Bradman v Allens Arthur Robinson (No 2) - [2009] SASC 180

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
BRADMAN & ORS v ALLENS ARTHUR ROBINSON (No 2)
[2009] SASC 180
Judgment of The Honourable Justice Kourakis
29 June 2009
PROCEDURE - COSTS - INTERLOCUTORY PROCEEDINGS
The defendants were successful on an application for summary judgment in their favour with respect to some paragraphs of the plaintiffs' statement of claim - whether those paragraphs should be struck out or dismissed- whether costs should be payable forthwith, reserved or costs in the cause.
Held: Summary judgment for the defendants is granted on paragraphs [33] - [35] of the plaintiffs' statement of claim - the remainder of the paragraphs that were the subject of the summary judgment application are struck out - the plaintiffs are to pay 80 per cent of the defendants' costs of and incidental to the summary judgment application, those costs not being payable forthwith.
Limitations of Actions Act 1936 (SA) s 3, 35, 48(1); Supreme Court Civil Rules 2006 (SA) r 54, 104, 117, 193, 263, 264, referred to.
Bradman & Ors v Allens Arthur Robinson [2009] SASC 80; Palmdale Insurance Co (In Liq) v L Grollo & Co Pty Ltd [1986] VR 408, applied.
Danae Investment Trust PLC v MacIntosh Nominees Pty Ltd (1993) 61 SASR 341; Channel Seven Adelaide Pty Ltd v Manock (2007) 232 CLR 245; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; Alstom Power Ltd v Yokogawa Australia Pty Ltd (No 2) (2006) 244 LSJS 65; H Stanke & Sons Pty Ltd v Stanke (No 2) [2007] SASC 109, considered.

BRADMAN & ORS v ALLENS ARTHUR ROBINSON (No 2)
[2009] SASC 180

KOURAKIS J: After the delivery of my reasons for judgment[1] on an application by the defendants for summary judgment in their favour on parts of the plaintiffs’ statement of claim, I heard the parties on the precise form of the orders that should be made and on the question of costs.
[1] Bradman & Ors v Allens Arthur Robinson [2009] SASC 80.
The defendants sought summary judgment on the grounds that there was no reasonable prospect that the plaintiffs would establish an entitlement, on the material fact pleaded by them, to an extension of time in which to bring common law proceedings for breach of duty and retainer. In Bradman & Ors v Allens Arthur Robinson[2] I held that the defendants were entitled to summary judgment on that question. The proceedings brought by the plaintiffs included proceedings for breach of equitable duty. That part of the plaintiffs’ claim was not the subject of the summary judgment application and will proceed to trial in the ordinary course.
[2] [2009] SASC 80.
The dispute between the plaintiffs and the defendants is as to the precise form of order that should be made with respect to those paragraphs of the plaintiffs’ statement of claim which plead the common law action. The plaintiffs submit that those paragraphs should be struck out. The defendants submit that those paragraphs should be dismissed. For the reasons that follow I have concluded that those paragraphs of the plaintiffs’ statement of claim should be struck out.
On the question of costs the defendants seek an order that the plaintiffs pay their costs of and incidental to the summary judgment application on the basis that the matter was fit for Senior Counsel, and that such costs be paid forthwith. The plaintiffs submit that the costs of the application should be reserved, or, alternatively that the costs should be the defendants’ costs in the cause. For the reasons that follow, I have determined that the defendants should have 80 per cent their costs on the basis claimed, but that no order should be made that the costs be payable forthwith.
Claim to be Struck Out
By paragraphs [11], [12], [15], [19], [25], [30] and part of [32], the plaintiffs claim against the defendants for breach of their contractual and tortious duties. By paragraphs [33] - [35] the plaintiffs sought an extension of time in which to bring those actions.
I have held that the plaintiffs’ application for an extension of time has no reasonable prospects for success.[3] My judgment is a final judgment on the issue whether the material fact pleaded in that paragraph entitled the plaintiff to an extension of time pursuant to the Limitations of Actions Act 1936 (SA) (the Act). It is appropriate, therefore, that there be summary judgment in favour of the defendants on that application. The parties agree that that is the appropriate order. I will enter judgment for the defendants on paragraphs [33] - [35] of the statement of claim.
[3] Bradman & Ors v Allens Arthur Robinson [2009] SASC 80 at [79].
However, precisely because I have held against the plaintiffs on their application for an extension of time, there has not been, and there cannot now be, an adjudication of the plaintiffs’ underlying claim alleging breaches of contractual and tortious duties. Summary judgment can therefore not be entered in favour of the defendants on those claims.
The parties agree that the orders I make should allow the plaintiff to pursue those claims in the event that an extension of time is granted on a different material fact, or facts. However, the defendants submit that orders should be made which would preclude the plaintiffs from bringing the common law claims for breach of duty, unless an extension of time is given on a different material fact or facts. The defendants are anxious to ensure that the plaintiffs do not bring a case for breach of those duties on the ground that the actions are not in fact statute barred. The plaintiffs accepted at the hearing of the summary judgment application that the common law claims could not be brought, unless an extension of time was granted. The plaintiffs’ counsel announced in the course of submissions on the orders that should be made that there is no present intention to bring the common law claims on the basis that they are still within time. To that extent the difference between the parties on the form of orders is, at least for now, academic. Moreover, it is accepted that if the plaintiffs attempted to replead those claims without obtaining an extension of time, the defendants may have grounds on which to have those claims struck out, dismissed or stayed as an abuse of process, or, on the basis of an Anshun estoppel.
The failure of the plaintiffs in their claim for an extension of time pursuant to s 48(1) of the Act does not enliven the power in r 193 of the Supreme Court Civil Rules 2006 (the Rules) to dismiss the proceedings. The plaintiffs’ claims for equitable relief can still be maintained; no application for summary judgment, or for dismissal on any other ground, has been brought with respect to those pleadings. For the same reason, the failure of the plaintiffs’ claim for an extension of time does not enliven the Court’s inherent jurisdiction to dismiss the proceedings altogether.
It is convenient, however, to observe that a dismissal of proceedings pursuant to r 193 or the inherent power is not a determination of the plaintiffs’ claim on the merits. A dismissal of an action because it discloses no reasonable cause of action or because it is frivolous, vexatious or an abuse of process, can involve no adjudication of an underlying legal matter. If proceedings are dismissed because they disclose no reasonable cause of action, by definition there cannot have been an adjudication of a cause of action that was not disclosed. Similarly, the dismissal of proceedings because they are frivolous, vexatious or an abuse of process involves no adjudication of the claim made; the very reason for the dismissal is that the claim does not merit adjudication and the making of a final judicial order. It follows that in such cases there can be no objection to a further action on the ground that the claim made is res judicata. It may of course be the case that the fresh action will be again dismissed pursuant to r 193 or the inherent power, or as an abuse of process, but both the original order and the subsequent order, if it is made, are procedural or adjectival and do not settle any underlying controversy.
In my view, the adjudication in favour of the defendants on the plaintiffs’ application for an extension of time does enliven the power in r 104 of the Rules to strike out those paragraphs of the statement of claim by which the statute barred claims are brought on the ground that it is an abuse to maintain them. The power in r 117 of the Rules is also enlivened on the ground that the prosecution of the common law claims is both an abuse and vexatious. Although r 117(2)(e) does not expressly empower a court to strike out part of a document, in my view, that sub-rule should be read as providing that power.
The Act provides that actions in contract and tort, not being actions for personal injury, shall “be commenced within six years next after the cause of action accrued and not after”.[4] An action is defined to include legal proceedings of all kinds.[5] It follows that those paragraphs of the plaintiffs’ statement of claim which plead the common law actions are vexatious.[6] It would also be an abuse of the process of the Court to maintain the common law claims, the plaintiffs having failed in their application for an extension of time, because of the express prohibition in s 35 of the Act. It also follows that the proper conduct of the remainder of the action would be prejudiced if the paragraphs of the statement of claim which plead the common law actions were to remain.
[4]    Limitation of Actions Act 1936 (SA) s 35.
[5]    Limitation of Actions Act 1936 (SA) s 3.
[6]    Palmdale Insurance Co (In Liq) v L Grollo & Co Pty Ltd [1986] VR 408.
I am satisfied, therefore, that it is appropriate to strike out the paragraphs that plead the common law claims pursuant to rr 104 and 117 of the Rules. The power conferred by those rules is a power to strike out. I see no reason to use any different terminology, and in particular the word “dismiss” in my order. The rules appear to use the term dismissal for orders which bring an end to the entire action.[7]
[7] Supreme Court Civil Rules 2006 r 193. Leave may also be required pursuant to r 54(5) and (6).
The striking out of part of a pleading does not determine the claim made thereby on the merits. There is no final adjudication of the underlying legal matter or dispute between the parties. The Court has an inherent jurisdiction to give leave to file a fresh pleading following a striking out.[8] The question on an application to replead is whether it is in the interests of justice that leave be given.[9]
[8] Danae Investment Trust PLC v MacIntosh Nominees Pty Ltd (1993) 61 SASR 341.
[9] Channel Seven Adelaide Pty Ltd v Manock (2007) 232 CLR 245 at 292, [97].
On an application for permission to amend or replead, or on the defendants application to dismiss or strike out any fresh pleading of the common law claims brought without leave, the fact of, and circumstances surrounding, the striking out of the claims in these proceedings will be a relevant consideration. Plainly, the plaintiffs will not be allowed to renew the common law claims on the basis of the material fact that was pleaded in this action. If the plaintiffs were to attempt to bring the common law claims on the basis that they were not statute barred, the concession made by the plaintiffs in the proceedings before me that an extension of time was required will be a relevant consideration.
It may also be, as I earlier observed, that the plaintiffs are estopped from bringing the common law claims without an extension of time. The dispute over whether the material fact pleaded by the plaintiffs entitled them to an extension of time only arose on the legal position, assumed by both parties, that the actions were in fact statute barred. At the very least, the defendants would appear to have good grounds to plead an estoppel by omission.[10] However, these questions need not be finally resolved by me. It is sufficient that I am satisfied that the defendants’ interests are properly protected by striking out the plaintiffs’ common law claims. It is therefore unnecessary to dismiss the plaintiffs’ common law claims with the attendant risk that the order might be regarded as a dismissal of the plaintiffs’ common law claims on the merits.
[10] Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589.
Costs
The effect of the summary judgment given in favour of the defendants on the application to extend time is that only the equitable claims remain. The plaintiffs contend that the costs of this application should be reserved until the determination of the equitable claims. I cannot see how the hearing, and ultimate determination, of the equitable claims could affect the proper exercise of the costs discretion on the summary judgment application. If the defendant is successful on those claims, then there would not appear to be any basis on which to refuse the defendants their costs of the summary judgment application. If the plaintiffs were to be successful on the equitable claims, I cannot see how their success on those claims would in some way have justified bringing the statute barred common law claims and, still less, the plaintiffs’ decision to unsuccessfully oppose the defendants’ summary judgment application. If the costs were to be made the defendants’ costs in the cause, the defendants would not recover the costs of their successful summary judgment application unless they were also successful on the equitable claims. There does not appear to me any reason to make the defendants’ costs of this application contingent on the failure of the plaintiffs’ equitable claims.
For these reasons I refuse the plaintiffs’ application that the costs of the action be reserved or be made the defendants costs in the cause.
The plaintiffs submit, however, that the costs order should be reduced to reflect the plaintiffs’ successful opposition to that part of the summary judgment application that was based on constructions of s 48 of the Act which I rejected. Substantial parts of the written and oral submissions were addressed to that question. The general rule is that costs follow the event.[11] However, a court may in its discretion order costs on any basis it considers appropriate.[12] In particular, a successful defendant may be deprived of a part of its costs where it has failed on some issues.[13]
[11] Supreme Court Civil Rules 2006 r 263.
[12] Supreme Court Civil Rules 2006 r 264.
[13] Byrns v Davie [1991] 2 VR 568.
In the circumstances of this matter, it is appropriate in my view to discount the costs ordered against the plaintiff to reflect its partial success on those issues. I would not, however, discount the award strictly in proportion to the time that was taken on the issues on which the defendants’ were unsuccessful. To do so would fail to take into account that there are some fixed costs of an application such as this which would not have been reduced even if the unsuccessful arguments had not been made. Approaching the matter broadly I have concluded that a discount of 20 per cent is appropriate.
Finally, it is necessary to deal with the defendants’ application that I order the costs to be payable forthwith. The matters relevant to the exercise of that discretion were considered by Debelle J in Alstom Power Ltd v Yokogawa Australia Pty Ltd (No 2)[14] and by White J in H Stanke & Sons Pty Ltd v Stanke (No 2).[15]The general rule is that an order for payment for costs forthwith should not be made in interlocutory applications. The rule is calculated to discourage interlocutory applications. It also recognises that over the course of proceedings, set offs against a costs order on one application may arise in the light of subsequent applications and orders and, ultimately, the disposition of the entire proceedings.
[14] (2006) 244 LSJS 65 at 66-7.
[15] [2007] SASC 109 at [5]-[10].
The reasons for discouraging interlocutory applications on the form of pleadings, the extent of discovery and similar such applications are evident enough. In my view, however, those reasons do not extend to interlocutory applications which are calculated to facilitate the efficient disposal of proceedings. An application for summary judgment, if soundly made, is such an application. No doubt for that reason it is a recognised exception to the general rule that an order for payment of costs forthwith may properly be made where the interlocutory application has had the effect of removing one of several causes of action in its entirety.[16]
[16] Mitanis v Pioneer Concrete (Vic) Pty Ltd [1998] ATPR 40,822 (41-623).
Nonetheless, it remains true that the separate enforcement of interlocutory costs orders can itself be unnecessarily expensive and distracting from the prosecution of the substantive proceedings. That reason for refusing an order for payment of costs forthwith still has some relevance and application to an interlocutory application which has been successful in removing an entire cause of action.
There is in this case, however, a further consideration which militates against an order that the costs be payable forthwith. The defendants persisted with their application even though the plaintiffs put them on notice that further applications for an extension of time may be made even if the defendants were to be successful in their summary judgment application. I have been provided, on the costs application, with correspondence between the parties that shows that the process of discovery is not yet complete. The correspondence also shows that the plaintiffs intend to obtain an expert report on the value of the intellectual property that was assigned as a result of what they allege to be breaches of the common law duties owed by the defendants. There is also a real prospect in my view that the completion of the process of discovery will reveal further material facts, not as to the nature of the retainer, but on the extent and nature of the advice given by the defendants.
Those prospects raise the real possibility of further interlocutory applications, that, depending on the plaintiffs’ success, may result in costs orders which can appropriately be set off against the costs of this application. For that very reason, if the plaintiffs had sought an adjournment of the summary judgment application they may have been successful. The plaintiffs having failed to make that application, it is now not appropriate that the costs of the application be reserved or that the defendants be denied the costs of their successful application. However, the prospect of the further applications to which I have referred is just reason enough to decline to order the costs payable forthwith.
Conclusion
I give summary judgment for the defendants on paragraphs [33] - [35] of the plaintiffs’ statement of claim. I strike out paragraphs [11], [12], [15], [19], [25], and [30]. I also strike out the words “the implied term of due care, skill and diligence, the duty of due care, skill and diligence, and”, and the paragraph numbers 15, 19, 25 and 30, from paragraph [32] of the plaintiffs’ statement of claim.
I order that the plaintiffs pay the defendants 80 per cent of the costs of their application.