LCY Pty Ltd v MA (No. 2)

[2017] VCC 403

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

GENERAL LIST

Case No.  CI-15-05752

LCY PTY LTD

v

DONG YAN MA

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JUDGE:	HIS HONOUR JUDGE COSGRAVE
WHERE HELD:	Melbourne
DATE OF HEARING:	22 March 2017
DATE OF JUDGMENT:	12 April 2017
CASE MAY BE CITED AS:	LCY Pty Ltd v Ma (No. 2)
MEDIUM NEUTRAL CITATION:	[2017] VCC 403

REASONS FOR JUDGMENT
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Subject:  COSTS;

Catchwords:             Application for indemnity costs – where plaintiff pursued case contrary to known facts -  where party abandoned allegations at trial -

Cases Cited:GT Corporation v Amare Safety Ltd (2008) VSC 296;

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D K Carlile	RTC Legal
For the Defendant	Mr G J Redenbach	New World Pty Ltd

HIS HONOUR:

1       After an eight day trial in February 2017 I gave reasons for judgment on 22 March 2017 in which I dismissed the plaintiff’s claim. I now address the matter of final orders and costs.

2       The defendant (“Ma”) contended that because he succeeded at trial, he should recover his costs against the plaintiff (“LCY”) on an indemnity, or alternatively on a standard basis. Ma submitted that an order for indemnity costs was appropriate because,

a)     LCY never had legal title enabling it to give Ma the right to manage the business and use its associated assets including plant and equipment and stock.

b)     LCY did not properly plead or prove its claim for breach of contract and estoppel.

c)     LCY made, or continued with the prosecution of, a claim in wilful disregard of the known facts; and

d)     LCY caused Ma to incur substantial costs in defending a claim which was bound to fail. This whole trial and the waste of both the defendant’s time and the court’s time could have been avoided if LCY had properly analysed the position.

3       LCY said that Ma should pay its costs due to allegations which it abandoned or failed to call evidence about at trial. LCY referred to the allegation that RTC Legal acted for Ma and it, or a solicitor at that firm, Petrus Chow, advised Ma in relation to the sale of business agreement. LCY also referred to:

a)     the allegation by Ma that the management fee was grossly excessive, unconscionable and a penalty.

b)     the allegation by Ma that the sale of business agreement was inconsistent with the rights of MCLY at common law and various taxation laws and the Corporations Act 2001 (Cth).

c)     the application to amend his pleadings which Ma made and then abandoned on the first day of trial.

d)     alternatively, LCY argued that if the court preferred not to award costs  on issue by issue basis, Ma should pay 70 per cent of LCY’s costs and LCY pay 30 per cent of Ma’s costs.

4       GT Corporation v Amare Safety Ltd[1] concerned a similar scenario to the extent that the successful plaintiff sought its costs of the proceeding (including some on an indemnity basis) and the defendant said that the plaintiff should recover just 40 per cent of its costs because it succeeded only on some of its claims and recovered a small proportion of the quantum claimed in the proceeding. Robson J analysed the authorities at some length before summarising the applicable general principles as follows:[2]

[1](2008) VSC 296.

[2]Ibid at [59].

1. The award of costs is in the discretion of the Court or Judge: s 24 Supreme Court Act 1986;

2. The discretion must be exercised judicially;

3. The discretion cannot be exercised arbitrarily or capriciously and it cannot be exercised on grounds unconnected with the litigation, or the circumstances leading up to the litigation;

4. Costs are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings.  The order is not made to punish the unsuccessful party;

5. As a general rule, costs should follow the event, and a successful party should obtain all of the costs of the action even though it failed to establish some of the alternative heads of its claim;

6. Rule 63.04(1) permits the court, in its discretion, to make an order not only as to a distinct question or issue in the pleading sense, but also to any part of the proceeding;

7. The court may, in its discretion, decline to order costs in favour of a successful party, or may order the successful party to pay the costs of the unsuccessful party, where the plaintiff failed to establish discrete heads of claim or failed to establish issues which it pursued in its claim, although ultimately succeeding on the basis of another discrete head of claim;

8. It is not necessary that the issue concerned was raised unreasonably by the party. Although, a relevant consideration may include whether the issue was raised unreasonably;

9. The court may, in its discretion, make an order that is a single order, fixing what proportion of a party’s costs should be paid by another party, thus obviating cross-orders or particular orders as to particular costs (citations omitted).

5       The conduct of both parties in this case was less than ideal: LCYs’ claim to the business and its assets was inconsistent with the relevant documents (which appeared to be drafted by its own solicitor); Ma made and then abandoned two claims immediately before and on the first day of trial and seemed to abandon without comment the claim that LCY’s solicitor had advised him in connection with the sale of business agreement.

6       I accept that I have a broad discretion in awarding costs in relation to the proceeding. As a general rule, costs should follow the event even if the successful party does not succeed on all issues raised at trial.

7       I am satisfied that I am able to make a global assessment of the trial and determine where and how the discretion as to costs is best exercised in this case. In circumstances where:

a)     I agree that LCY may well have been put to expense in relation to some matters which Ma failed to pursue;

b)     there is substance in Ma’s argument that LCY’s claim was misconceived given that MCLY owned the business giving rise to the major complaint of the case,

justice can be achieved appropriately by awarding Ma the costs of the proceeding including reserved costs,  on a party/party or standard basis. The inconvenience or wasted costs incurred by LCY were not so great as to merit either an award in its favour or a reduction in the costs payable in a situation where Ma was forced to defend a long trial where LCY’s case flawed.

Conclusion

8       By reason of the matters referred to above I make the following orders:

1)     the plaintiff’s claim is dismissed;

2)     there be judgment for the defendant against the plaintiff;

3)     the plaintiff pay the defendant’s costs of the proceeding including reserved costs, such costs to be taxed on a party/party basis until 5 October 2014 and from 6 October 2014 on a standard basis in default of agreement.