Bridge Bar Investments v Dog At the Bridge (No 2)
[2016] VSC 521
•31 AUGUST 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S CI 2014 04877
| BRIDGE BAR INVESTMENTS PTY LTD (ACN 154 906 377) AND ANOR | Plaintiffs |
| v | |
| DOG AT THE BRIDGE PTY LTD (ACN 161 759 959) AND ORS | Defendants |
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JUDGE: | JOHN DIXON J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 26 AUGUST 2016 |
DATE OF JUDGMENT: | 31 AUGUST 2016 |
CASE MAY BE CITED AS: | BRIDGE BAR INVESTMENTS v DOG AT THE BRIDGE (No 2) (Costs) |
MEDIUM NEUTRAL CITATION: | [2016] VSC 521 |
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Costs – Application for summary judgment, to strike out pleadings and for further particulars – Whether costs should follow event – Whether indemnity costs should be ordered - Whether order should be made that costs be taxable forthwith – No new statement of principle.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr A Herskope | JBT Lawyers |
| For the First Defendant No appearance by the Second to Sixth Defendants | Mr A M J Meagher | Blue Rock Partners |
HIS HONOUR:
Following publication of reasons on 5 August 2016, the application was adjourned for further argument in respect of costs. On 26 August 2016, I ordered :
(a) The first defendant’s summons filed 22 June 2016 is dismissed.
(b) The first defendant pay 90% of the plaintiffs costs of and incidental to the fist defendant’s summons filed 22 June 2016 on an indemnity basis.
(c) If the first defendant has not filed an application for leave to appeal this order by 26 September 2016, the proceeding shall be listed for further directions on 29 September 2016 at 9.30am.
(d) By 7 October 2016, the plaintiffs shall file and serve any expert reports that they intend to rely upon together with particulars of loss and damage.
(e) Costs are otherwise reserved.
(f) Liberty to apply.
What follows are my brief reasons in respect of the costs application.
The plaintiff sought that the first defendant pay 90 per cent of their costs on an indemnity basis and further, an order that such costs may be taxed immediately. The first defendant accepted that it substantially lost its application, but contended that it succeeded in a small part. The first defendant proposed that it should pay 85 per cent of the plaintiffs costs on the standard basis, opposing the claim for indemnity costs and the application for leave to immediately tax those costs.
Counsel for the plaintiffs submitted that indemnity costs should be awarded for two reasons. First, by a letter dated 23 June 2016, the plaintiffs explained in some detail why the application was bound to fail and warned that an application for indemnity costs would be made if the first defendant persisted with it.
Secondly, that letter also raised the issue that the impugned allegations in this pleading had been extant in earlier challenged pleadings since 14 September 2014 and that the first defendant had provided no explanation, including on this costs application, for its failure to raise its objections on the grounds pursued on this application when the proceeding was before the court on prior occasions on a pleading summons. I commented on this issue in the primary judgment.
Counsel for the plaintiffs submitted that costs ought to be taxed immediately because each of the conditions for such leave to be granted referred to by Hollingworth J in Dale v Clayton Utz (No.3)[1] was present. First, the application was a discrete matter, never to be repeated. Secondly, there is a prospect of significant delay occasioned by the application, particularly, as it now appears, the defendant will seek leave to appeal. Thirdly, the conduct of the first defendant was unreasonable in the sense discussed in Dale.
[1][2013] VSC 593, [58]–[71], [80]–[82].
Counsel for the first defendant submitted that the percentage allowance was a discretionary matter to be assessed by the court. However, costs should be allowed on the standard basis for two reasons. First, there was no substantial delay. The impugned pleading was filed on 10 June 2016. The first defendant’s application was promptly filed on 20 June 2016. Secondly, the mere fact that the application failed was not a reason to order indemnity costs. The first defendant succeeded in a small part. Thirdly, the first defendant’s conduct was not reprehensible. It accepted its liability to pay costs on the application. The default position under the Rules is that costs be taxed at the end of the proceedings and there was no sufficient reason to order immediate taxation.
Costs are in the discretion of the court and are awarded as a partial indemnity for the successful party in respect of professional legal costs and disbursements actually incurred in the conduct of an application. Costs are neither compensation nor punishment.[2] The settled practice is that costs follow the event, awarded on a standard basis[3] and taxable following the completion of the proceeding.[4] The principles on which costs may be awarded on an indemnity basis have been the subject of considerable discussion in the cases, a discussion that often commences with the oft-cited decision of Woodward J in Fountain Select Meats,[5] and the analysis by Harper J (as he then was) in Ugly Tribe.[6] I do not propose to undertake an analysis of principle in these reasons although I have taken these principles into account in exercising my discretion.
[2]Latoudis v Casey (1990) 170 CLR 534, 566-7.
[3]R 63.31.
[4]R 63.20.1.
[5]Fountain Select Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397.
[6]Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189.
The significant factor that persuaded me to award indemnity costs on this application was the unexplained failure of the first defendant to have raised on earlier occasions the arguments it advanced in this application. The finality of litigation is a principle of considerable importance. The court is mandated by the Civil Procedure Act (2010) to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute. In particular, and of present relevance, the court must have regard to the just determination of disputes and the efficient use of judicial resources. The first defendant has not appropriately limited the interlocutory applications it has chosen to bring resulting in an additional contested hearing with its attendant use of court resources. The additional application unnecessarily imposed legal costs on the plaintiffs who warned that indemnity costs would be sought if the first defendant persisted and lost its application.
In Setka v Abbott & Anor (No 2)[7] the Court of Appeal said:
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’.
[7][2013] VSCA 376, [27] (citations omitted).
I reject the plaintiffs contention that an application for summary judgment, or a pleading summons, or an application for further particulars is a discrete matter in the sense discussed It cannot be said that seeking clarification of the pleadings or summary judgment is discrete from what will finally require determination. The facts of Dale provide an illustration of a discrete application. This particular application has not occasioned a prospect of considerable delay in completion of the proceeding. The proceeding is moving slowly, but the contribution of this application to its snail-like progress is insignificant. The prospect of an appeal is irrelevant, no more than a future possibility and if an appeal causes significant delay, the Court of Appeal will be best placed to provide the appropriate remedy.
Notwithstanding that it might be thought that my findings constituted unreasonable behaviour on the part of a litigant that warranted leave to immediately tax the costs order, I was not persuaded that such an order was appropriate. I do not regard its conduct as reprehensible although it comes close to demonstrating a want of competence or diligence in the failure to respect the finality principle. I do not make that finding as it does not appear to me to be unarguably clear and it is inappropriate to embark on an inquiry into the competence or diligence of the first defendant or its agents in order to be satisfied to the requisite standard.
That said, there is a relevant discretionary consideration arising from the history of interlocutory disputes in this proceeding that have resulted in costs orders in favour of the first defendant, who does not have leave to immediately tax those orders. It is not clear that it would be just in the circumstances of this case, which until this application was managed by a judge in the Commercial Court, to permit selective taxation of interlocutory costs orders. There was no application that all interlocutory costs orders made to date in the proceeding be immediately taxed and set off in a settling of accounts. Without that additional step, I am not persuaded that an order for immediate taxation is an appropriate exercise of the costs discretion in this case.
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