Drip World Pty Ltd v Dardy Touring Corp (No 2)
[2021] NSWSC 74
•12 February 2021
Supreme Court
New South Wales
Medium Neutral Citation: Drip World Pty Ltd v Dardy Touring Corp (No 2) [2021] NSWSC 74 Hearing dates: On the papers Date of orders: 12 February 2021 Decision date: 12 February 2021 Jurisdiction: Equity - Commercial List Before: Stevenson J Decision: Plaintiff to pay second defendant’s costs on indemnity basis to but not including 3 December 2020
Catchwords: COSTS – whether costs should follow the event – whether costs should be made on an indemnity basis – whether plaintiff’s case as currently pleaded bound to fail - where plaintiff did not exist on date when cause of action alleged to arise - where plaintiff’s application to amend to substitute another company as plaintiff refused
Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited: Bookarelli Pty Ltd v Katanga Developments Pty Ltd (No 2) [2017] NSWCA 94
Calderbank v Calderbank [1975] 3 All ER 333
Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353
Drip World Pty Ltd v Dardy Touring Corp [2020] NSWSC 1772
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401; [1988] FCA 202
Harrison v Schipp [2001] NSWCA 13
Hudson Resources Limited v AceA Resources Pte Ltd [2021] NSWSC 41
J-Corps Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) [1993] FCA 70; 46 IR 301
The Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd [2007] WASC 257 S
Category: Costs Parties: Drip World Pty Ltd (Plaintiff)
Dardy Touring Corp (First Defendant)
William Morris Endeavour Entertainment, LLC (Second Defendant)Representation: Counsel:
Solicitors:
D F Elliott (Plaintiff)
D R Sulan (Second Defendant)
Piper Alderman (Plaintiff)
Baker McKenzie (Second Defendant)
File Number(s): 2020/149917
Judgment
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I gave judgment in this matter on 9 December 2020. [1]
1. Drip World Pty Ltd v Dardy Touring Corp [2020] NSWSC 1772.
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I am now dealing with the costs of the proceedings. It is agreed this may be done on the papers. These reasons assume familiarity with my 9 December 2020 judgment. I will use the same abbreviations.
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I found that the proceedings as presently constituted had “difficulties” as Drip World did not exist on the date that the Deposit, on which it sued, was lodged with WME. [2]
2. See [7].
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That understated matters somewhat. The case, as presently constituted, was for that reason bound to fail.
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As I recorded,[3] Drip World recognised those difficulties and, by Amended Notice of Motion filed in court on 3 December 2020, sought leave to amend its Summons and Commercial List Statement. The amendment would, if granted, have substituted Yellow Presents as plaintiff and alleged that Yellow Presents, rather than Drip World, lodged the Deposit with WME and (in January 2019 and not, as originally alleged, in June 2019).
3. At [8].
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In effect, Drip World thus abandoned its claim against WME. [4]
4. See [77].
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I refused to grant Drip World leave to amend. This was because I concluded that service by Yellow Presents of the proposed Amended Summons and Commercial List Statement on WME in Delaware would not be authorised under Uniform Civil Procedure Rule 11.4 and would be liable to be dismissed under UCPR 11.6; and because I would not have granted leave under UCPR 11.5.
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The result was that I dismissed Drip World’s notice of motion of 3 December 2020 and dismissed the proceedings as against WME. [5]
5. At [83].
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Unsurprisingly, WME seeks an order that Drip World pay its costs.
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Drip World submits that there should be no order as to costs because “the case was not decided on its substantive merits” and that “it was merely a procedural victory, one which does not dispose of the underlying dispute between the parties”.
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It is true that I have not dealt with the “substantive merits”, whatever they may be, of the dispute between Yellow Presents and WME.
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That is because Drip World did not persuade me that Yellow Presents should have leave to agitate that dispute against WME, a Delaware corporation, in this Court.
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But I dealt with the substance of the matters before me, namely WME’s application to dismiss the proceedings as presently constituted and Drip World’s application to amend.
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Drip World also drew attention to my finding that negotiations with WME “ceased at the end of May 2019 without any contract being entered”. [6]
6. At [50].
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I cannot see how that finding can be relevant to what order as to costs should be made in the proceedings.
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I think it clear, in these circumstances, that WME should have its costs of the proceedings.
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WME seeks indemnity costs.
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On its behalf, Mr Sulan submitted that “there was an absence of objective support for the cases pleaded and [the] proceeding was always bound to fail”.
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I recently dealt with this issue in Hudson Resources Limited v AceA Resources Pte Ltd:[7]
“The Court may make an order for indemnity costs where a claim has been commenced or continued in circumstances where the plaintiff should have known that there was no chance of success[8] or where a party maintains proceedings, having no reasonable prospects of success. [9]
The discretion to award indemnity costs arises when ‘for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case’. [10]
Indemnity costs will not be ordered simply because a party has been unsuccessful. [11] More than mere lack of success is required for an order for indemnity costs to be made. [12] Some ‘special or unusual feature of the particular case’ is necessary before an order is made for indemnity costs. [13] ”
7. [2021] NSWSC 41 at [7]-[9].
8. Eg Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401; [1988] FCA 202 (Woodward J).
9. Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 at [108] (Basten JA; with whom Giles JA and Young CJ in Eq agreed).
10. J-Corps Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) [1993] FCA 70; 46 IR 301 at 303 (French J).
11. Eg Bookarelli Pty Ltd v Katanga Developments Pty Ltd (No 2) [2017] NSWCA 94 at [13] (Macfarlan and Payne JJA, Sackville AJA).
12. Eg Harrison v Schipp [2001] NSWCA 13 at [138]-[139] (Giles JA; with whom Handley and Fitzgerald JJA agreed).
13. The Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd [2007] WASC 257 S at [5] (Pullin and Buss JJA, Newnes AJA)’ cited with apparent approval in Chaina v Alvaro (supra) at [109].
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I find this a clear case to award indemnity costs up to 3 December 2020, on which date Drip World sought to amend the proceedings to join Yellow Presents as plaintiff in the proceedings.
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Prior to 3 December 2020, the proceedings were bound to fail because Drip World did not exist on the critical date. Drip World, properly advised, must be taken to have known when it was incorporated and thus to know that the claim as constituted to 3 December 2020 could not succeed.
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I accept, however, that the application to amend to substitute Yellow Presents as plaintiff was at least arguable.
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For those reasons, my conclusion is that Drip World should pay WME’s costs of the proceedings up to, but not including, 3 December 2020 on an indemnity basis and to pay WME’s costs of and after 3 December 2020 on the usual basis.
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Mr Sulan also drew my attention to Calderbank offers sent by WME to Drip World on 17 July 2020, 28 October 2020 and 12 November 2020.
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Those letters each addressed the proceedings as then constituted and, in my opinion, take the matter no further than the matters I have set out above.
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I order that the plaintiff pay the second defendant’s costs of the proceedings on an indemnity basis up to, but not including, 3 December 2020 and on a party-party basis thereafter.
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Endnotes
Decision last updated: 12 February 2021
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