Duke Group Limited (in Liquidation) v Alamain Investments Limited - [2006] SASC 209

Supreme Court of South Australia
(Civil: Application)
DUKE GROUP LIMITED (IN LIQUIDATION) v ALAMAIN INVESTMENTS LIMITED & ORS
[2006] SASC 209
Judgment of The Honourable Justice White (ex tempore)
3 July 2006
PROCEDURE - COSTS - INTERLOCUTORY PROCEEDINGS
Application by defendants to set aside short form bill of costs served by plaintiffs - appeal to Full Court against decision of a single judge dismissing defendants' application to stay proceedings as an abuse of process - Full Court dismissed appeal with costs - consideration of Supreme Court Rule 101.07(7) which precludes a party proceeding, without an order of the Court, to a taxation of the costs of an interlocutory proceeding - whether proceeding before the Full Court was interlocutory in nature - Held: proceeding before Full Court interlocutory in nature - as plaintiff has no order allowing costs to be taxed pursuant to Rule 101.07(7) application granted.
Licul v Corney (1976) 180 CLR 213; Carr v Finance Corporation of Australia Ltd (No 1) (1981) 147 CLR 246; Hall v The Nominal Defendant (1966) 117 CLR 423, referred to.

DUKE GROUP LIMITED (IN LIQUIDATION) v ALAMAIN INVESTMENTS LIMITED & ORS
[2006] SASC 209
Civil (ex tempore)

WHITE J: By a decision delivered on 23 December 2003, the Chief Justice dismissed applications by the defendants for the dismissal or staying of this action on the grounds that it is an abuse of process. As part of the claim of abuse of process, the defendants had submitted that the proceedings were brought out of time and in circumstances in which the equitable defences of laches was bound to succeed.
The parties accept that the proceedings before the Chief Justice were interlocutory in nature. Leave to appeal his decision to the Full Court was granted by the Chief Justice on 12 February 2004. Separate appeals were filed by the second, third and fourth defendants, and by the fifth to eighth defendants.
On 11 March 2005, the Full Court, of which I was a member, dismissed the appeals and ordered the appellants to pay the plaintiff’s costs of and incidental to the appeals. The formal orders made by the Full Court were these:
1. The appeals be dismissed.
2. There be one set of costs with respect to both appeals.
3.The appellants pay the respondent’s costs of and incidental to both appeals to be taxed.
The third defendant is now represented separately from the second and fourth defendants. The fifth to eighth defendants, as a group, remain separately represented.
The plaintiff now seeks a taxation of the costs of the appeals. On 9 June 2006, it served on the defendants a short form bill of costs in accordance with r 101A.02.
The defendants were required, within 21 days of receipt of that short form bill, to respond in writing.[1] Rule 101A.02 provides for the procedure thereafter. It is not necessary to detail that procedure. It is sufficient to say that it provides for effect to be given to any agreement as to costs to which the response or responses indicate the serving party is entitled and, in the absence of agreement, permits the serving party to seek a taxation of the costs in dispute in accordance with r 101.
[1] Supreme Court Rules 101A.02(2).
The second and fourth defendants dispute that the plaintiff is presently entitled to enforce the order for costs in its favour. They refer to r 101.01(7) which provides:
An order for costs of an interlocutory proceeding shall not, unless the Court otherwise orders, entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded or further order.
I note that the action which a successful party is precluded from taking until the conclusion of the principal proceeding or until further order, is the taxation of costs itself.
Rule 101.01(6) provides that:
Where the Court makes an order in any proceeding for the payment of costs the Court may require that the costs be paid forthwith notwithstanding that the proceeding is not concluded.
The second and fourth defendants submit that the proceeding before the Full Court was interlocutory in nature and that, in the absence of any order to the contrary, the plaintiff is not entitled to proceed to a taxation of the costs of the appeal.
It is common ground that no order has been made by the Full Court that the costs be paid forthwith, and further, that no order permitting the plaintiff to proceed to taxation has been made.
By their notice for specific directions filed on 23 June 2006, the second and fourth defendants seek an order that the service of the short form bill of costs be set aside. In the alternative, they seek an extension of the time fixed by r 101A.02(2) in which they might respond to that short form bill.
The third defendant and the fifth to eighth defendants have not made applications to like effect themselves, but appear today to support the application of the second and fourth defendants.
Each defendant has, I am told, out of an abundance of caution, served responses in accordance with r 101A.02 upon the plaintiff. I understand, however, that in the event that the defendants are not successful in obtaining the relief they seek, they would wish to have an opportunity to serve a more detailed response.
The plaintiff opposes the relief sought by the defendants.
I am hearing this application as I am the judge assigned to manage the action.
It was not in dispute that the court does have power to set aside the service of a short form bill of costs.[2] The court also has power to extend the time in which a recipient party may respond to a short form bill.[3] An express power to that effect is also to be found in r 101A.2(2).
[2] See rr 3.04 and 3.05.
[3] See r 3.04.
The application which I am now considering is not an application for immediate enforcement of the costs of an interlocutory proceeding. If the decision of the Full Court is interlocutory in nature, an order to that effect can, in my opinion, be made only by the Full Court. I am informed that the plaintiff does not intend to apply to the Full Court for such an order.
If the appeal proceedings in the Full Court are correctly categorised as interlocutory in nature, then it is plain that the present attempt by the plaintiff to enforce its costs order is premature. In saying that, I do not overlook that the action which is proscribed by r 101.01(7) is the actual taxation of a bill of costs and not the delivery of a short form bill. The two actions are, however, inextricably linked. The delivery of a short form bill is an essential step in the process towards taxation of costs. A party cannot proceed to a taxation until a short form bill has been delivered. I am inclined to read r 101.01(7) expansively, therefore, so that it includes not only an actual taxation but the taking of a step which is an essential prerequisite towards the taxation of costs.
That requires me to consider, therefore, whether the proceeding in the Full Court was interlocutory in nature. In my opinion, that question is to be resolved in the same way in which the question of whether decisions are final or interlocutory is traditionally resolved, ie, by a consideration of whether the Full Court decision finally determined the rights of the parties.[4] As Mr Whitlam QC has submitted, that is not always an easy test to apply in practice. The court is required to have regard to the legal effect rather than the practical effect of the proceedings and of the order.
[4] Licul v Corney (1976) 180 CLR 213; Carr v Finance Corporation of Australia Ltd (No 1) (1981) 147 CLR 246.
The question really is whether a proceeding by way of appeal from an interlocutory order is itself interlocutory in nature. In resolving that question, assistance can be drawn, in my opinion, from the decisions of the High Court in Licul v Corney[5] and in Carr v Finance Corporation.[6]
[5] (1976) 180 CLR 213.
[6] (1981) 147 CLR 246.
In Licul v Corney the High Court held that a decision of the Full Court of the Victorian Supreme Court setting aside an order for substituted service, and an order as to the validity of service affected pursuant to that order, was an interlocutory judgment for the purposes of s 35(1)(a) of the Judiciary Act1903 (Cth). In Carr v Finance Corporation, the High Court held that a decision of the Full Court of the Supreme Court of New South Wales dismissing an appeal from an order refusing to set aside a judgment obtained in default of a defendant filing a defence was interlocutory in nature.
It was held in each case that the rights of the parties had not been finally determined. Those decisions suggest that the question of whether the rights of the parties have been finally determined is to be resolved not by a consideration of the rights of the parties in the appeal process itself, but by reference to the underlying claims asserted by the parties in the litigation giving rise to the appeal.
In my opinion the same holds true in the present case. It is still at least legally open to the defendants to pursue further interlocutory proceedings to have the plaintiff’s claim struck out on the grounds of abuse of process, lateness or laches. In any event, their claims in that respect are issues in the substantive trial. In a practical sense, it may not be open to the defendants to bring further interlocutory proceedings seeking to have the plaintiff’s claim struck out as an abuse of process, but for the reasons already mentioned, that is not the relevant test.
Mr Whitlam QC drew a distinction between an interlocutory order on the one hand and an interlocutory proceeding on the other. I accept that there is such a distinction. There may be cases in which an appeal from a decision following an interlocutory proceeding does give rise to a final order. There may also be cases in which resolution of the question of whether an order is final or interlocutory may depend upon who it was who was successful in the proceeding and hence on the precise nature of the order which was made. In Hall v The Nominal Defendant[7] Windeyer J gave an example of the latter kind of case.
[7] (1966) 117 CLR 423 at 443.
In the present case, however, I am satisfied that the proceeding before the Full Court is correctly characterised as an interlocutory proceeding. It was an appeal from an interlocutory order of a single judge and the order made on the conclusion of the appeal was not an order which had the effect of finally determining the rights of the parties in the action.
Mr Whitlam QC submitted that while the appeal itself could be categorised as interlocutory in nature, the costs order made by the Full Court was not interlocutory. It had the effect of determining finally the entitlements of the parties with respect to the costs of the appeal. In my opinion, that point does not avail the plaintiff. The subject of r 101.01(7) is the costs of an “interlocutory proceeding”. If the proceeding in the Full Court was interlocutory (as I consider it to be), then it is immaterial whether the costs order in respect of those proceedings is regarded as interlocutory or final.
Accordingly, as the plaintiff has not obtained any order pursuant to rr 101.01(6) or 101.01(7), I am satisfied that the plaintiff is not presently entitled to have the costs awarded to it by the order of the Full Court taxed. Rule 101.01(7) precludes it from doing so.
In case I am wrong in that conclusion, I will consider the alternative claim of the second and fourth defendants, namely, the claim for an extension of the time within which to serve a further response to the short form bill of costs.
One matter which, by itself, suggests that at least some extension is appropriate is the frank acknowledgment by Mr Rochow, who appeared for the second and fourth defendants, that the response served so far was in the nature of a holding action simply to preserve the position of the defendants until the present application could be determined. Implicit in Mr Rochow’s submission was the suggestion that a more complete and elaborate response than that provided to date would be appropriate. However, the second and fourth defendants seek an extension for a much longer period, and, in any event, until after the conclusion of the trial.
There are factors which operate in favour of both sides in relation to an extension.
In the first place it could be said in favour of the plaintiff that the decision of the Full Court was very much in the nature of a determination of a discrete part of the action, namely the attempt by the defendants to obtain a summary dismissal of its claim.
It could also be said that considerable time may yet elapse before the proceedings may be concluded. The trial is listed to commence on 4 December 2006 and it may not conclude until the expiry of a further four months. It is reasonable to suppose that it might take some time after the conclusion of the trial for a judgment to be delivered and there is always the prospect of appeal. Those are matters in support of the position of the plaintiff.
Despite those considerations, however, had I been required to exercise the discretion, I would have exercised it in favour of the defendants for a number of reasons.
The first is that I consider that there is considerable merit in the underlying rationale of the general rule that costs of interlocutory proceedings ought not to be taxed until the conclusion of the action; that is, that in general there ought to be only one taxation of costs in an action. That rationale has operation, in my opinion, in the present case.
The second reason is a more pragmatic consideration. The short form bill has been served only recently and at a time when the parties are expected to be devoting their energies to preparation for a major trial. I do not consider that the parties should be distracted from that preparation by having to address cost issues. That is a particularly pertinent consideration given the present proximity of the trial and the length of time which has elapsed since the order of the Full Court.
Thirdly, I am not aware that the plaintiff will suffer any particular prejudice if it is not able to proceed to enforce its entitlement to costs in the near future.
Fourthly, I am aware that the second and fourth defendants have limited financial means. They have put evidence of their financial status before the court in relation to other applications made to me in the course of my management of this action. With a view to maintaining the confidentiality of that material I have caused the affidavits containing that material to be bound up, but I have been referred to it for the purposes of the present application.
It is not necessary for me to recount in these reasons the detail of the financial circumstances of the second and fourth defendants. It is sufficient, I think, for me to indicate that I accept that if the plaintiff was permitted to enforce its entitlement to costs now, there is a very real risk that the ability of the second and fourth defendants to conduct their defence would by reason of a dilution of their financial resources, be adversely affected. I accept that such an effect could be avoided if the plaintiff was permitted to proceed to a taxation and to obtain an allocatur but was stayed from executing that allocatur, but I do not regard that as a desirable way in which to proceed.
Lastly, there is the fact that the decision of the Chief Justice which gave rise to the appeal was interlocutory. No steps have been taken by the plaintiff to tax the costs of the proceeding before the Chief Justice. I infer that that is because the plaintiff accepts that r 101.01(7) prevents it from doing so in the absence of an order entitling it to enforce the costs order that was made in its favour. The course adopted by the plaintiff contemplates the possibility, therefore, that there may be one taxation in respect of the appeal costs but a separate taxation in respect of the costs of the first instance proceeding to which the appeal relates. I regard such a prospect as undesirable and as, by itself, constituting good reason for an exercise of the discretion (were I called upon to exercise it) in favour of the defendants.
However, for the reasons already given, I am satisfied that it is appropriate to grant the first form of relief sought by the second and fourth defendants.
Although the third defendant and the fifth to eighth defendants have not sought relief in similar terms, they do, as I said at the outset, support the position of the second and fourth defendants. It is not desirable for there to be any differentiation between the defendants with respect to the taxation of the order for costs, especially, as Mr Robertson has pointed out, as the order of the Full Court was that there be one set of costs in relation to both appeals. I will therefore make orders relating to the short form bill served on all defendants.
I make the following orders:
1.That the short form bill of costs served by the plaintiff on the second and fourth defendants, on the third defendant, and on the fifth to eighth defendants, on 13 June 2006 be set aside.
2.That the respective responses of the second and fourth defendants, the third defendant and the fifth to eighth defendants to that short form bill of costs be set aside.
3.That the plaintiff pay the costs of the second and fourth defendants, third defendant and fifth to eighth defendants of and incidental to the hearing of the Notice for Specific Directions filed on 23 June 2006, being file document No 222.