Bulktec Pty Ltd v Geothesis Pty Ltd

[1995] FCA 988

IN THE FEDERAL COURT OF AUSTRALIA  )No. QG 78 of 1992
QUEENSLAND DISTRICT REGISTRY      )
GENERAL DIVISION                 )

BETWEEN:  BULKTEC PTY. LTD. (ACN 010 618 907)

First Applicant

RAMRAY PTY. LTD. (ACN 010 737 461)

Second Applicant

VISMATEC PTY. LTD. (ACN 010 608 081)

Third Applicant

AND:     GEOTHETIS PTY. LTD. (ACN 000 934 332)

First Respondent

SIMVILLE PTY. LTD. (ACN 003 268 817)

Second Respondent

WILLIAM EDGAR MATTHEWS

Third Respondent

TERRENCE NORMAN FERN

Fourth Respondent

DAVID WEBSTER

Fifth Respondent

AND:GEOTHETIS PTY. LTD. (ACN 000 934 332)

First Cross-Claimant

SIMVILLE PTY. LTD. (ACN 003 268 817)

Second Cross-Claimant

AND:BULKTEC PTY. LTD. (ACN 010 618 907)

First Cross-Respondent

RAMRAY PTY. LTD. (ACN 010 737 461)

Second Cross-Respondent

JOHN ALTHAUS

Third Cross-Respondent

VISMATEC PTY. LTD. (ACN 010 608 081)

Fourth Cross-Respondent

MINUTES OF ORDERS

JUDGE MAKING ORDER:          Drummond J
DATE OF ORDER:              7 December, 1995
WHERE MADE:                 Brisbane

THE COURT ORDERS THAT:

1. The respondents are refused leave to tax forthwith their costs thrown away as a result of the applicants' amendments to their statement of claim.

NOTE:     Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA  )    No. QG 78 of 1992
QUEENSLAND DISTRICT REGISTRY      )
GENERAL DIVISION                 )

BETWEEN:  BULKTEC PTY. LTD. (ACN 010 618 907)

First Applicant

RAMRAY PTY. LTD. (ACN 010 737 461)

Second Applicant

VISMATEC PTY. LTD. (ACN 010 608 081)

Third Applicant

AND:     GEOTHETIS PTY. LTD. (ACN 000 934 332)

First Respondent

SIMVILLE PTY. LTD. (ACN 003 268 817)

Second Respondent

WILLIAM EDGAR MATTHEWS

Third Respondent

TERRENCE NORMAN FERN

Fourth Respondent

DAVID WEBSTER

Fifth Respondent

AND:GEOTHETIS PTY. LTD. (ACN 000 934 332)

First Cross-Claimant

SIMVILLE PTY. LTD. (ACN 003 268 817)

Second Cross-Claimant

AND:BULKTEC PTY. LTD. (ACN 010 618 907)

First Cross-Respondent

RAMRAY PTY. LTD. (ACN 010 737 461)

Second Cross-Respondent

JOHN ALTHAUS

Third Cross-Respondent

VISMATEC PTY. LTD. (ACN 010 608 081)

Fourth Cross-Respondent

Coram:    Drummond J
Date:     7 December, 1995
Place:    Brisbane

REASONS FOR JUDGMENT

On 20 May, 1994 the applicants were ordered to pay the respondents' costs thrown away as a result of amendments to the applicants' statement of claim.  The issue now is whether the respondents should have leave, pursuant to O. 62, r. 3 the Federal Court Rules, to tax these costs so that they will then be able to insist on their payment, notwithstanding that the proceeding has not concluded.

The applicants in their statement of claim filed 5 June, 1992 set up a case whereby damages were claimed essentially on two bases:  under Claim A, for failure by the first and second respondents to use reasonable endeavours to float the third applicant; and under Claim B, for various defaults by the third to fifth respondents, in their conduct as directors, of the administration and business of the third applicant, which defaults included the mortgaging of the third applicant's patent.  The quantum of damages in respect of each was not identified in the claims as originally pleaded.  Since then, the applicants have made numerous attempts to finalise their pleading:  particulars have been delivered, as well as
amendments to their statement of claim, for the purpose of quantifying the damages.

The general rule set out in O. 62, r. 3 is that costs ordered to be paid in respect of interlocutory steps are not to be taxed, and so will not be recoverable, until the entire proceedings have been concluded.  There must be some good reason to justify a departure from the ground rule in the particular case in which leave to tax is sought under O. 62, r. 3(3).

Leave to tax could be justified if it were the case that the applicants commenced the action in circumstances in which they made no proper attempt to assess whether they had an arguable case against the respondents and, after putting the respondents to expense in connection with defending those claims, the applicants then abandoned their claims as originally set up.  This is the core of the argument relied on by the respondents; much is made of what is said to be claims for $148,000,000 damages, later altered to claims for very much smaller amounts.

In September 1992, the applicants particularised both the Claim A and the Claim B damages by reference to a figure of $148,000,000.  This figure was said to represent the total "worth" of a number of proposals which the respondents failed to exploit.  I do not read it as counsel for the respondents would read it, viz., as a claim for damages of $148,000,000, but rather as providing only a figure by reference to which a lower figure of damages would at some time in the future be calculated and pleaded.

Subsequent correspondence between the parties resulted in further particulars and an amendment to the statement of claim.  It was during this stage Claim A damages were particularised for the first time:  $4,500,000 was identified as the loss in value of the first and second applicants' shares in the third applicant.  The applicants submit this claim for $4,500,000 is not a new claim, but only the quantification of the claim they have made from the outset as to the diminution in value of their investment in the third applicant due to the defaults they have always complained of.  That seems to me to be correct.

The respondents also refer to the replacement of what they incorrectly call the Claim B "damages" of $148,000,000 with a claim for $542,000.  It is true that the Claim B damages, originally quantified on the same basis as the Claim A damages, has been recast.  But the core complaint in Claim B has always been the wrongful mortgaging of the third applicant's asset.  I do not accept that it was delivery of the Court of Appeal decision in Keddell v Regarose Pty. Ltd. [1995] 1 Qd.R. 172 that provided good reason for quantifying the Claim B damages in the form now pleaded: proper attention by the applicants to formulating this claim at the outset should have resulted in that.
         The way the applicants have gone about formulating their damages under both Claim A and Claim B involves a degree of failure to come to grips, for a time, with just what they might be able to justifiably claim in money terms.  But in view of the fact that their case has always been based on the same alleged defaults and that the respondents, who have an order in their favour for the costs thrown away, do not put forward any claim of example of prejudice suffered that leave to tax the costs now would ameliorate, I do not think it appropriate to punish the applicants by granting the leave sought.

Counsel for the respondents also relied upon the failure by the applicants to provide security for the respondents' future costs of the action, as ordered on 22 February, 1994.  There was some delay in complying with this order:  I note that on 13 July, 1994 the District Registrar advised the parties that a banker's undertaking dated 11 July, 1994 constituted security in a form acceptable to him.    But I do not regard this delay as providing any ground for granting the leave to tax that is sought.

I certify that this and the preceding
four pages are a true copy of the
reasons for judgment herein of the
Honourable Justice Drummond.

Associate:
Date:         7 December, 1995