set out in the Federal Circuit Court Rules and order that costs be taxed, ordinarily those costs will be taxed on a party and party, or standard, basis. However, where there is some special or unusual feature in the case to justify the Court doing so, it might depart from that usual practice and order costs on an indemnity basis: Colgate-Palmolive Co v Cussons Pty Ltd [1993] 118 ALR 248.
Here, the respondents argue that costs according to the schedule in the Federal Circuit Court Rules are inadequate because an examination of the relevant circumstances will reveal that it is appropriate that costs be taxed and paid on an indemnity basis. The schedule in the Federal Circuit Court Rules is inapt to respond to an order for costs on an indemnity basis.
The respondents argue that costs on an indemnity basis are warranted in this case because:
a)the applicant ought to have known that he had no prospects of success in the case, he persisted in making allegations which ought not have been made, has unduly prosecuted groundless contentions, and the real cause and occasion of the litigation is the recalcitrant attitude adopted by the applicant towards paying the first respondent for the work that it had done at the applicant’s request; and
b)the respondents offered to compromise the proceedings and the judgment secured by them, and the first respondent on the cross-claim was better than the offer that they made to the applicant.
The respondents argue that the action was only commenced in the Federal Circuit Court because of the applicant’s claim under the Australian Consumer Law. It is true that absent that claim, this case looks for all the world like a standard building case involving a claim for payment for contract works and variations and a delay or prolongation claim in response. But for the claim for misleading and deceptive conduct made by the applicant, this Court would have had no jurisdiction to deal with the other disputes in the case.
The evidence reveals that the application was filed on 11 November, 2011 after the applicant was put on notice by the first respondent that it intended to commence proceedings for what ultimately became the cross-claim in this case. The first respondent had been pressing for payment of its claims for work that it had done for the applicant for some time.
The applicant’s claim based on the Australian Consumer Law failed on the facts. I found that the representation relied upon by the applicant to found his claim for misleading and deceptive conduct was not in fact made and further, if it was made, the applicant did not rely on it when he engaged the first respondent to undertake the relevant work. Further, I was not satisfied that the applicant had suffered any loss or damage by reason of any reliance upon any operative misrepresentation made by the second respondent or on behalf of the first respondent.
As to the applicant’s claim for damages for breach of contract, I was satisfied that there was a term implied into the contract between the applicant and the first respondent that the relevant work would be completed within a reasonable time. However, even if the first respondent had breached that term, I was not satisfied that the breach caused any of the loss claimed by the applicant. The applicant’s claims failed essentially for those reasons.
However, just because a cause of action fails it does not mean that it was hopeless or bound to fail. Had I made the findings of fact contended for by the applicant the outcome of the case may have been different. The applicant’s damages were said to flow from the lapse of certain development approvals, the conditions of which could not be met because of the first respondent’s day in completing the contracted work before they lapsed. His case was that it was necessary to obtain further approvals at considerable cost to the applicant as a consequence.
It is right to say however, as the respondents argue, that the applicant did not present in his evidence, an adequate or complete picture of the status of the relevant development approvals upon which his claim relied. It is also right to say that the true state of affairs with respect to those matters was only revealed through cross-examination of the applicant by the respondents’ Counsel. On the evidence, I found that the lapsing of the relevant development approvals had nothing to do with the progress of the first respondent’s work but there were other causes for their lapse.
The respondents argue that the applicant must have known the true position with respect to the reasons for the lapse of the relevant approvals. The respondents argue that the applicant must have known that the claim for loss and damage had no merit because the loss occasioned by the lapse of the relevant approvals had nothing to do with the progress of the first respondent’s works and that a properly advised party would not have pursued that loss in these proceedings.
I accept those submissions. The applicant commenced the proceedings knowing the true state of affairs concerning the relevant approvals and their lapse. He disregarded the true position. Properly advised, as I assume he was, the proceedings were pursued in disregard of the known facts. Consequently, it is difficult to resist the conclusion that the applicant brought his claim only in an effort to delay payment of the first respondent’s variation claims.
Those matters might properly be regarded as a special or unusual feature in this case which justifies the Court departing from the ordinary practice of awarding costs on a party to party basis. Properly advised, the applicant must have known that his claim for loss and damage could not succeed because it was not causally linked to any breach of the Australian Consumer Law or the Fair Trading Act 1987 (WA) by the first and second respondents, or the breach of any contract between the applicant and the first respondent.
The respondents ought to have their costs of and incidental to the application, including reserved costs if any, on an indemnity basis. It is appropriate that the costs be taxed under Part 40 of the Federal Court Rules 2011 on an indemnity basis.
The first respondent’s cross-claim was the subject of an offer to settle made by the first respondent. As the first respondent points out r.25.14(3) of the Federal Court Rules 2011 applies to these proceedings by reason of FCCR 1.05(3) read with Part 2, sch. 3, Item 16 of those Rules.
On 4 July, 2013 the respondents made an offer to settle the proceedings. First, the offer dealt with the applicant’s claims against the first and second respondents. The offer required the applicant to have those claims dismissed. Secondly, the offer dealt with the cross-claim and in that respect, the first respondent offered to accept the sum of $125,000 (plus GST) and inclusive of costs in full and final satisfaction of the first respondent’s cross-claim against the applicant. The offer was not accepted.
The effect of the offer was that the applicant would pay to the first respondent $137,500 (inclusive of GST). The order obtained in these proceedings by the first respondent against the applicant was for the sum of $99,523.67 plus interest. For reasons that will become apparent, up to judgment I am satisfied that interest ought to be calculated at the sum of $32,063.95. That amount when added to the judgment sum is less than the offer that was made by the first respondent to the applicant, save for the question of costs.
The issue to be determined for the purposes of FCR 25.14 is whether the judgment obtained by the first respondent was more favourable than the terms of the offer. The amount recovered under the judgment, including interest as I have set out below, is $131,587.62 without costs. The amount of the offer was $125,000 (plus GST of I assume 12,500) all inclusive. Leaving aside the arguments about indemnity costs, there is nothing to suggest that costs would not abide the event in the proceedings and so if the first defendant succeeded on its cross-claim it would most likely receive an order for costs. Even if the costs were assessed according to schedule 1 of the Federal Circuit Court Rules, the amount recovered under the judgment including costs would exceed the amount of the offer made by the first respondent. There is no evidence of any offers from the applicant that might have impacted upon how the costs of the cross-claim might be dealt with.
I am satisfied that the judgment obtained by the first respondent was more favourable than the terms of the offer. It was not suggested that the first respondents offer did not meet the formal requirements for an offer for the purposes of FCR 25.14(3).
In my view, there was nothing put in argument for the applicant which would suggest that it is appropriate to deprive the first respondent of the benefit of FCR 25.14. It is appropriate to make an order for costs in accordance with FCR 25.14 in respect of the first respondent’s cross-claim.
The respondents also seek an order that the applicant pay their costs of the costs application and the appearance to make submissions in support of the claims for costs and interest. In my view such an order is unnecessary because those costs are part of the costs of the application and cross-claim and will be taken up in the costs orders that will be made in these proceedings.
Interest
The first respondent’s interest claim is a claim for contractual interest, rather than a claim for interest pursuant to s.76 of the Federal Circuit Court of Australia Act 1999 (Cth). In that regard, there was no dispute between the parties that the contract between the first respondent and the applicant was a construction contract for the purposes of the Construction Contracts Act 2004 (WA). By reason of s.19 of that Act and the provisions of sch. 1, div 6 thereof, it was an implied term of the construction contract between the first respondent and the applicant that interest was payable on overdue amounts at the rate equal to that prescribed under the Civil Judgments Enforcement Act 2004 (WA) s.8(1)(a). The appropriate interest rate is 6%.
As the first respondent submits, the contract sum of $67,991 was due 50 days after being invoiced. It was invoiced on 15 November, 2010 and therefore due on 4 January, 2011. That sum was paid by two instalments, namely $10,000 on 21 December, 2010 and $57,991 on 9 June, 2011. It is appropriate that interest be paid on the sum of $57,991 from 5 January, 2011 to 9 June, 2011. That amount as calculated by the first respondent is $1,487.11. I accept that calculation. The amount is recoverable as part of the first respondent’s contractual claim even though the principal upon which it is calculated was paid before the commencement of these proceedings. Were the first respondent’s claim for interest based upon the Court’s power set out in s.76(3) of the Federal Circuit Court Act, the amount would not be recoverable.
The first respondent claims interest on the judgment sum at the rate of 6% from 22 March, 2011 when the first respondent provided to the applicant a spreadsheet setting out details of the work performed by the first respondent for the applicant. The applicant argues that he was only ever provided with appropriate detail sufficient to permit him to assess the claims made by the first respondent when the first respondent provided its evidence in these proceedings in March, 2014. In my reasons for judgment delivered on 3 May, 2016 I rejected that argument and found that the applicant had been provided with sufficient detail about those claims by the provision, on 22 March, 2011, of a spreadsheet setting out the first respondent’s claims. It is appropriate that interest should run from that date. I accept the first respondent’s calculations about interest for that period and find that the interest due for that period on the judgment sum is $32,063.95.
Post judgment interest runs at the rate of 7.5% per annum. It was suggested in argument that the decision of the Full Court of the Federal Court of Australia in Rumsley v Vegas Enterprises Pty Ltd [2016] FCAFC 84 was authority for the proposition that interest should be calculated according to the Civil Judgments Enforcements Act (WA). In my view, however, the decision is not authority for that proposition and interest is properly payable post judgment pursuant to s.77(2) of the Federal Circuit Court of Australia Act 1999 (which, by reason of FCCR 26.01 applies the rate prescribed by the Federal Court Rules) at the rate of 7.5% per annum or at the daily rate of $20.45.
Instalment order
At the hearing of this application the solicitor for the applicant made an oral application, consistent with a minute of proposed orders that were forwarded to my chambers on the morning of the hearing, that the applicant be permitted to pay the judgment amount and interest by way of instalments as set out in that proposed order.
There was no formal application filed by the applicant for those orders. The first respondent was not put on notice that such an order was going to be sought. No affidavit material was filed to support the application.
It was said in submissions that the applicant is an elderly gentleman who is unwell and who was unable to pay the judgment other than by way of instalments. However, there is no evidence before me which would support the proposition that the applicant is unable to pay the judgment in full and that an instalment order is otherwise appropriate. In those circumstances, the application for payment by instalments is refused.
For the above reasons, I make the orders set out at the commencement hereof.
I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 24 June, 2016.
Date: 24 June 2016