Francovic, Boris v Fazzolare, John Domenic

[1996] FCA 561

NOT SUITABLE FOR DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA     )

)

NEW SOUTH WALES DISTRICT REGISTRY     )    NG 700 of 1994

)

GENERAL DIVISION  )

BETWEEN:

BORIS FRANCOVIC

Applicant

AND:

JOHN DOMENIC FAZZOLARE

First Respondent

AND:

ARISTOCRATIC LEISURE   INDUSTRIES PTY LIMITED

Second Respondent

CORAM:  Burchett J.
PLACE:  Sydney
DATE:   9 July 1996

MINUTE OF ORDER OF THE COURT

THE COURT ORDERS THAT:

(1)The applicant pay, on a party and party basis, the first and second respondents' costs of the motion to strike out the further amended statement of claim and of the motion for discovery, including all costs thrown away by reason of the successive amendments of the pleadings.

(2)Each party bear its own costs of the argument as to the basis on which the costs order in paragraph 1 should have been awarded.

NOTE:     Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA     )

)

NEW SOUTH WALES DISTRICT REGISTRY     )    NG 700 of 1994

)

GENERAL DIVISION  )

BETWEEN:

BORIS FRANCOVIC

Applicant

AND:

JOHN DOMENIC FAZZOLARE

First Respondent

AND:

ARISTOCRATIC LEISURE   INDUSTRIES PTY LIMITED

Second Respondent

CORAM:  Burchett J.
PLACE:  Sydney
DATE:   9 July 1996

REASONS FOR JUDGMENT

BURCHETT J.   This is an application by the respondents for an order that the applicant pay their costs on an indemnity basis for the period from the commencement of the proceedings until the date on which the applicant was granted leave by the court to file a second further amended statement of claim. 

The respondents' submissions in support of this application were lodged following the hearing on 2 April 1996 of a notice of motion filed by the respondents seeking an order that the further amended statement of claim be struck out, either wholly or in part.  A motion of the applicant was
also heard, seeking an order that the respondents provide discovery in advance of the provision of further particulars.  The history of the pleadings had been quite protracted, two substantially amended versions of the statement of claim having been filed since the original statement of claim was filed in October 1994 and lengthy correspondence having passed between the parties concerning alleged deficiencies in the applicant's pleadings.  The substance of the argument at the hearing concerned problems in the pleadings, including inconsistencies, failures by the applicant to plead legally viable causes of action, and insufficiency of particulars. 

Many of the respondents' arguments were persuasive to show that indeed there were serious defects in the applicant's pleadings, and during the course of his submissions in reply, Mr Miller QC for the applicant conceded that substantial amendments to the statement of claim were necessary.  Mr Yates for the respondents agreed to allow the applicant an opportunity to bring in fresh pleadings, and it was understood that costs consequences would follow.  In the circumstances, the applicant's motion for discovery was not pressed further, and ultimately was formally dismissed by consent.  The applicant was directed to lodge a draft second further amended statement of claim, which it did, albeit not within the time directed, and on 24 June 1996 leave was given to file the further pleading. 

An examination of the second further amended statement of claim reveals that the majority of the claims challenged by the respondents in their application to strike out have now been abandoned.  The new pleading is a much shorter, more succinct, document than its predecessor.  Indeed it most closely resembles the initial statement of claim.  It also overcomes other deficiencies which existed in the previous pleadings by the provision of particulars.

Despite the distressing problems caused by the deficiencies in the applicant's pleadings, and the time lost by reason of the successive amendments, I do not consider this to be the sort of case where an order for indemnity costs is warranted.  In Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225, Sheppard J canvassed the authorities in this area and distilled a number of principles. His Honour restated (at 232-233) the ordinary rule, which has "been the settled practice for centuries", that where the court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. He went on to say:

"In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis.  The circumstances of the case must be such as to warrant the Court in departing from the usual course.  ... (T)here should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice."

I respectfully accept what French J said in Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court, 3 May 1991), that the categories of cases in which the discretion may be exercised are not closed.   However, I do not think a new category should be designed for this case.  Something more serious than has been shown here would be required to move me to make the exceptional order sought.  Examples of the sort of situation the principle envisages are listed by Sheppard J in Colgate-Palmolive at 233-234.  But it should be noted that many of these situations involve matters of degree, so that they do not present clear-cut criteria.  I do not think what happened here, though near the line, constitutes a sufficiently serious case.

The respondents contend for a principle that where the court finds a claim by an applicant to be so untenable that it cannot possibly succeed, then the respondent should not in consequence suffer in a monetary sense.  NRMA Insurance Ltd v FR Coyle Pty Ltd (unreported, Cole J, Supreme Court of New South Wales, 13 May 1994) is cited as authority for this proposition.  However, "cannot possibly succeed" is a general test for striking out a claim, and the courts do not normally make orders for indemnity costs simply because a claim is struck out.  Indeed, upon awarding indemnity costs in the case cited, Cole J said:

"This does not mean ... that in every case where a court strikes out a plaintiff's claim indemnity costs will automatically follow ... (E)ach case must
be considered by reference to its particular circumstances".

For these reasons, it will be ordered that the applicant pay, on a party and party basis, the first and second respondents' costs of the motion to strike out the further amended statement of claim and of the motion for discovery, including all costs thrown away by reason of the successive amendments of the pleadings.  However, each party is to bear its own costs of the argument as to whether those costs should have been awarded on that basis. 

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Burchett.

Associate:

Date: 9 July 1996.

Counsel for the Applicant:       Mr G.T. Miller, QC and Mr R.N. Gye

Solicitors for the Applicant:        Tress Cocks & Maddox

Counsel for the Respondents:     Mr D.M. Yates and Mr S.C.G. Burley

Solicitors for the Respondents:   Gilbert and Tobin

Date of hearing:                 2 April 1996