Davey Nominees Pty Ltd v Miot
[2017] VCC 562
•12 May 2017
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
| EXPEDITED CASES LIST |
Case No. CI-15-04193
| DAVEY NOMINEES PTY LTD | First Plaintiff | |
| and | ||
| BEN ISARD | Second Plaintiff | |
| v | ||
| MELINDA JANE MIOT | First Defendant | |
| and | ||
| MARC MIOT and GAUL INVESTMENTS PTY LTD | Second Defendant Third Defendant | |
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JUDGE: | His Honour Judge Cosgrave | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 29 March 2017 | |
DATE OF JUDGMENT: | 12 May 2017 | |
CASE MAY BE CITED AS: | Davey Nominees Pty Ltd & Anor v Miot & Ors | |
MEDIUM NEUTRAL CITATION: | [2017] VCC 562 | |
REASONS FOR JUDGMENT
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Subject:PRACTICE AND PROCEDURE – COSTS
Catchwords: PRACTICE AND PROCEDURE – where leave granted to join party and amend statement of claim accordingly – where applicant fails to amend within time limit – whether further leave should be granted to join party
COSTS – apportionment of costs – whether successful party’s costs should be reduced on issues it failed on – whether pre-judgment interest should be awarded
Legislation Cited: Civil Procedure Act 2010 (Vic); County Court Act 1958 (Vic); County Court Civil Procedure Rules 2008 (Vic); Penalty Interests Rates Act 1983 (Vic); Supreme Court Act 1986 (Vic)
Cases Cited:Braeside Bearings Pty Ltd v HJ Brignell & Associates (Boronia) [1996] 1 VR 17; Cameron v McMahon & Anor (No 2) [2009] VSC 412; Clarke v Foodland Stores Pty Ltd [1993] 2 VR 382; Equuscorp Pty Ltd v Haxton (2012) 246 CLR 298; Ferguson v O’Neill [1943] VLR 30; GT Corporation Pty Ltd v Amare Safety Pty Ltd (No 3) [2008] VSC 296; Hodgson v Amcal Limited [2012] VSC 205; Hosking v Ipex Software Services Pty Ltd (No 2) [2004] VSC 343; Johnston Tiles Pty Ltd v Esso Australia Pty Ltd (No 3)[2003] VSC 244; JZ Interiors Pty Ltd v Brendon Smith [2015] VSC 693; Kioa v West (1985) 159 CLR 550; Lord Buddha Pty Ltd v Harper [2011] VSC 568; Management Three Group Pty Ltd (in liq) v Lenny’s Commercial Kitchens Pty Ltd (No 2) [2012] FCAFC 92; Marsh v Ruby [1975] VR 191; Neuchatel Swiss General Insurance Co Ltd v Vlasons Shipping Inc [2001] VSCA 25; Oshlack v Richmond River Council (1998) 193 CLR 72; Pavey & Matthews Pty Ltd v Paul (1987) 162 221; Ruby v Marsh (1975) 132 CLR 642
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr R Moore | Kalus Kenny Intelex |
| For the First Defendant | Mr J Styring | Robert James Lawyers |
HIS HONOUR:
1 This is an application for costs and final orders in a trial for which judgment was handed down in December last year. As the effluxion of time between judgment at trial and this application would suggest, this matter has had an unusually complicated procedural history.
Procedural Background
2 I handed down judgment in this matter on 8 December 2016 (“the principal judgment”). Capitalised terms in this judgment are a reference to terms defined in the principal judgment.
3 On 16 December 2016, the parties returned to court to make submissions on the costs and final orders to be made in the matter. Crucially, for the purposes of this judgment, I had found that:
· the plaintiffs were entitled to recover two of the advances of money deposited to the first and second defendants’ joint bank account, as money had and received by the first defendant;
· Mr Davey, the person in control of the first plaintiff, advanced $100,000 to the first and second defendants’ joint bank account;
· the plaintiffs had mixed success because they were not successful on all claims raised.
4 At the 16 December 2016 hearing, the first defendant submitted that because the final loan of $100,000 did not come from either of the existing plaintiffs (Davey or Mr Isard), but from Mr Davey (the person who controlled Davey), and because Mr Davey was not a party to the action, the plaintiffs could not recover the moneys advanced by Mr Davey. The plaintiffs had not considered this point. I sought to reconvene the court later that day to hear the plaintiffs’ submissions on this issue. Unfortunately, the commitments of counsel and closure of the court during the Christmas vacation meant that the hearing on final orders and costs was adjourned to 27 January 2017.
5 On 25 January 2017, the plaintiffs’ solicitor made an application to join Mr Davey as the third plaintiff in the proceeding and to amend the writ and statement of claim accordingly. This application, together with submissions, was served on Mrs Miot’s solicitors two days before the hearing date. Accordingly, I adjourned the further hearing of the application to 2 February 2017 so Mrs Miot had time to respond to the application.
6 On 21 February 2017 I handed down my reasons for allowing Mr Davey to be joined as a third plaintiff to the proceeding. I also rejected the original proposed Further Amended Statement of Claim provided by the plaintiffs, on the basis that it sought to frame dealings between Mrs Miot and Mr Davey in a way that was unsupported by the evidence and was different from the case run at trial. Thus, my orders on that day were as follows:
(1) By 10:00am on 27 February 2017, the plaintiffs file and serve the proposed further amended statement of claim and outline of submissions addressing the final orders to be made and the issue of costs; and
(2) By 4:00pm 2 March 2017 the first defendant file and serve an outline of submissions in response; and
(3) The matter be adjourned to 10:00am on 3 March 2017.
7 On 27 February 2017, plaintiffs’ counsel provided another proposed Further Amended Statement of Claim to the court, together with submissions on interest and costs.
8 However, for personal reasons, Mrs Miot could not provide instructions to her solicitors before the 3 March 2017 hearing. The matter was adjourned to 16 March 2017, and for various reasons, was ultimately relisted for hearing on 29 March 2017.
9 These reasons deal with the submissions made at the 29 March 2017 hearing made in respect of:
(a) the first defendant’s objections to the plaintiffs’ proposed Further Amended Statement of Claim;
(b) the proposed orders as to costs;
(c) the proposed orders as to interest.
The proposed further amended statement of claim (dated 27 February 2017)
10 I rejected the first proposed Further Amended Statement of Claim which the plaintiffs submitted to the court in order to give effect to the joinder of Mr Davey as a party. The plaintiffs have produced another proposed Further Amended Statement of Claim intended to overcome the problems identified in the earlier version of the most recent proposed pleading.
11 The new paragraphs of the pleading read as follows:
29. In the alternative to paragraph 27(b) above, the Third Principal Sum was advanced by the Third Plaintiff to the Miots on 11 August 2014.
Particulars
The Third Principal Sum was credited to the Miot’s NAB
Account on 11 August 2014.
30. The Third Plaintiff claims The Third Principal Sum as money payable by the Miots to the Third Plaintiff for money had and received by the Miots for the use of the Third Plaintiff.
12 Mr Moore, as counsel for the plaintiffs, contended that the proposed Further Amended Statement of Claim was consistent with the prior hearing and evidence and that it satisfied the applicable pleading rules. He made reference to the decision of Elliott J in JZ Interiors Pty Ltd v Brendon Smith,[1] where, in connection with an application to amend a claim to include an allegation for money had and received, His Honour said that the essential elements of such a claim were:[2]
[1][2015] VSC 693.
[2]Ibid at [24].
(a) the defendant must have received a definite and ascertained sum of money;
(b) the money received by the defendant must be either the claimant’s own money or money in which it was directly interested;
(c) the money or its equivalent must be clearly proved to have come into the defendant’s hands;
(d) the third party cannot in conscience retain the money as this would result in the third party being unjustly enriched at the expense of the owner of the money.
13 Mrs Miot objected to the proposed Further Amended Statement of Claim, and submitted that, in the absence of leave to amend the Amended Statement of Claim, the key basis for joinder evaporated. Further, she submitted that there was no other compelling ground for making the orders sought under Rules 9.06(b)(ii) and 9.11(1) of the County Court Civil Procedure Rules 2008 (Vic) (“Rules”).
14 Mrs Miot submitted that paragraph 29 sought to plead a cause of action against her which was not based on the evidence adduced at trial and the findings made by the court.
15 Pointing to my reasons for judgment, Mrs Miot outlined why I had concluded that the $100,000 was from Mr Davey, and was provided by Mr Isard as Mr Davey’s agent. Further, she submitted that the evidence showed that there was no advance or contractual dealings directly between Mr Davey and herself. Lodgement receipts showed that Mr Davey acknowledged that payment details of the document identified the payee as “Marc Miot”, not Mrs Miot. It was said that the evidence also showed that, at all material times, Mr Isard dealt only with Mr Miot, and it was Mr Miot who directed payment of the advances into the joint bank account of Mr and Mrs Miot. Thus, she argued that the statement that the sum was advanced by “the Third Plaintiff to the Miots” was incorrect.
16 It was further submitted that paragraph 29 sought to frame the claim as a claim under a loan contract, which was doctrinally inconsistent with the moneys had and received claim.
17 Mrs Miot submitted that the contended for “advance” in paragraph 29, implied that there was an advance by way of a contract of loan. In support of this submission, Mrs Miot directed me to Chitty on Contracts,[3] where it was stated a contract of loan of money is a contract “whereby one person lends or agrees to lend a sum of money to another, in consideration of a promise, express or implied, to repay that sum on demand, or at a fixed or determinable future time, or conditionally upon an event that is bound to happen, with or without interest”.[4]
[3](32nd ed, 2015, Vol 2).
[4]Ibid at [39-258].
18 I was also directed to the judgment of Lowe, Gavan Duffy and Martin JJ in Ferguson v O’Neill,[5] where it was held:[6]
‘”Lend” in its ordinary meaning in our view imports an obligation on the borrower to repay.’
[5][1943] VLR 30.
[6]Ibid at p.32.
19 Mrs Miot submitted that the existence and continuance of a loan contract would exclude the case put by the plaintiffs in closing written submissions, that the contracts failed to “materialise” or failed to “sustain” themselves.
20 I am troubled by paragraph 29 of the proposed Further Amended Statement of Claim because it seems to me that it does not conform sufficiently to the way the trial was conducted and the judgment framed. Mr Moore submitted that the intent is to reflect the factual matters found by the court in the judgment, namely, $100,000 was paid into the joint account of the Miots at the National Australia Bank on 11 August 2014. The difficulty is that the trial was run on the basis that:
· the advances by one or other of the plaintiffs was by way of loan;
· there were what purported to be written loan agreements with the three defendants;
· there was no separate incident or event pursuant to which any of the plaintiffs made a loan to Mr and Mrs Miot only (to the exclusion of Gaul Investments Pty Ltd);
· where there is a claim by way of alleged loan for certain moneys, such a claim is inconsistent with a claim to the same moneys based on money had and received.
21 During the course of argument, I understood the plaintiffs to withdraw any reliance upon paragraph 29 of the proposed amended claim. If the plaintiffs had not so withdrawn, I would have ruled against them and rejected that part of the amended claim in any event.
22 I note that I do not accept other aspects of Mrs Miot’s submissions. There were dealings between Mrs Miot and Mr Isard and Mrs Miot derived some benefit from monies in the joint account. To the extent that she sought to say otherwise, I did not believe her.
23 As to paragraph 30 of the proposed Further Amended Statement of Claim, Mr Moore contended that the elements of the plea were taken from Bullen & Leake and were satisfactorily pleaded consistent with the matters referred to by Elliott J in JZ Interiors Pty Ltd v Brendon Smith.[7]
[7][2015] VSC 693.
24 Mrs Miot contended that the proposed paragraph 30 was an inadequate pleading for a count of moneys had and received.
25 She said that first, no facts were alleged which demonstrated how the receipt by the first and second defendants was money had and received by them to the use of Mr Davey, with the effect of putting the first and second defendants under an obligation to repay the money to Mr Davey. This was said to be especially so when the dealings between Mr Davey’s agent, Mr Isard, and the defendants, were primarily with Mr Miot and not Mrs Miot.
26 In addition, a claim for moneys had and received is now understood to rest in, or rely upon, the concept of unjust enrichment. There are a number of distinct categories (which I listed in my 8 December 2016 judgment) in which the courts will recognise that there is an obligation the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff.[8] Thus, without explaining the nature of the claim against her, it was submitted that the first defendant would be denied procedural fairness if this pleading were accepted. The first defendant cited Mason J in Kioa v West,[9] where he said:
‘It is a fundamental rule of the common law doctrine of natural justice expressed in traditional terms that, generally speaking, when an order is to be made which will deprive a person of some right or interest…he is entitled to know the case sought to be made against him and to be given an opportunity of replying to it’
[8]Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at [29] per French CJ, Crennan and Kiefel JJ citing with approval the description given by Deane J in Pavey & Matthews Pty Ltd v Paul (1987) 162 221 at 256-257).
[9](1985) 159 CLR 550.
27 I agree with Mrs Miot that the claim for money had and received was poorly pleaded. The applicant has had the benefit of the trial, the judgment and extensive argument about the joinder and pleading issues. There was no reason proffered why the pleading did not better comply with the Rules and reflect the details and outcome of the trial. The principal point of the application to amend the writ and statement of claim to join Mr Davey was to bring finality to the action. There is no practical value in joining Mr Davey as a third party if the claim is not appropriately amended.
28 As a result of the plaintiffs’ failure to properly amend the writ and statement of claim, Mrs Miot contends that no order for joinder should be made because it is pointless. Also, she submits that if the applicant were to be given a further opportunity to amend the claim, conformably with the trial and judgment, she would want the opportunity to address Mr Davey’s claim.
29 By reason of the way in which the case has evolved, I now face a dilemma about what should happen next. One possibility is to adjourn again and give the plaintiffs yet another opportunity to amend. Another possibility is to make final orders giving effect to the December 2016 judgment and allow Mr Davey, if he so wishes, to pursue Mrs Miot separately in relation to the advance of $100,000.
30 In trying to determine the most appropriate course of action, I am influenced by several matters. First, I am troubled that, although I heard the trial in this proceeding over several days in August 2016 and delivered reasons for judgment on 8 December 2016, no final orders have been made. In my view, it is not satisfactory that the parties to the proceeding should have the case unfinished and without final orders for so long.
31 Secondly, given that the prospective third plaintiff was present in court during the trial, gave evidence at trial, and is represented by the same counsel and solicitors as the present plaintiffs, he has had ample opportunity to join the action and produce an appropriate amended writ and statement of claim. Notwithstanding this and notwithstanding the rationale underlying the joinder of new parties – namely, the avoidance of multiplicity of proceedings – there must be limits on the extent to which such applications can prevent the finalisation of a proceeding. Here, the plaintiffs and Mr Davey were, or ought to have been, aware of the problem during the trial in August 2016 and yet they have failed in their attempts thusfar to produce an amended statement of claim which satisfies the applicable criteria. On my view, the plaintiffs and Mr Davey have had abundant opportunity to address the issue which has arisen.
32 Thirdly, depending upon how the plaintiffs and Mr Davey frame the amendment, Mrs Miot wants the chance to respond to the case made against her. In principle, I accept that a party in Mrs Miot’s position should have the opportunity as a matter of fairness to consider and respond to the allegations made against her. It might be that the problem in this case is more apparent than real. Because Mr Davey’s attempts to date to articulate his claim have not accurately reflected the events at trial and the judgment, I have disallowed them. Had I allowed them and Mr Davey was free to conduct a case different from that run at trial, Mrs Miot would have been entitled to time in order to prepare and meet the new case.
33 Fourthly, there is the operation of the Rules and the Civil Procedure Act 2010 (Vic) (“the CPA”). Section 7 of the CPA states that the overriding purpose of the CPA and Rules is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute. The court is to give effect to that purpose,[10] and is to have regard to the matters set out in section 9 of the CPA. On one view, making final orders in this case does not advance the overarching purpose. However, on the other hand, it is wasteful of time, money and resources of the court to keep delaying the completion of this case when the issues between the present parties have been resolved. If Mr Davey wishes to pursue Mrs Miot, he can focus on his claim against her untroubled by the complexities of the present case. The outcome in this case would not bind any subsequent court.
[10]Civil Procedure Act 2010 (Vic), section 8.
34 While neither outcome is entirely satisfactory, I consider that, in circumstances where:
(a) the trial was completed in August 2016 and judgment given in December 2016,
(b) Mrs Miot through her counsel has contended and accepted that there is no legal impediment, for example by way of Anshun estoppel, to Mr Davey initiating a new action to substantiate his claim,
(c) if the plaintiffs and Mr Davey were to receive another opportunity to amend and Mrs Miot were then given the chance to respond to the amended case, the proceeding might continue to run for some further period,
(b) to allow further delay and cost caused by a non-party to the proceeding would be inimical to the exhortation in section 8 of the CPA regarding the court giving effect to the overarching purpose,
the interests of justice between the existing parties and Mr Davey are best served by making final orders in this case and leaving Mr Davey to bring a separate action against Mrs Miot if so advised.
35 In reaching this conclusion, it might be said that, from one perspective, I have acted inconsistently with the views expressed in my judgment of 21 February 2017. There, I concluded that it was permissible to join Mr Davey as a third plaintiff. That decision was made in a context where there was a principle to be resolved – could a plaintiff join another plaintiff to the proceeding after reasons for judgment in the substantive proceeding had been handed down? I determined that such a joinder could occur.
36 However, I may have failed to make sufficiently explicit the nexus between the amended writ and Further Amended Statement of Claim and the joinder. Any order joining Mr Davey depended for its purpose and utility upon the drafting of an appropriately amended claim. In circumstances where such a claim has not been produced, the proper basis for the joinder is not made out. Because no authenticated orders were produced after the hearing on 21 February 2017, it is possibly more accurate to say that, at that time, I foreshadowed I would make a joinder order when an appropriately amended writ and statement of claim was produced. My understanding is that, a decision which is not reduced into an authenticated order can be reconsidered. But once such an order is made, the order can be altered only by operation of the slip rule or by an appeal court. However, if I am wrong about that and the indication which I gave is legitimately treated as an order, then I rescind the order due to the plaintiffs’ failure to produce a properly amended writ and statement of claim.
37 If Mr Davey decides to launch a separate case against Mrs Miot to recover the final advance of $100,000, there will not automatically be a long delay in the resolution of that claim. Once Mr Davey has framed his claim and served it on Mrs Miot, she might acknowledge its force and capitulate. Such action would not be entirely unexpected in circumstances where she knows that:
· there has been a trial on related facts;
· her defence in the proceedings, namely, that she was not obliged to repay the moneys advanced, failed;
· I did not consider her to be a credible witness and where her evidence conflicted with that of Mr and Mrs Isard, I preferred their evidence to hers;
· I thought she was a calculating witness who was astute to give answers which would promote or advance her best interests. Some of her evidence was misleading and other parts were not credible;
· Notwithstanding that:
o Mrs Miot knew the money was advanced as a loan and not a gift,
o she executed mortgages over the family home and the family’s property at the beach,
o she agreed to caveats over the properties,
o she was aware that the advances were not repaid when due (and apologised to Mrs Isard for this),
her attitude at trial was that she was under no obligation to repay the moneys advanced.
Further, although as noted, no court would be bound by my views, another judge might be interested to hear something about this case and its outcome.
Costs
38 The key issue with respect to costs was whether costs should follow the event, or whether the court should exercise its discretion to apportion costs by taking into account the relative successes and failures of the parties on particular issues.
Apportionment
39 It is well accepted that ordinarily, costs will follow the event.
40 Section 78A(1) of the County Court Act 1958 (Vic) (“CCA”) provides that:
(1) The costs of and incidental to all proceedings are in the discretion of the Court and the Court may determine by whom and to what extent costs are paid
41 Rule 63A.04 of the Rules further provides that:
63A.04 Costs of question or part of proceeding
(1) The Court may make an order for costs in relation to a particular question in or a particular part of a proceeding.
(2) Where the Court makes an order under paragraph (1), the Court shall by order fix the proportion of the total costs of the proceeding which is attributable to the particular question in or the particular part of the proceeding.
42 The plaintiffs accepted that the costs of the proposed joinder which were referable to the 2 February 2017 hearing (and the incidental costs thereto) should be borne by Mr Davey.[11] I agree that the plaintiffs should pay Mrs Miot’s costs of and incidental to the adjournment of the application on 25 January 2017, the hearing on 2 February 2017 and the hearing on 29 March 2017.
[11]The plaintiffs submitted that those costs were referable to the hearing on 2 February 2017 and the costs incidental thereto (See Plaintiffs’ submissions dated 27 February 2017 at paragraph [19]).
43 However, with respect to the proceeding, the plaintiffs submitted that costs should follow the event, and be awarded on a standard basis.[12]
[12]Ibid at paragraph [19].
44 The plaintiffs referred me to the judgment of Robson J in Lord Buddha Pty Ltd v Harper.[13] In that case, His Honour outlined the relevant principles as to costs generally, as well as where there is the possibility of costs being awarded proportionate to a party’s overall success. In particular, the plaintiffs referred to three principles from that judgment:[14]
‘The general rule is that costs should follow the event. Absent disqualifying conduct, the successful party should recover its costs, even where it has not succeeded on all heads of claim;
The rules of Court permit significant flexibility in determining questions of costs. In particular, the Court is entitled to examine the realities of the case and will attempt to do “substantial justice” as between the parties on matters of costs;
Where there is a multiplicity of issues and mixed success has been enjoyed by the parties, a Court may take a pragmatic approach in framing the Order for costs, taking into consideration the success (or lack of success) of the parties on an issue basis. Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount’
[13][2011] VSC 568.
[14]Ibid at [122].
45 The plaintiffs contended that although they failed on their contractual claims, costs should still follow the event because:
(a) the plaintiffs succeeded in their claims for moneys had and received;
(b) the plaintiffs succeeded in their claims regarding the enforceability of the mortgages;
(c) only three witnesses were called to give evidence during the trial, and each of them gave evidence that was relatively brief;
(d) it would be difficult to dissect the oral evidence of the witnesses according to the issues that were presented before the court.
46 Mrs Miot submitted that, although the breadth of section 78A(1) of the CCA is constrained by the nature of the discretion that it be exercised judicially and not “arbitrarily, capriciously or so as to frustrate the legislative intent”,[15] in the circumstances of this matter, the plaintiffs should either be:
[15]Oshlack v Richmond River Council (1998) 193 CLR 72 at 81 per Gaudron and Gummow JJ.
(a) deprived of their costs of the proceeding; or
(b) alternatively, any costs of the proceeding should be limited to one third of the costs taxed on the standard basis.
47 In support of this submission, Mrs Miot pointed to the following:
(a) the plaintiffs failed in their primary case – for possession of the Beaumaris and Torquay properties upon default under the loan agreements;
(c) the plaintiffs failed on their estoppel case;
(d) the plaintiffs were only successful on a claim for money had and received, and the vitiating factor relied on was repositioned during closing submissions, from failure of consideration to a failure of the contract to materialise or sustain itself.
48 In GT Corporation Pty Ltd v Amare Safety Pty Ltd (No 3),[16] Robson J found in favour of GT. However because GT succeeded on only some of its claims (two of four alleged breaches of contract) and recovered a small proportion of the quantum alleged, Amare argued that GT should recover only 40 per cent of its costs. Ultimately, Robson J ordered that Amare pay less than the full amount of GT’s party/party costs. In the course of a detailed judgment which examined at length the authorities regarding this area of law, His Honour summarised the applicable principles as follows:[17]
[16][2008] VSC 296.
[17]Ibid at [59].
1. The award of costs is in the discretion of the Court or Judge: s 24 Supreme Court Act 1986.
2. The discretion must be exercised judicially;
3. The discretion cannot be exercised arbitrarily or capriciously and it cannot be exercised on grounds unconnected with the litigation, or the circumstances leading up to the litigation;
4. Costs are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings. The order is not made to punish the unsuccessful party;
5. As a general rule, costs should follow the event, and a successful party should obtain all of the costs of the action even though it failed to establish some of the alternative heads of its claim;
6. Rule 63.04(1) permits the court, in its discretion, to make an order not only as to a distinct question or issue in the pleading sense, but also to any part of the proceeding;
7. The court may, in its discretion, decline to order costs in favour of a successful party, or may order the successful party to pay the costs of the unsuccessful party, where the plaintiff failed to establish discrete heads of claim or failed to establish issues which it pursued in its claim, although ultimately succeeding on the basis of another discrete head of claim;
8. It is not necessary that the issue concerned was raised unreasonably by the party. Although, a relevant consideration may include whether the issue was raised unreasonably;
9. The court may, in its discretion, make an order that is a single order, fixing what proportion of a party’s costs should be paid by another party, thus obviating cross-orders or particular orders as to particular costs (citations omitted).
10. The caveat referred to by Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 may have less weight today than when it was decided.
11. Although the quantum of damages recovered compared to that claimed may be a relevant consideration to the court in exercising its discretion, greater emphasis should be given to the failure or loss on discrete claims or issue and the time occupied in relation to them.
49 Applying these principles to this case, I consider that the best resolution of the matter is to order that Mrs Miot pay 85% of the plaintiffs’ costs to be taxed on a standard basis.
50 In this case, the same or similar set of facts, was used as the basis of multiple legal arguments. In these circumstances, I agree with the plaintiffs that it would be difficult to determine what percentage or proportion of the trial was spent on agitating issues upon which the plaintiffs were ultimately unsuccessful.
51 Further, although the plaintiffs were unsuccessful on a number of issues they raised, they succeeded in obtaining repayment of the advances which they made to Mr and Mrs Miot.
52 Importantly, it cannot be overlooked that these proceedings arose out of Mrs Miot’s refusal to repay monies that had been advanced to a joint bank account in the names of herself and her husband. She was aware of the moneys advanced and the expectation that they would be repaid. She signed the two mortgages which secured the amounts advanced. Thus, although Mrs Miot had some success against part of the plaintiff’s claims, the plaintiffs nonetheless received the bulk of the moneys advanced which she refused to repay. On the case she ran, it appeared that Mrs Miot considered herself entitled to retain the money with no obligation to repay it. This was a bold and uncompromising position to adopt. I note that there was no evidence that Mrs Miot made an offer of compromise or a Calderbank offer. Thus, if the plaintiffs were to recover any of the moneys advanced, they had no option but to sue.
53 In such circumstances, I do not consider that it is appropriate either to award the plaintiffs no costs, or to limit their recovery to one third of their costs.
Interest
54 There are three issues to be dealt with in respect of the parties’ submissions on pre-judgment interest, namely:
(a) Should pre-judgment interest under section 60(1) of the Supreme Court Act 1986 (Vic) (“Supreme Court Act”) be awarded?
(b) If interest is awarded, from what date should it start running? Should it be calculated from the date of issue of the proceedings, or should it be calculated from when the plaintiffs amended their statement of claim to incorporate the main issue upon which they were successful?
(c) If interest is awarded, what interest rate should apply? Should the interest rate be that specified in the Penalty Interests Rates Act 1983 (Vic) (“PIRA”), or should the court exercise its discretion to award an interest rate which is lower than that under the PIRA?
Should pre-judgment interest be awarded? What date should interest start running from?
55 The plaintiffs submitted that I should award pre-judgment interest on the amounts awarded to them in accordance with the court’s power under section 60(1), as follows:
(a) $12,099.30 on the sum of $100,000, continuing at the rate of $26.02 per day from 8 December 2016.
(b) $24,882.15 on the sum of $206,000 continuing at a rate of $53.51 per day from 8 December 2016.
56 Mrs Miot submitted that no interest should be awarded to the plaintiffs or, alternatively, interest should only be awarded from the date of judgment, being 8 December 2016.
57 Section 60(1) of the Supreme Court Act gives the court the power to award pre-judgment interest on damages, providing:
The Court, on application in any proceeding for the recovery of debt or damages, must, unless good cause is shown to the contrary, give damages in the nature of interest at such rate not exceeding the rate for the time being fixed under section 2 of the Penalty Interest Rates Act 1983 as it thinks fit from the commencement of the proceeding to the date of the judgment over and above the debt or damages awarded.
58 Thus, interest should be awarded from the commencement of the proceeding to the date of judgment unless “good cause” is shown.
59 The plaintiffs submitted, and I accept, that in exercising the court’s discretion to award costs under section 60(1), the following principles apply:
(a) the power to refuse an award of interest is to be used to relieve injustice against the unsuccessful defendant, rather than a tool for penalising the successful plaintiff.[18]
[18]Hodgson v Amcal Limited [2012] VSC 205 at [14] per Vickery J referring to Gowans J in Marsh v Ruby [1975] VR 191 at 193.
(b) the purposes of the statutory power to award interest are: [19]
[19]Hosking v Ipex Software Services Pty Ltd (No 2) [2004] VSC 343 at [6].
(i) to compensate a plaintiff for the loss or detriment which he or she has suffered by being kept out of his or her money and deprived of its use during the relevant period; and
(ii) to encourage the early resolution of litigation
60 The plaintiffs also submitted that:
(a) what constitutes good cause will depend on the particular facts of the case, and it is unwise to put any gloss on the expression – see Clarke v Foodland Stores Pty Ltd.[20]
[20][1993] 2 VR 382 at 394 per Fullagar, Marks and J D Phillips JJ.
(b) the defendants bear the onus of showing that there is good cause.
(c) good cause should be measured against the purposes of the statutory power identified by Habersberger J in Hosking v Ipex Software Services Pty Ltd (No 2).[21]
[21][2004] VSC 343 at [6].
61 I accept these statements of principle.
62 The plaintiffs submitted that the defendant had failed to show there was good cause for not awarding pre-judgment interest.
63 First, Mrs Miot could not identify any injustice that would be caused to her if she were ordered to pay pre-judgment interest. It was submitted that the plaintiffs had not had the use of their money for “a considerable period of time” whereas the first defendant had the benefit of the moneys advanced since 22 April 2014, August 2014 and 11 August 2014 respectively.
64 Secondly, the fact that the plaintiffs were only successful on a claim for moneys had and received, which was clarified at a later stage of the action, did not establish good cause for refusing to award interest under section 60(1). In support of this, the plaintiffs submitted that the Federal Court’s decision in Management Three Group Pty Ltd (in liq) v Lenny’s Commercial Kitchens Pty Ltd (No 2),[22] supported that view that even though the plaintiffs in that action were only successful on a claim which was added some months after they filed the original pleadings, interest should run from the time the cause of action arose.
[22][2012] FCAFC 92.
65 Additionally, the plaintiffs contended that Mrs Miot had not pointed to any significant injustice she suffered as a consequence of the amending to add the claim for moneys had and received.
66 Mrs Miot submitted that she would suffer injustice if the court awarded the plaintiffs pre-judgment interest because:
(a) although the amounts were deposited in the joint bank account she held with her husband, she did not have the benefit of the money. Mrs Miot appeared to interpret the plaintiffs’ assertion that Mrs Miot had the benefit of the money, as implying that she had the benefit of “all” of the money. Thus, it was said that such assertions were “bare assertions”, given it was a joint bank account.
(b) the plaintiffs’ submission that Mrs Miot had the benefit of the moneys advanced, did not take into account Mrs Miot’s evidence that she had limited use of the joint account. Additionally, the account was in credit at the time of the respective credits, thus no benefit on the basis of keeping the account in credit through the deposits, could be inferred.
(c) awarding interest at the rate under section 2 of the PIRA would visit injustice upon the first defendant. Mrs Miot referred to Neuchatel Swiss General Insurance Co Ltd v Vlasons Shipping Inc,[23] and submitted that there would be injustice in awarding such interest because it had been recognised by the courts that the rate specified in the PIRA was in excess of prime market rates.[24] In that judgment, Ormiston JA (with whom Callaway and Batt JJA agreed) said:
[23][2001] VSCA 25.
[24]Ibid at [60]-[61].
[60]…It is argued that interest is essentially compensatory and not intended by way of penalty. That may be so in many jurisdictions but it is by no means clear in Victoria where the applicable rate I fixed pursuant to the Penalty Interest Rates Act 1983 and has ordinarily been well in excess of prime rates and for some years has exceeded ordinary lending rates. It has been the effective practice over many years for the Attorney-General to prescribe an interest rate which has been in excess of most market rates.”
(d) although Mrs Miot had acknowledged the principle in Braeside Bearings Pty Ltd v HJ Brignell & Associates (Boronia)[25] – that generally, where a cause of action on which a plaintiff recovers judgment was added by amendment, the court has the power to award interest under section 60 from a date earlier than the date of amendment – in this instance, the real issue was not the plaintiffs’ amendment to include the claim for moneys had and received. Rather, it was the fact that the basis of that claim changed during the proceeding which was never incorporated into the pleading.
[25][1996] 1 VR 17 at 21.5.
67 Mrs Miot submitted that the plaintiffs’ late explanation of the moneys had and received claim, in circumstances where the court had given leave to the plaintiffs to allege this claim several months before hearing of the trial, [26] provided the court with good cause to refuse to award pre-judgment interest. It was submitted that injustice would be caused to Mrs Miot as a result of the late reliance upon the claim for moneys had and received, and that a claim by the plaintiff that no injustice was caused to the first defendant, in such circumstances, was “egregious”.
[26]Orders of His Honour Judge Anderson made on 11 April 2017.
68 In support of this submission, Mrs Miot pointed to the fact that:
(a) on the first day of the first trial date, 11 April 2016, the court heard arguments about the plaintiff’s proposed amended statement of claim, which included the claim for moneys had and received at paragraph 27. On that day, the first defendant submitted that paragraph 27 should not be allowed in its form, without identification of the qualifying or vitiating factor as espoused in Equuscorp Pty Ltd v Haxton.[27] The plaintiffs were granted the opportunity to amend their statement of claim and have further time to consider the proposed amendments, in the orders of His Honour Judge Anderson made that day.[28] The plaintiffs did not take up this opportunity;
[27](2012) 246 CLR 298.
[28]See Order 4 of Orders of His Honour Judge Anderson made on 11 April 2016.
(b) the vitiating factor was revealed in the plaintiffs’ closing submissions as a failure of consideration;
(c) by the plaintiffs’ submissions dated 25 August 2016, they changed their vitiating factor to a failure of contracts to materialise or sustain themselves
69 Mrs Miot also submitted that the plaintiff’s reliance on Management Three Group was distinguishable as:[29]
[29][2012] FCAFC 92.
(a) in that case, the Full Federal Court awarded interest from the date the action accrued, rather than the date the claim was made in the proceeding;
(b) the claim in that case appeared to be fully pleaded at the time of amendment, unlike in this proceeding, where the claim was not fully known until 25 August 2016.
Consideration of submissions
70 In my opinion, Mrs Miot has not established good cause which would preclude an award of pre-judgment interest on the sums awarded to the plaintiffs.
71 As outlined above, section 60(1) provides that interest will be awarded for the period from the commencement of the proceeding until the date of judgment, unless good cause is shown to not award such interest. In this proceeding, judgment was handed down on 8 December 2016.
72 The plaintiffs’ conduct of this case has been less than ideal – both before and after judgment. Not only were issues not properly explained early on in trial – we are still, almost 6 months after the trial, dealing with the plaintiffs’ application to join another party and amend its claim.
73 The plaintiffs delayed in bringing their claim for moneys had and received. Then having brought it they were slow to fully explain it.
74 However, the decision of the Full Federal Court in Management Three Pty Ltd highlights that more than mere delay is required to justify a finding of good cause not to award interest. The court there suggested some circumstances in which a court might think that good cause was established. The first example was delay. But the court expressly said that delay simpliciter was not enough to deprive a plaintiff of interest where the defendant continued to have the benefit of the use of the money. The second example was where the plaintiff was compensated or indemnified in some other way, or from some other source, in respect of the damages resulting from being shut out of its money. The final situation was where the plaintiff was awarded damages including damages for loss of use of the money.
75 None of the above situations apply to the present case.
76 In the principal judgment in this matter, I found that there was no prejudice caused to Mrs Miot sufficient to disallow the claim for moneys had and received.
77 As has been outlined by Davies J in Cameron v McMahon & Anor (No 2),[30] the good cause requirement should be measured against the two-fold purposes of the power to award statutory interest. Those purposes are:[31]
[30][2009] VSC 412.
[31]Cameron v McMahon & Anor (No 2) [2009] VSC 412 at [7] per Davies J citing Ruby v Marsh (1975) 132 CLR 642 at 652 per Barwick CJ, concerning s 79A, the predecessor to s 60; Johnston Tiles Pty Ltd v Esso Australia Pty Ltd (No 3)[2003] VSC 244 at [62] per Gillard J.
· to compensate the plaintiff for its loss or detriment which it has suffered as a result of being kept out of its money, and deprived of its use during the relevant period;
· to encourage the early resolution of litigation.
78 In performing this balancing exercise, I consider that it would be inappropriate to withhold from the plaintiff any of the interest which could be awarded to it.
79 Further, in addition to the plaintiffs being kept out of their money, it also must be acknowledged that, on the evidence, Mrs Miot did not, at any stage, attempt to resolve the proceedings by making an offer of compromise or a Calderbank offer.
80 Also, Mrs Miot unnecessarily contributed to the prolongation of the proceedings, by maintaining her position that, whilst she knew the money had been advanced from the first and second plaintiffs not as a gift but as a loan, she had no obligation to repay it. As I outlined in my primary judgment, I did not believe parts of her evidence and did not accept her claim that she was ignorant of all the relevant factors which would necessitate her repaying the amounts owed. I concluded that it would have been unjust for her to retain the moneys.
81 Although the plaintiffs raised the claim for money had and received belatedly, in my view, this is not a sufficient basis to constitute good cause within the meaning of s 60 of the Supreme Court Act. Accordingly, the plaintiffs should receive interest from the date the proceedings were issued.
Interest rate
82 The plaintiffs did not make submissions on the specific rate of interest that should apply, if interest were awarded in their favour. They appeared to assume that if interest were awarded, it would be at the highest rate allowed under section 60(1).
83 Mrs Miot submitted that, if interest were to be awarded, given the circumstances of this proceeding, the court should use its discretion under section 60(1) to order interest at a rate less than the rate specified under section 2 of the PIRA. Mrs Miot cited Neuchatel Swiss General Insurance Co Ltd v Vlasons Shipping Inc,[32] in support of this submission, where the court held that:[33]
“…a discretion is given to a trial judge which must come within that which the statute permits. Where s.58 and s.60 applies, either the judge awards interest at the rate prescribed by statute or the judge chooses deliberately to impose a lower rate…”
[32][2001] VSCA 25.
[33]Ibid at [62].
84 I do not think that the circumstances of this case necessitate a reduction in the interest rate.
85 The penalty interest rate for the period running from 2 September 2015 when the plaintiffs filed the writ in this matter until 8 December 2016 was 9.5% per annum.
86 This rate is below the rate contemplated as payable to the plaintiffs under the failed loan agreements.[34]
[34]Interest was set at 4% per month.
Conclusion
87 In summary, my conclusions are that:
(a) leave is not granted for the plaintiffs to file the proposed further amended statement of claim
(b) the application to join Mr Davey to the proceeding as the third plaintiff is dismissed
(c) Mrs Miot is to repay the amounts of $100,000 and $206,000 respectively to the plaintiffs
(d) the plaintiffs are entitled to interest on the amounts payable from the time proceedings issued
(e) the interest rate applicable is that specified from time to time in section 2 of the Penalty Interest Rates Act 1983
(f) the plaintiffs pay the costs of Mrs Miot of and incidental to the joinder application as set out in paragraph 44 above, such costs to be taxed on a standard basis in default of agreement
(g) save as provided in subparagraph (f), Mrs Miot pay the plaintiffs’ costs of the proceeding including reserved costs, such costs to be taxed on a standard basis in default of agreement
If the parties cannot agree upon orders giving effect to these reasons, I will hear them further.
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