Kadac Proprietary Limited v Complete Health Products Pty Ltd (Costs)

[2015] VSC 657

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2015 000335

IN THE MATTER of COMPLETE HEALTH PRODUCTS PTY LTD (ACN 092 672 627)

BETWEEN

KADAC PROPRIETARY LIMITED (ACN 004 971 733)	Plaintiff
and
COMPLETE HEALTH PRODUCTS PTY LTD (ACN 092 672 627) & ORS	Defendants

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JUDGE:	SIFRIS J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF JUDGMENT:	20 November 2015
CASE MAY BE CITED AS:	Kadac Proprietary Limited v Complete Health Products Pty Ltd & Ors (Costs)
MEDIUM NEUTRAL CITATION:	[2015] VSC 657

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COSTS – Successful transfer application – Proceeding transferred to Supreme Court of Queensland – Whether costs should follow the event or be in the cause – Successful party put the other party on notice before the commencement of the proceeding and before the hearing of the application – No special circumstances – Costs in the cause; Bateman v Fairfax Media Publications Pty Ltd (No 2) [2013] ACTSC 95 applies.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr G Dalton	Arnold Bloch Leibler
For the Defendant	Mr B W J Kidston	Rostron Carlyle Lawyers

HIS HONOUR:

Introduction

1. On 28 October 2015 I made orders transferring this proceeding to the Supreme Court of Queensland.  I published reasons for my decision on 9 November 2015.[1]

   [1][2015] VSC 613. I will assume familiarity with my reasons. Defined terms bear the same meaning.

1. The defendants seek costs on an indemnity basis, alternatively that costs be awarded on the standard basis.

1. The plaintiff submits that the costs of the application should be costs in the cause.

Submissions

1. The gravamen of the defendants’ submission is that they advised the plaintiff, prior to commencement of the proceeding, that proceedings should be commenced in Queensland. It was submitted that the plaintiff’s failure to do so in the circumstances, was unreasonable.

1. Further, prior to the filing of the interlocutory process (but after the service of Mr Powell’s affidavit) the defendants wrote to the plaintiff’s solicitors and offered to compromise the application on the basis that the plaintiff consent to orders transferring the proceeding to the Supreme Court of Queensland and that there be no order as to costs.[2]  The result, it was submitted, demonstrated that it was imprudent to refuse that offer of compromise.  That type of unreasonable conduct is recognised, it was submitted, as conduct enlivening the discretion to award indemnity costs.[3] 

   [2]Exhibit WTF-2 attached to the affidavit of William Timothy Fitzgerald dated   13 November 2015.

   [3]Reference was made to the decision of Shepard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.

1. The plaintiff submitted that it was entitled to invoke the jurisdiction of this Court and take advantage of the Pilot scheme applicable to certain oppression type proceedings.[4] It considered that, based on the rights that it sought to vindicate, Victoria was the appropriate forum. The plaintiff submitted further that prior to commencing the proceeding it was unaware of the defendants’ defence, the possibility of expert evidence, and the full extent and ambit of the case.

   [4]Practice Note 13 of 2015.

1. Next it was submitted that the application has been determined at a very early stage and, necessarily, at a time when the precise shape of the proceeding, the issues involved and the evidence to be called could not be predicted or assessed with accuracy.

1. Further, it was submitted that, as a result of commencing proceedings in this Court, the plaintiff has obtained the benefit of the defendants’ undertakings in relation to the future conduct of the proceeding. The defendants had failed to provide critical documents despite repeated requests[5] and by their proposed orders would not do so until February 2016.[6]

   [5]Letters from ABL to Rostron Carlyle dated 27 August and 1 and 24 September 2015, exhibited as ARP-1 to the affidavit of Anna Rose Heather dated 23 October 2015.

   [6]Proposed order 10, exhibited as WTF-1 to the affidavit of William Timothy Fitzgerald dated 23 October 2015.

1. For these reasons it was submitted that the application was properly characterised as part of the ordinary interlocutory steps in the course of the proceedings, the costs of which should be allocated in accordance with the final determination of the proceeding.

Consideration

1. In Bateman v Fairfax Media Publications Pty Ltd (No 2)[7], Refshauge J identified the following costs orders made by courts following successful transfer applications:

   [7][2013] ACTSC 95.

a)   an unsuccessful opposing party may be ordered to pay the costs of the application, as in Waterhouse v Australian Broadcasting Corporation (1989) 97 FLR 1; Bainton v Sheahan (Unreported, Supreme Court of New South Wales, Hunt J, 2 March 1990); Valceski v Valceski (2007) 70 NSWLR 36;

b)     a successful applicant may be ordered to pay some costs, as in Dye v Commonwealth Bank of Australia [2010] NSWSC 1237, being the costs wasted by proceedings commenced in an appropriate court and the lateness of the application, though this was a special case where the plaintiff applied for the transfer;

c)   costs may be reserved to the trial court, as in Koltai v World Dot Net Holdings Pty Ltd; Asia Gold Mining Corp NL v Gray Eisdell Timms Pty Ltd (Unreported, Supreme Court of Queensland, Ambrose J, 21 September 1999);

d) perhaps most commonly, costs may be ordered to be costs in the cause, as in Arrowcrest Group Pty Ltd v Advertiser News Weekend Publishing Co Pty Ltd (1993) 113 FLR 57; Packer v John Fairfax Publications Pty Ltd [2000] ACTSC 101; Laoulach v Lee Commercial Investments [2006] NSWSC 547; Paccar Financial Pty Ltd v Menzies [2009] VSC 643; Robbins v Sons of Gwalia Ltd [2009] FCA 96; Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 14) [2011] FCA 1277; Byrne v Australian and New Zealand Banking Group Ltd [2013] FCA 233; Khoury v Commonwealth Bank of Australia [2013] FCA 304.[8]

[8] Ibid, [16].

1. As submitted by the plaintiff, few of cases cited above include reasons for the costs orders made and, of those that do, the reasons are brief.  As Refshauge J noted, although the cases do not establish any particular approach, there are helpful comments, including what his Honour regarded as the “just approach” of Habersberger J in Paccar Financial Pty Ltd v Menzies:

In terms of the costs of today, I do regard an application such as this as one that is part and parcel of the interlocutory steps of the proceeding.  Mr McInnis urged that it was a discrete proceeding, and that costs should follow the event.  In my view, the costs of this application should be allocated in accordance with the final determination of the proceeding.  I will order that the costs of and incidental to today’s hearing be costs in the cause.[9]

[9]Bateman v Fairfax Media Publications Pty Ltd (No 2) [2013] ACTSC 95, [19]-[21] (Refshauge J), quoting Paccar Financial Pty Ltd v Menzies [2009] VSC 643, [34] (Habersberger J).

1. In my opinion, in the absence of special circumstances, which would include lack of jurisdiction or a very clear case, the costs of a successful transfer application should ordinarily be costs in the cause.

1. In my opinion there are no special circumstances in this case.  Success in applications of this kind, calling for a nuts and bolts management decision at an early stage, is not a persuasive factor and is of limited relevance.

1. I do not regard the defendants’ prior communicated position (including the offer of compromise) as to the non-desirability of commencing or continuing proceedings in Victoria as sufficient.  No doubt it was the defendants’, now vindicated position.  However, the additional factual matters, that I found relevant and the anticipated extended ambit of the case as the application unfolded were not sufficiently part of the argument raised.  Nor was the position regarding the possible equivalent procedural position in Queensland.  I do not consider that the plaintiff was obliged to make these enquiries.

1. In short, the parties had different views at an early stage of the proceeding.  The plaintiff considered that the three issues raised (excessive directors fees, failure to declare dividends and failure to appoint two directors) were short, discrete, documentary and non-fact intensive matters that could easily and expeditiously be dealt with in Melbourne and with the benefit of the Pilot scheme.  The views at the time of commencement of the proceeding, were reasonably held and the plaintiff was entitled to invoke its ‘home’ jurisdiction.

1. The plaintiff did not, in my view, act unreasonably in rejecting the defendants’ pre-commencement argument as to the appropriate forum. Having commenced the proceeding, there is some force in the defendants’ submission that the plaintiff, now better informed having been served with the Powell affidavit, should have accepted the offer of compromise, made as it was before the interlocutory process was filed.  However on balance and in the exercise of my discretion I am inclined to the view that the plaintiff was entitled to have the argument, the usual interlocutory argument, without adverse cost consequences.  It sought to argue that despite the defendants’ position the case ought to be dealt with within the narrow framework of the issues that it proposed.

1. In all of the circumstances, in my opinion the costs of the application should be costs in the cause and I so order.