Home Loan Centre Australia Pty Ltd v Investloan Pty Ltd (No.3)
[2013] VCC 476
•29 April 2013 (revised 30 April 2013)
| IN THE COUNTY COURT OF VICTORIA | Revised (Not) Restricted |
AT MELBOURNE
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-09-05241
| HOME LOAN CENTRE AUSTRALIA PTY LTD | Plaintiff |
| v | |
| INVESTLOAN PTY LTD | Defendant |
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JUDGE: | HIS HONOUR JUDGE ANDERSON | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 29 April 2013 | |
DATE OF JUDGMENT: | 29 April 2013 (revised 30 April 2013) | |
CASE MAY BE CITED AS: | Home Loan Centre Australia Pty Ltd v Investloan Pty Ltd (No.3) | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 476 | |
REASONS FOR JUDGMENT
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Catchwords: Costs - Offer of compromise relevant to one of the plaintiff’s claims – Other claims by plaintiff withdrawn – Both plaintiff and defendant successful on another claim and the counterclaim – Whether usual
costs orders under the Rules of Court or accepted practice appropriate – Whether the Court should “otherwise order” under the appropriate Rules of Court – No order made as to the costs of the proceeding – Each party to bear its own costs.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A.T. Schlicht | JA Fillmore & Co |
| For the Defendant | Mr M. Clarke | HWL Ebsworth Lawyers |
HIS HONOUR:
1. This proceeding was concluded by judgments I delivered on 15 June 2012, following a hearing of 11 days, and on 27 March 2013, following a hearing of one day and the receipt of later written submissions. I also had earlier involvement in the proceeding during the hearing of contested interlocutory applications.
2. There are a number of matters which are relevant to the determination of the costs orders to be made in the proceeding. In summary, they are as follows:
a. on 4 October 2010, the plaintiff served an offer of compromise pursuant to Rule 26 offering to “compromise all its claim in this proceeding by the defendant paying the plaintiff the sum of $300,000”;
b. the plaintiff was successful at trial, both in relation to a claim which was current at the time the offer of compromise was made and, further, in relation to a claim which was introduced into the proceeding by later amendment;
c. the plaintiff withdrew three claims it originally made in the proceeding; the first in July 2011, and two further claims (“the churning claims”) during the course of the trial in May 2012;
d. the defendant succeeded on its counterclaim at the trial of the proceeding and, at the further hearing determined by the judgment on 27 March 2013, in having its claim for ongoing trailing commissions quantified.
3. It is necessary to examine each of these matters in turn and to consider what would be the approach that would ordinarily be taken if the Rules or accepted practice were followed in each case. It will then be necessary to consider whether there are special circumstances relating to the proceeding which make it appropriate to not follow the Rules or accepted practice in any of these matters, or to consider an alternative costs order in relation to the whole of the proceeding.
Plaintiff’s offer of compromise
4. The plaintiff’s offer of compromise related to four claims, three of which were later withdrawn. The plaintiff offered to compromise all of these claims for the total sum of $300,000. Only one claim remained for determination at the trial. The plaintiff succeeded in relation to that claim and obtained judgment for $365,000 including GST, together with interest agreed at $103,935. In these circumstances, it can be seen that the plaintiff was more successful at trial in relation to the claims it had offered to resolve by the offer of compromise.
5. Rule 26.8(2) provides that in these circumstances the plaintiff should receive its costs on a party-party basis to the date of the offer, and subsequently on an indemnity basis, unless the Court should otherwise order.
6. The defendant has submitted that the withdrawal of the three original claims should affect the operation of the Rule. In my view, there is no basis for adopting that course because the plaintiff had offered to compromise four claims and was more successful on the one remaining claim than the offer it had made.
7. A difficulty however arises because the plaintiff later, by amendment, introduced a substantial claim upon which it was successful at trial in obtaining judgment for $1,103,287 including GST, together with interest of $210,202.89. Both of the successful claims essentially depended upon an argument that payments had been made by mistake, in the first instance in respect of commissions paid on fixed interest loans and, in respect of the later claim introduced by amendment, for introduction fees on construction loan draw downs.
8. In the circumstances, there is a strong argument for the plaintiff’s costs on an indemnity basis to either terminate or be moderated after the later introduction of the further claim upon which the plaintiff was successful at trial. In my view, the better course, if the Rules in relation to the offer of compromise were to take their course, would be to order indemnity costs from the date of the offer until the date the further claim was introduced by amendment and, thereafter, for the costs on the initial claim covered by the offer of compromise to be paid on a party-party basis.
Plaintiff’s successful claim introduced by amendment
9. The plaintiff succeeded on the further claim introduced by amendment in relation to the payments made in respect of introduction fees on construction loan draw downs. Ordinarily, there would be no reason why the plaintiff should not therefore obtain an order for the payment of the costs of that successful claim on a party-party basis.
Withdrawn claims
10. The plaintiff indicated during the course of the trial in May 2012 that it would not proceed with the churning claims. These were extensive claims which related to a large number of transactions in respect of which the plaintiff alleged the defendant had wrongfully caused to be terminated or transferred to another financier, as a result of which, it had suffered significant loss.
11. It appeared, as the evidence developed, that if any loss had occurred it had been suffered not by the plaintiff but by a related company. The plaintiff did not seek to amend the proceeding to add that plaintiff and, as a consequence, withdrew those claims. The claims involved a large number of transactions, particularised in extensive annexures to the Amended Statement of Claim. The claims would also have involved difficult arguments in relation to quantification as the plaintiff had foreshadowed that this would be sought by reference to sample transactions, rather than by proving the actual loss in relation to each transaction.
12. At the costs hearing, plaintiff’s counsel was under the impression that a Notice of Discontinuance had been filed in respect of the churning claims. Investigation of the Court file and other Court records suggest that a formal Notice was probably not filed. At the trial in May 2012, plaintiff’s counsel announced in open Court that the churning claims were being withdrawn. In these circumstances, I consider that Rule 25, relating to the discontinuance or withdrawal of a claim, should apply. By the operation of Rules 25.05 and 63A.15, the plaintiff would ordinarily be required to pay the defendant’s costs relating to the parts of the proceeding covered by those claims. Rule 63A.15 is subject to any order that the Court might otherwise make.
13. The defendant has submitted that the operation of the Rules should be modified and the plaintiff should be required to pay the defendant’s costs of the withdrawn claims on an indemnity basis. It relies upon the fact that the inherent difficulty in the claim (that another company would be entitled to any damages rather than the plaintiff) should have been obvious to the plaintiff and the claim should never have been brought. The defendant also referred to the lack of timely discovery of documents which might have clarified this issue prior to trial.
Defendant’s counterclaim
14. The defendant counterclaimed in respect of commissions it said were owing by the plaintiff. It succeeded at trial in obtaining judgment on its counterclaim in the sum of $1,015,000 together with interest agreed at $96,619.77. Subsequently, the defendant’s entitlement on its counterclaim for ongoing commissions due to it following the termination of the agreement between the parties was quantified in the total sum of $372,983. The defendant would therefore ordinarily be entitled to its costs on the counterclaim to be taxed on a party-party basis.
Conclusions
15. Overall, in the proceeding, the plaintiff has recovered the total sum of $1,782,424.89 and the defendant has recovered on its counterclaim a total sum of $1,484,602.77. The defendant has submitted that I should consider approaching the question of costs on a global basis. It submits that, essentially, there were three claims before the Court. Firstly, the plaintiff’s claims it pursued being the “mistake claims”, secondly the churning claims which it withdrew, and thirdly the defendant’s counterclaim in respect of which it was successful. The defendant submitted that in respect of two of these groups of claims the defendant had been successful and therefore should recover two thirds of its costs of the proceeding.
16. An alternative approach is to consider the plaintiff’s two claims; for the first of which it obtained more at judgment than the offer of compromise and, in respect of the second, it was also successful at trial. On the other hand, the plaintiff withdrew the churning claims and the defendant was successful in relation to its counterclaim.
17. The quantification of the appropriate costs order would be an extremely difficult task for the Costs Court if orders were to be made in respect of the four separate groups of claims that I have earlier referred to. It would be necessary for the parties to prepare costs claims on an issue by issue basis. This would be complicated by the fact that certain claims were introduced by amendment during the proceeding, claims were withdrawn at different times and questions of quantum in relation to the claim and the first part of the counterclaim had been resolved by the commencement of the trial.
18. I consider that in the circumstances, it is appropriate for the Court not to follow the usual orders and practices and, in relation to the claims where the Rules would ordinarily apply, for the Court to otherwise order. I consider that the appropriate order to make in respect of the proceeding is that there should be no order as to costs so that each party bears its own costs of the proceeding.
19. In my view, that order is appropriate for the following reasons:
a. the monetary result of the litigation has been that the plaintiff has obtained a total judgment for $1,782,424.89 and the defendant, total judgments of $1,484,602.77;
b. applying the ordinary orders contemplated by the Rules or accepted practice, the plaintiff would have been entitled to, at least, a partial order for indemnity costs in respect of the claim based upon commissions for fixed interest loans, and would have been entitled to party-party costs in respect of the balance of its costs in respect of the claims it succeeded upon at trial;
c. the defendant would, by application of the Rules and accepted practice, have been entitled to orders for the payment of its costs relating to the withdrawn claims, and to its costs on the counterclaim. There would also be an argument that, at least in respect of part of the defendant’s costs of the churning claims, that those costs should have been paid on an indemnity basis;
d. the issues in the case were substantially interwoven and it would be an extremely difficult exercise for the Costs Court to tax the costs on the basis of the ordinary application of the Rules or accepted practice, or to otherwise tax costs on an issue by issue basis;
e. in my judgment, there was little to separate the parties in respect of their conduct during the proceeding or the final monetary result following the judgments that have been delivered.
20. In the circumstances, I propose to make no order as to the costs of the proceeding.
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Certificate
I certify that these 6 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 29 April 2013 and revised on 30 April 2013.
Dated: 30 April 2013
Catherine Kusiak
Associate to His Honour Judge Anderson
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