Clone Pty Ltd v Players Pty Ltd (No 3) - [2020] SASC 29

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
CLONE PTY LTD v PLAYERS PTY LTD & ORS (No 3)
[2020] SASC 29
Reasons for Ruling of Auxiliary Judge Norman a Master of the Supreme Court
20 February 2020
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - TAXATION AND OTHER FORMS OF ASSESSMENT - PRINCIPLES OF TAXATION OR ASSESSMENT
Costs of a discontinued application - discontinuance of application for production of files relating to an adjudication - rule 107(4) provision that unless parties agree or court orders to the contrary a party against whom a matter is discontinued is entitled to costs arising from the claim up to the time of receiving notice of the discontinuance - proper approach to the exercise of that discretion is that as a general rule the successful party is entitled to costs but in an appropriate case a court will make an order even where there has been no hearing on the merits if it is able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs - finding that plaintiff had acted unreasonably in informing defendants that it was seeking to obtain an electronic file to see if it could assist in substantiating remaining items in itemised schedule of costs for adjudication, but having been advised subsequently that it was not seeking to rely on the file, in not informing the defendant of this until after the application had been issued - no order as to costs of the application.
Re the Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622, applied.
RG & RT Trott Pty Ltd v A & G Engineering Pty Ltd [2014] SASC 80; Pentroth Pty Ltd v Kirschild Pty Ltd [2006] SASC 356; Samowitz v Wilson [2013] NSWSC 1194; Transfield Services (Australia) Pty Ltd v Gaha [2012] NSWSC 865; Mineralogy Pty Ltd v National Native Title Tribunal [1998] FCA 1700, considered.

CLONE PTY LTD v PLAYERS PTY LTD & ORS (No 3)
[2020] SASC 29

These are applications as to the costs of the defendants’ application dated 4 December 2019 (FDN 258), which had sought an order for the production of the electronic file of Grope Hamilton, the former solicitors for the plaintiff.
That application had been listed for argument before me on 30 January 2020 but in a letter dated 23 January 2020 the defendants’ solicitors advised the plaintiff’s solicitors that it was no longer pursued.
At the hearing on 30 January when Mr Ericson of counsel appeared for the plaintiff and Mr Whitington with Mr Cogan of counsel appeared for the defendants, Mr Whitington sought that there be no order as to the costs of the application, or alternatively that they be costs in the adjudication, whereas Mr Ericson sought an order that the plaintiff have its costs of the application.
I heard submissions and reserved my decision.
Background
The plaintiff’s costs of the trial…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] SASC 29
Decision Date: 20 February 2020

CaseChat Overview and Summary

The matter before the court involved Clone Pty Ltd as the plaintiff and Players Pty Ltd as the defendants. The dispute centred on the costs associated with a discontinued application by the defendants, seeking the production of files relating to an adjudication. The court was tasked with determining the appropriate costs, if any, to be awarded under rule 107(4) of the relevant procedural rules, which provides that unless the parties agree or the court orders otherwise, a party against whom a matter is discontinued is entitled to costs arising from the claim up to the time of receiving notice of the discontinuance.

The key legal issue was the application of the discretion under rule 107(4) to determine whether the defendants should be awarded costs of the discontinued application. The court considered whether the plaintiff had acted unreasonably in informing the defendants that it was seeking to obtain an electronic file to assist in substantiating remaining items in the itemised schedule of costs for adjudication, but subsequently not relying on the file without informing the defendants until after the application had been issued. The court had to weigh this against the principle that as a general rule, a successful party is entitled to costs, but in an appropriate case, a court will make an order even where there has been no hearing on the merits if it is able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs.

The court concluded that the plaintiff had acted unreasonably in not informing the defendants that they were no longer relying on the electronic file. The court found that the plaintiff's conduct was unreasonable because it had not communicated the change in reliance on the electronic file until after the application had been issued. Consequently, the court exercised its discretion to make no order as to the costs of the defendants’ application, reflecting the plaintiff's unreasonable conduct.

The court's final order was that there be no order as to the costs of the defendants' application (FDN 258). The court's reasoning was based on the plaintiff's unreasonable conduct in not updating the defendants about the change in their reliance on the electronic file, despite having the opportunity to do so before the application was issued.

Orders

Orders of the court

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Background

Background to the litigation

I heard submissions and reserved my decision.Background The plaintiff’s costs of the trial in these proceedings are being adjudicated. This process has extended over many months and is continuing. Mr Ericson is appearing for the plaintiff and Mr Cogan for the defendants.Orders of 11 November 2019 At a hearing on 11 November 2019 orders were made that any application by the defendants or other processes, together with supporting affidavits in relation to inspection of records, were to be filed and served by 2 December 2019. It was further ordered that any responding documents, affidavits etc to be relied upon by the plaintiff were to be filed and served by 23 December 2019. Dates for written submissions by the parties were fixed and the matter was adjourned for argument on 30 January 2020 at 10.00am.Application of the defendants dated 4 December 2019 On 4 December 2019 the defendants issued and served an application (FDN 258) seeking an order that the plaintiff produce for inspection all parts of the electronic file of Grope Hamilton, former solicitors for the plaintiff, which related to disputed items from 5035 and following appearing in the plaintiff’s itemised schedule of costs for adjudication dated 11 March 2008 (FDN 146) including electronic records from which a bundle of hard copy documents had been extracted. A further order was sought that the Grope Hamilton electronic records be made available to the defendants’ solicitors for inspection in electronic format in such a manner that the content of, and the metadata associated with, each record or document was accessible. The application was based on rr 131, 271(3), 274(2), 274(4)(a) and 274(4)(b). First affidavit of Mr Dart (FDN 259) In an affidavit in support of the application sworn by Mr Jack Dart, solicitor for the defendants, on 4 December 2019, he referred to the orders made on 11 November 2019 and exhibited various email communications between the parties during the period 17 October 2019 to 6 November 2019. He testified that pursuant to those communications the defendants’ solicitors had sought access to and inspection of the electronic records of the Grope Hamilton electronic file referred to in correspondence from the plaintiff’s current solicitors, Finlaysons. Mr Dart also referred to and exhibited a letter received from Finlaysons dated 9 October 2019 which stated, inter alia, that they were currently seeking to obtain Grope Hamilton’s electronic file. The stated reason for obtaining this electronic file was to see if it could assist in substantiating any of the remaining items in the plaintiff’s itemised schedule of costs for adjudication filed on 11 March 2008. He testified that on 4 November 2019 he had received an email from Finlaysons confirming that that firm had received a bundle of hard copy documents from Grope Hamilton which had been sourced from the latter’s electronic records but that there were some documents missing, and that when documents were located they would be made available for inspection.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

For all of these reasons, I have come to the view that pursuant to r 107(4) it is inappropriate to award costs in favour of the plaintiff incurred by it in consequence of the application, notwithstanding that it was ultimately not pursued. In my view, the appropriate order is that there be no order as to the costs of and incidental to that application. Conclusion In these circumstances, I remind myself of the test as to such a matter as set out by the High Court in Re the Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin. As a general rule, a successful party is entitled to costs, but in an appropriate case a court will make an order even where there has been no hearing on the merits, if it is able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action - in which case it will usually mean that the court will make no order as to the cost of the proceedings. What is significant here, in my view, is that Finlaysons wrote to the defendants’ solicitors on 9 October 2019 stating that they were currently seeking to obtain Grope Hamilton’s electronic file, for the reason to see if it could assist in substantiating any of the remaining items in the plaintiff’s itemised schedule of costs for adjudication. Subsequently, Finlaysons was advised on 19 November 2019 that the plaintiff was not relying upon Grope Hamilton’s electronic file in the costs application. Although this notification was received two weeks before the defendants’ solicitors filed their application, no attempt had been made by this date to advise them of Grope Hamilton’s position in this regard. It was only after the defendants received the letter from Grope Hamilton of 16 December 2019, that they decided to no longer pursue their application. They explained why this was the case in their letter of response dated 23 January 2020. In my view, the court can conclude in these circumstances that the plaintiff acted so unreasonably that the court should make no order as to the costs of the application (FDN 258) even though it was not ultimately pursued.Order1.I order that there be no order as to the costs of the defendants’ application (FDN 258).

Ratio Decidendi

Legal Principle Established

The proper approach to the exercise of the discretion as to costs on a discontinuance is that as a general rule the successful party is entitled to costs, but in an appropriate case a court will make an order even where there has been no hearing on the merits, if the court is able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action, and if it appears that both parties have acted reasonably in commencing and defending the litigation and their conduct continued to be reasonable until it was settled or became futile, the proper exercise of the discretion will usually mean that the court will make no order as to the cost of the proceedings: Re the Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; per McHugh J; Transfield Services (Australia) Pty Ltd v Gaha [2012] NSWSC 865; Mineralogy Pty Ltd v National Native Title Tribunal [1998] FCA 1700 and other cases.Consideration Delay The plaintiff has submitted that the defendants have delayed the matter by the issue of their application. I do not accept this submission. My observation during the adjudication is that on many occasions its progress has been delayed by reason of the plaintiff having to go back to hunt up records to justify the items claimed. The defendants’ application for the production of electronic records, although not ultimately pursued, was, they have submitted, issued to render this process more efficient and to assist the court as to whether individual items could be substantiated or rejected, and thereby minimise the time spent on the adjudication. Ultimately, the plaintiff has chosen to rely on the paper record and not the electronic record, and this might or might not have ramifications. That will remain to be seen.What costs order is appropriate? In order to determine whether the defendants are entitled to an order that there be no costs of their application, or alternatively, as the plaintiff seeks, it be awarded its costs, it is necessary to consider the background to the application and the circumstances of its withdrawal. On 9 October 2019 the plaintiff’s solicitors wrote to the defendants’ solicitors stating, inter alia, that they were currently seeking to obtain Grope Hamilton’s electronic file and were therefore not in a position to concede any items which might be capable of being substantiated by the electronic file. (my emphasis) In my view, this would suggest to the reader of that letter that the plaintiff was considering the use of the electronic file to substantiate its claims for costs. Further, on 4 November 2019 the plaintiff’s solicitors wrote to the defendants’ solicitors and stated, inter alia, that they had just received a bundle of hard copy documents from Grope Hamilton “which have been sourced from their electronic records”. This, likewise, would suggest to the reader that the electronic records had a part to play in the creation of hard copy documents.