Genworth Financial Mortgage Insurance Pty Limited v Peter Clisdell Pty Limited (No 2)
[2009] FCA 1078
•17 SEPTEMBER 2009
FEDERAL COURT OF AUSTRALIA
Genworth Financial Mortgage Insurance Pty Limited v Peter Clisdell Pty Limited (No 2) [2009] FCA 1078
COSTS – costs thrown away by reason of amendment of defence and consequent vacation of hearing date – where amendment to defence caused by issuance of a subpoena – circumstances of issuance of subpoena and effect of those circumstances on late amendment to the defence resulting in the vacation of the hearing date – whether indemnity costs order warranted.
Held: respondents pay applicant’s costs.
Genworth Financial Mortgage Insurance Pty Limited v Peter Clisdell Pty Limited [2009] FCA 1014
Jones v Dunkel (1959) 101 CLR 298GENWORTH FINANCIAL MORTGAGE INSURANCE PTY LIMITED (ACN 106 974 305) v PETER CLISDELL PTY LIMITED, MARK GERARD CASEMORE and BRUCE CLISDELL; MACQUARIE UNDERWRITING PTY LIMITED (ACN 008 497 318)
NSD 635 of 2008
JAGOT J
17 SEPTEMBER 2009
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 635 of 2008
BETWEEN: GENWORTH FINANCIAL MORTGAGE INSURANCE PTY LIMITED (ACN 106 974 305)
ApplicantAND: PETER CLISDELL PTY LIMITED
First Respondent / First Cross-ClaimantMARK GERARD CASEMORE
Second Respondent / Second Cross-ClaimantBRUCE CLISDELL
Third Respondent / Third Cross-ClaimantMACQUARIE UNDERWRITING PTY LIMITED (ACN 008 497 318)
Cross-Defendant
JUDGE:
JAGOT J
DATE OF ORDER:
17 SEPTEMBER 2009
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The respondents pay the applicant’s costs thrown away by reason of the vacation of the hearing dates fixed for 7-11 and 17 September 2009, as agreed or taxed. The costs may be agreed or taxed forthwith.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 635 of 2008
BETWEEN: GENWORTH FINANCIAL MORTGAGE INSURANCE PTY LIMITED (ACN 106 974 305)
ApplicantAND: PETER CLISDELL PTY LIMITED
First Respondent / First Cross-ClaimantMARK GERARD CASEMORE
Second Respondent / Second Cross-ClaimantBRUCE CLISDELL
Third Respondent / Third Cross-ClaimantMACQUARIE UNDERWRITING PTY LIMITED (ACN 008 497 318)
Cross-Defendant
JUDGE:
JAGOT J
DATE:
17 SEPTEMBER 2009
PLACE:
SYDNEY
REASONS FOR JUDGMENT
On 7 September 2009 I granted leave to the respondents to amend their defence (Genworth Financial Mortgage Insurance Pty Limited v Peter Clisdell Pty Limited [2009] FCA 1014). The remaining issue is that of costs in relation to the consequent vacation of the hearing date.
In my reasons for decision delivered on 7 September 2009, the circumstances in which the hearing date came to be vacated by reason of the respondents’ application for leave to amend their defence are identified. I do not propose to repeat those circumstances. Insofar as relevant, I incorporate them into the reasons I now give.
In short, the applicant says that the respondent should pay the applicant’s costs thrown away by reason of the vacation of the hearing date on an indemnity basis. The applicant’s submissions in support of this proposition are straightforward. The applicant says that:
(1)the respondents have been aware of their exposure to a claim for damages since February 2006 when they notified their insurers of the prospect of a claim;
(2)these proceedings have been on foot since May 2008 and, the applicant has always claimed damages by reason of the respondents’ alleged liability;
(3)the respondents delayed taking any action in relation to the defence of the claim for damages, other than putting the applicant to proof by reason of the defence and it was not until May 2009 that the respondents took steps to issue the subpoena to FirstMac Limited, the lender, which has generated the need to seek leave to amend the defence; and
(4)although it is the case that the applicant sought to have the subpoena set aside, it still took four weeks for the respondents to inspect and examine the documents produced under the subpoena on 23 July 2009.
The applicant says it follows from these matters that in accordance with the usual course, the applicant should have the benefit of its costs thrown away, occasioned by the vacation of the hearing date as a consequence of the respondents’ late application to amend. In addition, the applicant seeks indemnity costs on the basis of the circumstances which led to the late application to amend.
The respondents’ position is more complex.
The respondents say that there are two possible costs orders which would properly reflect the circumstances of the case, depending upon the facts as found. The first is an order that each party bear its own costs of the vacation, but that the applicant indemnify the respondents in respect of one half of the costs which they were ordered to pay in relation to the cross-defendant, namely, the professional indemnity insurer. This order is supported by reason of some fairly brief submissions to the effect that the reason for the late amendment can be sheeted home to the applicant as a result of its resistance to the subpoena served on FirstMac on or about 11 May 2009.
The respondents say that had FirstMac and subsequently the applicant not resisted production of documents under the subpoena (and in this regard, I should note that FirstMac’s rights are subrogated to those of the applicant) then the documents under the subpoena could have been produced eight weeks before 23 July 2009. According to the respondents, this would have given ample time to the parties to consider their respective positions. The consequence would then have been that although the hearing date may have still needed to be vacated, any costs thrown away by that vacation would have been possibly avoided altogether.
The alternative position of the respondents is that the applicant should pay the respondents’ costs thrown away by reason of the vacation of the hearing dates, albeit on the usual, and not an indemnity, basis. This submission depends on the drawing of inferences from certain documents and circumstances. The inference that the respondents seek to draw is that from at least about May 2009 onwards (that is, the time of the service of the subpoena), the actions of the applicant and FirstMac in resisting the subpoena should be understood as a consequence of the fact that the applicant was aware that the contents of the documents to be produced under the subpoena had the potential to open a line of inquiry about the bona-fides of the borrowers. This has in fact resulted with the consequence that the applicant resisted the subpoena at its own risk as to the consequences of late amendment.
The respondents say that this inference can be drawn by reviewing documents which disclose that neither the applicant nor FirstMac has attempted to enforce the loan agreements or the personal covenants for repayment in respect of the properties the subject of the proceedings. Instead, FirstMac has simply taken whatever measures were necessary to gain possession of each of the properties, and then sold them as mortgagee in possession. This is so in circumstances where, for example, at least one of the nominated borrowers, Monica Tong, is still resident at an address known to the parties, with there being no suggestion that she would not be a worthwhile commercial target for enforcement of her apparent contractual obligations of repayment under the relevant loan.
The respondents say that when these circumstances are combined with the fact that the applicant has called no evidence about matters within its control and knowledge, given the subrogation of FirstMac’s rights to the applicant, the inference should be drawn that the applicant, in effect, is conscious of problems in proceeding with any claim against the borrowers, and thereby, it is said, resisted the subpoena with those matters in mind.
Finally, the respondents say there is no basis for the applicant’s claim for indemnity costs. Indemnity costs are not the usual order. They are unusual in sense that some special or exceptional circumstance, usually having regard to some particular default in conduct on the part of the recipient of such an order, is required.
In terms of these issues in dispute, it seems to me that the respondents’ difficulties are twofold. First, I accept the submission by Mr Newton, counsel for the applicant, that the time issues in relation to the subpoena only became critical because of a long delay by the respondents in making a decision to issue a subpoena to the lender. That subpoena could have been issued at any time in the proceedings, and as the solicitor for the respondents’ own correspondence to FirstMac makes plain, seeks production of documents clearly relevant to the issues in dispute between the parties. It therefore is not a reasonable characterisation of the facts to say that the applicant’s or FirstMac’s actions to resist the subpoena caused the late application to amend. The prime cause is the timing of the issue of the subpoena.
The subpoena was in relatively broad terms, unlimited as to date, but be that as it may, there is no basis to infer that the applicant was doing anything other than acting in accordance with its rights to challenge the validity of the subpoena on the grounds that it did. The fact is it was ultimately unsuccessful. In any event, I have considerable difficulty in accepting what seems to me to be a fairly high level of speculation that if the documents had been produced earlier, then everything could have been done so as to keep the hearing date in place (which seems highly unlikely) or that all or most of the costs associated with a vacation of the hearing date could have been avoided. I do not draw either inference.
As to the other aspects of the respondents’ submissions, again I accept Mr Newton’s response that based on the material before me, there is simply a lack of foundation for the drawing of any inference against the applicant that somehow it decided to resist the subpoena for an improper purpose in effect to prevent the respondents from obtaining access to otherwise relevant documents, so as to avoid a line of inquiry potentially relevant to the respondents’ defence. The documents do not enable that inference to be drawn, and they do not enable the reliance on the reasoning in Jones v Dunkel (1959) 101 CLR 298. There is simply an absence of evidence from which such an inference about what is a relatively serious allegation would be drawn.
In those circumstances, the respondents’ submissions do not persuade me that the usual order as to costs is inappropriate. However, I am persuaded by the respondents’ submissions that there is no basis in the circumstances of this matter, as explained in my reasons delivered on 7 September, for an order for indemnity costs. It seems to me that this matter, in terms of the vacation of the hearing date, is in the usual run of things. There has been no conduct by the respondents which would warrant liability in terms of costs under an indemnity costs order. Rather, consistent with the ordinary principle, the applicant should be compensated for the fact that it may have suffered costs thrown away by reason of the respondents’ late application to amend the defence.
I should also address the remaining issue of the claim, that the applicant indemnify the respondents in respect of one half of the costs of the cross-defendant. In relation to that issue, I accept Mr Newton’s submission that the applicant is not a party to the cross-claim, it has not made any claim against the cross-defendant, and in the circumstances which I have already referred to, there is no reason why the applicant should give any indemnity to the respondents in terms of the respondents’ liability for costs to the cross-defendant.
Accordingly, I make the usual order as to costs, namely, the respondents pay the applicant’s costs thrown away by reason of the vacation of the hearing dates fixed for 7-11 and 17 September 2009, as agreed or taxed. Those costs may be agreed or taxed forthwith.
I should also note that, following the delivery of these oral reasons, counsel for the respondents, Mr Parsons, clarified that no submission was being made to the effect that the applicant’s resistance to the subpoena was for an improper purpose. That clarification is acknowledged.
I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. Associate:
Dated: 17 September 2009
Counsel for the Applicant: Mr P T Newton Counsel for the Respondents/ Cross-Claimants: Mr R A Parsons and Mr T M Faulkner Solicitor for the Applicant: P H Legal Solicitor for the Respondents/ Cross-Claimants: McCulloch & Buggy Lawyers The Cross-Defendant did not appear.
Date of Hearing: 17 September 2009 Date of Judgment: 17 September 2009
0