Duffy v Marr

[2017] VSC 384

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST

S CI 2016 05220

ANDREW PETER DUFFY AND ANOTHER	Plaintiffs
v
GRAEME DAVID MARR AND ANOTHER	Defendants

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JUDGE:	JOHN DIXON J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	26 MAY 2017 (Further Submissions received 22 June 2017)
DATE OF JUDGMENT:	29 JUNE 2017
CASE MAY BE CITED AS:	DUFFY & ANOR v MARR & ANOR
MEDIUM NEUTRAL CITATION:	[2017] VSC 384

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COSTS – Interlocutory costs – Pleading amendment - Costs thrown away and costs of directions hearing – Whether court should otherwise order under r 63.17 – Whether immediate taxation should be directed – Civil Procedure Act 2010 (Vic), s 8(1), 9(1), Supreme Court (General Civil Procedure) Rules 2015 (Vic), rr 63.17, 63.20.1.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr J Castelan	MNG Lawyers
For the Defendants	Mr MS Goldblatt	Draddy Legal

HIS HONOUR:

1. On 26 May 2017, I granted leave to the defendants to file and serve a second further amended defence.  Amongst other directions, I directed that the parties exchange submissions in respect of the plaintiffs’ application for costs and an order for immediate taxation.

1. I received submissions from the plaintiffs dated 31 May 2017, from the defendants dated 8 June 2017 and from the plaintiffs in reply dated 22 June 2017.  The parties agreed that I should determine the question of costs on the basis of these written submissions without a further court attendance.

1. In the proceeding, the plaintiffs claim damages for defamation, injurious falsehood, and deceptive and misleading conduct. 

1. Relevantly, the procedural history is as follows. Initially, the defendants were not legally represented and a form of defence was served but not filed.  On 17 February 2017, the defendants’ current solicitors commenced to act and on 22 February 2017 filed a defence.  The plaintiffs complained of deficiencies in that defence and required that if the defendants proposed to amend it, an amended pleading ought to be provided by 14 March 2017.

1. An amended defence was filed and served on 16 March 2017.

1. On 17 March 2017, I struck out some paragraphs of that amended defence and gave the defendants leave to file and serve a further amended defence that repleaded the paragraphs struck out on the basis that in respect of each imputation, the defences are taken as separate and distinct allegations with proper particulars.

1. Pursuant to that order, a further amended defence dated 7 April 2017was filed on 10 April 2017.

1. Without prejudice, confidential discussions between counsel followed the service of that amended pleading.  On 1 May 2017, the defendants filed and served further and better particulars of the further amended defence.  The parties’ legal representatives exchanged further correspondence about the sufficiency of the pleading.

1. On 23 May 2017, the defendants served a proposed second further amended defence. As noted, I granted leave to the defendants to file and serve this pleading.

1. Rule 63.17 provides that where a pleading is amended (whether with or without leave), the costs of and occasioned by the amendment and the cost of any application for leave to make the amendment are the parties’ costs in the proceeding, unless the court otherwise orders.

1. Rule 63.20.1 provides that if an order for costs is made on an interlocutory application or hearing, the party in whose favour the order is made shall not tax those costs until the proceeding in which the order is made is completed, unless the court orders that the costs may be taxed immediately.

1. In relation to amendment of pleadings, the incidence and timing of any costs liability is ordinarily determined by the application of the rule and should not necessitate a contested application at a directions hearing. The default position is that an order is unnecessary and all are taxed together on the conclusion of the proceeding.

1. Notwithstanding this rule, the plaintiffs seek an order for the payment of their costs together with an order that they be immediately taxed. Plainly, the court has a discretion to so order. A ruling is presently required for two reasons. The defendants do not oppose an order that they pay certain costs thrown away, rather than the disputed costs (or some of them) being the parties’ costs in the proceeding. The plaintiffs apply for immediate taxation of the costs that they submit have been thrown away.

1. The plaintiffs submit that the court should otherwise make an order for immediate taxation of costs because the defendants have been guilty of unsatisfactory conduct, that is, conduct that was unreasonable, reprehensible or involving a want of competence and diligence.  This submission was advanced on the basis of Setka v Abbott (No 2)[1] and Dale v Clayton Utz (No 3).[2]

   [1][2013] VSCA 376, [27].

   [2][2013] VSC 593.

1. In Setka v Abbott (No.2), the Court of Appeal summarised the factors that may warrant an order for immediate taxation of costs as one or more of the following:

(a)    there is a prospect of considerable delay in completion of the proceedings;

(b)   the issue the subject of the interlocutory order is discrete from what will finally require determination; and

(c)    the party against whom the order was made has been guilty of unsatisfactory conduct, that is, conduct that was unreasonable, reprehensible or involving a want of competence and diligence. 

1. It was not necessary for the Court of Appeal in Setka v Abbott (No 2) to define more precisely circumstances in which a party may be adjudged guilty of unsatisfactory conduct.

1. It cannot be said that interlocutory disputes concerning the pleadings in defamation actions are matters that are discrete from what will finally require determination.  Nor can it be said in this case that there is a prospect of considerable delay in the completion of the proceeding. The plaintiffs submitted that the defendants’ conduct involved a want of competence and diligence by reason of the following features:

·The defence dated 20 February 2017 pleaded defences of truth, qualified privilege and honest opinion that were rolled up into a single paragraph without any particulars;

·The amended defence dated 14 March 2017 still contained obvious deficiencies in the truth, qualified privilege and honest opinion defences, as was evident from the orders I made on 17 March 2017 striking out those paragraphs;

·The further amended defence dated 7 April 2017 remained deficient in many areas, a deficiency that was exacerbated by the further and better particulars dated 1 May 2017;

·Further complaint from the plaintiffs’ legal representatives resulted in the service of the second further amended defence dated 23 May 2017.

1. It is all too common a problem that parties and their legal advisers struggle with the technicalities required in pleading defamation defences. 

1. For my part, I am not persuaded that the conduct identified by the plaintiffs in this case can be described as unreasonable, reprehensible or involving a want of competence and diligence.  The underlying purpose of the rules is to avoid multiple taxations and to leave taxation of costs until all issues of costs between the parties have been resolved.  At one extreme, it could be suggested that a party was guilty of unsatisfactory conduct because failing to get a pleading right on the first occasion may demonstrate a want of competence and diligence.  I do not consider that the rule against immediate taxation should be excepted in such circumstances. 

1. The purpose of setting a threshold for unsatisfactory conduct is to permit the objective of the rule to be achieved enabling the overarching purpose of civil litigation to be effected. The rule must be interpreted in this context.[3] The court has regard to the objects set out on s 9 of the Civil Procedure Act 2010 when furthering the overarching purpose. Those objects include the efficient conduct of the business of the court and the efficient use of judicial and administrative resources, in this case, judicially managed directions hearings for case management and the resources of the Costs Court in taxations.

   [3]Civil Procedure Act 2010 (Vic), s 8(1).

1. While the relevant inquiry whether the defaulting party’s conduct was unreasonable, reprehensible or involved a want of competence and diligence, the degree to which that conduct answers that description is determined by reference to the purpose of the rule.  The bar may be lower where unsatisfactory conduct has occasioned considerable delay, or where the issue was discrete as in Dale v Clayton Utz (No 3). Where, as here, unsatisfactory conduct is merely founded on conduct that is frequently seen by the court, namely, an inability to plead the case correctly on the first occasion, the party applying for immediate taxation must demonstrate the degree of fault implicit in the phrase ‘unreasonable, reprehensible or involving a want of competence and diligence’.

1. In many instances, the requisite degree of unsatisfactory conduct will be demonstrable.  In other cases, the proper cause of unsatisfactory pleading may be more obscure. I am not persuaded in the present circumstances that the defendants’ conduct warrants an order for immediate taxation and that application is refused. I see no reason in the circumstances to upset the intended consequence of the usual application of the rule. Parties should not make applications to disturb the intended consequences of the rules unless a clear basis to enliven the relevant discretion is properly demonstrated.

1. Ordinarily, I would not be minded to make a further order in respect of costs associated with the orders I have made effecting the status of the defendants’ defence. The incidence of costs on the application should to be determined in accordance with r 63.17 and r 63.20.1. For the court to make an alternate order requires the exercise of a discretion and the plaintiffs’ argument was circular. They advanced no basis for a discretionary order beyond the arguments put for or against immediate taxation, which would not be available to the plaintiffs on the unexcepted application of r 63.17. However, because the defendants agreed that they ought to pay costs thrown away in respect of the amended defence dated 14 March 2017, and the further amended defence dated 7 April 2017, I will make an order for those costs.

1. However, those costs may not represent all costs occasioned by the amendments made by the defendants and my order is not intended exhaustively to state the position in respect of costs wasted by the plaintiffs and occasioned by the defendants’ conduct in relation to their defence. Any liability asserted by the plaintiffs in the defendants for remaining costs is to be determined in accordance with r 63.17. Beyond a want of opposition to part of the costs sought, no satisfactory basis was demonstrated to depart from the rule.

1. Finally, I am satisfied that the defendants’ conduct caused the expense of an additional directions hearing, being the directions hearing that was held on 17 March 2017. I will order that the plaintiffs’ costs of and occasioned by the appearance before the court on 17 March 2017 are their costs in the proceeding.

1. I will also direct that the proceeding be listed for further directions at 9.30 am before the judge in charge of the Major Torts List on 1 September 2017.

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