Clone Pty Ltd v Players Pty Ltd - [2019] SASC 47

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
CLONE PTY LTD v PLAYERS PTY LTD & ORS
[2019] SASC 47
Reasons for Ruling of Auxiliary Judge Norman a Master of the Supreme Court
21 March 2019
PROCEDURE - COSTS - TAXATION
"Amendment" - "Costs in the cause" - "Costs thrown away"
Supreme Court Rules 1987 rr 53.11 and 101.02, referred to.
Fashion Warehouse Pty Ltd v Pola [1984] 1 Qd R 251; Laing O'Rourke (BMC) Ltd (formerly Barclay Mowlem Construction Ltd v Dampier Port Authority [2007] WASC 87; Fitzgerald & Anor v CBL Insurance Ltd (No 2) [2015] VSC 176; Brookvista Pty Ltd v Meloni [2009] WASCA 180; Simmons v Love (No 2) [2016] WASC 167; Edelman v Badower [2010] VSC 427; Ashwin v Minara Resources Ltd (No 2) [2010] WASC 330; EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59; Hannover International Ltd v C W Robson; Mine & Quarry Equipment International v C W Robson, G F Robson v C W Robson [2012] QSC 47, considered.

CLONE PTY LTD v PLAYERS PTY LTD & ORS
[2019] SASC 47

This is a ruling on an adjudication of the plaintiff’s costs of the original trial in these proceedings.
Mr Ericson is representing the plaintiff and Mr Cogan is representing the seventh, eighth and tenth defendants.
In item 1723 of the plaintiff’s Bill of Costs it claims $112 for an attendance on 6 July 2004 for perusing proposed changes to the amended statement of claim. The document perused is seven pages long and the relevant provision is Scale Item 5 of the Tenth Schedule to the then Supreme Court Rules.
I heard submissions on 19 March 2019 and reserved my decision.
It is clear that the ruling will affect a number of other times in the bill.
Background
It appears that the amendment, at least in part, was necessitated by facts and events occurring subsequent to the issue of the proceedings. During the hearing before Judge Bowen Pain when leave to amend was sought, Mr McNamara QC, counsel for the plaintiff, told the court (at transcript page 32) that the first defendant had been in breach of its lease of the premises from the plaintiff and that its recent conduct had provoked the plaintiff to scrutinise its degree of compliance with the lease in close detail. He said that inspections that had occurred were “flushing out” those breaches. He indicated that the plaintiff was conscious that this had created a procedural difficulty for the court, but at the same time he said it was essential that it be seized of all issues between the parties.
Mr Tisato, counsel for the defendants, responded that the matters raised by Mr McNamara might result in further amendments to the pleadings. He expressed concern that there were continuing suggestions of amendments during the interlocutory process.
At page 42.25, Judge Bowen Pain dealt with the application.
One; I give leave to the plaintiff to file and serve a further amended statement of claim in the form initialled by me within 24 hours
At page 43.20 he asked Mr McNamara as to the costs of the application:
His Honour: You are going to have to pay the costs of the defendants thrown away as a result of the amendments, are you not?”
Mr McNamara: Yes.
His Honour: Five; the plaintiff to pay the costs of the defendants, thrown away, as a result of the amendments; otherwise costs in the cause.
Defendants’ submissions
Mr Cogan objected to the claim for this item on the basis that when Judge Bowen Pain gave leave to the plaintiff to amend the statement of claim on 6 July 2004, (see transcript of that hearing at pages 42-43), he ordered that it was to pay the costs of the defendants thrown away as a result of the amendments, and otherwise costs in the cause.
Mr Cogan’s contention was that because the defendants were awarded the costs on this issue, it was accordingly inappropriate for the plaintiff itself to recover any costs concerning its amendments.
Plaintiff’s submissions
Mr Ericson submitted that the expression “costs thrown away” should not include the costs of an amendment occasioned by the receipt of new information from the plaintiff subsequent to the issue of the original proceedings. He contended that costs of such an amendment were to be treated differently from costs thrown away.
Amendment Rules
The relevant rules in force at the time of the work undertaken were the Supreme Court Rules 1987.
Rule 101.02(1) provided that subject to the rules, the costs of and incidental to a proceeding should follow the event unless the court otherwise ordered.
Subrule (2) provided:
(2)Unless the Court otherwise orders, the costs of and occasioned by:
(a) an amendment made pursuant to Rule 53 shall be borne to the extent provided by Rule 53.11 by the party making the amendment; …
Rule 53.11 provided:
(1)Unless the Court otherwise orders, and subject to (2) below, the costs of and occasioned by any amendment shall be borne by the party making the same.
(2)Unless the Court otherwise orders, where a party makes an amendment which is solely consequent upon, and necessitated by, an earlier amendment made by another party, the costs of and occasioned by that consequential amendment shall be borne by the party making that first amendment.
(Mr Cogan contended that this “default” rule was applicable so consequently the plaintiff as a party that had made the amendment, could not recover any costs of and incidental to that amendment).
“Costs thrown away”
The expression “costs thrown away” is generally used to refer to the costs of a proceeding that are reasonably incurred and relate to work which has been wasted in the circumstances.
In Fashion Warehouse Pty Ltd v Pola [1984] 1 Qd R 251, Williams J discussed a line of authority relating to the phrase “costs thrown away” and said that “[a]ll that those cases establish is that for costs to be allowed as ‘costs thrown away’, they must have been, in the opinion of the Taxing Officer, reasonably incurred and relate to work done which has become wasted in the circumstances” (254).
In Laing O’Rourke (BMC) Ltd (formerly Barclay Mowlem Construction Ltd) v Dampier Port Authority [2007] WASC 87, Martin CJ said at [39]:
On that view, the work done and the costs incurred by the respondent in preparing the schedule of objections were thrown away by reason of the appellant’s repleading of the statement of claim. Of course, the usual practice is to require any party seeking the indulgence of an amendment to a pleading to pay the costs thrown away by reason of that amendment. However, that practice only extends to costs properly and reasonably incurred. On this approach, the real question in this case becomes whether the costs incurred by the respondent in preparing the schedule of objections were properly and reasonably incurred. If, and to the extent they were properly and reasonably incurred, principle would suggest that they should be recouped by the respondent.
In Fitzgerald & Anor v CBL Insurance Ltd (No 2) [2015] VSC 176 at [27]‑[30] the costs were occasioned by the plaintiff's change of case in withdrawing and substituting the particulars of claim. See also Quick on Costs at [1.220], Brookvista Pty Ltd v Meloni [2009] WASCA 180 at [28] Newnes and Buss JJA agreeing, and Simmons v Love (No 2) [2016] WASC 167 at [62]–[63] Kenneth Martin J.
“Costs thrown away” can be occasioned by reason of an amendment to a pleading by another party. However, if the amendment is occasioned because of a new or intervening fact which could not reasonably be anticipated, for example, because it was made necessary by events after issue of the pleading, it may be appropriate to make the costs of the amendment costs in the cause: Quick on Costs, (looseleaf) at [1.1280].
An order for costs thrown away is regarded as compensation for work already done but wasted as a result of the other party’s error or failure to comply with the procedures set by the rules: Dal Pont Law of Costs 2^nd Ed, at 1.23; Edelman v Badower [2010] VSC 427.
The assessment of costs thrown away may require a consideration of each item of work, which the party seeking these costs claims have been incurred and wasted. It will be a matter for the taxing officer to determine whether or not that party is entitled to the costs of any particular item of work and the amount to be allowed of that work: Ashwin v Minara Resources Ltd (No 2) [2010] WASC 330.
In Fashion Warehouse Pty Ltd v Pola [1984] 1 Qd R 251 at 254 Williams J (as he then was) held that:
It was for the taxing Master in the exercise of his discretion to determine what costs were actually ‘thrown away’. All that those cases establish is that for costs to be allowed as ‘costs thrown away’ they must have been, in the opinion of the taxing officer, reasonably incurred and relate to work done which has become wasted in the circumstances.
In EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59 at 74, the court held that in determining reasonableness the receiving party would be given the benefit of the doubt, and considerable liberality should ordinarily be extended in assessing reasonableness. See also Hannover International Ltd v C W Robson; Mine & Quarry Equipment International v C W Robson; G F Robson v C W Robson [2012] QSC 47.
Consideration
Essentially, Mr Ericson’s submission in support of this client’s claim is that the expression “costs thrown away” is linked to a situation where the beneficiary of the order is reimbursed for costs incurred for work done but wasted as a result of the other party’s error, or its failure to comply with the procedure set by the rules. However in the case of an amendment to a pleading that is not occasioned by waste or error, but rather was necessitated by a change in circumstances or the ascertainment of new facts, he said, the costs incurred should not be classified as “costs thrown away” and should be quarantined from that order. It would not be appropriate, he submitted, for that part of the costs linked to that situation to be the subject of the order.
The learned authors of Quick on Costs and Dal Pont’s Law of Costs provide some support to Mr Ericson’s argument, as they both indicate that an order for costs thrown away is regarded as compensation for work already done but wasted as a result of the other party’s error or failure to comply with the procedures set by the rules, but that if instead an amendment is occasioned because of a new or intervening fact which could not reasonably be anticipated - for example, because it was made necessary by events after issue of the pleading - it may be appropriate to make the costs of the amendment costs in the cause.
However, the difficulty I see in this instance is that Judge Bowen Pain clearly intended in his order that the defendants would recover all costs thrown away as a result of the amendments. He used the expression “as a result of the amendments” on two occasions, and Mr McNamara conceded that this would be the appropriate order.
Judge Bowen Pain did not, in any manner or form, qualify that order so as to quarantine those parts of the costs not resulting from the plaintiff’s error or failure to comply with the procedure set by the rules.
Had the plaintiff wanted to avoid the effect of an order for costs thrown away, it could at the time have sought orders from Judge Bowen Pain quarantining those costs which resulted from change in circumstances or facts since the original pleading, and ruling that those be costs in the cause, or something similar. However, it did not do so.
If I were to make a ruling in favour of the plaintiff on this issue, this would have the effect of partly overturning Judge Bowen Pain’s order, and would be inappropriate.
In the circumstances, by reason of Judge Bowen Pain’s order awarding costs thrown away by reason of the amendments to the defendants, the plaintiff cannot itself recover costs associated with the amendments it made, so I will accordingly rule that the sum of $112, being item 1723 of the plaintiff’s bill, be taxed off.
This ruling may be of some significance in the taxation, as there are other items which might fall within this category.
Ruling
I rule that the sum of $112, being item 1723 of the plaintiff’s bill, be taxed off.