GVE Hampton Pty Ltd v Shangri-La Construction Pty Ltd
[2018] VCC 1806
•12 November 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
BUILDING CASES LIST
Case No. CI-17-04885
| GVE Hampton Pty Ltd | Plaintiff |
| v | |
| Shangri-La Construction Pty Ltd | Defendant |
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JUDGE: | HIS HONOUR JUDGE COSGRAVE | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 1 November 2018 | |
DATE OF JUDGMENT: | 12 November 2018 | |
CASE MAY BE CITED AS: | GVE Hampton Pty Ltd v Shangri-La Construction Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 1806 | |
REASONS FOR JUDGMENT
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Subject:PRACTICE AND PROCEDURE – COSTS
Catchwords: PRACTICE AND PROCEDURE – Review of decision of Judicial Registrar – Conduct of parties to civil proceeding – Overarching obligations – Whether overarching obligations apply to non-party
COSTS – Non-party costs – Plaintiff/respondent company insolvent – Unable to meet order for costs – Whether director of plaintiff company was ‘real party’ to litigation – Neither role nor interest sufficient to enliven costs discretion
Legislation Cited: Building and Construction Industry Security of Payment Act 2002 (Vic); Civil Procedure Act2010 (Vic); County Court Act 1958 (Vic); Evidence Act 2008 (Vic); Supreme Court Act 1986 (Vic)
Cases Cited:Briginshaw v Briginshaw (1938) 60 CLR 336; Commissioner of State Revenue v Carmrer Pty Ltd & Ors [2014] VSC 571; Gdanski v Palms Court Management Pty Ltd [2017] VSCA 348; Giles v Jeffrey [2016] VSCA 314; Knight v FP Special Assets Ltd (1992) 174 CLR 178; Linchi Group Pty Ltd v Wang [2018] VSC 482; Rushton (Qld) Pty Ltd v Rushton (NSW) Pty Ltd [2004] QSC 47
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D Snyder | RKL Lawyers |
| For the Defendant | Mr D Noble (solicitor) | Noble Lawyers |
HIS HONOUR:
Nature of application
1 This is an application by the defendant to review orders made by Judicial Registrar Tran on 31 August 2018. The orders sought to be reviewed were that:
(a) the summons dated 5 July 2018 was dismissed;
(b) the defendant/applicant was to pay the respondent’s costs relative to the 5 July 2018 summons on a standard basis fixed in the sum of $6,000; and
(c) the proceeding was otherwise dismissed without adjudication on the merits and with no order as to costs.
2 The defendant seeks a review of the first two orders on the following grounds:
(1) The learned Judicial Registrar, applying the Knight principle, ought to have exercised her discretion in favour of an order for costs against Vladislav Hyatt pursuant to section 78A of the County Court Act 1958 (Vic);
(2) The learned Judicial Registrar ought to have exercised her discretion to order costs against Mr Hyatt pursuant to section 29 of the Civil Procedure Act 2010 (Vic) (“the Act”) in respect of, on the balance of probabilities, a contravention of one of the overarching obligations, namely the paramount duty pursuant to section 16 of the Act and/or the overarching obligation to act honestly pursuant to section 17 of the Act and/or the obligation not to mislead or deceive pursuant to section 21 of the Act.
Background
3 The plaintiff company was incorporated in 2013. It is currently in voluntary liquidation. The liquidators appointed were Peter Gountzos and Michael Carrafa.
4 At all relevant times, the plaintiff has had three equal shareholders: Krok Developments Pty Ltd, AG Krok Developments Pty Ltd and Hyatt Investments Pty Ltd. Until August 2017, the plaintiff had three directors: Eugene Krok, Greg Krok and Vladimir Hyatt. After August 2017, Hyatt was the sole director.
5 The plaintiff undertook a property development in Hampton. The defendant was the builder for that development. On 28 August 2014, the plaintiff and the defendant entered into a building agreement.
6 During the course of the project, there were various contractual disputes between the plaintiff and the defendant. There were several disputes between the parties prior to the appointment of the liquidators. One dispute between the parties had already been resolved. This arose from the defendant making an application under the Building and Construction Industry Security of Payment Act 2002 (Vic) (“the SOP Act”). The defendant obtained an adjudication in its favour and registered the consequential determination as a judgment against the plaintiff in the sum of $194,266.30. In the present proceeding, the plaintiff has raised claims against the defendant which could not be raised in the adjudication proceedings. The claims relate primarily to liquidated damages claims. The plaintiff claims approximately $259,000 as owing under the building contract.
7 The statement of claim was settled by counsel and reviewed by the plaintiff’s solicitors. Hyatt signed an overarching obligations certification and the plaintiff’s solicitor signed a proper basis certification.
8 In about mid-November 2017, there was correspondence between the parties’ solicitors in which the defendant sought security for costs from the plaintiff in the sum of $69,500. The solicitor for the plaintiff contended that unless and until the defendant prepared, filed, and served a defence, there was no basis for an application for security for costs. In any event, the plaintiff’s solicitor contended that the amount sought by way of security was not just premature and without foundation, but was excessive. The plaintiff’s solicitor added that, in the absence of a defence, the plaintiff would proceed to enter judgment against the defendant.
9 On 28 November 2017, the defendant filed its defence in the proceeding.
10 On 1 December 2017, the defendant filed an application for security for costs. The application was returnable on 5 December 2017. At that time, the court ordered that the hearing of the application be adjourned to 1 February 2018. This was because on the day before, namely 4 December 2017, the plaintiff entered into voluntary liquidation as a result of a resolution by its shareholders.
11 In an initial notice to creditors, the liquidators of the plaintiff set out a brief summary of the meetings, discussions, and correspondence which had taken place between them and the plaintiff. The liquidators revealed that there was an initial meeting between Peter Gountzos, the plaintiff’s external accountant and Hyatt on 4 October 2017. The purpose of the meeting was to obtain information about the plaintiff company and to advise the accountant and director on the consequences of insolvency and the alternative courses of action in the case of insolvency. Gountzos explained to Hyatt the process of a creditors’ voluntary liquidation.
12 On 23 October 2017, there was a telephone discussion between Gountzos and Hyatt. Apart from providing further information about the consequences of insolvency and the courses of action which might be adopted, Gountzos obtained information about the company to assess the resources required to act as liquidator and to assess potential conflicts of interest.
13 On 7 November 2017, Hyatt emailed Gountzos requesting formal details of the process to be undertaken to place the plaintiff into voluntary liquidation.
14 On 10 October 2017, a representative of SV partners, the firm of which Gountzos and Carrafa were members, emailed Hyatt pre-appointment documentation concerning a creditors’ voluntary liquidation.
15 On 28 November 2017, Gountzos and Hyatt exchanged emails to arrange a meeting on 30 November to provide an update on the company’s financial position and to discuss the process associated with beginning the creditors’ voluntary liquidation.
16 On 4 December 2017, the plaintiff entered voluntary liquidation.
17 On 23 February 2018, the court ordered that the plaintiff pay security for costs in the sum of $40,000.
18 On 2 March 2018, the liquidators issued a further report to creditors. The report noted that:
(a) both the plaintiff and defendant acknowledged the existence of set-off clauses within the building contract;
(b) the liquidators received advice from their solicitors that there were merits to the plaintiff’s claim made in this proceeding against the defendant;
(c) there were insufficient funds to meet the security for costs order and the legal costs associated with continuing to pursue the plaintiff’s claim. The liquidators were seeking creditor funding for this purpose.
19 The liquidators were required to elect by 21 May 2018 whether or not they were proceeding with the claim against the defendant. The liquidators decided not to proceed.
Application for review
20 An application for review of an order made by a judicial registrar is brought under Rule 84 of the County Court Civil Procedure Rules 2008 (Vic).
21 In conducting such a review, the judge may:
(a) exercise all the powers and discretions of the court with respect to the subject matter of the review; and
(b) confirm, set aside or vary the order of the court constituted by the judicial registrar or make such further or other order as may be necessary or as the case requires.
22 It has been said in the case law that, with a review under Rule 84.02, the court does not simply review the decision to see if an error has been committed. The court considers the application made before the judicial registrar and decides the case afresh on the same materials as those which the registrar had.
23 The defendant’s application for review raises two grounds for review. The first is that a costs order should have been made against Hyatt under section 78A of the County Court Act 1958 (Vic). The second is that a costs order should have been made against Hyatt under section 29 of the Civil Procedure Act 2010 (Vic).
24 The first ground of appeal relies upon principles set out by the High Court in Knight v FP Special Assets Ltd.[1] These principles were recently examined in some detail by the Victorian Court of Appeal in Gdanski v Palms Court Management Pty Ltd.[2] There, the court noted:[3]
“The making of an order for costs against a non-party is an exceptional course for a court to take. The usual order, of course, is that the losing party pays the successful party’s costs of the proceeding. There are, however, recognised sets of circumstances in which express provisions authorise, or the interests of justice require, the making of a non-party order for costs. Naturally, such an order can only be made if the circumstances of the case satisfy the conditions laid down for the exercise of the relevant power.”
[1](1992) 174 CLR 178, 192-3.
[2][2017] VSCA 348.
[3]Ibid at [1].
25 The court did not take issue with the trial judge’s summary of the applicable principles decided in Knight[4] and later authorities applying that case.[5] Knight identified a well-established category of case where a court has discretion to make a non-party costs order.[6] Mason CJ and Deane J said:[7]
[4](1992) 174 CLR 178.
[5]See Gdanski [2017] VSCA 348 at [33].
[6](1992) 174 CLR 178
[7]Ibid, 192-3.
“For our part, we consider it appropriate to recognise a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active role in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.”
So, the power to make a non-party costs order can arise where:
· a named party is insolvent;
· the non-party played a sufficiently active role in the conduct of the litigation;
· the non-party has a sufficient interest in the litigation.
26 In other words, for the Knight category to be applicable, there is a threshold requirement that the non-party is a real party to the litigation. This requires that the party be actively involved and personally interested in the proceeding. It is the combination of these two requirements which enlivens the court’s jurisdiction to consider making an order against a non-party for the costs of the successful party. Unless the non-party can be properly characterised as a real party to the litigation, no question of the interests of justice or of exceptional circumstances arises and it cannot be appropriate to make a costs order against such a non-party.[8]
[8]Gdanski [2017] VSCA 348 at [69]-[70].
27 The discretion to make a costs order against a non-party is to be exercised with considerable caution. The discretion is to be exercised judicially and in accordance with general legal principles pertaining to the law of costs. Ultimately, the enquiry will depend upon the facts of each particular case.
28 The mere fact that a director causes an insolvent company to either bring or defend legal proceedings is insufficient of itself to justify a non-party cost order under the Knight principle. Something more is required to justify such an order. As explained in Gdanski, the Knight principle applies where recourse to the losing party is unavailable because it is insolvent and the non-party can be seen to have substantively contributed to the claim or defence in pursuit of the non-party’s own interests such that the non-party was a real party to the proceeding.
29 In assessing whether a director has been actively involved in the litigation in the requisite sense, it is necessary to acknowledge that a company is an artificial legal entity which must, of necessity, act through the agency of natural persons. The fact that a sole director and shareholder was the prime decision-maker in the company’s litigation is not sufficient to establish that the director was a real party to the litigation in the necessary sense. As Muir J explained in Rushton (Qld) Pty Ltd v Rushton (NSW) Pty Ltd:[9]
“In my view the mere fact that a person is the sole director and shareholder of an unsuccessful litigant corporation will not, without more, suffice to justify a costs order against that person. And that is so even if the person was the corporation’s sole, principal or ultimate decision maker in relation to the litigation.
To conclude otherwise would be to ignore the principle that costs orders against non-parties are “exceptional” and ought be made only if appropriate in the interest of justice. The control of a corporate litigant by a director who is also its sole or majority shareholder is an unremarkable occurrence. It is sanctioned by a long established legislative framework which recognises that a company has an independent legal personality distinct from that of its members and that neither members nor directors, as a general proposition, are personally liable for its acts and defaults.”
[9][2004] QSC 47 at [12]–[13]. This passage was quoted with approval by the Court of Appeal in Gdanski at [43].
30 In assessing a director’s conduct, it is also important to recognise that when a company director plays an active role in litigation involving the company, this may be entirely consistent with the director’s fiduciary duty to the company. The director’s duties might require the director to cause the company to prosecute a potentially valuable cause of action. Here, the company’s solicitors advised the liquidators that there were merits in the claim against the defendant.
31 The question whether the non-party had standing to bring the proceedings is relevant to whether or not the non-party was a real party to the litigation with the requisite personal interest in the outcome of the litigation. The fact that a non-party does not have standing to bring the claim and the corporate litigant is the only proper plaintiff militates against the making of a non-party costs order.
32 The courts have exhibited a general concern to avoid undermining principles of limited liability. Accordingly, the mere fact that a non-party is a sole director and shareholder of a corporate litigant does not of itself attract the Knight principle. If this were not so, the corporate veil would effectively be nullified at the very point where it provides protection against personal liability for shareholders and directors. Thus, the simple fact that a shareholder has an indirect interest in the success of a company’s litigation does not mean that the Knight exception for costs orders is applicable.
33 Similarly, the mere fact that a creditor, which might include a director who lent money to the company, has an indirect interest in the success of a company’s litigation does not mean that the Knight exception applies. Relevant factors in this context include the existence of other creditors of the company and the amount of the indirect benefit which the creditor might receive from successful litigation.
34 In the present case, I am not satisfied that Hyatt was a real party to the litigation. I have reached this conclusion for several reasons. First, Hyatt’s involvement was consistent with his role as the sole director of the plaintiff. The plaintiff was represented by external solicitors and counsel. To that extent, it was a weaker case than Gdanski, where Gdanski was the solicitor for the company, the sole director and shareholder in the company, and lent money to the company through another company which he controlled. Notwithstanding these matters, the Court of Appeal found that no order should be made against Gdanski personally.
35 Secondly, as a director of the company in circumstances where independent lawyers advised that the claim had merits, Hyatt was at least entitled, and possibly obliged, to pursue the claim on behalf of the plaintiff company. Because the defendant had already obtained a judgment against the plaintiff by reason of the determination under the SOP Act, it was readily understandable that the plaintiff should promptly issue its claim for liquidated damages in order to generate a set-off which might limit the defendant’s prospects of obtaining execution on its judgment.
36 Thirdly, Hyatt could not bring the liquidated damages claim personally because he had no standing to do so. Under the building contract, it was only the company that had an entitlement to make the claim.
37 Fourthly, Hyatt was not the sole shareholder in the plaintiff. There were three equal shareholders. Even if Hyatt’s company had been the only shareholder, that would not necessarily have given him a sufficient financial interest in the outcome to attract the Knight doctrine. Especially is that the case in circumstances where the liquidators report showed that the estimated amount owing to all unsecured creditors of the company was $3,760,617 and the estimated deficiency of assets was $3,654,117. Given the magnitude of the deficiency, it was most unlikely that the shareholders in the plaintiff would have received any dividend. Further, even if there had been a dividend, while Hyatt was the only director and secretary of Hyatt Investments Pty Ltd, his former wife was the sole shareholder. Hence, any dividend from the liquidation would ultimately have been to her benefit.
Second ground of review
38 The second ground of review and the one upon which the defendant appeared to place greater reliance was the Civil Procedure Act 2010 (Vic) (the “CPA”).
39 The defendant argued that the court has a broad discretion to make costs orders under the CPA. The defendant placed particular reliance upon section 29 of that Act. This provides that if the court is satisfied that, on the balance of probabilities, a person has contravened any overarching obligation, the court may make any order it considers appropriate in the interests of justice including, but not limited to, an order that the person pay some or all of the legal costs or other expenses of any person arising from the contravention of the overarching obligation.
40 As I understood the defendant’s argument, it contended that the overarching obligations apply to Hyatt through the operation of section 10(1)(d) of the CPA. This provides that the overarching obligations apply to any person who provides financial assistance or other assistance to any party insofar as that person exercises any direct control, indirect control or any influence over the conduct of the civil proceeding or of a party in respect of that civil proceeding.
41 The defendant then relied upon section 16 of the CPA, which states that each person to whom the overarching obligations apply has a paramount duty to the court to further the administration of justice in relation to any civil proceeding in which that person is involved.
42 Finally, the defendant relied upon section 21 of the CPA, which says that a person to whom the overarching obligations apply must not, in respect of a civil proceeding, engage in conduct which is misleading or deceptive or likely to mislead or deceive.
43 The essence of the defendant’s complaint in this area can be summarised as follows:
· Hyatt was at the relevant time the sole director of the plaintiff company;
· Hyatt instructed the company’s lawyers to issue the proceeding against the defendant;
· at the time when he gave those instructions Hyatt knew or should have known that the company was already, or would shortly be, insolvent and he was obtaining advice about a creditors voluntary winding up;
· 14 days before signing the overarching obligation certification, Hyatt met with the liquidator, Gountzos, for the purposes of obtaining advice on the consequences of the plaintiff’s insolvency;
· notwithstanding the actual or threatened insolvency of the plaintiff, Hyatt procured the commencement of proceedings and put the defendant to the cost of both filing a defence and issuing an application for security for costs;
· shortly after the defendant filed its defence and issued the security application, the plaintiff went into liquidation;
· Hyatt was in a position to disclose the plaintiff’s true financial position to the defendant but opted not to do so. By remaining silent and not disclosing this information, Hyatt caused the defendant to incur unnecessary costs which Hyatt would or should have appreciated the defendant would not recover. Hyatt’s silence and failure to reveal the financial situation of the plaintiff constituted misleading and deceptive conduct in contravention of section 21 of the CPA.
44 The defendant did not refer me to any cases in which a party had specifically relied upon section 21 of the CPA to obtain an order for costs. It did refer to Commissioner of State Revenue v Carmrer Pty Ltd & Ors.[10] There, the plaintiff served statutory demands and accompanying affidavits on each of the defendants in July 2013 and the defendants commenced proceedings to set aside those demands. Those proceedings were discontinued. The Commissioner then commenced proceedings in August 2013 to wind up the defendants. The underlying debt to which the statutory demands related was for outstanding tax and interest said to be owed jointly and severally by the defendants. On 4 September 2013, the application to wind up was listed for hearing before Randall AsJ. The court made orders allowing the defendants to defend and they were ordered to file material on the question of solvency. The Commissioner was granted leave to file an amended originating process seeking winding up on the just and equitable ground.
[10][2014] VSC 571.
45 The application was listed for hearing before Efthim AsJ on 4 February 2014. The court made orders for filing affidavit material. The hearing was set down for 19 May 2014. On that day, the court wound up the defendants because they conceded they were insolvent. The Commissioner sought orders against Mr Rosen, the director of the defendants, that he pay the costs of the proceedings personally. Rosen filed no affidavit in opposition to the application.
46 The Commissioner sought costs against Rosen pursuant to section 24 of the Supreme Court Act 1986 (Vic) and section 10(1)(d) of the CPA. The Commissioner also relied on “the overarching obligations in sections 16-21, 23, 25, and 26” of the CPA.[11]
[11][2014] VSC 571 at [11].
47 Efthim AsJ made the costs order against Rosen pursuant to section 24 of the Supreme Court Act for the period after 4 February 2014 because of the significant delay which the defendant companies caused from that time.
48 Efthim AsJ also said that if Mr Rosen provided financial assistance within the meaning of section 10(1)(d) of the CPA, he would also have awarded costs against him from the same date. Ultimately, the court concluded that Rosen was the sole director of the company and whether or not he was the source of funding for the litigation was something within his knowledge. He could have filed an affidavit stating that he did not give any financial assistance to the defendant companies if that were the case.[12] In circumstances where:
[12]Ibid at [30].
· the information was within Rosen’s knowledge and not the plaintiff’s;
· Rosen was the sole director of the defendants and their guiding mind;
· the timetabling orders for the application expressly provided an opportunity for Rosen to file affidavit evidence; and
· Rosen chose not to file any affidavit material,
the court concluded there was a strong inference that Rosen financially assisted the defendants. Efthim AsJ concluded that there had been a breach of the overarching obligations of the CPA because Rosen “has not acted to minimise delay and has not cooperated in the conduct of the civil proceeding”.[13]
[13]Ibid.
49 The judgment made no specific reference to any conduct by Rosen which was misleading or deceptive. The parties referred me to no case which expressly dealt with the provision or the principles which I ought apply. For example, I received no guidance on whether it might be misleading or deceptive to remain silent even if there is no obligation to speak up (as is usually the case in disputes under the former section 52 of the Trade Practices Act). Likewise, the defendant failed to identify a positive misrepresentation. This was not a case in which, for example, the plaintiff represented that the company was in any particular financial position or enjoyed a surplus of assets over liabilities.
50 The plaintiff made two main submissions in regard to this aspect of the application:
(a) section 21 of the CPA imposes an obligation only upon those persons to whom the overarching obligation applies. It was said that the obligation did not apply to Hyatt because:
(i) Section 10(1)(a)-(c) was inapplicable as Hyatt was neither a party nor a legal practitioner nor a firm acting on behalf of a party to the proceeding
(ii) Section 10(1)(d) was inapplicable as it concerned only persons who provided financial or other assistance to any party and it was not shown that Hyatt had provided any such assistance.
(b) even if the overarching obligations applied to Hyatt, there was no contravention which enlivened the discretion to make a costs order.
51 Section 10(1)(a)-(c) cannot be relevant in this case. I am not satisfied that section 10(1)(d) applies to Hyatt. From cases such as Commissioner of State Revenue v Carmrer Pty Ltd[14] and Linchi Group Pty Ltd v Wang,[15] it is necessary for a court to find that there is financial assistance or other assistance rendered by the person in question. In reaching this conclusion, a court is to be aware that the fact that a sole director of a corporate litigant instructs solicitors for the company and, to that extent, is involved in the litigation, does not of itself equate to financial or other assistance.
[14][2014] VSC 571.
[15][2018] VSC 482.
52 The defendant focused on the chronology of events to contend that, in circumstances where:
· Hyatt first spoke with Gountzos about the liquidation process in early October 2017;
· Hyatt probably intended from around that time to put the plaintiff into liquidation;
· Hyatt instructed the plaintiff’s solicitors to issue proceedings and then insist upon the defendant filing a defence and applying for security;
· the plaintiff went into liquidation soon after the defendant filed its defence and made the security application;
Hyatt’s silence about the likely fate of the plaintiff company caused the defendant to incur needless costs.
53 Based on the evidence before me, I am not satisfied that section 10(1)(d) of the CPA applies to Hyatt. As sole director of the plaintiff, the company acted through his agency when instructing solicitors and conducting the litigation. There was no evidence that, aside from this work, Hyatt rendered some separate or other assistance to the plaintiff in connection with the litigation. Nor did the evidence disclose that Hyatt provided financial assistance to the plaintiff. The solicitors who acted for the plaintiff in this proceeding were listed as unsecured creditors in the winding up in the sum of $10,000. This suggests that the solicitors were unpaid and that Hyatt did not meet the fees owed by the plaintiff to the solicitors. I do not read Commissioner of State Revenue v Carmrer Pty Ltd[16] as establishing a general rule that a court should always draw an adverse inference against a party who fails to file evidence. My view is that it always depends upon the facts of the case.
[16][2014] VSC 571.
54 Another problem the defendant faces is the identification of the conduct which was misleading or deceptive. I do not consider that the plaintiff or Hyatt made any relevant representation, whether about the financial position of the plaintiff or anything else. Merely issuing proceedings says nothing about a party’s financial capacity or solvency. Companies which are actually or arguably insolvent are entitled to initiate proceedings. The defendant can then seek security, as occurred here. Ultimately, the liquidators could not obtain funding to run the case and meet the court order for security, so they abandoned the litigation. That decision was taken by the liquidators independently of Hyatt.
55 I note that, at least in so far as the defendant relied upon section 29 of the CPA in the claim against Hyatt, it is appropriate for a court deciding such a claim to apply the Briginshaw[17] principles in assessing whether a person has breached overarching obligations such as the obligation to act honestly and not to engage in misleading and deceptive conduct.[18] This makes it more important that I be comfortably satisfied that it is an appropriate outcome that Hyatt be personally responsible for the payment of costs due to his contravention of the CPA. Both Briginshaw[19] and section 140(2) of the Evidence Act 2008 (Vic) make clear that the seriousness of the allegation and the gravity of the consequences flowing from a finding affect the level of satisfaction which must be reached before a court can find an allegation proved on the balance of probabilities. Particularly when viewed from this perspective, I do not consider that the defendant has discharged its evidentiary burden.
[17](1938) 60 CLR 336.
[18]Giles v Jeffrey [2016] VSCA 314 at [120]-[122].
[19](1938) 60 CLR 336.
56 In passing, I refer to the argument which the defendant advanced to the effect that section 16 of the CPA was one of the overarching obligations with which Hyatt had to comply. It was for this reason that the defendant argued that Hyatt had a paramount duty to the court to further the administration of justice in relation to any civil proceeding in which he was involved. My view is that the overarching obligations are set out in sections 17-26 inclusive of the CPA. I do not regard section 16 as the source of an overarching obligation. I consider my view is supported by, and consistent with, the statement of the Court of Appeal in Giles v Jeffrey, where the Court said that, “The headings to sections 17-26 of the CPA describe the overarching obligations in those sections…”.[20]
[20][2016] VSCA 314 at [85].
57 After I handed down my ruling, counsel for the plaintiff forwarded an email in which he pointed out that section 3 of the CPA defined “overarching obligations” as the obligations set out in sections 16-26 of the CPA. Whether or not section 16 is an overarching obligation is not determinative in this case. The critical point in the context was the defendant’s reliance upon section 21 of the CPA. I concluded that the defendant had not shown that the plaintiff contravened this provision.
Conclusion
58 In summary, I consider that the defendant’s application should fail. While at one level I understand the defendant’s frustration with its predicament, my view is that the evidence does not justify a special order being made against Hyatt either under the Knight principle or the CPA for contravention of its terms. Accordingly, subject to hearing from the parties, I propose to order that:
(1) the defendant’s application for review be dismissed;
(2) the defendant pay the plaintiff’s costs of the application, such costs to be taxed on a standard basis in default of agreement.
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