Crowe v Stevedoring Employees Retirement Fund (No 2)
[2003] VSC 334
•9 September 2003
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 8648 of 2002
| GRAHAM CROWE | Plaintiff |
| v | |
| STEVEDORING EMPLOYEES RETIREMENT FUND PTY LTD (ACN 058 013 773) (as Trustee of the Stevedoring Employees Retirement Fund) | Defendant |
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JUDGE: | Balmford J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 3 September 2003 | |
DATE OF JUDGMENT: | 9 September 2003 | |
CASE MAY BE CITED AS: | Crowe v Stevedoring Employees Retirement Fund (No 2) | |
MEDIUM NEUTRAL CITATION: | [2003] VSC 334 | |
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COSTS – whether plaintiff’s costs should be paid on a solicitor and client basis rather than a party and party basis – the matters relied upon did not justify the making of such an order.
Corporations Act 2001 – ss.1017C(5), 1311, Schedule 3
Corporations Regulations – reg. 7.9.45
Supreme Court (General Civil Procedure) Rules 1996 – Rule 63.30
Bass Coast Shire Council v King [1997] 2 VR 5
Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Botany Municipal Council v Secretary, Department of the Arts, Sport, Environment, Tourism and Territories (1992) 34 FCR 412
J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (No 2) (1993) 46 IR 301
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr JDS Barber | Clements Hutchins & Co |
| For the Defendant | Dr I Hardingham | Blake Dawson Waldron |
HER HONOUR:
Judgment was delivered on 3 September 2003 in relation to the substantive issues in this matter. Submissions as to costs were invited from counsel, and after hearing their submissions, I reserved my decision on that issue. These reasons should be read with the reasons for judgment delivered on that occasion (“the earlier reasons”). It is common ground that orders should be made that the defendant pay the plaintiff’s costs of the proceeding, including reserved costs, and that the plaintiff pay the defendant’s costs of and occasioned by the amendment of the originating motion effected by the filing of the further amended originating motion on 21 August 2003.
Mr Barber, for the plaintiff, submitted that his client’s costs should be ordered to be paid on a solicitor and client rather than a party and party basis.
He referred to section 1017C(5) of the Corporations Act 2001 (“the Corporations Act”) and Regulation 7.9.45 of the Corporations Regulations. It is common ground that the combined effect of those provisions, read with definitions appearing elsewhere in the legislation, is that the trustee of a superannuation fund must provide to certain defined categories of persons, of whom the plaintiff is one, audited accounts of the fund, and (with some qualifications which it has not been suggested are relevant) the most recent actuarial report. Failure to comply with subsection 1017C(5) is an offence, and the effect of section 1311 and Schedule 3 of the Corporations Act is that the maximum penalties are 100 penalty units or two years imprisonment or both.
In the letter of 21 June 2002 referred to in paragraph [11] of the earlier reasons, the solicitors for the plaintiff requested inter alia copies of the audited accounts of the fund for the years ending 30 June 2000 and 2001 and copies of the actuarial reports on the fund for the years ending 30 June 2000 and 2001. No reply was received to that letter or to a reminder letter sent on 23 July 2002. The substantive proceeding was initiated by originating motion on 17 December 2002.
By facsimile transmission dated 20 March 2003 the solicitors for the defendant wrote to the solicitors for the plaintiff, referring to the orders sought in the proceeding, and continuing:
The Trustee considers that your client is entitled to the following documents and we enclose copies for your client’s consideration:
1.The Fund’s financial statements as at 30 June 2000;
2.The Fund’s financial statements as at 30 June 2001; and
3.The actuarial report prepared by Towers Perrin as at 1 July 2001 dated 22 February 2002.
Mr Barber submitted that, in view of the provisions of the legislation, his client should not have had to initiate proceedings in order to obtain those documents. On that basis he sought costs on a solicitor and client basis for the period up to and including 20 March 2003.
As to the balance of the relevant period, he submitted that by not producing the documents on request, the trustee had completely disregarded its obligations to the plaintiff and had adopted a position in defiance of settled law.
It is well established that there is a power to award costs on other than a party and party basis, which power is wholly in the discretion of the Court, but that the discretion must be exercised judicially and not unreasonably. Winneke P said in Bass Coast Shire Council v King[1]:
Although, as a general rule, the court will order costs to be taxed and paid on a party and party basis (see r. 63.31 of the Rules of Civil Procedure) it none the less is invested with the discretion to order costs to be taxed and paid on a solicitor and client basis (see r. 63.32 of the Rules). That discretion is not limited to the particular circumstances described in the rule: see per Batt J. Regal Life Insurance Ltd. v. Pacific Financial Resources Pty. Ltd. (unreported, 16 November 1994). The discretion to award costs on a solicitor and client basis is, thus, an unlimited one although it must be exercised judicially and not unreasonably. The circumstances in which a court might be moved to award costs on the solicitor and client scale should be described as “special” if only to set them apart from the usual basis upon which costs are awarded: see per Callaway J.A. Spencer v. Dowling ([1997] 2 VR 127]).
[1][1997] 2 VR 5 at 29.
Rule 63.30 of the Supreme Court (General Civil Procedure) Rules 1996 provides:
63.30Solicitor and client basis
On a taxation on a solicitor and client basis all costs reasonably incurred and of reasonable amount shall be allowed.
In Colgate Palmolive Co v Cussons Pty Ltd[2] Sheppard J considered at some length the authorities as to the principles relating to the award of indemnity costs. At 231 His Honour set out the following passage from the judgment of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [3]:
I believe that it is appropriate to consider awarding ‘solicitor and client’ or ‘indemnity’ costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion.
[2](1993) 46 FCR 225 at 229 ff
[3](1988) 81 ALR 397 at 400-1.
However, at 231 Sheppard J cited the comment of Gummow J in Botany Municipal Council v Secretary, Department of the Arts, Sport, Environment, Tourism and Territories [4], after referring to what Woodward J had said in Fountain Selected Meats. His Honour expressed the view that the discretion was not so circumscribed that an order might be made only against an ethically or morally delinquent party. Further, he cited the similar view of French J expressed in J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 at 303 in the following terms:
Although there is said to be a presumption in such cases that the action was commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law, it is not a necessary condition of the power to award such costs that a collateral purpose or some species of fraud be established. It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case.
[4](1992) 34 FCR 412 at 415.
Sheppard J continued at 233:
Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo [Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court of Australia, decided on 3 May 1991)], “The categories in which the discretion may be exercised are not closed”. Davies J expressed (at p 6) similar views in Ragata (supra).
His Honour went on to enumerate a number of circumstances which have been thought to warrant the exercise of the discretion, including:
qthe making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud;
qevidence of particular misconduct that causes loss of time to the Court and to other parties;
qthe fact that the proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law;
qthe making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; and
qan imprudent refusal of an offer to compromise.
I have considered the matter, in the light of the authorities to which I have referred, and assuming, without deciding, that I accept the submissions of Mr Barber as to the conduct of the defendant. On that basis, I have formed the view that the matters relied upon by Mr Barber are not such as to justify the making of an order that the trustee pay the costs of the plaintiff on a solicitor and client basis.
There will be the following orders additional to those made on 3 September 2003:
6(a)That the defendant pay the plaintiff’s costs of the proceeding, including reserved costs, on a party and party basis.
6(b)That the plaintiff pay the defendant’s costs of and occasioned by the amendment of the originating motion effected by the filing of the further amended originating motion on 21 August 2003.
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