Basset Holdings Pty Ltd v Pascale (No 2) - [2010] SADC 38

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
BASSET HOLDINGS PTY LTD & ANOR v PASCALE & ORS (No 2)
[2010] SADC 38
Judgment of His Honour Judge Barrett
16 March 2010
TRADE AND COMMERCE - TRADE PRACTICES AND RELATED MATTERS - ENFORCEMENT AND REMEDIES - INJUNCTIONS - MANDATORY INJUNCTIONS
Costs - Plaintiffs' application for an interlocutory injunction dismissed. Plaintiffs successful in numerous findings but not in the overall result. Consideration of principles relating to costs at interlocutory stage of proceedings. Plaintiffs permitted to amend claim to add Trade Practices Act claims.
Held: Plaintiffs to pay defendants' costs of amendment. Balance of costs reserved for trial judge.
District Court Civil Rules 2006 (SA) r 263; Trade Practices Act 1974 , referred to.
Australian Securities and Investments Commission v Krecichwost and Ors (2008) 72 NSWLR 497; Kickers International SA v Paul Kettle Agencies Ltd and Another (1990) Fleet Street Reports 436; Cretazzo v Lombardi (1975) 13 SASR 4, considered.

BASSET HOLDINGS PTY LTD & ANOR v PASCALE & ORS (No 2)
[2010] SADC 38

I have dismissed the plaintiff’s application for an interlocutory injunction. The defendants seek an order for costs. The plaintiffs oppose the order on the basis that the trial judge will be in a better position than I am to determine the overall order for costs.
The District Court Civil Rules 2006 (SA) r 263 provides that as a general rule costs follow the event. Sub-r 263(2) qualifies the general rule as follows:
(2) The general rule is, however, subject to specific rules to the contrary 1 and also to the following exceptions (which apply subject to the Court’s order to the contrary)-
(a)the costs of an amendment are to be awarded against the party making the amendment;
(b)the costs of an application to extend time fixed by or under these rules are to be awarded against the application;
(c)the costs of an application that should have been (but was not) made at an earlier stage of the proceedings are to be awarded against the applicant;
(d)the costs of an adjournment arising from a party’s default are to be awarded against the party in default;
(e)the costs of proving a fact or document that a party has unreasonably failed to admit are to be awarded against that party;
(f)…;
(g)…;
(h)…
Mr Roberts for the defendants submits that the considerations relevant to costs at the interlocutory stage are different from those obtaining at the trial stage. The questions at the interlocutory stage are different from the questions at trial. A mandatory injunction is a process designed to preserve the status quo and the plaintiff need establish only an arguable case. It must establish that the balance of convenience calls for the making of the order. If the plaintiffs have been unable to succeed in those circumstances the costs of the defendants should be met by the unsuccessful plaintiffs.
In support of that proposition Mr Roberts cited Australian Securities and Investments Commission v Krecichwost and Ors (2008) 72 NSWLR 498 where Young CJ in Eq said:
15 … interlocutory injunctions are purely preservative: the court does not determine rights and titles, but merely makes orders that are necessary to keep the status quo pending the final hearing.
16 In an interlocutory application for injunction, the usual consequence as to costs is that if the plaintiff succeeds, then costs are costs in the cause or sometimes plaintiff's costs in the cause; if the plaintiff loses, then the plaintiff pays costs. This is because all the success of the plaintiff in the interlocutory application means is that the plaintiff has demonstrated a case for preserving the status quo, not that it is necessarily successful in the litigation and that it is fair to wait to see the success in the litigation before dealing with the costs of the interlocutory application.
He also referred to a discussion by Hoffmann J in Kickers International SA v Paul Kettle Agencies Ltd and Another (1990) Fleet Street Reports 436 at 438. Mr Roberts cited two passages. In the first Hoffmann J said of interlocutory costs:
… The question cannot be settled simply by reference to practice: it must be answered on the facts of the individual case. Would it be unfair in this case for the defendants to have the costs of the motion even if they lost at the trial? On balance I do not think that it would. Although I cannot decide the merits, I can form a view on whether the plaintiff, on the material it has produced and what it must have known about the defendants, was justified in launching the motion.
In the second his Honour said:
One solution sometimes adopted is to reserve the costs of the motion to the trial judge. There is a superficial attraction about this course because the trail judge will have all the facts and be in the best position to decide whether a party should have interlocutory costs despite the fact that he has lost at the trial. But in practice it has serious disadvantages. One is the difficulty of reconstructing for the trial judge how things looked at the time of the interlocutory application, particularly when it involved questions of balance of convenience which were irrelevant at the trial. But the more important reason is that very often there is no trial. In such a case, an order that costs be in the cause or reserved to the trial judge is in practice a decision that there should be no order as to costs.
His Honour then referred to the undesirability of an unsuccessful plaintiff having a powerful bargaining weapon in negotiations which lead to a resolution.
Mr Ross-Smith for the plaintiffs referred to remarks of Bray CJ in Cretazzo v Lombardi (1975) 13 SASR 4 at 11 and 12:
Order 65, rule 1 provides generally that all costs shall be in the discretion of the court or judge, subject to a proviso irrelevant for the present purpose. Time and again attempts have been made to fetter that general discretion by the imposition of judge-made rules. Time and again those fetters have been released by appellate courts. I think the guiding principle still stands as it left the House of Lords in the famous case of Donald Campbell & Co. v. Pollak , that the general discretion is absolute and unfettered, except that it must be exercised judicially, not arbitrarily or capriciously, and that it cannot be exercised on grounds unconnected with the litigation.
The Hearing
The application was set down for two days. Addresses commenced on 11 January and concluded halfway through 13 January. The matter was adjourned because, in his address, counsel for the plaintiffs sought to raise a Trade Practices argument. The matter was adjourned to 20 February to hear the application to amend and further adjourned to 25 February to hear argument about the calling of further documentary evidence on the application. The Trade Practices Act argument was presented by both counsel in half a day on 5 February. Mr Roberts submits that if the Trade Practices Act matter had been raised at the outset, the whole application could have been heard in the two days set aside for it. There is obviously merit in that argument and the costs for amendment are usually awarded against the party making the application (r 6DCR 263(2)(a)).
Hearing and Judgment
I summarise the way in which the application for an injunction arose and the findings made. The plaintiffs were the franchisors and the first and second defendants were the franchisees of a coffee shop. The first and second defendants declined to renew the franchise as its term was coming to an end. With a degree of secrecy a company formed by the son of the second defendant took over the lease of the premises and appears now to be running the business. The shop has been rebadged and continues to be operated by the second defendant, his wife and his son.
At the hearing the parties identified the matters in issue. Four of the issues are what might be described as technical objections by the defendants to the plaintiffs’ entitlement to sue. I do not mean the word “technical” in a pejorative sense. The issue were legitimate legal objections which were concisely argued. I found in favour of the plaintiff in respect of all of those technical issues except as they applied to the third defendant – see findings at [31],[43] and [55].
I found against the plaintiffs’ argument that the operation of the business by the third defendant was a sham [74]. I found against the plaintiffs in all three aspects of the Trade Practices Act claim although only as they applied to the third defendant – see [82], [83] and [102]. I found that the balance of convenience did not favour the granting of the injunction because, while orders could have been made in respect of the first and second defendants, they could not, in my view, be made against the third defendant – see [101]. It can thus be seen that the plaintiff was successful in many aspects of its claim particularly against the first and second defendants, but not against the third defendant. In these circumstances the application by the plaintiffs was not an unreasonable one and they were successful in several aspects of the application, though not in the final result.
Conclusion
In these circumstances it is appropriate to grant the defendants their costs occasioned by the amendments including the attendances on 20 and 25 February and I order that the remainder of costs be reserved for the trial judge.