I Cook Foods Pty Ltd v State of Victoria (No 2)
[2023] VSC 708
•30 November 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S CI 2020 02728
| I COOK FOODS PTY LTD (ACN 094 392 060) | Plaintiff |
| v | |
| STATE OF VICTORIA (DEPARTMENT OF HEALTH AND HUMAN SERVICES) | Defendant |
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JUDGE: | McDonald J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF RULING: | 30 November 2023 |
CASE MAY BE CITED AS: | I Cook Foods Pty Ltd v State of Victoria (No 2) |
MEDIUM NEUTRAL CITATION: | [2023] VSC 708 |
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COSTS – Plaintiff’s claim for declaratory relief upheld – Plaintiff’s claim for damages dismissed – Appropriate to apportion costs to reflect plaintiff’s partial success – Defendant failed to fully comply with orders for pre-trial discovery – Defendant refused to answer interrogatory without proper basis for doing so – Defendant ordered to pay costs of pre-trial discovery application and interrogatories – Defendant otherwise ordered to pay 50% of plaintiff’s costs.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Clarke KC with Ms V Plain | BSP Lawyers |
| For the Defendant | Mr C Caleo KC with Mr M McLay | Minter Ellison |
HIS HONOUR:
The Court delivered reasons for judgment in this matter on 13 November 2023. The plaintiff’s (‘ICF’) claim for damages for misfeasance in public office was dismissed. The Court upheld ICF’s claim for a declaration that the order made by the Acting Chief Health Officer on 21 February 2019 (‘the Order’) and a variation of the Order made 23 February 2019 were invalid by reason of the defendant’s failure to observe the requirements of procedural fairness when making the Order. The parties were provided with an opportunity to file submissions as to the costs of the proceeding.
The plaintiff proposes two alternative orders:
(a) The defendant pay the plaintiff’s costs on a standard basis; or
(b) The defendant pay 50% of the plaintiff’s costs on a standard basis.
The plaintiff further submitted that the defendant should not be awarded any costs referrable to the dismissal of ICF’s claim for damages based on misfeasance in public office.
The defendant proposes three orders in the alternative:
(a) The plaintiff pay the defendant’s costs of the proceeding on a party/party basis up to 18 September 2020 and on an indemnity basis from 18 September 2020;
(b) The plaintiff pay the defendant’s costs of the proceeding on a party/party basis; or
(c) The plaintiff pay 50% of the defendant’s costs of the proceeding.
The defendant’s claim for indemnity costs is based on a Calderbank offer dated 18 September 2020. The defendant offered to settle the proceeding on the basis that the proceeding be dismissed and each party bear their own costs. The defendant contends that notwithstanding the Court has upheld ICF’s claim for a declaration, ICF has failed to obtain a result in the proceeding more favourable than that contained in the Calderbank offer. I reject this submission.
The question of whether the Order was invalid by reason of a denial of procedural fairness was a substantive issue in the proceeding. Counsel for the defendant advanced comprehensive submissions as to why the exercise of the power conferred by s 19(2)(b) and (3) of the Food Act 1984 was not subject to a requirement to accord procedural fairness. Counsel also advanced detailed submissions as to the content of any duty to accord procedural fairness if such duty existed. Further, counsel advanced detailed submissions as to why no declaratory relief should be granted if the Court concluded that the Order was invalid by reason of a failure to observe the requirements of procedural fairness. ICF has succeeded in obtaining a declaration that the Order was invalid. This is a more favourable outcome than that contained in the Calderbank offer. As such, ICF’s failure to accept the terms of the offer does not enliven an entitlement for the defendant to be awarded indemnity costs.
In Chen v Chan,[1] the Court of Appeal set out the principles governing the award of costs in circumstances where a party has partial success in obtaining relief claimed:
[1][2009] VSCA 233.
The contentions of the parties raise a number of questions relevant to costs orders on appeal. The principles relevant to these questions can be summarised as follows:
(1) The general rule is that costs should follow the event. Absent disqualifying conduct, the successful party should recover its costs even where it has not succeeded on all heads of claim.
…
(3)Where there is a multiplicity of issues and mixed success has been enjoyed by the parties, a Court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis. Generally, if such an order is made, it is reflected in the successful party being awarded a proportion of its costs but not the full amount.
(4)A Court may, when fixing costs in a claim where there has been mixed success, take into account complications which it considers will arise in the taxation of costs, as part of its consideration of the overall interests of justice.
(5)Where a Court determines to make an order apportioning costs, then it does so primarily as “a matter of impression and evaluation,” rather than with arithmetical precision, having considered the importance of the matters upon which the parties have been successful or unsuccessful, the time occupied and the ambit of the submissions made, as well as any other relevant matter.[2]
[2]Ibid [10]. See also Vision Australia Ltd v Adam Elisha (No 2) [2023] VSCA 288.
ICF is entitled to an order for costs even though it did not succeed in obtaining damages referrable to its claim based on misfeasance in public office. Subject to two qualifying considerations addressed below, the defendant will be ordered to pay 50% of ICF’s costs, to be taxed on a standard basis in default of agreement. I consider that such an apportionment of costs is appropriate for the following reasons. First, the validity of the Order was a key issue in the proceeding. In order to make good its claim based on misfeasance in public office, ICF had to establish that the Order was invalid and that the Acting Chief Health Officer was recklessly indifferent as to its invalidity when making the Order. ICF succeeded in establishing the invalidity of the Order but failed to establish reckless indifference.
Second, I reject the defendant’s contention that the grant of declaratory relief in the present proceeding does not support a costs order because the declaration is of limited utility.[3] As set out in the reasons for judgment, the Order had an immediate and very significant adverse effect on ICF’s business. There was a direct nexus between the making of the Order and the closure of the business which had previously operated for more than 30 years. The declaration as to the invalidity of the Order provided ICF with vindication that it had been subject to a wrong done to it by a public office holder. Further, public interest considerations support the Court recording by way of declaration that the exercise of the power to make food destruction and closure orders under s 19(2)(b) and (3) of the Food Act is subject to a requirement to accord procedural fairness. As a matter of ‘impression and evaluation’, I consider that ICF’s success in obtaining a declaration as to the invalidity of the Order warrants an order that the defendant pay 50% of its costs.
[3]Defendant’s written submissions as to costs dated 27 November 2023, [22].
The Court’s order that the defendant pay 50% of ICF’s costs is subject to two qualifications. The defendant will be ordered to pay ICF’s costs of and incidental to its summons for pre‑trial discovery dated 28 November 2019 without any deduction. The defendant will also be ordered to pay the costs incurred by ICF in respect of the preparation of interrogatories served on the defendant on 13 October 2021 without deduction.
By its application for pre‑trial discovery, ICF sought discovery of ‘the report’ of an officer of the Department of Health and Human Services Food Safety Unit referred to in paragraph 1 of the Order. The defendant was ordered by Daly AsJ on 17 February 2020 to make discovery of this report. In response to her Honour’s order, the defendant produced one document, an email from Dr Finn Romanes to Dr Sutton at 8.21pm on 21 February 2019. A covering letter from the defendant’s solicitor confirmed that the 8.21pm email was the only document responsive to the pre‑trial discovery order. Upon receipt of this correspondence ICF was entitled to assume that the sole report of an authorised officer provided to Dr Sutton prior to the making of the Order was the 8.21pm email. This assumption was at odds with the manner in which the defendant subsequently pleaded and conducted its defence at trial. At trial, the defendant submitted that Dr Sutton based his decision to make the Order on multiple reports he received from multiple authorised officers. This included an email at 5.27pm on 21 February 2019 which was not produced in response to the order of Daly AsJ.[4] The defendant’s failure to fully comply with the order of Daly AsJ warrants an order that the defendant pay the costs in respect of ICF’s pre‑trial discovery application without any discount being applied.
[4]See particulars of paragraph 13(q) of the Defence to the Further Amended Statement of Claim.
Interrogatories were served on the defendant by the plaintiff on 13 October 2021. Interrogatory 10 sought the usual particulars of the documents and/or correspondence reviewed by Dr Sutton prior to issuing the Order. The defendant filed answers to the interrogatories on 15 December 2021. The defendant objected to answering interrogatory 10 on the basis of the interrogatory was too broad, or alternatively, that it was oppressive. During the trial I raised with the defendant’s counsel my concerns regarding the response to the pre‑trial discovery application and the defendant’s refusal to answer interrogatory 10. Counsel conceded that the refusal to answer interrogatory 10 was ‘probably not appropriate’.[5] This concession was properly made. There was no basis for the defendant to refuse to answer interrogatory 10. The defendant will be ordered to pay the costs incurred by the plaintiff in the preparation of the interrogatories dated 13 October 2021 without any discount being applied.
[5]Transcript of Proceedings, T 152 L 19.
I shall make the following declarations and orders:
(1) The order made by the Acting Chief Health Officer on 21 February 2019 pursuant to s 19 of the Food Act 1984 (the Order) was invalid by reason of the failure of the defendant to observe the requirements of procedural fairness.
(2) The variation to the Order made by the Acting Chief Health Officer on 23 February 2019 pursuant to s 41A of the Interpretation of Legislation Act 1984 was invalid by reason of the failure of the defendant to observe the requirements of procedural fairness when making the Order.
(3) The defendant pay the plaintiff’s costs of and incidental to the summons for pre‑trial discovery filed 28 November 2019 and the plaintiff’s costs of the interrogatories dated 13 October 2021 on a standard basis to be taxed in default of agreement.
(4) The defendant otherwise pay 50% of the plaintiff’s costs on a standard basis to be taxed in default of agreement.
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