Baronglow Pty Ltd v Willing & Thomas (Intervener) (No 3)

[2006] SASC 326

SUPREME COURT OF SOUTH AUSTRALIA

(Civil: Application)

BARONGLOW PTY LTD v WILLING & THOMAS (INTERVENER) (NO 3)

[2006] SASC 326

Reasons of Judge Lunn a Master of the Supreme Court

1 November 2006

PROCEDURE - COSTS

Principal proceeding concluded and only the ancillary issue of taxation of the costs ordered against the plaintiff left for determination - intervener served short form bill of costs for costs of interlocutory proceedings taken after conclusion of principal proceeding - plaintiff's application to strike out the short form bill on the ground that its taxation was precluded at this stage by R 101.01(7) - held R 101.07(7) did not apply to interlocutory proceedings taken after the principal proceeding was concluded and thus the costs were immediately taxable.

BARONGLOW PTY LTD v WILLING & THOMAS (INTERVENER) (NO 3)
[2006] SASC 326

Reasons on plaintiff’s application to strike out the short form bill of costs filed on 23 June 2006.

1. JUDGE LUNN:                   This is yet another round in this ongoing saga where the costs being incurred far outweigh what is in issue.

2. On 15 May 2006 I published Reasons [2006] SASC 140 on an earlier application (“my previous Reasons”). I do not here repeat all of the history of the matter which I set out in those Reasons. For the purposes of these Reasons it is sufficient to state that the principal proceeding in this Court was an application by the plaintiff for leave to appeal against a District Court order. On 2 April 2004 Vanstone J refused that leave to appeal and ordered that the plaintiff pay the intervener’s costs. My previous Reasons dealt with the plaintiff’s application to set aside a default allocatur for $3,077.70 for those costs. On 15 May 2006 I ordered that the allocatur be set aside upon condition that the plaintiff paid into Court $4,077 and failing such payment that the application be dismissed. An appeal against that order by the plaintiff was dismissed by Perry J on 21 September 2006, Judgment No [2006] SASC 291. The plaintiff has not paid the $4,077 in the time allowed by the Court, as extended by Perry J, or at all, and the application to set aside that default allocatur therefore stands dismissed.

3. On about 23 June 2006 the intervener served a short form bill of costs under R 101A.02 of the 1987 Rules on the plaintiff in respect of further orders for costs made against the plaintiff on 15 and 26 May and 9 June 2006.  On 15 September 2006 the plaintiff took out an application (FDN 25) that this short form bill be struck out. 

4. The principal contention of the plaintiff was that the costs payable under the orders of 15 and 26 May and 9 June were not taxable or due for payment by virtue of R 101.01(7) which provides:

   An order for costs of an interlocutory proceeding shall not, unless the Court otherwise orders, entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded or further order.

   In my previous Reasons I had held that R 101.01(7) did not preclude the taxation of the costs ordered by Vanstone J when refusing leave to appeal.  This ruling was upheld by Perry J.  The primary ground for that ruling was that the proceeding for leave to appeal against an interlocutory order of the District Court was not an interlocutory proceeding in this Court.  The present application raises different issues which have not previously been decided in this action, or to my knowledge in any other proceedings. 

5. The order of 15 May 2006 was the order which I made when publishing my previous Reasons and dealing with the plaintiff’s application to set aside the default allocatur.  The order of 26 May was made by Layton J on an application by the plaintiff (FDN 14) for an extension of time to appeal against my order of 15 May.  The order of 9 June was made by Layton J on FDN 18 which was an application by the plaintiff to set aside the earlier short form bill on which the default allocatur had been based on grounds not previously raised by the plaintiff.  In effect it was an attempt to outflank the appeal against my order by attempting to establish that there had been no valid short form bill delivered for those costs.  Each of the applications was directed to the ancillary issue in this action of the amount payable by the plaintiff for the costs ordered by the Court in disposing of the principal proceeding.  The applications all failed and the plaintiff was ordered to pay the costs of them to the intervener.

6. It is not necessary to go into the vexed question of precisely what constitutes an interlocutory proceeding.  I assume in the plaintiff’s favour that the three applications of the plaintiff which gave rise to the three orders for costs were each an interlocutory proceeding for the purposes of R 101.01(7).  The crucial issue is whether R 101.01(7) applies to orders for costs on interlocutory proceedings made after the principal proceeding is concluded.  I consider it does not apply to the costs of such interlocutory proceedings.  Here the principal proceeding was the application for leave to appeal and that was concluded on 2 April 2004.  Everything subsequent to that (apart from the application for leave to appeal to the Full Court) has been directed to the ancillary issue of determining the quantum of the costs properly payable by the plaintiff to the intervener.  If R 101.01(7) applied to interlocutory proceedings after the conclusion of the principal proceeding, it would mean those costs may never become payable unless the Court made a specific order to that effect under R 101.01(7).  Here none of the applications by the plaintiff related to the determination of the principal proceeding, but to ancillary issues consequent upon the determination of the principal proceeding.  It was never intended that R 101.01(7) should restrict the rights of a party who has benefit of a costs order of such interlocutory proceedings to enforce it.  Mr Jordan for the plaintiff submitted that part of the rationale of R 101.01(7) was to prevent a multiplicity of taxations of interlocutory orders and to allow the taxations of all interlocutory costs to be dealt with in the one exercise.  While that is true in part it is not the only relevant consideration.  It was also never intended to allow a party who kept on taking out continuous interlocutory applications to be able to delay payment of any of the costs ordered against it until all possible interlocutory applications had been dealt with.  In other words, it could not postpone its liability to pay the costs merely by taking out another application where the Court would have to make a further order for costs.  The proper interpretation of R 101.01(7) is that it does not apply to any interlocutory proceeding taken after the principal proceeding is concluded.

7. The plaintiff also argued that the short form bill of 23 June 2006 was defective in that it did not differentiate between the work done in respect of each of the three orders for costs.  That may have been significant if I had found that R 101.01(7) had applied to one or two of the orders, but not to all three.  The plaintiff can raise matter again on the taxation of the individual items, but it is not a ground here for striking out the short form bill.

8. Accordingly, the plaintiff’s application to strike out the short form bill delivered on 23 June 2006 is refused.

9. The intervener took out an application on 6 October 2006 (FDN 32) seeking that the plaintiff’s application, which I have just dealt with, be struck out as vexatious and an abuse of process, that no further applications by the plaintiff be issued except with prior leave of the Court and that the costs of the plaintiff’s application be taxed on an indemnity basis.  On this application the intervener argued that the issue raised here by plaintiff under R 101.01(7) had already been decided against it by my decision of 15 May and the judgment of Perry J.  For the reasons given I do not accept this.  It raised a different point on which there is no reported authority.  While it failed, it was not a point which could be categorised as vexatious or hopeless.  Accordingly, the relief sought by the intervener, which I have just mentioned, is to be refused.

10. The intervener’s application also sought an order that the costs of the plaintiff’s application (FDN 25) and the intervener’s application be paid by the plaintiff and its director, Neville Jordan, jointly and severally.  Mr Jordan, although not now an admitted legal practitioner, has been permitted, without objection, to appear for the plaintiff in this action to date.  His objection to my hearing the application that he pay the costs personally that he had not been served personally with the application was without merit.  His presence before the Court, and him being in possession of the relevant papers from the intervener, was sufficient proof of notice to him of the application against him personally.

11. The undisputed evidence put forward by the intervener was that Mr Jordan is the sole director and secretary of the plaintiff company whose paid up capital is $10.  The controlling shareholder of the plaintiff is another company, ACN 103 552 549 Pty Ltd (“ACN 103”).  Mr Jordan is the sole director of that company and it holds a registered charge over the assets of the plaintiff.  Mr Jordan holds a registered charge over the assets of ACN 103.  There is no evidence before me of the financial position of the plaintiff.  It has failed so far to pay the default allocatur of $3,077.  The evidence satisfies me that there is a significant risk that the plaintiff will not be able to pay the costs which have already been ordered against it in these proceedings and that any financial benefit from the District Court proceedings from which these proceedings emanate is likely to be for Mr Jordan personally.  Those findings are sufficient to make it proper to order that Mr Jordan be jointly liable to pay the costs of FDN 25.  It is no longer necessary in law that there also be a finding that the non party director of the company has in some way acted improperly before a costs order will be made against him:  B E Studios Ltd v Smith & Williamson Ltd [2006] 2 All ER 811; Goodwood Recoveries Ltd  v Breen [2006] 2 All ER 533. Accordingly, such an order will be made.

12. Up until now the Court has expressly or impliedly given leave to Mr Jordan to represent the plaintiff in these proceedings under R 36.11.  The intervener bitterly complained in pursuing his application (FDN 32) that he was being put to substantial expense and inconvenience  by the procession of applications brought by the plaintiff which are incurring costs exceeding the amount of the default allocatur of $3,077.  Apart from the initial leave application, the plaintiff has now brought 5 interlocutory applications or appeals.  It has lost all of them and has been ordered to pay the costs of all of them to the intervener.  It would be unusual for a litigant employing a solicitor on a commercial basis to incur on contesting a taxation of costs both its own costs of five such applications and those of the successful intervener.  It has not been previously raised in these proceedings whether R 36.13 precludes Mr Jordan, as a former practitioner of the Court, from being appointed as a representative of the plaintiff under R 36.11.  It will be for the intervener to take the objection if he so wishes on any future hearing in which Mr Jordan seeks to represent the plaintiff company.

    I have today made the following orders:

    1That the plaintiff’s application (FDN 25) to strike out or stay the short form bill served by the intervener on about 23 June 2006 be refused.

    2That the orders sought in paragraphs 1, 2, 3, 4, 5 and 7 of the intervener’s application (FDN 32) be refused.

    3That the plaintiff and Neville Jordan jointly and severally pay to the intervener his costs as agreed or taxed of the application, FDN 25, and of paragraph 6 of the intervener’s application, FDN 32.

    4That there be no order as to the costs of the balance of the application FDN 32.

    5That the intervener be at liberty to apply to me for a hearing date to be set for a preliminary hearing for the taxation of his bill of costs, FDN 28.

    6Liberty to apply.