Kusumanadi v Artemas (No. 3)

[2016] VCC 1904

IN THE COUNTY COURT OF VICTORIA Revised
Not Restricted
Suitable for Publication

AT MELBOURNE

COMMERCIAL DIVISON
 EXPEDITED CASES LIST

Case No. CI-15-05083

JOENG KUSUMANADI and MULJATI SULIMIHARDJA	Plaintiffs
v.
JUN ARTEMAS and JULIA ARTEMAS	Defendants

---

JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	9 December 2016 (written submissions)
DATE OF JUDGMENT:	14 December 2016
CASE MAY BE CITED AS:	Kusumanadi & Anor v. Artemas & Anor (No. 3)
MEDIUM NEUTRAL CITATION:	[2016] VCC 1904

REASONS FOR DECISION

---

Catchwords:              Practice and procedure – Costs – Application for indemnity costs based on defendants’ conduct during the proceeding – Whether case sufficiently “special” or “unusual”.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr C. Gunst QC and Mr A. W. Sandbach of Counsel	AJH Lawyers
For the Defendants	Mr P. G. Willis SC	Liberogiannis & Associates

HIS HONOUR:

1On 6 December 2016, I made final orders in this proceeding, save for the issue of costs. The parties have filed written submissions in relation to costs and have not sought to address the Court further by way of oral submissions.

2The issue for determination is whether the plaintiffs should receive their costs on a standard or an indemnity basis. Plaintiffs’ counsel had foreshadowed that the plaintiffs would seek an order for indemnity costs on two bases:

a.the conduct of the defendants in the proceeding;

b.an offer of compromise made by the plaintiffs.

3The second basis for the application was not proceeded with, following my decision as to the date from which interest should be paid. The sum the plaintiffs indicated they were prepared to accept exceeded the amount of the judgment sum and interest.

4The plaintiffs have filed extensive written submissions and voluminous affidavit material attesting to the following conduct by the defendants:

a.“making groundless contentions that were known to be false and without a proper basis”;

b.conducting the proceeding “in contravention of their ‘overarching obligations’ under the [Civil Procedure Act]”;

c.prolonging the hearing by unnecessarily disputing matters raised in the plaintiffs’ notices to admit.

5In response, defendants’ counsel Mr Willis SC submitted that:

a.there was no basis for suggesting that contentions, “known to be false and without a proper basis”, were made by the defendants;

b.the defendants’ conduct both in responding to the notices to admit and in the conduct of the trial “assisted the speedy resolution of the issues”;

c.whilst it was a “hard fought case, it was conducted efficiently”.    

6Counsel referred me to the leading authorities on the matter for decision. Justice Harper in Ugly Tribe Co Pty Ltdv Sikola [2001] VSC 189 at paragraph [10] quoted from the judgment of Winneke P in Spencer v Dowling [1997] 2 VR 127 at 147 where the President stated that, the “practice in the superior courts [of awarding costs on a party/party basis as ‘the usual measure’ unless there are ‘special circumstances’]…is….universal [and] is designed to reflect a compromise between the interests of successful and unsuccessful litigants”.

7In Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No. 2) [2005] VSCA 298, the Court of Appeal at [22], in the context of discussing the “policy rationale underlying the availability of special orders for costs where offers of compromise are rejected”, endorsed the statement of Redlich J in Aljade & MKIC v OCBC [2004] VSC 351 at [95] that, “Potential litigants should not be discouraged from bringing their disputes to the Courts”.

8Whilst these decisions pre-date the Civil Procedure Act 2010 (Vic), the High Court said in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46, that “The terms of the CPA [Civil Procedure Act 2005 (NSW)] assume that its [overriding] purpose, to a large extent, will coincide with the dictates of justice”, which may require regard to be had to “other relevant matters”.

9The exhibits to the plaintiffs’ solicitors’ affidavit are contained in a single lever arch file which contains many hundreds of pages of documents. These documents (some of which appear as exhibits to the affidavit in duplicate, or in one case as three separate exhibits) include a selection of:

a.documents, including pleadings, filed with the Court;

b.correspondence between the parties’ solicitors;

c.exhibits at the trial.

10The affidavit itself includes summaries of documents exhibited, reference to selected quoted passages, commentary on the contents of the documents and other matters which generally should more properly have been the subject of submissions rather than purporting to be evidence. This conclusion is reinforced by the language of the affidavit which uses expressions such as “grossly false”, “absurd”, “unsubstantiated, false and/or exaggerated”, “false, inflated and exaggerated, and more importantly irrelevant or unsubstantiated”, “false affidavit” and “false assertions”, when describing the documents or their contents.

11I have read the affidavit and the exhibits. In my view, it is only possible to give appropriate consideration to the plaintiffs’ submissions and supporting material by having regard to all the documentation from the Court file (primarily the pleadings) and the documents from the many volumes of court books and the further documents received as exhibits at the trial.

12I have a “general impression” of how the trial was conducted, and the proceeding generally, primarily from my recollection from the hearing in August and the following two months as my reasons for judgment were prepared and refined through my consideration of the evidence. I have, to a degree, been assisted by the further material recently filed by the plaintiffs, although I have needed to put that documentation in context by looking back at the court books from the hearing.

13Whilst no answering material has been filed by the defendants, Mr Willis SC asserted in his written submissions that some, unstated, matters raised by “the plaintiffs’ submissions…from the interlocutory history of the proceeding…are disputed and would require a mini-trial to resolve”.

14Notwithstanding, that is the task I have attempted, and I refer to the following matters:

a.the trial was fixed with an estimate of originally 3 sitting days, then a revised estimate of 5-7 sitting days. The trial was completed in 8 sitting days;

b.the longest single element in the trial was the cross-examination of Mr Artemas by Mr Gunst QC which occurred over 3 days;

c.otherwise, the trial proceeded quickly with all counsel taking positive steps to curtail arguments about procedural and evidentiary issues;

d.Mr Willis SC made many concessions throughout the trial, including during final submissions, in order to facilitate the hearing;

e.the single most significant factor which enabled the judgment to be delivered within about 8 weeks of the completion of the hearing was the spreadsheet submitted by the defendants;

f.during the interlocutory stages, the defendants were represented by solicitors and counsel. The proposed amended defence dated 20 April 2016 (which the plaintiffs’ solicitor described as containing “false assertions”) was signed by junior counsel. Appearances at interlocutory hearings were made on behalf of the defendants by counsel, on one occasion by senior counsel;

g.the defendants’ solicitors filed a notice of ceasing to act on 18 July 2016. Solicitors only came on the record again for the defendants on the day the trial commenced, presumably so that Mr Willis SC might appear;

h.the pleadings in the case were inadequate and unsatisfactory. This included the pleading of the plaintiffs’ claim. At the request of both counsel, I did not require the parties to realign the pleadings to the case that was opened. Much of the detail in the case was not sorted out until Mr Willis SC produced the final version of his spreadsheet and I could, during my consideration of the matter, understand the detail of what was asserted by the parties, and what was conceded by the opposite party;

i.the parties wished to rely on witness statements, but at my suggestion, counsel agreed to a process whereby oral evidence was given of contentious conversations, and other issues which counsel agreed between themselves. The parties’ examination in chief of witnesses was limited in this way;

j.although this was done very late in the proceeding, Mr Willis promptly and appropriately responded to many requests, including the provision of a witness statement by Mrs Artemas and further discovery relating to the execution of the transfer of Mr Artemas’s interest in the Donvale property to his wife;

k.the issues relating to the notices to admit and the defendants’ responses were of minor significance at the trial. The notice to Mr Artemas contained 76 requested admissions. The response admitted 43 and partly admitted 5 of the requests. Of the 28 disputed matters, many related to the costs associated with the construction of the units where the first defendant was essentially put to his proof at trial. In response to the 29 requests to her, Mrs Artemas admitted 20, partly admitted 2 and disputed 7;

l.Mr Artemas was a witness whose credibility was very detrimentally affected as the evidence emerged, largely during cross-examination, about the loan applications to ING Bank in 2007 and to Westpac in 2014;

m.however, notwithstanding the very serious criticisms I made about his evidence and my conclusion that I could not rely on his evidence unless otherwise supported, Mr Artemas was a witness who was not totally unreliable. He had very fixed positions about some issues as he attempted to “defend the indefensible”. At other times, he made concessions and admitted shortcomings in his memory;

n.on the issue of what constituted the agreement between the parties, the oral evidence was of limited value because of the lapse of time. Essentially, the critical terms relating to the repayment of the plaintiffs’ contributions, the sharing of profit and what items were appropriate project expenses arose from a consideration of the history of the parties’ relationship and the contemporaneous documentation;

o.the plaintiffs were unsuccessful in establishing a proper basis for the caveat lodged over the Donvale property. The argument advanced in final submissions on behalf of the plaintiffs was not pleaded in the statement of claim;

p.the plaintiffs originally entrusted Mr Artemas with substantial sums of money. They took no steps to finalise their arrangements in even the simplest of documents and appeared to then take only limited interest in what Mr Artemas was doing with the development and with their money for a number of years. Later, Mr Artemas deliberately misled the plaintiffs about the sale of the properties.

15I consider that this was not a “special” or “unusual” case which warrants an order for costs otherwise than on the standard basis. It is important to keep in mind that of the commercial litigation initiated in the County Court, only about 2% of the cases result in a judgment after a trial. Trials are unusual. Fortunately, it can rarely be said that trials are run unnecessarily, with an ulterior motive or a wilful disregard to known facts. This proceeding was initiated on 28 October 2015 and the defendants filed an appearance on 6 November 2015. The matter came to trial about 9 months later on 15 August 2016.

16It is not a proceeding which, in my judgment, requires an order for indemnity costs to reflect the conduct of the defendants, either from the time they appeared, or from the later dates suggested by plaintiffs’ counsel in their submissions.

17I will order that the defendants must pay the plaintiffs’ costs of the proceeding, including reserved costs but excluding all costs associated with the application for indemnity costs made by the plaintiffs’ solicitors email addressed to the Court and dated 8 December 2016, to be assessed by the Costs Court on a standard basis in default of agreement.

- - -

Certificate

I certify that these 5 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 14 December 2016.

Dated: 14 December 2016

Carla Cianfaglione    

Associate to His Honour Judge Anderson