DM Tilley Enterprises P/L v Montesi (No 2)

[2013] SADC 126

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

DM TILLEY ENTERPRISES P/L v MONTESI & ORS (No 2)

[2013] SADC 126

Judgment of His Honour Judge Tilmouth

16 September 2013

PROCEDURE - COSTS

Partial order for costs made on a solicitor/own client basis, consistent with the terms of a loan agreement providing for such costs.

District Court (Civil) Rules 2006 Rules 264(5)(a) and (b); Land and Business (Sale and Conveyancing) Act 1992 (SA) s 15(2), referred to.
Gomba Holdings (UK) Ltd v Minories Finance Ltd (No. 2) [1993] Ch 171; Jamieson v Gosigil Pty Ltd [1983] 1 Qd R 117; Citibank Savings Ltd v Nicholson [1998] ANZ Conv R 442; Russo v Buck (2007) 252 LSJS 144, applied.

DM TILLEY ENTERPRISES P/L v MONTESI & ORS (No 2)
[2013] SADC 126

The Issue

1. Judgment was entered in this action in favour of the plaintiff and the defendant’s counterclaim was dismissed, for reasons outlined in a judgment published on 22 August 2013.[1] 

   [1]    DM Tilley Enterprises Pty Ltd v Montesi & Ors [2013] SADC 114

2. A provisional order was made at that time for the plaintiff to have the costs of the action and counterclaim, to be agreed or taxed on a party/party basis.  Liberty was given to the plaintiff to file further submissions seeking an elevated costs order.  By written submission filed on 30 August 2013, an order for costs is sought by the plaintiff on a solicitor and client basis.  This judgment deals with that outstanding question.  Mr Montesi raised an issue concerning certain funds held in the trust account by the plaintiff’s solicitors, however that issue is well outside the ambit of these proceedings.

   Basis of the Application

3. The application for a more favourable costs order arises in this way.  In the underlying proceedings the plaintiff sued and succeeded in obtaining judgment for outstanding moneys and interest under a loan agreement.  The action was defended principally on the basis of alleged misrepresentations, which was resolved adversely to the defendant.  More particularly, the court expressly found that there were no actionable misrepresentations and that even if there were, there was no reliance thereon and still further, it had not been proven that any damage was caused. 

   The Loan Agreement

4. Clause 4 of the subject loan agreement provides:

   The Borrower shall pay all costs, charges and expenses including legal fees calculated as between solicitor and own client reasonably incurred by the Lender and by reason of any default on the part of the Borrower.

5. The power to make an order for costs on a solicitor/client, or indeed on an indemnity basis, is beyond doubt since either may be awarded in the exercise of a discretion under Rules 264(5)(a) and (b) of the District Court (Civil) Rules 2006.  Nor can there be any doubt that in proceedings as between lender and lendee, the terms of any costs order in favour of the successful lender, should ordinarily reflect the terms of any special bargain contained in the loan agreement on that subject: Gomba Holdings (UK) Ltd v Minories Finance Ltd (No. 2),[2] Jamieson v Gosigil Pty Ltd,[3] and Citibank Savings Ltd v Nicholson.[4]

   [2] [1993] Ch 171 at 185-186, 191

   [3] [1983] 2 Qd R 117 at 121-122

   [4] [1998] ANZ Conv R 442

6. In this particular case, the breach of the loan agreement and the liability to make payment of principal and interest, were not disputed by the defence, subject only to the action on counterclaim based on alleged misrepresentation.  The defence were on solid ground in relation to the deficiency in compliance by the plaintiff with the Land and Business (Sale and Conveyancing) Act 1994 (SA), but failed because they did not demonstrate prejudice within the meaning of s 15(2) thereof. Because of this deficiency, the defendant’s case was not without some substance.

7. The trial itself took three days in mid-June of 2013.  As counsel for the plaintiff points out, the substantial portion of the hearing related to the misrepresentations.  However as the Full Court recognised in Citibank Savings cited above, and to a certain extent later in Russo v Buck,[5] (both defended on the basis of alleged misrepresentations) the contractual rights to costs agreed between the parties should be given effect to, consistent with other principles pertaining to costs orders. 

   [5] (2007) 252 LSJS 144 at 151

8. On the other hand, as mentioned earlier, given that the counterclaim was not without substance, at least to the extent that it was based on clear non‑compliance with an important statutory provision, it is appropriate in lieu of the provisional orders made on 23 August 2013 to order that the plaintiff should have two-thirds of the costs of the proceedings to be agreed or taxed on a solicitor and own client basis, but that it should have one-third of its costs only on a party/party basis.