Jindra v Tech-Rentals Pty Ltd (No. 2)

[2000] VSC 132

SUPREME COURT OF VICTORIA
COMMERCIAL & EQUITY DIVISION	Not Restricted

CORPORATIONS LIST

No. 7981 of 1998

HEIKE JINDRA & OTHERS

Plaintiffs

v

TECH-RENTALS PTY LTD
(ACN 005 499 721)

and

Defendants

AUSTRALIAN PACIFIC TECHNOLOGY LIMITED

TECH-RENTALS PTY LTD
(ACN 005 499 721)

Plaintiff by Counterclaim

and

HEIKE JINDRA & OTHERS

Defendants by

---

JUDGE:	Warren J
WHERE HELD:	Melbourne
DATE OF HEARING:	7 April 2000
DATE OF JUDGMENT:	11 April 2000
CASE MAY BE CITED AS:	Heike Jindra & Ors v Tech-Rentals Pty Ltd & Anor (No. 2)
MEDIUM NEUTRAL CITATION:	[2000] VSC 132

---

Costs – whether conduct of applicants was "highhanded" – whether application was "hopeless" – solicitor/client costs

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr R. Kendall QC with Mr A. Phillips	Tress Cocks & Maddox
For the Defendant	Mr M. Shand QC with Ms C. Rome-Sievers	Bazzani Brand Lawyers
For the Second Defendant	Mr P. Anastasiou	Norton Gledhill

HER HONOUR:

1. On 6 April 2000 I delivered judgment dismissing an application brought by the plaintiffs and defendants by counterclaim to vary an injunction ordered by Byrne J on 19 March 1999.  As a result of the dismissal of the application the first and second defendants seek an order that the plaintiffs and defendants by counterclaim pay the costs of the first and second defendants of and incidental to the application on an indemnity basis.

1. Order 63 rule 28 of the Supreme Court Rules provides that subject to the Rules, costs in a proceeding which are to be taxed shall be taxed on a party and party basis, a solicitor and client basis, or such other basis as the Court may direct. Rule 30 provides for solicitor client costs. Rule 31 provides that, except as provided by the rules or any order of the Court, costs are to be taxed on a party and party basis.  The ordinary rule in adversary litigation is that where the Court orders the costs of one party to be paid by another party, the order is for payment of those costs on the party and party basis:  Colgate‑Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 230, 232. However the discretion of the Court to order costs and as to the appropriate basis for such an order is "absolute and unfettered" and may depart from the usual practice in a judicial exercise of the discretion: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 3 97 at 400; also Re Wilcox, ex parte Venture Industries Pty Ltd & ors (1996) 141 ALR 727.

1. The authorities suggest that there are a number of bases whereby the Court in the exercise of its discretion should award solicitor and client or indemnity costs.   Firstly, if the bringing of the application and the pursuit of it was a "highhanded presumption":  AGC Ltd v De Jager [1984] VR 483 at 502 per Tadgell J. Secondly, if the application was commenced and prosecuted in circumstances where the applicants, properly advised, should have known that they had no chance of success: Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 231. Thirdly, if the application was on proper consideration a hopeless one: J‑Corp Pty Ltd v Australian Builders Labours Federaton Union of Workers (WA Branch (No 2) (1993) 46 IR 301 at 303 per French J. Fourthly, if the application was unnecessary: Regata Developments Pty Ltd v Westpac Banking Corporation unreported judgment of the Federal Court per Davies J delivered 5 March 1993 (cited with approval in Colgate).  Fifthly, if the application has been brought and prosecuted, not for the bona fide purposes of protecting and enforcing a legal right, but to achieve an ulterior or extraneous purpose: Regata Developments Pty Ltd, supra.  Sixthly, if the application was commenced or continued in wilful disregard of known facts or clearly established law: Fountain Selected Meats, supra.  Seventhly, if on the findings of the court, the justice of the case requires that solicitor client or indemnity costs be awarded: Andrews v Barnes (1887) 39 Ch D 133. Finally, if "there is some special or unusual feature in the case to justify the court exercising its discretion in that way": Fountain Selected Meats, at 400.

1. The first and second defendants submitted that in the present case, each of those bases provided a good and proper foundation for the court to make an order for solicitor and client or indemnity costs on the application to vary the injunction. They relied upon particular findings in my reasons for judgment. 

1. In summary, my findings in relation to the conduct of the plaintiffs was that they issued the application prior to availing themselves of the opportunity of inspection, that the first defendant endeavoured in all respects to meet the requests of the plaintiffs and that it was difficult to fathom the purpose of the Jindra interests in seeking to vary the terms of the injunction ordered on 19 March 1999.  In particular, I observed:  "It is difficult to comprehend the purpose of the Jindra interests served by the granting of the orders sought in the summons. The regime presently in place has worked well. There has been small effort to take advantage of it in the six months leading to the bringing of this application. All reasonable requests have been complied with.  It is far from clear precisely what it is that the Jindra interests actually want by way of further information."

1. I observed, also, that on the evidence there was no instance of an attempt by the Jindra directors to carry out their duties that had been stymied, such as to found a ground for bringing the application to vary the injunction as sought.  It is significant that the Jindra interests brought and pursued the application to vary the order of 19 March 1999 when they could not identify any problem caused to them by it.  Furthermore, there was no new material that could properly be seen to change the balance of convenience as it stood at the time of the granting of the injunction. 

1. Applying the principles set out in the authorities I am satisfied that the Jindra directors did not make an attempt to inspect company records until 23 February 2000, that is, immediately prior to issuing the application.  I observe, further, that the late inspection of the documents was intended to provide the basis for the variation of the orders made by Byrne J on 19 March 1999.  Significantly, I was satisfied that Tech‑Rentals endeavoured to accommodate the requests of the Jindra interests.  The fact that the request was made by the Jindra interests on 23 February 2000 and a summons issued on 2 March 2000 prior to taking the opportunity to inspect the documents notwithstanding the accommodation by Tech-Rentals causes me to draw an adverse view as to the conduct of the plaintiffs and their real purposes in instituting the application.  It was submitted on the costs application by the first and second defendants that I might reasonably infer that the request for inspection made on 23 February 2000 was made in the hope of creating a ground or basis for the application contemplated to vary the orders made on 19 March 1999.  In all the circumstances of this matter I would take the matter one step further.  I conclude that the conduct of the plaintiffs in the context of the imminent trial date of 2 May 2000 constituted of a tactical manoeuvre intended to distract the interests of Tech‑Rentals and APT from preparation for the trial.  My view is borne out by the fact that at no stage have the Jindra interests explained on a satisfactory basis their purpose in seeking further access to the documents of Tech-Rentals beyond that accommodated by the terms of the court order made by Byrne J on 19 March 1999, an order that they in turn did not oppose. 

1. Mr Kendall QC on behalf of the plaintiffs did not resist an order for costs on the usual basis, that is party party costs.  However, Mr Kendall urged that the costs of the application to vary the injunction be reserved for determination by the trial judge, alternatively, for determination by me after judgment is delivered by the trial judge.  Mr Kendall submitted that there may be matters that come to light during the course of the trial that demonstrate that the conduct of the plaintiffs in seeking to vary the injunction and the matters that they relied upon are proved correct.  I consider it is unsatisfactory to leave the question of costs in abeyance pending the outcome of the trial.  Further, I consider it would be inappropriate to leave the determination of the costs of the application to the trial judge.  I am in the best position to determine where costs should fall at this point in time.

1. Mr Kendall further submitted that each of the authorities that set out the principles as to when costs should be ordered on an indemnity basis were matters where costs were determined after trial and judgment.  On that basis he submitted that as the present proceeding was only at the interlocutory stage it was inappropriate to order costs on an indemnity basis.  In my view these submissions do not provide a satisfactory answer or explanation for the conduct of the plaintiffs in instituting the application without foundation and prior to taking the opportunity to inspect the documents that were in issue.  I am satisfied that the conduct of the plaintiffs as found in my reasons provides a basis for determining that the application was commenced and prosecuted in circumstances where the applicants, properly advised, should have known that they had no chance of success (see Colgate-Palmolive, supra, 231).  I do not consider on the basis of the evidence before me that I could regard the conduct of the plaintiffs as "highhanded" (see AGC Limited v D.E. Jager, supra, 502).  However, I consider that the application was hopeless and unnecessary (see J-Corp Pty Ltd, supra, 303; also, Regata Developments, supra).  Ultimately, in light of the circumstances underlying the application I am satisfied that those circumstances constitute a special or unusual feature such as to justify the court exercising its discretion to order costs on a solicitor client basis.  In my view the discretion to order costs on a solicitor client or indemnity basis is a discretion that can be exercised by the court on any occasion whether the hearing is an interlocutory hearing or a final hearing.  To impose the constraints suggested by Mr Kendall would be to fetter the discretion of the court in an entirely inappropriate way and contrary to the principle stated in Fountain Selected Meats and Re Wilcox, supra.  Indeed, the discretion is unlimited (Bass Coast Shire Council v King (1997) 2 VR 5 per Winneke P at 29).

1. For these reasons I will order that the plaintiffs and defendants by counterclaim pay the costs of the first and second defendants of the application on a solicitor client basis.

---