Brookfield v Yevad Products Pty Ltd
[2004] FCA 1717
•23 DECEMBER 2004
FEDERAL COURT OF AUSTRALIA
Brookfield v Yevad Products Pty Ltd [2004] FCA 1717
PRACTICE AND PROCEDURE – orders – costs orders – where judgment set aside – costs sought to punish respondent – function of award of costs – whether applicant entitled to costs thrown away at first trial – whether a lump sum should be awarded – whether subsequently unrepresented litigant entitled to costs.
Oshlack v Richmond River Council (1998) 193 CLR 72 applied
Latoudis v Casey (1990) 170 CLR 534 applied
Cachia v Hanes (1994) 179 CLR 403 appliedIAN WALTER BROOKFIELD AND SEPTIC PRODUCTS AUSTRALIA PTY LTD (IN LIQ) v YEVAD PRODUCTS PTY LTD (FORMERLY KNOWN AS DAVEY PRODUCTS PTY LTD) (ACN 004 813 192)
SAD 112 of 1993
LANDER J
ADELAIDE
23 DECEMBER 2004
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
SAD 112 OF 1993
BETWEEN:
IAN WALTER BROOKFIELD
FIRST APPLICANTSEPTIC PRODUCTS AUSTRALIA PTY LTD
SECOND APPLICANTAND:
YEVAD PRODUCTS PTY LTD
RESPONDENTJUDGE:
LANDER J
DATE OF ORDER:
23 DECEMBER 2004
WHERE MADE:
ADELAIDE
THE COURT ORDERS THAT:
1.Paragraph 1 of the orders made by Branson J in the within action on 8 February 1996 be set aside.
2.Paragraph 2 of the orders made by Branson J in the within action on 8 February 1996 be set aside.
3.The order made by Branson J on 19 December 1997 be set aside.
4.The respondent pay the applicants’ costs thrown away by reason of the respondent’s failure to make proper and appropriate discovery.
5.There will be no order for costs of the notice of motion.
6.The application to join McPherson’s Limited is dismissed.
7.Insofar as any party requires leave to appeal from paragraphs 5 and 6 of these orders, leave is granted.
8.Extend the time for any party to appeal from these orders until 31 January 2005.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
SAD 112 OF 1993
BETWEEN:
IAN WALTER BROOKFIELD
FIRST APPLICANTSEPTIC PRODUCTS AUSTRALIA PTY LTD
SECOND APPLICANTAND:
YEVAD PRODUCTS PTY LTD
RESPONDENT
JUDGE:
LANDER J
DATE:
23 DECEMBER 2004
PLACE:
ADELAIDE
REASONS FOR JUDGMENT
On 9 September 2004 I delivered reasons for concluding that orders made by the primary judge should be set aside.
Initially, the applicants were unrepresented before me but on 20 October 2004 the applicants, who were then represented by solicitors, filed a notice of motion seeking the following orders:
‘1.The judgement of Justice Branson in action number SG1121 [sic] of 1993 dated 8 February 1996 be set aside.
2.The order of Justice Branson in action number SG112 of 1993 dated 19 December 1997 be set aside.
3.All other orders made for costs in favour of the respondent in the proceeding be vacated.
4.The respondent or its solicitors Piper Alderman and/or Thomson Playford pay the applicants’ costs of this proceeding including all reserved costs on an indemnity basis.
5.Such costs as are awarded be fixed by the Court on a lump sum basis.
6.In the alternative such costs be taxed in default of agreement.
7.The respondent and its solicitors Thomson Playford pay the expenses incurred by the applicants arising out of application to set aside the judgement of Branson J dated 8 February 1996 and the orders arising therefrom.
8.The respondent and its solicitors pay interest on the costs so fixed at the rate prescribed from time to time pursuant to Order 35 Rule 8 of the Federal Court Rules.
9.This proceeding be transferred to the Melbourne Registry of the Federal Court and be listed for trial Directions.
10.The respondents pay the cost of this application.’
A preliminary hearing was held and, shortly thereafter, I was advised that the applicants were again unrepresented.
The applicants filed a further notice of motion on 8 December 2004 seeking to amend the notice of motion, to which I have already referred, and seeking the following orders:
‘1). The judgement of Justice Branson in action number SG112 of 1993 dated the 8th of February 1996 be set aside.
2).The order of Justice Branson in action number SG112 of 1993 dated the 19th of December 1997 be set aside.
3).All other orders made for costs in favour of the first respondent in the proceedings be vacated as follows;
Orders made;
a).12th of September 1996 Full Court.
b).19th of May 1998, O’Loughlin J.
c).16th of September 1998.
d).12th of April 2000, Mansfield J.
e).22nd of February 2001, Mansfield J.
f).6th of November 2002, Mansfield J.
g).6th of November 2002, Von Doussa J.
h).15th of August 2003, Mansfield J.
4).The costs of the 30th of May 1997 Re; High Court special leave application be stayed until application is made by the applicant’s [sic] to the High Court to vacate the cost order.
5).That the second respondent pays the applicant’s [sic] cost [sic] forthwith as per annexure “IWB 11” of the affidavit of the first applicant, pursuant to Order 35 Rule 8 of the Federal Court Rules.
6).That the costs sought by the applicant’s [sic] be treated as a lump sum for costs purposes.
7).In the alternative the costs be treated as exemplary damages.
8).That the first respondent’s failure to comply with the Federal Court Rules of discovery be treated as contempt. Re; Paragraphs 178, 384, 385, 417 and 418 of the judgement of Lander J 9th September 2004.
9).That the first respondent be required to file and serve a verified list of discovery in the above action pursuant to the Federal Court rules, prior to the filing of any other documents in these proceedings.’
In that notice of motion the applicants included McPherson’s Limited (McPherson’s) as a second respondent.
McPherson’s had never been a party to the proceedings.
I indicated to the applicants that they could not join McPherson’s by simply including McPherson’s as a second respondent in the title of the action. Consequently, a further notice of motion was filed on 14 December 2004 seeking the following further orders:
‘1). That McPherson’s Limited be joined as second respondent in the above action.
2).That a cost order be made against McPherson’s limited in favour of the applicant’s [sic].
3).That the cost order be paid forthwith.
4).Such further or other orders as this Honorable [sic] Court deems fair and just.’
The notices of motion were supported by two affidavits sworn by the first applicant on 30 November 2004 and 14 December 2004.
The applicants have made the process of entering orders reflecting my reasons unnecessarily complicated.
I said in my reasons at [420]:
‘In my opinion, the interests of justice will be served by setting aside the order made by Branson J on 8 February 1996 dismissing the applicants’ application and ordering the applicants to pay the respondent’s costs. There should also be an order setting aside the order made by Branson J varying the order for costs made on 8 February 1996 and providing that the first applicant pay the respondent’s costs specified in the sum of $380,493.82.’
The orders made by Justice Branson on 8 February 1996 were:
‘1. The application is dismissed.
2.The first applicant to pay the first named respondent’s costs of the proceedings.’
The order made by Justice Branson on 19 December 1997 was:
‘1. The costs order of 8 February 1996 be varied to read:
“The first applicant to pay the first named respondent’s costs specified in the sum of $380,493.82.”’
As my reasons show, the applicants’ proceedings consisted of a number of causes of action which were dismissed by the primary judge for different reasons.
The respondent contends that I should not simply set aside the primary judge’s order dismissing the applicants’ application but should, instead, make an order in the following terms:
‘1.So much of the judgment of Justice Branson in Action No: SG 112 of 1993 given on 8 February 1996 be set aside as:
1.1Dismissed the claim of the Second Applicant, and the First Applicant as assignee, for breach of the term implied by section 14 I of the Sale of Goods Act in those contracts alleged in the Statement of Claim which related to the sale by the Respondent to the Second Applicant of Doc 3 pumps.’
The respondent contends that even if it failed to give discovery, which should give rise to the setting aside of the order made by the primary judge, that the applicants’ claim should be limited to the claim for the breach of an implied term of the Sale of Goods Act 1895 (SA).
In my opinion, there was only one order made by the primary judge and that was an order dismissing the applicants’ claim.
In my opinion, it would not be appropriate to make the kind of order suggested by the respondent thereby, perhaps, limiting the applicants future proceedings.
It is not possible, on this application, to make any other order other than an order setting aside that order.
There will be an order:
1.Paragraph 1 of the orders made by Branson J in the within action on 8 February 1996 be set aside.
The respondent did not contend that the costs order in its favour should not be set aside so there will be a further order:
2.Paragraph 2 of the orders made by Branson J in the within action on 8 February 1996 be set aside.
The order made by her Honour on 19 December 1997 was a variation of paragraph 2 of the order of 8 February 1996.
The respondent did not contend that that order should not be set aside. There will be an order:
3. That the order made by Branson J on 19 December 1997 be set aside.
Paragraphs 3 and 4 of the amended notice of motion were not pursued so no order will be made in respect of paragraph 3.
The applicants seek an order for the costs of the proceedings before Branson J.
In my opinion, the applicants are entitled to their costs thrown away by reason of the respondent’s default in making proper discovery.
That must include the costs of trial and may include other costs.
The applicants have sought an order that a lump sum be awarded. That would not be appropriate for two reasons. First, I was not the trial judge and do not have an understanding of the work involved in getting the matter to trial and of the trial itself. Secondly, it is not possible at this stage to identify the costs which have been thrown away by reason of the respondent’s default.
At this stage, there should be an order that the respondent pay the applicants’ costs thrown away. However, it will be necessary that there be a debate before the taxing Registrar as to what costs have been thrown away by reason of the respondent’s default.
I therefore make the following order:
4.The respondent pay the applicants’ costs thrown away by reason of the respondent’s failure to make proper and appropriate discovery.
That deals with both paragraphs 5 and 6 of the proposed amended notice of motion.
Paragraphs 7 and 8 of the proposed amended notice of motion are misconceived. The purpose of an order for costs is to compensate the party for the legal costs incurred in prosecuting or defending an action. Costs are not a punishment. They are an indemnity, usually only partial, for professional legal costs incurred in the litigation: Oshlack v Richmond River Council (1998) 193 CLR 72 at 89; Latoudis v Casey (1990) 170 CLR 534.
It is not appropriate for me to make any order in relation to any further trial. The proceedings will take their own course and it will be a matter for the applicants to prosecute their claim or claims.
The applicants sought costs of the notice of motion before me which has given rise to these orders. The applicants were only represented on two occasions on the notice of motion filed on 20 October 2004.
Because the applicants were unrepresented they are not entitled to costs but only to whatever out of pocket expenses have been incurred in prosecuting the notice of motion: Cachia v Hanes (1994) 179 CLR 403. No allowance can be made for the applicants’ time in prosecuting the notice of motion.
However, the respondent itself did apply for costs. It argued that the applicants had wrongly accused it of fraud and had unduly protracted the hearing.
It is right that the applicants did accuse the respondent of fraud and that I found there to be no fraud. It is also probably right that the applicants’ conduct in the hearing meant that the hearing took longer than it should have.
However, the applicants have, at all relevant times, been unrepresented. They are aggrieved by the respondent’s admitted failure to make appropriate discovery. They earnestly believe that that failure meant that her Honour dismissed their claim.
Whether or not that is so remains to be seen but they are entitled, in my opinion, to be aggrieved by the conduct of the respondent.
As I remarked in my reasons, and it is still the case, the respondent still has not provided a complete list of documents.
In my opinion, the appropriate order would be not to allow the applicants any costs or disbursements and to not make an order for costs in favour of the respondent. So, the order will be :
5. There will be no order for costs of the notice of motion.
I therefore allow the original notice of motion to be amended to include paragraphs 1, 2, 5 and 6 of the amended notice of motion.
The other matters in the original notice of motion were abandoned. Apparently, the applicants came to some form of settlement with the solicitors mentioned in paragraphs 4 and 7 of that original notice of motion.
That leaves only the notice of motion seeking to join McPherson’s and seeking an order for costs against it.
McPherson’s is the sole shareholder of the respondent. There is no dispute that the respondent sold its business some time in 1995 and received in the order of $29 million for it. That sum was used to retire group debt.
The applicants say that, in those circumstances, the respondent is insolvent and without assets. In my opinion, that does not follow.
One must assume that the directors of the respondent acted in accordance with the law. If they received $29 million, which appears likely, and that money was used to retire group debts, which also appears likely, it must be assumed, in the absence of any other evidence, that whichever company received the benefit of the $29 million, if it were not the respondent, is now indebted to the respondent in that sum.
The directors of the respondent could not simply hand over the sum of $29 million to some other company and allow that company to apply that money for its own use without becoming obligated to the respondent.
I am not satisfied, therefore, as a matter of fact, that the respondent is insolvent or without assets.
The applicants’ claim that McPherson’s has directed the respondent in its defence and therefore that McPherson’s should become liable in costs.
There is no evidence to support that assertion. It may be accepted that McPherson’s is the sole shareholder of the respondent. However, the respondent has separate directors who are, admittedly, employees of McPherson’s. However, those directors must have, in discharge of their directors’ duties, acted in accordance with the best interests of the respondent.
There is no evidence that McPherson’s acted improperly in maintaining the respondent’s defence or in the conduct of the respondent’s defence.
In my opinion, it would only be appropriate to join McPherson’s if I thought it appropriate to make an order for costs against it.
In my opinion, there is no material before this Court upon which an order for costs could be made against McPherson’s. Therefore, the application seeking the joinder of McPherson’s should be dismissed.
I therefore make the following order:
6. The application to join McPherson’s Limited is dismissed.
Of my own motion I make the following further orders:
7.Insofar as any party requires leave to appeal from paragraphs 5 and 6 of these orders, leave is granted.
8.I extend the time for any party to appeal from these orders until 31 January 2005.
I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. Associate:
Dated: 23 December 2004
Counsel for the First Applicant: The First Applicant appeared in person Counsel for the Second Applicant: Mr I W Brookfield Counsel for the Respondent: Mr J Wells QC with Mr H Abbott Solicitor for the Respondent: Thomson Playford Date of Hearing: 17 December 2004 Date of Judgment: 23 December 2004
2
0