Candibon Pty Ltd v Minister for Planning (No 3)
[2012] VSC 597
•10 December 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S CI 2006 4637
| CANDIBON PTY LTD (ACN 006 867 358) | Plaintiff |
| v | |
| THE HONOURABLE JUSTIN MADDEN (IN HIS CAPACITY AS MINISTER FOR PLANNING) | |
| THE STATE OF VICTORIA | Defendants |
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JUDGE: | EMERTON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 November 2012 | |
DATE OF JUDGMENT: | 10 December 2012 | |
CASE MAY BE CITED AS: | Candibon Pty Ltd v Minister for Planning (No 3) | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 597 | |
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COSTS – Unsuccessful application for costs against a non-party – Application by the non-party for costs of the application against him – Whether circumstances exist to justify departure from rule that costs should follow the event – Unnecessary, lengthy and misconceived submissions made on behalf of the non-party – Whether the non-party should be deprived of costs as a result – Ritter v Godfrey [1920] 2 KB 47.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Manetta | Belleli King & Associates |
| For the Defendant | Mr M Clarke Mr D Austin | Victorian Government Solicitor |
| For Mr Souhail Mondous (a non-party) | Mr J Manetta | Belleli King & Associates |
| For Cardinia Shire Council (a non-party) | Mr C Cantor (Solicitor) | Maddocks |
HER HONOUR:
Introduction
Mr Sam Mondous seeks his costs of resisting applications for costs made against him as a non-party by the defendants and the Cardinia Shire Council (also as a non-party). The non-party costs applications against Mr Mondous were heard at the same time as applications for costs against Candibon following Candibon’s unsuccessful prosecution of proceedings against the defendants arising from the sale of land owned by it at Pakenham to the then Minister for Planning. The defendants sought their costs of the proceeding on an indemnity or solicitor/client basis against both Candibon and Mr Mondous as the sole director of Candibon. The Council sought its costs of complying with subpoenas and orders for non-party discovery pursuant to the Supreme Court (General Civil Procedure) Rules 2005 (the ‘Rules’).
The costs applications made by the defendants and the Council prompted an application by Mr Mondous for me to disqualify myself from hearing the costs applications on the ground of apprehended bias against him.[1]
[1]Candibon foreshadowed that if the Court were to accede to Mr Mondous’ apprehended bias application, it would submit that I should refrain from hearing not just the non-party costs application against Mr Mondous, but also the costs application as between the parties, due to the close relationship between certain issues.
After a lengthy directions hearing to establish the basis for Mr Mondous’ apprehended bias application and how it should be heard, Mr Mondous’ application was heard over the better part of a day on 3 April 2012 and was dismissed. The applications for costs against both Candibon and Mr Mondous were subsequently heard over five days. As Mr Mondous points out in his submissions, more than half of that time was taken up by his counsel making submissions resisting the non-party costs application against him. Lengthy written submissions, corrigenda and addenda to submissions were filed on his behalf prior to and during the course of the hearing.
In the event, the Court ordered Candibon to pay the defendants’ costs on a party/party basis and to pay the Council’s costs as provided by the Rules. The applications against Mr Mondous were dismissed.
Mr Mondous therefore succeeded in resisting the non-party costs applications made against him. As a result, Mr Mondous submits that he should have his costs of the non-party costs applications, because costs should follow the event.
The settled practice is that the successful party, in the absence of special circumstances, should be awarded its costs.[2] However, for the reasons that follow, I have concluded that the justice of the situation demands that the costs of the applications against Mr Mondous lie where they fall.
[2]Ritter v Godfrey [1920] 2 KB 47.
It is convenient to begin with Mr Mondous’ submission that the Council pay his costs.
The Council
The Council issued a summons against both Candibon and Mr Mondous seeking its costs of complying, as a non-party, with subpoenas and applications for non-party discovery made by Candibon. It had previously made requests to Candibon for payment of these costs and expenses.
The Council would not have made any application to the Court had Candibon simply compensated it for the costs that it incurred complying with Candibon’s requests. The Council provided the discovery and produced the documents requested by Candibon. The Council’s former (acting) CEO, Mr David Roff, provided a witness statement and attended Court to give evidence at the request of Candibon. As the Council submits, it did these things as a disinterested non-party. The Rules provide for a person in the Council’s position to be compensated for their costs.
Candibon should have paid the Council’s costs in accordance with the Rules without further ado. Instead, Candibon delayed and obfuscated and then launched counter attacks against the Council, apparently in order to avoid paying the costs.
When, in the course of the trial, Mr Mondous was cross-examined about Candibon’s failure to pay the Council’s costs and those of the former Minister for Planning,[3] he told the Court that Candibon was a very wealthy company and that it had no difficulty ‘with compliance’.[4] However, in his affidavit filed in response to the present applications,[5] and in stark contrast to what he had told the Court at trial, Mr Mondous let it be known that costs would only be recoverable from Candibon on an ‘insolvency administration’.
[3]The costs of the former Minister for Planning were incurred complying with non-party discovery orders before the former Minister was joined.
[4]Transcript of Proceedings, Candibon Pty Ltd (ACN 006 867 358) v The Honourable Justin Madden (in his capacity as Minister for Planning) and The State of Victoria (Supreme Court of Victoria, S CI 2006 4637, Emerton J, 14 October 2010) 728.
[5]Affidavit of Sam Mondous sworn 16 May 2012.
More generally, Mr Mondous deposed that funds were moved in and out of Candibon at the behest and/or for the benefit of the Mondous and Canzoneri families. Hence, although Candibon ‘had already exhausted its money on the litigation’, if Mr Mondous wished to put Candibon in funds for the purpose of bringing an appeal, that would occur. Likewise, Mr Mondous deposed that had a security for costs application been made in the proceeding, ‘Candibon could have obtained financing for any reasonable security orders from within the Mondous and Canzoneri family groups’. He deposed generally that when Candibon needed money for the litigation, money was deposited in Candibon’s account by or on behalf of the Mondous and Canzoneri families. In the case of the Mondous family, monies were deposited by companies in the Mondous family group of which Mr Mondous was a director.
It is plain, however, that Mr Mondous has no intention of putting Candibon in funds to meet its obligations to the Council or of using one of the companies that he controls to do so.
I have already expressed my disapproval of Mr Mondous ‘about face’, and what I consider to be his misleading evidence to the Court. In the circumstances, I have no intention of ordering the Council to pay Mr Mondous’ costs. I agree with the Council that to order it to pay Mr Mondous’ costs in these circumstances would be ‘perverse’.
In reaching this conclusion, I am conscious that the Council did not need to make an application against Mr Mondous as well as against Candibon, and must be taken to have done so in the knowledge that it would be exposed on costs if it was unsuccessful. However, the Council had to come to Court to obtain an order for its costs against Candibon. It made a concurrent application against Mr Mondous, presumably as a matter of caution to give itself the best chance of recovering its costs, given the difficulties it had already encountered with Candibon. In fact, the Council’s application against Mr Mondous caused little or no additional preparation or Court time, as Mr Mondous had to meet the application made by the State of Victoria in any event.
Mr Mondous’ costs of resisting the Council’s application against him will lie where they fall.
I turn to the application made by the defendants against Mr Mondous.
The Defendants
Again, I consider that Mr Mondous’ conduct in misleading the Court as to Candibon’s ability and/or willingness to meet costs orders and the manner in which he and Mr Canzoneri apparently put Candibon in and out of funds at their discretion in apparent disregard of Candibon’s obligations, significantly weakens his own claims to awards of costs in his favour.
Furthermore, the time taken by Mr Mondous’ counsel to resist the costs applications against him was, in my experience, unprecedented. It was also unnecessary. The arguments made on Mr Mondous’ behalf could have been made succinctly. They were not. Mr Mondous’ submissions on his liability to pay costs as a non-party were richly embroidered around an application based on a fundamentally misconceived allegation of apprehended bias. Whether or not, as Mr Mondous now suggests, both the defendants and the Court had taken a view of the relevant part of the law of which they needed to be disabused, the form of the argument, the amount of written material produced and the time taken by Mr Mondous’ counsel in oral submissions could not, on any view, be justified.
The application made by Mr Mondous alleging apprehended bias lay at the heart of the lengthy and convoluted submissions that were made on his behalf. The basis for the application that I disqualify myself on the grounds of apprehended bias was that a fair minded lay observer would regard my fact finding in the substantive judgment as unreasoned, as comprising mere assertion, as lacking rational or reasoned foundation, as at times plainly wrong and as selective of material going one way. I was therefore invited by counsel for Mr Mondous to go through my own judgment page by page, passage by passage and word by word and asked to find that the fair minded lay observer would regard particular findings of fact as unreasoned, as comprising mere assertion, as lacking rational or reasoned foundation, as plainly wrong and/or as selective of material going one way. As I pointed out at the time, the Court was asked to find, in effect, that its findings were unreasoned, lacking in rational foundation and so on, because unless the Court so found, there would be no basis upon which to infer the existence of the necessary apprehension on the part of the fair minded lay observer.
In my view, the attack on my reasons in fact involved an allegation of actual bias, because counsel for Mr Mondous was at pains to point out that it was not submitted that the Court was incapable of making rational and reasoned findings.
Not surprisingly, after half a day of this exercise, the Court dismissed the application.
However, that was not the end of the matter. Counsel for Mr Mondous submitted that the apprehended bias application was ‘double barrelled’ in that it was directed both to my disqualification and to shaping the manner in which the costs applications would be heard by a different judge. Mr Mondous contended that none of the findings of fact made by the Court in the substantive judgment could be relied on by the Court when determining the non-party costs applications against him. He relied upon the decision of the Court of Appeal in Flinn v Flinn,[6] in which the Court articulated the principle that a non-party is not bound by findings made in the litigation and that those findings may not even be used as evidence of facts found. Based on this principle, Mr Mondous went further to submit that the Court could not rely on the ‘event’ of the trial (that is, the unsuccessful prosecution of the proceeding by Candibon) in considering the application for costs against Mr Mondous as a non-party. Counsel submitted:
You cannot fairly apply any of the findings or therefore the event of the trial against Mr Mondous because the findings, the event, the whole process is tainted by apprehended bias.[7]
[6][1999] 3 VR 712.
[7]Transcript of Cost Proceedings, Candibon Pty Ltd (ACN 006 867 358) v The Honourable Justin Madden (in his capacity as Minister for Planning) and The State of Victoria (Supreme Court of Victoria, S CI 2006 4637, Emerton J, 7 June 2012) 504.
Counsel went on to describe what should happen before any costs orders could be made against Mr Mondous. A submission would be made to a new judge as follows:
You cannot decide this costs application against Mr Mondous on the basis of the findings and event at trial unless you re-try them and confirm those findings because they are a nullity. They are the product of a kind of trial that our system does not recognise, that is a trial before a tribunal that is not apparently impartial.[8]
[8]Ibid 505.
Counsel said that the first step would be to make a submission of that kind. The second step would be to say to the judge that he or she should not exercise his or her discretion to conduct a re-trial. I take the consequence of this to be that the costs applications against the non-party would just fall away.
This submission has a distinct air of unreality about it. Candibon did not appeal the substantive decision on the grounds of apprehended bias. It instigated an appeal - on no less than 122 other grounds - which it subsequently discontinued. The orders and judgment below therefore stand. However, Mr Mondous now comes to the Court in response to an application for costs against him and asks the Court to make orders predicated on the substantive decision being a nullity. This represents a collateral attack on the judgment, in circumstances where it has not been appealed. Mr Mondous, who is the directing mind of Candibon and the person who made the decision that Candibon should not pursue an appeal,[9] nonetheless now asks the Court to treat the judgment of the Court as a nullity and to re-try the proceeding.
[9]On his account, in conjunction with Sebastian Canzoneri.
These submissions were made at length after the Court had ruled on the apprehended bias application, ostensibly in order to preserve ‘points of appeal’. They occupied a great deal of the Court’s time.
In my view, it is fanciful to suggest that the findings of the Court in the substantive proceeding could not be relied upon in an application for costs against Mr Mondous. In Flinn v Flinn, after discussing authorities on the use of findings against non-parties, the Court of Appeal said:
If this was an application to the trial judge for an order for costs against [the non-party], it would be well open to him to conclude (and we would ourselves conclude) that [the non-party’s] connection with the action was so close that he would not suffer any injustice if the judge treated himself as at liberty to use for the purposes of the costs application such of the evidence given at trial as could properly be said to be relevant to the application.[10]
[10]Flinn v Flinn [1999] 3 VR 712, 757.
Mr Mondous was the chief protagonist in the events that gave rise to the proceeding, he was the principal witness in the proceeding, he was the sole director and directing mind of Candibon at all relevant times, he made the decision to commence the proceedings and to prosecute them, and he gave instructions to Candibon’s lawyers throughout the lengthy lead-up to the hearing of the proceeding and at trial. No-one could be more intimately involved in the proceeding and the events with which the proceeding was concerned than Mr Mondous. Indeed, this was the very basis upon which the non-party costs application was made against him. To suggest, as Mr Mondous’ counsel did during the hearing of the apprehended bias application, that it would be necessary to re-run the trial with Mr Mondous as a party in order to establish the facts upon which costs orders could be made against him is, frankly, bizarre. However, it is indicative of the approach that Mr Mondous and his counsel have taken throughout the course of the proceeding.
It was open to Mr Mondous to seek to have another judge hear the costs application against him, providing that he had proper grounds to do so. It was also open to him to submit that that some of the findings and evidence below could not be relied upon to order costs against him (although, given Mr Mondous’ intimate connection to the proceeding, such an application would have been bound to fail). However, the line of argument that commenced with the proposition that there was an apprehension of bias against Mr Mondous because of alleged unreasonableness or irrationality in the Court’s fact finding, and concluded with the proposition that the Court must treat the proceeding as a nullity and re-try it in order to make orders against Mr Mondous, was both misconceived and unhelpful. It ought not to have been advanced.
The general principle in civil litigation is ‘prima facie the costs of the proceedings should follow the verdicts on the issues’.[11] This does not mean that costs ought to follow the event ‘universally and inflexibly’.[12] In appropriate cases, it is plainly open to a court to award costs in a manner other than on the basis that the party who succeeds at trial be given the whole of their costs.[13]
[11] Keith Bray Pty Ltd v Hamburg-Amerikanische [1970] 3 NSWR 226, 227.
[12] Lollis v Loulatzis (No 2) [2008] VSC 35, [26].
[13]See, eg, Ritter v Godfrey [1920] 2 KB 47, 60.
In Ritter v Godfrey,[14] Atkin LJ considered circumstances where it may be appropriate to deny a wholly successful defendant their costs. His Honour noted that where a defendant ‘(1) brought about the litigation, or (2) has done something connected with the institution or the conduct of the suit calculated to occasion unnecessary litigation and expense, or (3) has done some wrongful act in the course of the transaction of which the plaintiff complains’, it would be open to the court to depart from the principle that a successful party ought be awarded their costs.[15]
[14][1920] 2 KB 47.
[15]Ibid 60.
The hearing of the costs applications against Mr Mondous and Candibon took almost seven days. More than half of this time was taken up with the non-party costs application (including the application based on apprehended bias) against Mr Mondous and the bulk of that time was taken up by Mr Mondous’ counsel.
Counsel for Mr Mondous submitted that it was necessary to take so long in argument because the stakes were high (the costs orders would result in payments significantly larger than amounts of damages in many commercial cases in this court) and the issues were very complex. He also submitted that there was no authority to support the proposition that a successful party could be denied its costs on the ground that its case had taken too long to argue.
However, costs can and have be denied a successful party on the grounds that the party unnecessarily protracted the proceeding. As Kaye J noted in Lollis v Loulatzis (No 2),[16] there is a respectable body of authority that supports the proposition that where a party has by its conduct caused a case to take longer than it ought to have, it is appropriate that that party, upon succeeding, should not be awarded the whole of its costs at trial.[17] Further support for this proposition can be found in Capolingua v Phylum Pty Ltd[18] where Ipp J said that ‘where … the conduct of the defendant has resulted in an unnecessarily protracted trial, the defendant may be deprived of an appropriate part of its costs.’[19]
[16][2008] VSC 35 (‘Lollis’).
[17]Ibid [27].
[18](1991) 5 WAR 137.
[19]Ibid 141.
I agree with the concern expressed by Kaye J in Lollis about the trend for cases to take an unduly long period of time to complete.[20] This concern is as relevant to the hearing of costs applications as it is to the conduct of trials. As his Honour observed:
As the consequential burden of costs to all parties is increasing exponentially, it behoves trial judges to be conscious of the principle that a losing litigant ought not to be required to bear that portion of the successful party’s costs which is attributable to conduct of the successful party which has unduly protracted the length of the trial.’[21]
[20]Lollis v Loulatzis (No 2) [2008] VSC 35, [29].
[21]Ibid.
The hearing of this costs application was unduly protracted. That was entirely attributable to the way in which Mr Mondous’ counsel approached the issues and the convoluted way in which he then presented them. Mr Mondous had one or two good points to make as to why he should not be personally saddled with the costs of the proceeding. Those points were well made, but the Court’s time and the time of the other parties was unnecessarily consumed by arguments that could have little bearing on the outcome of the application, for the reasons that I have explained.
In my view, more than half of the time spent on the non-party costs application by Mr Mondous’ counsel was unnecessary. Mr Mondous would be entitled (at most) to half of his costs. The State of Victoria should have its costs of the time and effort wasted on unnecessary argument. This means that Mr Mondous’ costs of the application against him should simply lie where they fall.
There will be no order for costs in respect of the applications against Mr Mondous.
Related considerations
I have concluded that much of the argument made on Mr Mondous’ behalf was wholly without merit, misconceived and that it ought not to have been made.
In such circumstances, the question arises as to whether the Court should exercise its exceptional power to make an order against the legal practitioners involved in conceiving the argument.
Rule 63.23 of the Rules provides for the Court to disallow the costs between a barrister or solicitor and his or her client, where costs have been wasted by ‘a failure to act with reasonable competence and expedition’.
The Court has power to refer the matter to a Costs Judge for inquiry and report in these circumstances.[22] I do not propose to take such any such step at this stage. I will leave it to Mr Mondous to consider his position and to make an application to the Court if he so chooses.
Orders
[22]Supreme Court (General Civil Procedure) Rules 2005 r 63.23(4).
The Defendants
I have already made orders that Candibon pay the defendants’ costs of the proceeding.
I will further order that there will be no order as to costs in respect of the costs of the defendants’ summons dated 5 March 2012 directed to Mr Mondous.
I do not propose to vary the order I have already made in respect of the defendants’ costs. For the avoidance of doubt, the award of costs in the proceeding includes the costs of the costs application against Candibon.
The Council
I have made orders that the Council have its costs of the various applications made by Candibon to which it responded as a non-party.
I will now order that Candibon pay the Council’s costs of its summons dated 16 March 2012 on a solicitor and client basis.
For the avoidance of doubt, I do not propose to exclude the costs of that part of the summons directed to Mr Mondous.
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