Lucke v Cleary (No 2)

[2011] SADC 136

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

LUCKE v CLEARY & ORS (No 2)

[2011] SADC 136

Judgment of Her Honour Judge Davey

1 September 2011

PROCEDURE - COSTS

The defendants seek costs from the plaintiff on an indemnity basis - the plaintiff resists the orders.

Held:  The defendants are to have the costs of the matter on a party/party basis.

Sunburst Properties Pty Ltd (in liquidation) v Agwater Pty Ltd & Ors (No 2) [2005] SASC 393; Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, considered.

LUCKE v CLEARY & ORS (No 2)
[2011] SADC 136

1. In this matter I declared that the parties, by their solicitors, reached a binding agreement and agreed the terms of the deed of settlement provided by the plaintiff’s solicitors, Corsers Lawyers, on 1 November 2010.  I found for the defendants.  The defendants now seek an indemnity costs order and say that the defendants are entitled to an order that the plaintiff pay the legal costs arising from the plaintiff’s failure to execute the deed.  Those costs are sought on a special basis principally because the defendants assert that the plaintiff, properly advised, should have known that he had no chance of successfully defending those proceedings.

2. The defendants referred me to a number of authorities and particularly the case of Sunburst Properties Pty Ltd (in liquidation) v Agwater Pty Ltd & Ors (No 2).[1]In that case, Gray J helpfully summarised the relevant principles:

   6.The Court has an unfettered discretion as to costs orders.  The ordinary rule is that costs should be ordered on a party and party basis.  The ordinary rule assumes that an order for costs does not operate as a complete indemnity.

   7.The Court has a discretion where some special or unusual feature of the case provides justification to depart from the usual rule that costs be taxed on a party and party basis.  The Court has regard to the particular facts and circumstances of the particular case.  Those circumstances may include improper conduct which has had the effect of imposing an undue burden on the successful party.  Such conduct includes propounding a defence where there were no prospects of success on the merits.

   8.Unreasonable conduct is sufficient to enliven the discretion.  Vexation need not be proved.  The Court is entitled to order solicitor and client costs or solicitor and own client costs if satisfied that it ought to mark its disapproval of inappropriate conduct on the part of the party ordered to pay costs.

   [1] [2005] SASC 393

3. Justice Gray also quoted at length from the judgment of Sheppard J in Colgate Palmolive Co.[2]  Justice Gray continued:

   10.The Court’s discretion to award solicitor and client or indemnity costs is enlivened if a party fails in circumstances where, properly advised, he should have known he had no chance of success.  That is so notwithstanding that no order will be made that costs be paid on a solicitor and client basis merely because the losing party’s case lacked merit.

   11.It may also be appropriate to consider solicitor and client or indemnity costs if it is found that a defence was pursued for some ulterior motive, or because of some wilful disregard of the known facts or clearly established law.

   12.The plaintiff must adduce a basis to justify departure from the ordinary rule.  The question must always be whether the particular facts and circumstances of the case in question warrant a departure from the usual rule that costs be awarded on a party and party basis.

   [2]    Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225

4. The plaintiff in this case resists the orders and argues (inter alia) that the defendants did not succeed in their primary case against the plaintiff.  In that regard, I agree with counsel for the defendants that that submission overstates my findings in respect of the matter. 

5. The defendants’ arguments on their claim for indemnity costs included that the plaintiff’s conduct was improper and unreasonable; that the defence of the application brought by the defendants involved propounding a defence where there was no reasonable prospect of success on the merits; that properly advised, there was no chance of success and that the plaintiff acted with wilful disregard of the known facts and clearly established law.

6. The plaintiff argues that there is no evidence that the conduct of the plaintiff was unreasonable; there is no evidence one way or the other about that topic.  Counsel for the plaintiff submitted that there was an arguable case as to whether or not there was a binding agreement between the parties. 

7. I have had regard to all of the submissions put to me together with the authorities referred to by the parties.  I am not satisfied that the circumstances of this case are such as to warrant me departing from the usual course of party/party costs.  I am not satisfied that there has been a wilful disregard of known facts or clearly established law or that the plaintiff has acted in a way which is unreasonable in the manner described in the case of Colgate Palmolive Co.  I cannot say that, were the plaintiff properly advised, he should have known that he had no chance of success in his argument.  In this case I have no adequate basis for finding that the defence of this matter was pursued for some ulterior motive or because of some wilful disregard of known facts and clearly established law. 

8. Accordingly, I decline to make an order for indemnity costs.  The defendants are to have the costs of the matter on a party/party basis.