Collie v Merlaw Nominees (in liq)

IN THE SUPREME COURT OF VICTORIA	Not Restricted
AT MELBOURNE COMMERCIAL AND EQUITY DIVISION

No. 5565 of 2000

GEOFFREY MALCOLM COLLIE	Plaintiff
v
MERLAW NOMINEES PTY LTD (IN LIQUIDATION)	Defendants
AND DAMIEN JOHN NOLAN

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JUDGE:	NETTLE J
WHERE HELD:	Melbourne
DATE OF HEARING:	23 October 2003
DATE OF JUDGMENT:	23 October 2003
CASE MAY BE CITED AS:	Collie v Merlaw Nominees Pty Ltd & Anor (No. 1)
MEDIUM NEUTRAL CITATION:	[2003] VSC 439

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PRACTICE AND PROCEDURE – Costs – Indemnity costs – Whether tardiness in prosecution of proceeding should be visited with an indemnity costs order.

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A.D. Murphy	Howie & Maher
For the Applicant	Mr J. Tsalanidis	Peter Lustig
For the Secondnamed	Mr C. Harrison	Voitin Walker Davis
Defendant HIS HONOUR:

On 19 March 2002, Pagone J made orders that out of the moneys paid into the Court's Common Fund No. 1 on 17 December 2001 the plaintiff be paid the amount of $198,623.35, and the second defendant's summons filed 25 February 2002 be dismissed.
By summons dated 9 May 2002, Dean Royston McVeigh (as trustee in bankruptcy of Jeffrey Willetts, solicitor) sought orders that all the moneys payable to the plaintiff from the Court's Common Fund No. 1 (being the sum of $198,623.35 the subject of the order made by Pagone J less an amount of approximately $93,000 payable to Margaret Mary Nolan pursuant to orders made by Master Wheeler on or about 4 and 23 April 2002) be paid to him; or alternatively, that the net sum be retained in the Court's Common Fund No. 1 until the hearing and determination of proceedings then yet still to be instituted by Mr McVeigh for recovery of the net sum and any other moneys due to him.
Affidavits filed in support of the summons made reference to a claim based upon costs said to be due by the plaintiff to Willetts as solicitor for work done in connection with the prosecution of the proceeding on behalf of the plaintiff, and asserted a right of recourse by way of lien to the fund for satisfaction of that liability.
Upon the matter coming on for hearing before Osborn J on 17 June 2002, his Honour ordered that:
"Upon Mr McVeigh, by his counsel, undertaking to abide by any order that the Court may subsequently make as to damages, and upon the plaintiff, by his counsel, undertaking to preserve all files and records of Jeffrey Willetts and Jeffrey Willetts & Associates Pty, relating to the proceeding and to an earlier proceeding No.6265 of 1991 pending the determination of Mr McVeigh's claim for payment of legal fees and costs, the plaintiff be restrained until further order from obtaining, receiving or having paid to him the moneys paid into the Court's Common Fund No. 1 referred to in the Order of Pagone, J. made on 20 March 2002".
His Honour also directed that the further hearing of the summons be adjourned to the Causes List and be fixed for hearing with such priority as the Listing Master considered to be appropriate.
For reasons which need not be explored, the matter has moved particularly slowly. That has led to an application made by the plaintiff by summons dated 14 November 2002 that Mr McVeigh's summons of 9 May 2002 be dismissed. Those two summonses now come on for hearing before me.
Mr Tsalanidis (who appears for Mr McVeigh) has explained that after queries were raised as to Mr McVeigh's standing to pursue the claim for costs, Jeffrey Willetts Pty, which had been struck off the register, was restored to the register and placed in liquidation, and that Mr McVeigh was appointed liquidator; and thus, that the claim for costs is now pursued by Mr McVeigh on behalf of Mr Willetts and on behalf of the company, according to whichever be the true creditor.
Mr Tsalanidis has also explained that the proceeding is not yet at an end, because an application for special leave to appeal to the High Court from the decision of the Court of Appeal is yet to be heard; and thus, it is still possible that the plaintiff may not succeed in this proceeding.
The summons of 9 May 2002 is somewhat unusual, in that it seeks what appears to be both final and interlocutory relief in a proceeding to which Mr McVeigh is not party. It is said that that procedure was adopted as a convenient means of obtaining relatively urgent interim relief pending the institution of fresh proceedings by Mr McVeigh for the recovery of the legal costs. But I doubt that can be right. Moreover, even if it were appropriate to adopt that course, which I suppose is something that need not be decided, the passage of time and the failure of Mr McVeigh to institute any proceedings within that time means that we have now arrived at the stage where, in my opinion, the summons is no longer an appropriate basis upon which to found the sorts of orders that are sought.
Mr Tsalanidis says that Mr McVeigh is ready to institute a fresh proceeding within the space of seven days and that I should (or may) treat his application for interim relief to maintain the status quo as one, in effect, made ore tenus in anticipation of the institution of that proceeding.
Mr Murphy (who appears for the plaintiff) responds that the orders which are sought are unnecessary and unwarranted for the reason that it was not until Mr McVeigh was appointed as liquidator of Willetts & Associates Pty that Mr McVeigh had any standing to bring the proceedings; and that it has always been made plain that, if Willetts & Associates Pty were restored to the register and made the claimant, the moneys would be preserved pending the outcome of the claim. As matters have now developed, the plaintiff is prepared to undertake or to continue the undertakings proffered to Osborn J on the 17 June 2002 upon the condition of Mr McVeigh instituting the fresh proceedings to which Mr Tsalanidis has referred.
In the circumstances, it seems to me that there is no utility, if there ever were, in the summons of 9 May 2002 and that, accordingly, it should be dismissed.
The frustration which the plaintiff appears to have experienced over the lack of speed of this proceeding is understandable. But I am bound to say that I think that the plaintiff's summons was misconceived. Thus it too should be dismissed. It was not necessary to file a summons in order to apply to set aside or have dismissed the McVeigh summons; nor was it appropriate to do so.
In the way in which the matter has developed, and in light of the undertakings which have been offered by the plaintiff, the only question of substance which calls for decision is that of costs. The plaintiff submits that it should have its costs of the summons of 9 May 2002 because it sought but was not offered the undertakings to preserve the fund; and thus, that it was necessary to apply, as it did, for the orders that were made by Osborn J.
The defendant replies that it is patent from the materials which are adduced in support of Mr McVeigh's claim that the only party with a claim for costs (if there be one) is Jeffrey Willetts & Associates Pty, and that the plaintiff has always been ready to undertake in the terms that it now offers, if Willetts & Associates Pty was restored to the register and instituted a claim for the recovery of the costs which it is said to seek.
In the defendant's contention, the fault is all with Mr McVeigh for having taken 18 months to get Willetts & Associates Pty restored to the register and thus the claim on a footing on which it should have been placed from the outset. In those circumstances, it is submitted on behalf of the defendant, that the defendant should not only have its costs of the summons but that the costs should be paid on an indemnity basis.
There is some substance in what is said on behalf of Mr McVeigh. He does not concede that the proper claimant is necessarily Willetts & Associates Pty. He maintains that it may well be established at trial that it is Mr Willetts, and that his actions in having Willetts & Associates Pty restored to the register and made a claimant are taken out of an abundance of caution.
On the other hand, as I have observed already, I consider that the summons of 9 May 2002 was ill-conceived; and whilst that might not be enough in itself to result in an order for costs, I cannot escape the conclusion that Mr McVeigh has moved with remarkable dilatoriness in failing to do anything about the claim which he seeks to assert.
I am, however, not persuaded that this is one of those exceptional cases referred to by Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd[1], that warrants an order for indemnity costs. I see no “high-handedness” or anything else of the nature to which Tadgell J referred in Australian Guarantee Corporation Ltd v De Jager[2].
[1] (1988) 81 ALR 39.
[2] [1984] VR 483.
It follows, in my opinion, that Mr McVeigh should pay the plaintiff's costs of the summons of 9 May 2002, but on the basis that they be taxed as between party and party.
Ordinarily, perhaps, there would be an order that the plaintiff pay the defendant's costs of the plaintiff's summons, for the reason that it is to be dismissed. But that summons has not in any way added to Mr McVeigh's costs and, as I have attempted to explain already, I can understand why it was thought appropriate to use it as a means to bring the matter to a head. In the result, I think that the proper order is that there be no order as to costs upon that summons.
Subject to anything further which counsel may seek to say as to the form of orders, the orders that I propose to make are as follows:

(1) that upon Dean Royston McVeigh, by his counsel, undertaking to abide any
order that the Court may make as to damages;
that upon Dean Royston McVeigh, by his counsel, undertaking to institute, within seven days of this day a proceeding for the recovery of the costs which are said to be due by the plaintiff to Jeffrey Willetts and/or Jeffrey Willetts & Associates Pty in respect of work done by Mr Willetts or that company for the plaintiff, in proceeding No. 5565 of 2000;
upon Mr McVeigh, by his counsel, undertaking to abide by any order that the Court may make as to damages in case the Court shall hereafter be of the opinion that the plaintiff has sustained any by reason of this order which Mr McVeigh ought pay;
upon the plaintiff, by his counsel, undertaking that he will preserve all files and records of Jeffrey Willetts and Jeffrey Willetts & Associates Pty relating to this proceeding, and proceeding No. 6265 of 1991, currently in the possession of the plaintiff or his solicitors, and to hold the said files pending the determination of the proceeding to be instituted by Mr McVeigh for the payment of legal fees and costs; and,
upon the plaintiff, by his counsel, undertaking that he will not and will not seek to obtain, receive or have paid to him any of the moneys paid into the Court’s Common Fund No.1 referred to in the Order of the Pagone J made on 20 March 2002 without the written consent of Mr McVeigh or until further order.

(2)

Mr McVeigh’s summons of 9 May 2002 is dismissed, and Mr McVeigh shall pay the plaintiff’s costs of that summons, to be taxed as between party and party.
(3) The plaintiff’s summons of 14 November 2002 be dismissed with no order as to
costs.

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(2)	Mr McVeigh’s summons of 9 May 2002 is dismissed, and Mr McVeigh shall pay the plaintiff’s costs of that summons, to be taxed as between party and party.
(3)	The plaintiff’s summons of 14 November 2002 be dismissed with no order as to costs.

[2003] VSC 439

23 October 2003