Davis v Robek Australia Pty Ltd
[2014] VSC 360
•7 August 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2014 00849
BETWEEN
| DAVID PAUL DAVIS | Plaintiff |
| - and - | |
| ROBEK AUSTRALIA PTY LTD (ACN 006 308 961) and ANOTHER | Defendants |
| BY COUNTERCLAIM: | |
| ROBEK AUSTRALIA PTY LTD (ACN 006 308 961) and ANOTHER | Plaintiffs by Counterclaim |
| - and - | |
| DAVID PAUL DAVIS | Defendant by Counterclaim |
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JUDGE: | DALY AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 26 May and 18 July 2014 |
DATE OF JUDGMENT: | 7 August 2014 |
CASE MAY BE CITED AS: | Davis v Robek Australia Pty Ltd and Anor |
MEDIUM NEUTRAL CITATION: | [2014] VSC 360 |
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PRACTICE AND PROCEDURE – Summary judgment application by defendants – Civil Procedure Act 2010, s 63 – Only outstanding issue is costs.
COSTS – Offer of compromise by plaintiff not accepted by defendants – Defendants agreed to entry of judgment for sum greater than offer made by the plaintiff in the offer of compromise – Rule 26.08(3) of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) – Special circumstances warranting departure from the usual order set out in r 26.08(3) – Relevance of amendment of pleading to bring a fresh claim.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N. Andreou | McKean Park |
| For the Defendants | Mr A. Downie | Kalus Kenny Intelex |
HER HONOUR:
This proceeding concerns a claim by the plaintiff for the return of deposits paid by him to purchase two apartments in a multi-unit development in Hampton. It was originally commenced in the Magistrates’ Court in January 2013, and uplifted to this Court late last year after the plaintiff amended his statement of claim. The original statement of claim contended that the defendants in their marketing campaign for the development, and in the presentation of a display unit, made misleading representations with respect to the quality of the apartments, in particular, that:
(a) the development was a prestige development with a high quality of work and materials to be used in construction;
(b) apartments in the development would have a high quality finish;
(c) the standard of work and materials used in the apartments would be of a high quality; and
(d) the standard of work and materials used in the apartments would be at least the same as used in the display unit.
The plaintiff relied upon certain defects in the internal finish of the apartments as outlined in the reports prepared by Buildspect Consulting Pty Ltd (Buildspect Reports), to support his claims that the representations outlined above were misleading, and to claim that he was entitled to rescind the contracts of sale and have the deposits paid by him returned to him. In their defence, the defendants, among other things, relied upon certain terms of the Contracts of Sale for the apartments (contract of sale) which purported to exclude any conditions and warranties other than those in the contract of sale, and referred to the marketing material being provided for illustration purposes only. They contended that the standard of work, materials used, and finishes were consistent with the display unit and as agreed in the contract of sale. The defendants relied upon a term of the contract of sale providing for the notification and rectification of defects, and contended that the plaintiff’s purported termination of the contract of sale was unlawful.
On or about 13 November 2013, the plaintiff made an application to amend his statement of claim to allege that the defendants had engaged in misleading and deceptive conduct by misrepresenting (and overstating) the size of the apartments in their marketing material. In his affidavit sworn on 15 November 2013 in support of the application to amend, the solicitor for the plaintiff deposed that the expert valuer engaged by the plaintiff had informed him of the area of the apartments based upon information provided to him by the council building department. On 18 December 2013, in an affidavit sworn in support of his application for a freezing order, the plaintiff deposed that on 11 November 2013 he inspected documents produced by the defendants, including construction plans. Upon inspection of those plans, the plaintiff measured the floor areas of all of the apartments in the development as shown by the construction plans, and compared them with the dimensions shown in the floor plans provided to him before he executed the contract of sale. He prepared a table which showed that, with one exception, the actual internal area of all apartments in the development fell short of the dimensions shown by the original floor plans.
On 23 December 2013, the plaintiff filed a further amended statement of claim which sought, relying upon the same facts as alleged in the amended statement of claim, a declaration that the contract of sale was void by reason of s 14 of the Sale of Land Act 1962 (Vic), on the basis that the contract of sale was an agreement under which the purchaser purported to waive rights under the Sale of Land Act in a manner prohibited by the Sale of Land Act.
As a consequence of this amendment, the proceeding was uplifted to this Court on or about 21 February 2014.
Shortly after the proceeding was uplifted to this Court, the defendants made a determination that the plaintiff’s claim for the return of the deposits and conveyancing costs was likely to succeed, and offered to pay the full amount of the plaintiff’s claim, plus interest and costs. In correspondence between solicitors, the plaintiff contended that the defendants should pay the plaintiff’s costs of the proceeding from the inception of the proceeding in the Magistrates’ Court on a standard basis, and from 9 May 2013 on an indemnity basis. He also contended that those costs should include the costs incurred by him in making an application for a freezing order in December 2013. That application was resolved by consent with the defendants depositing the sum of $160,640 into a trust account pending the outcome of the proceeding.
In seeking his costs after 9 May 2013 on an indemnity basis, the plaintiff relies upon an offer made by him under Order 26 of the Rules on 9 May 2013, in which he offered to accept the sum of $62,240 plus costs (offer of compromise). The defendants accept that, in agreeing to enter judgment for the plaintiff in the sum of $98,782.52 plus costs, the plaintiff has achieved a better outcome than the terms of the offer of compromise, and that the usual position regarding the costs consequences of the defendants’ refusal of the offer of compromise is that the plaintiff would be entitled to his costs of the proceeding on an indemnity basis, unless the Court otherwise orders.[1] The defendants submit that the Court should “otherwise order” in the circumstances of this proceeding, as by reason of the amendments to the statement of claim in late 2013, the claims on foot against the defendants at the time that the offer of compromise was made were materially different, and substantially weaker, than those on foot at the time that the defendants determined it was unlikely to be able to successfully defend the claim, and agreed to meet the plaintiff’s claim in full.
[1]See Rule 26.08(2).
The defendants contend that the defendants should pay the plaintiff’s costs on a party-party basis on the Magistrates’ Court scale until the date that the proceeding was uplifted to this Court, and on a standard basis according to the Supreme Court scale thereafter. The defendants also contend that those costs should not include the plaintiff’s costs of making the application for a freezing order. They do not seek their own costs of defending that application, but contend that the plaintiff did not have a sound basis for making the application, because if the application had proceeded, the plaintiff would not have been able to establish that there was a real risk that the assets of the defendants would be dissipated. The defendants only agreed to deposit funds in a trust account to avoid the cost and inconvenience of litigating the issue.
The parties’ positions as summarised above were the subject of correspondence between the solicitors for the parties over the course of several weeks. However, no agreement was reached, and on 16 May 2014 the defendants issued a summons seeking the following relief:
1. There be judgment for the plaintiff against the first and second defendants in the sum of $98,782.52;
2. the counterclaims be dismissed;
3. the defendants pay the plaintiff’s necessary or proper costs of the proceeding as agreed, or taxed failing agreement.
It is not clear from the evidence of the parties filed and served in the course of the application what is financially at stake in this dispute, although I note that on 20 March 2014 the plaintiff did offer to accept the sum of $200,000 inclusive of costs. However, I can assume that it is significant, considering the length of the hearing of the application (approximately one full sitting day over two separate hearing dates) and the number and length of the affidavits and exhibits tendered prior to and during the course of the hearing of the application, with further discovery being made by the defendants prior to the date upon which the hearing of the application resumed. One hopes the difference is at least greater than the parties’ costs of the application itself.
During the course of correspondence between the solicitors for the parties after the defendants issued their summons on 16 May 2014, the solicitor for the plaintiff queried the basis upon which the defendants could move the Court to grant judgment against themselves, and in particular, under which Rule of Court. However, I agree with the submissions advanced on behalf of the defendants that the Court has the power under s 63 of the Civil Procedure Act 2010 (Vic), to give judgment on the application of any party, or on the Court’s own motion. I also agree that it is appropriate for the Court to do so, on the basis that, given the only outstanding issue is with respect to costs, the parties and the Court would not comply with their obligations to promote the overarching purpose of the Civil Procedure Act by facilitating the just, efficient, timely and cost effective resolution of the real issues in dispute by requiring the matter to proceed to trial, particularly given the detailed evidence and submissions before the Court upon which I can determine whether I should exercise my discretion to order that the defendants be excused from the usual consequences flowing from a failure to accept an offer of compromise. In determining whether I should do so, I accept that the principles applicable to the exercise of my discretion are those summarised by the Full Federal Court in IFTC Broking Services Limited v Commissioner of Taxation,[2] as follows:
[2][2010] FCAFC 31, at [9] and [12].
It may be accepted that the prima facie position established by O 23 r 11(6) can be departed from. So much is clear from the statement of exception in the rule which the appellants seek to invoke (”unless the Court otherwise orders”). The cases say more than this, however. The cases establish that:
If O 23 r 11(6) is engaged it is for the applicant to satisfy the Court that the prima facie position established by that rule should be departed from (Futuretronics at [12]).
Unlike a case in which a Calderbank offer (named after the decision in Calderbank v Calderbank [1975] 3 All ER 333) is made, the fact that an unsuccessful litigant acted reasonably in rejecting an offer of compromise “is not of itself a sufficient reason to displace the operation of the rule” (Futuretronics at [11]).
It is true that doubts have been expressed about a need to show “compelling and exceptional circumstances” to justify otherwise ordering (see Port Kembla Coal Terminal at [17]). Nevertheless, properly understood, the rule creates a presumption in favour of indemnity costs which the unsuccessful party must rebut. A court may depart from the presumptive position but only “for proper reasons which, in general, only arise in an exceptional case” (Port Kembla Coal Terminal at [17] cited with approval in Futuretronics at [10].
The requirement for “proper reasons” for any departure from the prima facie position of indemnity costs reflects the purpose of the rule. As explained by Mason P in Morgan v Johnson [1998] NSWSC 367; (1998) 44 NSWLR 578 at 581F-582E the rule is intended to encourage the compromise of litigation (such compromise being in both the private and the public interest) and to oblige parties “go give serious thought to the risk involved in non‑acceptance” on the basis that “litigation is inescapably chancy” (Maitland Hospital v Fisher [No 2] (1992) 27 NSWLR 721 at 725). For these reasons “the ordinary provision is expected to apply in the ordinary case” (referring to New South Wales Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100 at 102-103).
…
Futuretronics exposes the difference between a Calderbank offer and an offer of compromise. In respect of a Calderbank offer, characterisation of the refusal to accept the offer as reasonable or not is significant, even potentially determinative. In respect of an offer of compromise, the reasonableness of the refusal to accept the offer is not, of itself, sufficient to displace the consequence of indemnity costs. The appellants’ reliance on various circumstances said to make their refusal of the offer reasonable fails to confront this difference of principle.
In summary, while the “reasonableness” of a party might be a relevant factor in determining whether to “otherwise order” under rule 26.08(2), it is not, of itself, determinative. I also accept, as have many others, that there are strong and sound policy considerations which ground the rules in Order 26,[3] and, that the Court should not readily “otherwise order”.
[3]Maitland Hospital v Fisher(No 2) (1992) 27 NSWLR 721, 724.
The defendants submitted that I should depart from the usual position because at the time that the offer of compromise was made, objectively considered, the defendants had a very strong defence to the plaintiff’s claim that he was entitled to rescind the contracts of sale based upon certain defects in the apartments. These defects were particularised in the Buildspect reports, which include, among other things, defects such as chipped paint, lifting floor tiles, dents in window frames, visible plaster joints, carpet not being property stuck down, missing grout in a shower stall, a damaged sliding door, and marks and nicks on tiles and skirting. The solicitor for the defendants, in an affidavit affirmed on 14 June 2014, noted that the Buildspect reports recommended that the defects be rectified prior to the apartments being “handed over”, and asserts that these defects were in fact rectified. The solicitor for the defendants asserted that the complaints set out in the Buildspect reports could not have given the plaintiff the right to terminate the contract of sale by reason of either fundamental breach, or relief in respect of misleading and deceptive conduct, as the matters identified in those reports were minor and capable of rectification. In any event, special condition 15 of the contract of sale provided a particular procedure for the notification and rectification of defects for apartments in the development.
The solicitor for the defendants also deposed as follows:
In the Amended Statement of Claim dated 13 November 2013, the plaintiff alleged, for the first time, that:
a.There was a discrepancy in size between the actual apartments and the area of the apartments represented on the plans attached to the Contracts.
b.The discrepancy was that:
i.apartment 208 was to have an internal floor area of 40.8 square metres, whereas it is alleged to actually have an actual internal floor area of 34 square metres; and
ii.apartment 214 was to have an internal floor area of 41.3 square metres, whereas it is alleged to actually have an actual internal floor area of 34 square metres
c.The fact of the discrepancy amounted to misleading or deceptive conduct in breach of the Australian Consumer Law, and fundamental breach of the contract.
In the Further Amended Statement of Claim dated 24 December 2013, the plaintiff alleged, for the first time, that:
a.the Contracts are agreements under which a person purports to waive rights under the Sale of Land Act 1962 (Vic) (the “SLA”); and
b.by reason of the above, s14 SLA renders the Contracts void.
…
By reason of the amendments made above, specifically the claims in paragraphs 4(e) and (f), 8(e) and (f), and 12(d) and (e) of the Further Amended Statement of Claim, I formed the view after receipt of the defendants’ expert evidence that the plaintiff’s case in respect of those paragraphs was strong. I advised the clients of this, and the clients instructed me to negotiate with the plaintiff so as effect a return of his deposits, together with interest, and to pay costs on a party and party basis.
The defendants relied upon the decisions of the Court of Appeal in AJ Lucas Drilling Pty Ltd v McConnell Dowell Constructions[4] and Kyrou J in Simply Irresistible Pty Ltd v Couper,[5] where the Court found particular circumstances existed that warranted relieving the party who had failed to accept an offer of compromise from the usual cost consequences of that failure. In AJ Lucas, the Court found (by way of obiter), that at and after the time at which the offer was made, there was a “shifting landscape” in terms of the parties to the proceeding, the state of the pleadings, and the status of certain key evidence. In Simply Irresistible, the Court “otherwise ordered” on the basis that, after the relevant offer of compromise was made, the defendant filed an amended defence. Kyrou J found that:
The factual and legal issues that were added to the proceeding by virtue of the amendments to the defence materially contributed to the findings of the Court in relation to causation.
The fact that the amendments were made after the expiration of the offer of compromise meant that Simply could not take them into account when it was considering the offer of compromise and that it could not assess their possible impact on the outcome of the proceeding. In my opinion, it would be unfair for Simply to pay to Riordans the additional costs that were incurred as a consequence of the amendments. Accordingly, the amendments and their timing constitute special circumstances warranting departure from the usual order set out in r 26.08(3) of the Rules.
[4][2010] VSCA 128.
[5][2011] VSC 233.
The defendants contended that the plaintiff’s amendments to the statement of claim amounted to a material alteration to the plaintiff’s case, both in terms of the factual matters in contention, but also the legal consequences if those facts could be made out at trial, given that the plaintiff was not merely seeking to rescind the contracts of sale, but to have them declared void. They submitted that it was not reasonable for them to take into consideration what case the plaintiff might bring when determining whether to accept or reject the offer of compromise. Counsel for the defendants noted that, despite there being voluminous evidence filed and served by the plaintiff in the context of this application, no evidence was advanced to support the merits of the claims brought by the plaintiff in his original statement of claim.
The plaintiff does not accept that the defendants should be relieved of the cost consequences of their failure to accept the offer of compromise. The plaintiff submits that it is not open to the defendants to “pick and choose” what part of the plaintiff’s claim they chose to concede and what part they choose to continue to assert was weak. Furthermore, there were other relevant matters which distinguished the features of the current proceeding from the cases relied upon by the defendants. In particular, at the time that the offer was made, the defendants must have known that the claim ultimately advanced by the plaintiff with respect to the size of the relevant apartments was likely to be made, as it had received a rescission notice from and was facing legal proceedings by a purchaser of another apartment in the development with respect to the same issue: that is, the difference between the size of the relevant apartment in the original plans and marketing material and the apartment as built. Further, the defendants should have been aware that this size discrepancy was a systemic issue in the development, and that is in fact borne out by the evidence. Finally, in seeking to rely upon the plaintiff’s amendments as a ground for persuading the Court to exercise its discretion under r 26.08, the defendants are in effect, trying to benefit from their own failure to disclose discoverable documents, (namely the construction plans) which provided the plaintiff with the information required to advance and formulate the additional claims regarding the size of the apartments. These documents were first requested by the plaintiff’s solicitor in March 2013, prior to the service of the offer of compromise, but were not provided until November 2013, when the plaintiff was compelled to make an application for further and better discovery in order to obtain further relevant documents.
In my view, the defendants have discharged the onus upon them to persuade me that I should relieve them of the usual cost consequences of their failure to accept the offer of compromise. I accept that there is a material difference between the claim as pleaded as at May 2013 and as at December 2013. I also accept that, based upon the terms of the contract of sale, and the evidence before me regarding the nature of the defects in the apartments, and the uncontradicted evidence that those defects had been rectified, that the defendants had a strongly arguable defence prior to the making of the amendments. In particular, clause 15.8 of the special conditions of the contract of sale provides as follows:
15.8 Dispute
If, at the Settlement Date, any dispute arises as to the quality or standard of the finish of the Works, the Purchaser must not:
15.8.1 delay or postpone settlement as a consequence of this dispute; or
15.8.2request or demand the holding back or retention of any part of the balance of the Purchase Price or Purchase monies payable as security for the satisfactory completion of the Works; or
15.8.3claim compensation, damages or an indemnity therefore other than by way of damages (which is limited to the reasonable rectification costs) if the Vendor fails to amend and make good any fault or defect within a reasonable time thereafter.
It does not appear that the plaintiff filed a reply which responded to the defendants’ reliance upon clause 15 of the special conditions of the contract of sale. However, the pleadings and the available evidence does support the defendants’ contention that the plaintiff’s case at the time that the offer of compromise was made was weak.
However, the strength or weakness of the plaintiff’s case, either as perceived by the defendants at the time, or objectively viewed, is not really critical to the determination of the application currently before the Court.
What is of significance is that, at the time that the offer of compromise was made, the plaintiff’s case was materially different from the case which was advanced by the plaintiff in his further amended statement of claim. The question of the size of the apartments, compared with the finish of the apartments, not only set in train a materially different factual enquiry than was previously necessary, but, if made out, had materially different legal consequences. The fact that those changes required the uplift of the proceeding from the Magistrates’ Court to this Court underlines how materially the proceeding had changed. It may well be that the defendants may have perceived the commercial consequences of the plaintiff’s claim differently as well after the amendment to the statement of claim, in that the plaintiff was not merely challenging the conduct of the defendants but attacking the validity of what are no doubt standard form contracts of sale. The landscape had well and truly shifted.
In such circumstances, relieving the defendants of the costs consequences of their failure to accept the offer of compromise does not detract from the policy objectives behind order 26. After all, the New South Wales Court of Appeal decision in Maitland Hospital v Fisher (No 2)[6] referred to the promotion of early offers of compromise which
amount to a realistic assessment of [a party’s] real claim.
[6](1992) 27 NSWLR 721, 724.
In that case, the Court of Appeal was referring to a defendant making offers, but I have no doubt that the policy objectives underlying order 26 apply equally to all parties.
In my view, a party can only be required to make an assessment before it of the claim as pleaded. It could not be intended that a party in receipt of an offer be expected to consider other claims that another party might have against it, regardless of whether the party actually knew, or ought to have known of those potential claims. Indeed, the language of order 26 itself is instructive: rule 26.02(1) states that:
The plaintiff and the defendant may in respect of any claim in a proceeding serve on one another an offer of compromise …
Similarly, rule 26.08(2) states as follows:
Where an offer of compromise is made by a plaintiff and not accepted by the defendant, and a plaintiff obtains a judgment on the claim to which the offer related …
It is noteworthy in the context of the current application that the rule refers to the judgment being in respect of “a claim”, rather than “the proceeding”.
On the basis of the reasoning above, the fact that the defendants knew or ought to have known that the plaintiff may well have a better claim for the return of the deposits to it is not of great relevance to the determination of this application. The language of the rule itself limits the scope of the enquiry that is required to be made, although the actual or constructive knowledge of the parties might be relevant to the determination of whether the refusal of a Calderbank offer was reasonable. But, as noted in IFTC Broking Services, the principles applicable to Calderbank offers and offers of compromise under Order 26 and their equivalents elsewhere are different.
While of course the onus of persuasion in the current application rests with the defendants, and therefore there was no particular burden upon the plaintiff to adduce evidence of what the defendants knew or ought to have known in May 2013 in respect of a potential claim by Mr Davis in respect of the size of the apartments, what evidence that is before the Court demonstrates that, as at May 2013, the defendants would have been aware that one other purchaser had made a claim for the return of her deposit based on the size of the apartment, and that the defendants had decided to defend the claim. However, the plaintiff’s own evidence demonstrates that the discrepancies between the floor plans provided to purchasers and the “as built” plans varied between apartments. If, indeed, the defendants did know that the plaintiff, in addition to having claims with respect to the quality of the apartment, might have or did have a claim with respect to the size of the apartment, they may well have been more likely to accept the offer of compromise. But that conclusion, like the submissions of the plaintiff in respect of what the defendants did or ought to have known about this plaintiff’s potential claims, is based upon mere speculation.
That a party in receipt of an offer of compromise is not required to embark upon such speculation is underlined by the English Court of Appeal in Cheeseman v Bowaters United Kingdom Pper Mills Ltd.[7] In that case, a plaintiff in a personal injuries case claimed, among other things, damages for three periods he was absent from work, when in fact there were four such periods, as well as general damages, following which the defendant made a payment into court. At trial, the plaintiff obtained leave to amend his statement of claim to include a claim for damages for the fourth period, as well as loss of future earnings. The sum ultimately awarded on the amended claim exceeded the sum paid into court, but the part of the damages which was referrable to the claim as originally pleaded fell short of the funds paid into court. The following extract of the judgment demonstrates that there are strikingly similar features to the current case, and I see no reason why a similar approach should not be applied.
The extra £700 (approximately) which the judge awarded was in respect of these two other matters, the fourth period of being off work and the accelerated retirement, neither of which formed any part of the plaintiff’s pleaded case. Counsel for the plaintiff sought valiantly to say that the defendants ought at any rate to have anticipated a claim in respect of the October-December being off work because they must have known that the plaintiff was off work. I am not sure really that there is much force in that contention; and of course there is nothing at all in the case which should have made them anticipate the claim in respect of the accelerated retirement.
On the whole of the case I have come to the conclusion that the contention for the defendants is correct, ie that the judge ought to have made the standard order which is normally made when the plaintiff fails to recover as much as the amount in court. It is true that this plaintiff did recover more; but, in the circumstances I have indicated, this was a completely new case which necessitated one amendment and ought to have resulted in another amendment which was not made. Therefore in my view the judge should have made the usual order.[8]
[7][1971] 3 All ER 513.
[8]Ibid, at 516-517.
The question remains whether, in exercising the discretion to relieve the defendants of the cost consequences of their failure to accept the offer of compromise, the Court is somehow excusing the defendants of their alleged delinquencies in respect of discovery. I am not convinced that, despite the defendants handing over the construction plans to the solicitors for the plaintiff in November 2013, the defendants were actually in breach of their discovery obligations in May 2013. I see some force in the submission of the defendants that, based upon the pleadings as they stood prior to the amendments to the statement of claim, the construction plans were not relevant to the issues in dispute as at May 2013, given that the plaintiff’s claims primarily, if not exclusively, focussed upon cosmetic defects in the apartments, not structural matters. The fact that the construction plans assisted the plaintiff to make a new claim against the defendants does not lead one to a conclusion that they were relevant to the existing claim. Indeed, in the affidavit in support of the plaintiff’s application to amend the statement of claim sworn on 15 November 2013, the solicitor for the plaintiff made no mention of the construction plans (which had been inspected by the plaintiff some days prior), but in fact relied upon what the plaintiff’s expert valuer had told him. Further, while the solicitors for the plaintiff had been agitating for the discovery of “plans and specifications”, this is a very generic description and these documents did not appear to be the primary focus of the plaintiff’s discovery application just prior to the initial trial date. In his affidavit sworn on 6 November 2013, the solicitor for the plaintiff stated:
In my opinion all documents which evidence the standard of work, materials used and finishes for the apartments 208, 214 and the display unit are relevant in the proceeding.
Most of the categories of documents sought in this application related to the construction of the display unit for the development. Another category, such as “payment claims in relation to the Development” appear to me to have been patently irrelevant. As such, it is difficult not to accept the defendants’ evidence that it provided the construction plans, along with other documents, to compromise the discovery application, rather than on the basis that they conceded that all of the documents they produced were relevant.
Accordingly, I shall order that the defendants pay the plaintiff’s costs of the proceeding on a party-party basis on the highest Magistrates’ Court scale until the date of the proceeding was transferred to this Court, and on a standard basis thereafter.
I accept the plaintiff’s submission that these costs should include the plaintiff’s costs referrable to the application he made for a freezing order. The defendants submit that those costs should not be payable by them, on the basis that the defendants say the application was unnecessary, and that the plaintiff would not have satisfied the test for the grant of a freezing order based upon the authorities in this Court of Deputy Commissioner of Taxation v Gashi,[9] Mr Gloss v Mischel[10] and Portbury Developments Co Pty Ltd v Offedin Investments Pty Ltd,[11] because of the absence of any cogent evidence that there was a risk that the defendants would dissipate their assets in order to frustrate a judgment. Once again, the payment by the defendants of a sum into court was intended to compromise the application, and should not be seen as evidence of an acknowledgement on the part of the defendants that the plaintiff’s application was meritorious.
[9][2010] VSC 120, 141.
[10][2011] VSC 40.
[11][2012] VSC 147.
The plaintiff submitted that the defendants’ current position is in contradiction to the position adopted after the application was made: that is, to refuse any order or give any undertaking absent a court order. At the time that the application was made, the defendants were seeking to sell, or had sold, their remaining real property, and there is uncontradicted evidence that they were trying to do so on terms providing for unusually short settlement periods.
In my view, it was not unreasonable for the plaintiff to make an application for a freezing order in the context of the defendants’ solicitors’ response to the plaintiff’s solicitors’ request for information. The application made by the plaintiff may, with the benefit of hindsight, have been unsuccessful. Accordingly, I will order that the plaintiff’s costs of the application be part of their costs in the proceeding.
I shall hear further from counsel on the form of orders to be made, and the question of the costs of the application.
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