Australian and Pacific Investment Corporation Pty Ltd v Jeshing Property Management Pty Ltd (No 2)
[2024] VSC 552
•11 September 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2024 03490
| AUSTRALIAN AND PACIFIC INVESTMENT CORPORATION PTY LTD & ORS (according to the Schedule attached) | Plaintiffs |
| v | |
| JESHING PROPERTY MANAGEMENT PTY LTD | Defendant |
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JUDGE: | COSGRAVE J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 11 September 2024 |
CASE MAY BE CITED AS: | Australian and Pacific Investment Corporation Pty Ltd & Ors v Jeshing Property Management Pty Ltd (No 2) |
MEDIUM NEUTRAL CITATION: | [2024] VSC 552 |
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Catchwords: COSTS – Plaintiffs unsuccessful in interlocutory injunction application – Default position in relation to costs established under r 63.20 of the Supreme Court (General Civil Procedure) Rules 2015 – Court’s discretion to ‘otherwise order’ – No reason to depart from default position.
Legislation Cited: Civil Procedure Act 2010 (Vic); Supreme Court (General Civil Procedure) Rules 2015 (Vic).
Cases Cited: Archbishop Petros v Arch Priest Biru [2006] VSC 404; Dale v Clayton Utz (No 3) [2013] VSC 593; Setka v Hon Abbott MP (No 2) [2013] VSCA 376; Tower Australia Limited v Ambridge Investments Pty Ltd [2003] VSC 478.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr M Galvin KC with Mr J Schulz | Colin Biggers & Paisley |
| For the Defendant | Dr D I Mence | Peter G Richards |
HIS HONOUR:
I delivered my reasons for judgment in this matter on 27 August 2024 dismissing the plaintiffs’ summons filed 8 July 2024 (‘the principal reasons’). These reasons adopt the same terminology as used in the principal reasons and should be read in conjunction with them.
In my principal reasons, I proposed to order that the costs of the application be costs in the cause. I noted that while I did not grant the plaintiffs’ interlocutory injunction application, the Court may still conclude, after a full trial, that the plaintiffs are successful in their claim and, by implication, that this injunction ought to have been granted.
The parties have filed written submissions on the issue of costs.
Defendant’s position
The defendant submits that costs should follow the event. The defendant outlines a number of factors which it says should point in favour of an award for costs:
(a) the injunction was a discrete issue which required determination on the evidence presently before the Court as produced by the plaintiffs;
(b) the plaintiffs moved the injunction urgently. The plaintiffs’ summons was filed on the same day as the plaintiffs’ writ was issued. This was prior to the close of pleadings and any exchange of critical documents pursuant to s 26 of the Civil Procedure Act 2010 (Vic). The defendant contends that the plaintiffs may have been assisted by the exchange of critical documents in formulating their case;
(c) the plaintiffs’ statement of claim did not disclose a prima facie case which the defendant submits was previously communicated to the plaintiffs via email and again reiterated in their written submissions;
(d) the plaintiffs chose to proceed with a weak cause of action in circumstances where there was no clear documentary or oral evidence to support the alleged contractual relationship;
(e) the plaintiffs’ supporting material was extensive, the relevant documents were not identified in advance and some of the material was corrupted. The defendant submits that this affected its understanding of the case it had to meet and added greatly to the cost of preparing for the hearing. It contends that these costs should not be borne by the defendant should the plaintiffs ultimately succeed at trial;
(f) it was unreasonable for the plaintiffs to refuse the defendant’s open offer when it would have satisfactorily preserved the status quo and made damages an adequate remedy; and
(g) despite the defendant’s communication to the plaintiffs prior to the hearing that granting the interlocutory injunction would make record keeping and recovery onerous for the defendant, the plaintiffs chose to proceed.
The defendant seeks an order that the plaintiffs pay the defendant’s costs of and incidental to the summons dated 8 July 2024 to be taxed on a standard basis in default of agreement.
Plaintiffs’ position
The plaintiffs submit that costs should be in the cause and that, at this stage of the proceeding, the Court is not in a position to readily determine where justice lies as between the parties in relation to the costs of the interlocutory injunction application.
They submit that the decision not to grant the interlocutory injunctive relief which they sought did not foreclose any of the issues in the proceeding. Those issues and the nature of final relief in the litigation, being declaratory relief and permanent injunctive orders, have not yet been adjudicated. Accordingly, they contend that the party to bear the costs of the plaintiffs’ interlocutory injunction application ought be determined by the result of the principal litigation.
The plaintiffs submit that they have not engaged in any conduct, nor are there any circumstantial reasons, which would warrant a departure from the default position established by r 63.20 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘the Rules’). They contend that there is no evidence to suggest considerable delay in the completion of the principal litigation; that the interlocutory application was discrete only insofar as it concerned the interlocutory position; and that they have not engaged in unsatisfactory, unreasonable or reprehensible conduct in the prosecution of their interlocutory application.
The plaintiff contends that each of the documents included in the exhibit to the affidavit filed in support of the summons was necessary in order for the plaintiffs to explain and substantiate the complex investment scheme and the changes in the property holdings over time.
In relation to the defendant’s criticism of the corrupted files within the materials, the plaintiffs submit that the impact upon the defendant was limited. They refer to an email from the defendant’s solicitors to the plaintiffs’ solicitors noting that they believed that the problems encountered had not prevented them from a proper examination of the issues for the purposes of the injunction application.
Finally, the plaintiffs contend that the defendant’s submission regarding the increase in costs due to the voluminous material filed by the plaintiffs ought be assessed in line with the comment by the defendant’s counsel at the hearing that he had only recently been briefed and had not yet had an opportunity to become acquainted with the material.
Legal principles
Rule 63.20 of the Rules provides that:
Where an interlocutory or other application is made in a proceeding and—
(a) no order is made on the application; or
(b) the order made is silent as to costs—
the costs are the parties’ costs in the proceeding, unless the Court otherwise orders.
In Dale v Clayton Utz (No 3)[1] Hollingworth J considered the Court’s power to ‘otherwise order’ under r 63.20. Her Honour stated that:
[I]t is common on the grant or dismissal of an application for an interlocutory injunction to order either that costs be in the proceeding, or reserved. That is in recognition of the fact that there may be various reasons why a party may fail at the interlocutory stage, but nevertheless succeed at trial.[2]
[1][2013] VSC 593.
[2]Ibid at [18].
Her Honour noted however that common practice may not prevail in every case and that it may be necessary to have regard to the reason for refusal of an interlocutory injunction when considering costs. For example, a court may be more willing to order costs against the unsuccessful applicant if the application fails because they have not established a prima facie case than if the application fails on the balance of convenience or on a discretionary ground.[3]
[3]Ibid at [19].
In Setka v Hon Abbott MP (No 2),[4] Warren CJ, Ashley and Whelan JJA referred to Hollingworth J’s judgment in Dale v Clayton Utz (No 3) and said that:
The discretion to order that the default position not apply is confined only by the principle that the discretion must be exercised judicially. But it has been held, depending upon the circumstances of the particular matter, that the default position may be upset 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 — described variously as ‘unreasonable’ or ‘reprehensible’, or as involving a want of ‘competence and diligence’.[5]
[4][2013] VSCA 376.
[5]Ibid at [27] citing Dale v Clayton Utz (No 3) [2013] VSC 593 at [58]-[71], [80]-[82].
In Archbishop Petros v Arch Priest Biru,[6] Morris J ordered that the plaintiffs, who sought an interlocutory mandatory injunction and failed, pay the defendants’ costs of the application. His Honour noted that:
[I]f a party loses a proceeding it will not always be appropriate that it be required to pay the costs of the proceeding and the costs of some unsuccessful interlocutory application. On the contrary, it will often be just for the ultimate loser to recover costs in respect of an interlocutory “win”, particularly where that “win” is (as here) relatively clear cut.[7]
[6][2006] VSC 404.
[7]Ibid at [4].
Similarly, in Tower Australia Limited v Ambridge Investments Pty Ltd,[8] the discretion under r 63.20[9] was exercised in favour of the defendants and the unsuccessful plaintiff was ordered to pay the first to fourth defendants’ costs of the injunction application.
[8][2003] VSC 478.
[9]R 63.20 of the Supreme Court (General Civil Procedure) Rules 1996 (Vic) provided that: ‘[e]ach party shall bear his own costs of an interlocutory or other application in a proceeding, whether made on or without notice, unless the Court otherwise orders’.
Analysis
Having considered the parties’ submissions, it is my view that the costs of the application should be costs in the cause. I so find for the following reasons.
Firstly, while costs are always in the discretion of the court, the usual position in relation to costs on interlocutory applications is set out in r 63.20 of the Rules. Subject to the court making a different order, the default position is that costs are the parties’ costs in the proceeding. I do not find that there is sufficient basis to ‘otherwise order’.
Secondly, while the plaintiffs’ interlocutory application was dismissed, the evidence was such that I could readily conceive of circumstances in which the plaintiffs might succeed in the substantive litigation – albeit with an amended statement of claim.
Thirdly, the plaintiffs’ rejection of the open offer made by the defendant was not determinative. While it would have enabled the plaintiffs to continue enjoying the privileges of a Heritage Lodge Member, it required them to each pay membership fees of approximately $5,000 per annum, a not insignificant amount. For that reason, their rejection of the offer was not unreasonable or irrational.
Fourthly, the defendant complains that the plaintiffs moved too quickly in seeking an injunction. If anything, as I noted in my judgment, I consider that they were possibly too slow and could have moved sooner. Laches or delay is a discretionary factor which can count against the grant of relief.
Fifthly, the fact that the defendant alleged in correspondence to the plaintiffs that their statement of claim did not reveal a prima facie case and their cause of action was weak is not decisive. Often parties exchange contentions which seek to criticise each other’s position. They frequently involve exaggeration and hyperbole. They are commonly intended to weaken the confidence or resolve of the opposing party and prepare the ground for mediation or settlement discussions. While I have ultimately agreed with certain points made by the defendant, that fact is not enough of itself, given the overall circumstances, to require the plaintiffs to pay the costs of the unsuccessful application.
Finally, there is no conduct by the plaintiffs which could properly be described as unreasonable or reprehensible and used as a basis for a costs order against the plaintiffs. In my view, the plaintiffs’ application was not so lacking in merit that they should not have brought it.
In short, while the plaintiffs’ application was not successful, the plaintiffs did not act in such a way as to warrant an order for costs against them. In the circumstances, it is appropriate that the costs of the application be determined on the ultimate merits as decided by the trial judge.
Conclusion
For the reasons set out here and in the principal reasons, I make the following orders:
(a) the plaintiffs’ summons filed 8 July 2024 is dismissed;
(b) the costs of the plaintiffs’ application are costs in the cause.
SCHEDULE OF PARTIES
| BETWEEN: | |
| AUSTRALIAN AND PACIFIC INVESTMENT CORPORATION PTY LTD (ACN 005 445 107) | First plaintiff |
| YARRA VALLEY HERITAGE ESTATE PTY LTD (ACN 645 561 851) | Second plaintiff |
| LIONEL SYDNEY RICHARDS | Third plaintiff |
| - and - | |
| JESHING PROPERTY MANAGEMENT PTY LTD (ACN 617 076 338) | Defendant |
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