Bufalo Corp Pty Ltd v Lendlease Primelife Ltd (No 2)
[2010] VSC 151
•28 April 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
No. 6668 of 1999
| BUFALO CORPORATION PTY LTD (ACN 007 122 296) (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION) | Plaintiff |
| V | |
| LENDLEASE PRIMELIFE LIMITED (formerly PRIMELIFE CORPORATION LIMITED) (ACN 010 662 901) and others (according to the schedule attached) | Defendants |
---
JUDGE: | JUDD J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 27 November 2009 | |
DATE OF JUDGMENT: | 28 April 2010 | |
CASE MAY BE CITED AS: | Bufalo Corp Pty Ltd v Lendlease Primelife Ltd (No 2) | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 151 | |
---
COSTS – Application for leave to amend pleadings – Case Management Conference –Supreme Court (General Civil Procedure) Rules 2005, r 63.17(2).
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr C E Shaw | Tresscox |
| For the First and Fourth Defendants | Mr S K Wilson QC with Mr P J Marzella | Russell Kennedy |
| For the Fifth Defendant | Mr J P Gorton | Minter Ellison |
HIS HONOUR:
This proceeding was first commenced in 1999. Its progress has been unacceptably slow. A number of attempts at mediation have failed to achieve a compromise. In February 2008, the plaintiff filed and served a fourth further amended statement of claim. On 30 April 2009, I delivered judgment on an application by the defendants for security for costs and at the same time gave directions for a Case Management Conference (CMC) then to be held on 24 June 2009.
In preparation for the CMC, I directed that the parties confer and prepare a joint memorandum to include a statement of issues for trial, lists of witnesses, proposals as to the manner in which evidence should be prepared and adduced, and estimates of the likely duration of trial. I also directed that any applications for interlocutory orders should be made returnable on 24 June 2009, and that outlines of submissions in support of any such application should be filed and served by 22 June 2009. Other directions were made in an endeavour to prepare the case for trial.
In conformity with the orders made on 30 April 2009, the first and fourth defendants, the Primelife Parties, gave notice to the plaintiff of their intention to challenge its fourth amended statement of claim. In written submissions dated 22 June 2009, the Primelife Parties set out in some detail the grounds upon which they would contend that numerous paragraphs in a very lengthy statement of claim should be struck out. The written submission also dealt with a request for further and better particulars and for discovery, and claims for legal professional privilege. A further application for security for costs was foreshadowed.
The fifth defendant, Darrer Muir Fleiter (Darrer), also filed submissions, dated 19 June 2009, in which it foreshadowed complaints concerning the fourth amended statement of claim.
The CMC was ultimately convened in court on 25 June 2009. On that day, directions were made with the object of resolving claims for legal professional privilege, additional discovery, the provision of further and better particulars and for the hearing of the application to strike out the statement of claim. The hearing was to take place on 29 July 2009. At the CMC, the Primelife Parties and Darrer outlined the scope of their complaints about the statement of claim. Numerous other issues were addressed and the CMC was adjourned to 29 July 2009.
On 3 July 2009, the plaintiff served on the other parties a proposed fifth amended statement of claim, which was apparently designed to respond to many of the complaints made by the Primelife Parties in their written submission dated 22 June 2009. Thus, by 29 July 2009, the anticipated attack on the fourth further amended statement of claim was replaced by the plaintiff’s application for leave to file and serve a fifth amended statement of claim.
At the hearing on 29 July 2009, the majority of hearing time was devoted to the plaintiff’s application for leave. Because the day had also been set aside to continue the CMC, other issues, notably discovery, were dealt with. Further directions were made to ensure that the claims for legal professional privilege could be resolved. The plaintiff proposed to deliver a new version of its statement of claim and it was ordered to file any further draft by 7 August 2009. The CMC was adjourned to 18 August 2009.
On 11 August 2009, the plaintiff delivered a further draft amended statement of claim and yet another on 17 August 2009, the day before the plaintiff was to resume its application for leave.
The plaintiff proceeded with its application for leave on 18 August, although it became necessary to suspend submissions at 1pm due to an urgent application to be made that afternoon. Consequently, the plaintiff’s application was adjourned to 24 August, at which time it was anticipated that submissions would conclude and a ruling would be made in relation to that matter as well as the claims for legal professional privilege.
On 24 August 2009, rulings were made in relation to the claims for legal professional privilege and the plaintiff was granted leave to file and serve a fifth amended statement of claim. Even then, the plaintiff foreshadowed several amendments to its draft pleading, although these had been formulated in the course of submissions and debate that day.
The Primelife Parties submit that they should be paid their costs of the plaintiff’s application for leave, such costs to include:
(1)The costs of preparing submissions dated 22 June 2009, 23 July 2009, 17 August 2009 and 23 August 2009.
(2)Costs of the day of each of 29 July 2009, 18 August 2009 and 24 August 2009.
(3)Costs of and incidental to drawing, settling and filing an amended defence and counterclaim in response to the fifth amended statement of claim.
(4)Costs of and incidental to the drawing, settling and filing of their amended statement of claim as between defendants.
The orders sought by the Primelife Parties, if made, would displace the operation of r 63.17(2) of the Rules of Court which provides –
A party who amends a pleading or other document by leave shall, unless the court otherwise orders, pay the costs of and occasioned by the amendment.
In my view, the scope of r 63.17(2), absent a displacing order, is limited to costs not yet incurred at the time leave was granted. The rule is not intended to cover costs “thrown away” by reason of the amendment or costs of the application to amend. To order costs thrown away and costs of and occasioned by the amendment would seem to over-compensate the defendants. The Primelife Parties did not seek costs thrown away by reason of the amendment, although Darrer sought such an order.
If r 63.17(2) is allowed full reign, all defendants will be entitled to the operation of the rule. To make orders in terms of paragraphs 11(3) and (4) above would, in my view, have the effect of displacing the operation of r 63.17(2). I do not propose to make any order displacing the operation of r 63.17(2) and therefore decline to make orders in terms of paragraphs 11(3) and (4).
As for the Primelife Parties’ application for costs of preparing written submissions, a significant part of the work undertaken by them in the preparation of their written submission dated 22 June 2009 was to foreshadow an attack on the fourth amended statement of claim. That submission may have induced the plaintiff to reformulate its pleading. The proposed attack by the Primelife Parties was, however, overtaken by the plaintiff’s application for leave.
The plaintiff does not submit that the written and oral submissions made by the Primelife Parties in opposition to its application for leave to amend, were frivolous, prolix or otherwise unreasonable. While the Primelife Parties did not succeed on every point, the very fact that the plaintiff made successive redrafts provides some evidence of the force of many of the objections made by the Primelife Parties. The written submissions, prepared by the Primelife Parties and employed in opposition to the application for leave to amend, provided order and discipline to a broad ranging list of objections to a complicated statement of claim. I was greatly assisted by the written submissions. I am prepared to make an order that the plaintiff pay the costs incurred by the Primelife Parties in the preparation of their written but undated submissions, which are described in the following terms:
(1)SUBMISSIONS OF THE FIRST AND FOURTH RESPONDENTS IN SUPPORT OF THEIR APPLICATIONS TO STRIKE OUT PARAGRAPHS OF THE PROPOSED FIFTH AMENDED STATEMENT OF CLAIM, ALTERNATIVELY IN OPPOSITION TO ANY APPLICATION FOR LEAVE TO DELIVER THE SAME.
That submission was probably dated late July 2009.
(2)REVISED SUBMISSIONS TO ADDRESS THE REVISED PROPOSED 5TH AMENDED STATEMENT OF CLAIM, ALTERNATIVELY IN OPPOSITION TO ANY APPLICATION FOR LEAVE TO DELIVER THE SAME.
That submission was probably dated 17 August 2009.
There was no written submission dated 23 August 2009.
I do not propose to allow the Primelife Parties their costs of the written submission dated 22 June 2009. That submission was prepared for the purpose of a CMC. The conference was initiated by the court. The purpose of a CMC is to achieve effective case management and facilitate, where possible, an early negotiated resolution of the dispute.
Effective case management commences with the identification of issues by the parties. These are often refined at the conference. It is essential that each CMC is attended by leading counsel who will have carriage of the trial on behalf of each of the parties. The parties are required to identify witnesses, including experts, and provide considered estimates of the likely duration of a trial. Anticipated future disputes are to be identified and scheduled for hearing. A high level of cooperation is required between the legal representatives for the parties in preparing a joint memorandum, identifying issues and possible interlocutory disputes.
The nature of the CMC, as a procedural tool employed by the court, and its dependency on cooperation between legal representatives makes it appropriate that costs of and incidental to the conference will ordinarily be reserved to the trial judge, save in exceptional circumstances. The circumstances of this case do not warrant a departure from the ordinary rule.
The Primelife Parties should also have their costs of hearings substantially dedicated to the plaintiff’s application for leave to file and serve the fifth amended statement of claim. The relevant hearing days were on 29 July 2009; 18 August 2009; and 24 August 2009. It is not appropriate in a case such as this to dissect, on an issue by issue basis or by reference to pages of transcript, the extent to which the plaintiff’s application dominated each day’s hearing. The Primelife Parties’ response to the plaintiff’s application was not unreasonable. There were successive drafts of a proposed statement of claim prepared by the plaintiff to support its application. While it is true that on each of the days mentioned other matters were dealt with, the substantive issue before the court on each day was the plaintiff’s application for leave. The majority of time taken on each of the days was in relation to that application.
FIFTH DEFENDANT’S APPLICATION FOR COSTS
The fifth defendant, Darrer, argued that the plaintiff should be ordered to pay its costs of and incidental to its application for leave to amend its statement of claim and its application to strike out parts of the plaintiff’s fourth amended statement of claim, alternatively, its application for further and better particulars. In addition, Darrer sought its costs thrown away by reason of the plaintiff’s amendment.
In written submissions dated 19 June 2009, filed in response to a direction by the court for the purpose of the CMC, Darrer foreshadowed an application to strike out the fourth amended statement of claim. In substance, Darrer alleged that the pleading did not identify the causal nexus between its alleged wrongful conduct and the damage suffered. Darrer also submitted that the pleading contained internal inconsistencies. The inconsistencies identified by Darrer overlapped with complaints made by the Primelife Parties. Darrer made oral submissions on 25 June 2009 in support of its complaints, but did not thereafter attend hearings at which the plaintiff’s application to file and serve a fifth amended statement of claim was prosecuted and determined.
The CMC on 25 June 2009 was not an occasion for the resolution of any dispute between the parties. It was intended by the court (and must have been understood by the parties) that contested applications would be scheduled for hearing and determination at a later time. In the circumstances, it is inappropriate to make any order for costs in relation to the preparation for and attendance by Darrer at the CMC, other than to reserve those costs.
Darrer did not oppose the plaintiff’s application for leave to file and serve a fifth amended statement of claim. That being so, there is no basis for any order for costs in favour of Darrer in relation to the plaintiff’s application for leave. Darrer also sought costs thrown away by reason of the amendment. I do not propose to allow Darrer its costs thrown away and its costs “of and occasioned by the amendment”. Darrer will be adequately compensated, in my view, by the operation of r 63.17(2). That rule should be given scope to operate uniformly in respect of all defendants insofar as they may have an entitlement to claim such costs.
ORDERS
(1)The plaintiff pay the costs of the first and fourth defendants of and incidental to the plaintiff’s application for leave to amend its statement of claim, which costs are, for the purpose of this order:
(a)their costs incurred in the preparation of their written submissions described in sub-paragraphs 16(1) and 16(2) above; together with,
(b)their costs of each of the following days – 29 July 2009; 18 August 2009; and 24 August 2009,
all such costs to be taxed on a party/party basis in default of agreement.
(2)The applications by the first, fourth and fifth defendants for their costs are otherwise dismissed without prejudice to any right they might have to costs pursuant to r 63.17(2) of the Rules of Court.
---
0
0
0