Lumley Life Ltd v IOOF of Victoria Friendly Society

[1991] FCA 195

Re: LUMLEY LIFE LIMITED
And: IOOF OF VICTORIA FRIENDLY SOCIETY
No. N G354 of 1989
FED No. 195
Practice and Procedure
100 ALR 600
(1991) 36 FCR 590

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart J.(1)

CATCHWORDS

Practice and Procedure - Costs - payment in under Order 23 Federal Court Rules - meaning of "cause of action" in Order 23 rule 1 - whether notices of deposit too uncertain - Court's discretion as to costs.

Federal Court of Australia Act 1976: s. 43.

Federal Court Rules: Order 23, Order 62 rule 27(2).

HEARING

SYDNEY

#DATE 17:4:1991

Counsel for the Applicant: S. Epstein

Solicitors for the Applicant: Phillips Fox

Counsel for the Respondent: L.M.F. Watts

Solicitors for the Respondent: Higgins Teale

ORDER

Lumley Life Limited pay to IOOF of Victoria Friendly Society the

sum of $46,133.13 as compensation for loss and damage sustained by IOOF of Victoria Friendly Society in compliance with the undertaking as to damages given to the Court by Lumley Life Limited on 10 July 1989.

2. IOOF of Victoria Friendly Society pay to Lumley Life Limited its

costs of the motion for compensation incurred after 22 march 1990, including costs reserved after that date.

3. There be no order for costs of the motion for compensation on and

prior to 22 March 1990.

4. The sum of $46,133.13 of the sum of $100,000 paid into Court by

Lumley Life Limited be paid to IOOF of Victoria Friendly Society and that the remainder of the sum paid into Court by Lumley Life Limited be paid to Lumley Life Limited.

5. Leave is reserved to any party to apply to the Court on two days'

notice for payment out of interest accrued on the moneys paid into Court.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

JUDGE1

In this proceeding Lumley Life Limited ("Lumley") and Drake and Eades Pty Limited ("Drake and Eades") sought to restrain IOOF of Victoria Friendly Society ("IOOF") from using the name "Flexibond" or "Flexi Bond" or any deceptively similar name as part of its name or otherwise in the conduct of its activities as a Friendly Society. The claims were based on alleged contraventions of ss. 52 and 53(c) of the Trade Practices Act 1974 and passing off.

1. On 10 July 1989 the Court granted in favour of Lumley and Drake and
   Eades an interlocutory injunction restraining IOOF from engaging in the impugned activities until the final hearing of the proceeding. An undertaking was given on behalf of Lumley at the time the interlocutory injunction was granted in these terms:
   

"Upon the applicant, by its counsel, giving to the Court an undertaking to pay to the respondent or to investors or potential investors who on or before 10 July 1989 have received the respondent's brochure, exhibit RGH2 to the affidavit of Ross Greenwood of 7 July 1989, such compensation (if any) as the Court thinks just, in such manner as the Court directs."

1. The matter was heard by me on a final basis and I gave judgment on 16 November 1989 in which, in substance, I found in favour of IOOF. As there was then outstanding the question of the damages, if any, sustained by IOOF or its investors or potential investors resulting from the grant of interlocutory relief, the Court adjourned the application to a date to be fixed for the purpose of hearing any motion of IOOF with respect to any such damages, but otherwise dismissed the application.

2. IOOF then moved the Court for the payment of compensation flowing from the grant of the interlocutory relief and the undertaking given by Lumley as the quid pro quo for it. The motion came on before the Court and I gave judgment with respect to it on 21 December 1990. At that time I made no orders but stood the matter over to a date to be fixed so that the parties could consider my reasons for judgment and hand up short minutes of order. I indicated then that I would also hear argument on the question of costs of the motion for compensation. On 14 February 1991, the stood-over date, the parties and their legal representatives informed me that in accordance with my reasons for judgment of 21 December 1990, the amount which it would be appropriate to award by way of compensation to IOOF against Lumley pursuant to the undertaking as to damages given by Lumley on 10 July 1989 would be the sum of $46,133.13.

3. As a question of costs of the motion for compensation was then outstanding, I took the course, concurred in by the parties, of not ordering payment of that compensation at that time but awaiting until the argument of costs of the motion had concluded so that no question would arise as to whether any order for compensation at that stage of the proceeding was interlocutory. Subsequently the parties have, in accordance with directions of the Court, filed outlines of submissions relating to the one outstanding question which is the question of costs of the motion for compensation. The matter was then listed for hearing today for the purpose of dealing with that question of costs and the formal entry of judgment in respect of the compensation in the sum previously mentioned.

4. The other matter which it is relevant for me to mention, and which is at the heart of the dispute between the parties on the question of costs, is that on 22 March 1990 Lumley paid into Court the sum of $80,000 purportedly as a payment in pursuant to order 23 rule 6. The payment in was made pursuant to a document called "Notice of Deposit", which reads as follows:
   

" Notice of Deposit

(Order 23, rule 6)

The Applicants have paid into Court $80,000. That sum is in answer to all the causes of action on which the Respondent claims."

1. On 10 May 1990 a further sum of $20,000 was paid into Court by Lumley again purportedly as a payment into Court pursuant to Order 23, rule 6, accompanied by a notice of deposit reading as follows:
   

" Notice of Deposit

Order 23, rule 6.

The Applicants have paid into Court a further $20,000. That sum together with the sum of $80,000 which was paid in by the Applicant on 22 March 1990 is in answer to all the causes of action on which the Respondent claims."

1. Each notice was signed by the solicitor for the applicants to the principal proceedings, Lumley and Drake and Eades. I should add that the heading in each notice of deposit is the heading which the papers have borne at all material times in this matter, showing Lumley and Drake and Eades as the applicants and IOOF as the respondent.

2. Lumley contends that it is entitled to payment of its costs from IOOF since the date of the first payment in of $80,000 because the amount of compensation to which IOOF has been held to be entitled is less than that sum. IOOF resists that order on a number of grounds to which I shall now turn.

3. IOOF submits that order 23, rule 2 is inapplicable to an applicant such as Lumley, who faces a claim for compensation pursuant to an undertaking to the Court given in terms such as those given by Lumley in this case on 10 July 1989. I have heard full argument from counsel for IOOF and it may be summarised as follows:
   1. IOOF's claim for compensation is not a "cause of action" within the meaning of that expression in rule 1, order 23 (which is the interpretation rule for the purposes of order 23);
   2. Whatever the answer be to (1), IOOF's claim for compensation is not a cause of action;
   3. IOOF's claim for compensation is not a claim for the recovery of a debt or for damages, but rather a claim for compensation and reference is made in that respect in particular to Air Express Limited v Ansett Transport Industries (Operations) Pty Limited (1981) 146 CLR 249 per Barwick C.J. at 311 and Stephen J. at 318-319;
   4. Order 23 rule 2 is limited to providing a mechanism for a "respondent" to pay moneys into Court and does not permit an applicant to do so, and that Lumley was at all times in this proceeding the applicant.

4. It was argued on behalf of IOOF that on the assumption that order 23 is not applicable, the normal rule that costs follow the event should apply.

5. It was also argued on behalf of IOOF that the notices of deposit on their face are defective as being too uncertain in that they refer to payments by the "applicants", whereas the undertaking of 10 July 1989 was given solely by the first applicant, Lumley, by its counsel and not by the other applicant, Drake and Eades. It was further argued on behalf of IOOF that another ground of uncertainty of the notice of deposit was that they failed to specify to which causes of action the payments into Court related.

6. Finally, it was argued on behalf of IOOF that, in respect of the notice of motion of Lumley of 30 May 1990, IOOF ought to be entitled to those costs in any event as the further documents, the subject of that motion, were never called for by Lumley at the final hearing. It was submitted that for the same reasons IOOF should be entitled to its costs of its notice of motion filed in Court on 25 May 1990.

7. In my opinion, IOOF's claim for compensation does answer the description of a "cause of action" within the meaning of order 23 rule 1. That rule defines for the purposes of order 23 "cause of action" as meaning "a cause of action for the recovery of debt or damages".

8. In Crisp and Gunn Co-op Ltd v Hobart Corporation (1963) 37 ALJR 255 a question arose concerning rule 1 of order 24 of the Rules of the Supreme Court of Tasmania 1958 which related to the question of payment of moneys into Court. The provisions of that rule applied to actions "to recover a debt or damages". At pages 256 and 257 McTiernan, Taylor and Windeyer JJ. in a joint judgment said:
   

"The view that the payment into Court was without legal effect stemmed, in the first instance, from the fact that, in terms the provisions of order 24 applied to actions 'to recover a debt or damages' and in his Honour's opinion an action to recover compensation for land compulsorily acquired is not such an action. 'It was not' his Honour said, 'an action for debt' apparently, because it 'was not an action for a sum certain and involved an assessment of compensation'. Nor was it, he considered, an action to recover damages because the appellants' title to relief did not depend upon proof of any wrongful act. It may be conceded that the action was not strictly an action for damages but the expression used in the rule has a composite significance and having regard to its history, was doubtless intended to cover any action in which a claim for money, as distinct from other specific forms of relief, was made. However, this may be, to say that the action was "not an action for debt" as it was not for a sum certain because of the necessity that compensation should be assessed, was virtually to equate that part of the expression used in the rule - 'an action to recover a debt' with the old form of action for debt. But the rule did not speak of and was never intended to refer to actions of debt; it spoke of an action to recover a debt or damages and the first part of this expression not only covered a field at least as wide as the old common money counts but extended to claims for money sums arising under specialities or statute. It is no answer to this proposition to say that the claim in question here was not for a fixed and certain sum as was requisite in the old action for debt. ... Further, we cannot fail to observe that in Spencer's case ((1907) 5 CLR 418) the question whether the action was an action to recover a debt or damages passed without question. We have no doubt that order 24 applied to an action such as the present."

1. In Letang v Cooper (1965) 1QB 232, Lord Diplock said at 242-243:
   

"A cause of action is simply a factual situation the existence of which entitles one person to obtain from the Court a remedy against another person."

1. This passage was cited with approval by Jenkinson J. in T.N. Lucas Pty Limited v Centrepoint Freeholds Pty Limited (1984) 1 FCR 371 at 382.

2. Order 23 relating to payment into Court is an order of a general kind intending to encompass the various circumstances in which it is appropriate for a party to bring money into Court with respect to proceedings before the Court. In my opinion, the definition of "cause of action" is one which should be given a liberal rather than a restrictive meaning and, applying the reasoning of the High Court in Crisp's Case, supra, and that of Lord Diplock in Letang v Cooper, the claim for compensation by IOOF arising out of the giving of the undertaking on 10 July 1989, answers the description of a "cause of action" within the meaning of rule 1 and subsequent rules of order 23. I see nothing in the reasons for judgment of Barwick C.J. or Stephen J. in Air Express Limited v Ansett Transport Industries (Operations) Pty Limited, supra, which points to any contrary conclusion. Their Honours' observations do not touch the problem presently before the Court.

3. The right to bring money into Court is afforded by order 23 rule 2 to a "respondent". "Respondent" is defined by order 4, rule 2 as "a party against whom relief is claimed". In my opinion, Lumley plainly answers the description of a "respondent" for the purposes of the claim for compensation in this matter because at the time of the payment in the only extant issue was with respect to the claim of IOOF for compensation from Lumley arising out of the undertaking as to damages.

4. Nor is there any uncertainty or ambiguity as to the "causes of action" for which the money was paid into Court. At the time of the payment into Court of the sums of money pursuant to the two notices of 22 March 1990 and 10 May 1990, the principal issues in the case had been disposed of. Indeed, as I said earlier, judgment on the substantive issues was given on 16 November 1989 and all that remained was the motion for compensation of IOOF. That was the only matter with respect to which any payment into Court could have been made. There could therefore be no uncertainty whatever about the matter. Nor do I have any evidence before me to suggest that any officers of IOOF seriously thought that there was any such uncertainty. Nor is there any suggestion by IOOF that the payment into Court at the time it was made gave rise to any confusion on IOOF's part as to what the payment represented. No dispute was made or has been made at any time until this question of costs arose as to the efficacy of the payment into Court.

5. Accordingly, in my opinion, the payment into Court is one properly made pursuant to order 23 of the Court's rules.

6. The question arose in argument as to whether the provisions of order 62, rule 27(2) are confined in their application to payments into Court pursuant to order 23 or have a wider application. That rule, which is part of order 62 concerning costs, reads as follows:
   

"Where a party has brought money into Court, the Court may, in exercising its discretion as to costs, take into account that fact, and the amount of the money brought into Court."

1. I do not find it necessary to decide in this case whether order 62 rule 27(2) does have an operation which goes beyond order 23; because, as I say, the payments into Court in this case fall within order 23.

2. What then are the orders which should be made with respect to the costs of the motion? It was not suggested by counsel for Lumley that the payment into Court necessarily must carry with it an order for costs in its favour from the date of the first payment in, or indeed any other time, but rather that it was a very strong circumstance in favour of such an order being made in the exercise of the Court's discretion. The Court has, of course, a general discretion with respect to costs of proceedings before it: see s. 43 of the Federal Court of Australia Act 1976.

3. The principles which the Court should apply in exercising its discretion to award costs when money has been paid into Court pursuant to order 23 were discussed by Woodward J. in Westsub Discounts Pty Limited v Idaps Australia Limited (No 2), (1990) 94 ALR 310, especially at pages 318 and 319. After reviewing the principles and the authorities his Honour said at 319:
   

"The court still has complete discretion to do what is just in all the circumstances; but the payment into court cannot be disregarded: see O 62 r 27. I believe that courts should do all they can to encourage the sensible compromise of actions. If money is paid into court and the applicant recovers less than the amount paid in, then for all practical purpose the respondent has succeeded in the action."

1. In T.N. Lucas Pty Limited v Centrepoint Freeholds Pty Limited, supra, Jenkinson J. said, at page 385:
   

"Order 23 and order 62, rule 27 and the practice as to costs which is founded upon those and similar rules of court give vigorous effect to the policy that the parties to civil litigation should be induced to compromise"

(a passage cited by Woodward J. in Westsub at 319).

1. In this case IOOF has established an entitlement to compensation in the sum of $46,133.13. The amounts paid into Court were, as I have said, $80,000 on 22 March last year, and $20,000 on 10 May last year.

2. No circumstances exist which would suggest that Lumley should not have its costs from IOOF since the date of the first payment in, and that is the order which the Court proposes to make. However, it remains to deal with other questions relating to costs.

3. Assuming for the moment that the two payments in were not made validly pursuant to order 23 of the Court's rules (an assumption with which I disagree), I would nevertheless regard the fact of those two payments in, accompanied by the notices of deposit in each case, in all the circumstances as an indication or offer by Lumley that it was prepared, without prejudice, except on the question of costs, to pay those sums of money, totalling $100,000, to IOOF in settlement of the claims for compensation arising from the giving of the undertaking. It seems to me that any other interpretation of those events, in the absence of any suggestion by IOOF of confusion or doubt as to what the payment in signified, is the reasonable construction to place on the events. I draw a distinction, for this purpose, between the facts as they appear in this case and as they appeared before Jenkinson J. in T.N. Lucas Pty Limited v Centrepoint Freeholds Pty Limited. The two cases turn upon their own facts; c.f. Messiter v Hutchinson (1987) 10 NSWLR 525 and Amev Finance Limited v Artes Studios Thoroughbreds Pty Limited (1988) 13 NSWLR 486.

4. Even if the payments in were not made pursuant to order 23 and even if the construction of the events of the payment in did not answer the description to which I have just referred, there is another, and again independent, reason why Lumley should succeed substantially on the costs of the motion for compensation. As my earlier reasons for judgment of 21 December 1990 demonstrate, together with the evidence and submissions that were led on the question of compensation, although there were many items of compensation in dispute between the parties, Lumley succeeded on substantially all the issues in dispute. There were some minor heads or items of compensation in relation to which IOOF succeeded which were not conceded by Lumley and I referred to those in my earlier reasons for judgment, but the amounts attributable to those items are very small indeed. The dispute with respect to those items occupied very little time in evidence and argument. If I were to award costs on that footing I would have ordered IOOF to pay three-quarters of Lumley's costs of the motion for compensation.

5. It remains to deal with the submission by counsel for IOOF (whatever be the answer to these earlier questions) that it should have its costs reserved on 5 June and with respect to the two motions of 25 and 30 May 1990. I need say very little about this aspect of the case. The interlocutory applications were brought because of deficiencies in the discovery of documents by IOOF. It is true that, as it turned out, the documents in question were not called for by Lumley at the final hearing, but that could be for any one or more of a number of reasons, none of which is or should be or can be before the Court as they relate to the conduct of a case by counsel, a matter which the Court should not probe. I see no reason why those costs should not be regarded simply as costs of the motion for compensation generally.

1. Accordingly, the Court orders that Lumley Life Limited pay to IOOF of Victoria Friendly Society the sum of $46,133.13 as compensation for loss and damage sustained by IOOF of Victoria Friendly Society in compliance with the undertaking as to damages given to the Court by Lumley Life Limited on 10 July 1989.

2. The Court orders IOOF of Victoria Friendly Society to pay to Lumley Life Limited its costs of the motion for compensation incurred after 22 March 1990, including costs reserved after that date.

3. The question arises as to the costs of the motion for compensation which were incurred prior to 22 March 1990. Counsel for IOOF seeks an order for costs that Lumley pay its costs during that time. Counsel for Lumley submits that there be no order for costs on the ground that the proceedings were substantially prolonged because of IOOF's failure to properly conduct its case. Counsel for Lumley pointed to the fact that on the evening before the first day of the hearing of the compensation claim, IOOF reformulated its case with further affidavit evidence and particulars in a manner which caused the original hearing to be vacated. He said that a further delay was occasioned on the adjourned dates of the hearing when more affidavit evidence from experts and lay witnesses was put forward by IOOF late in the piece, and, on the further adjourned hearing of 24 October 1990, still further revisions were made to IOOF's original evidence.

4. I have a clear recollection of the events in question and in my opinion the submissions by counsel for Lumley are substantially correct.

5. Accordingly the proper order for costs should be that there be no order for costs of the motion on and prior to 22 March 1990.

6. That leaves the question as to what should happen to the moneys that have been paid into Court. The Court orders that the sum of $46,133.13 of the sum of $100,000 paid into Court by Lumley be paid to IOOF and that the remainder of the sum paid into Court by Lumley be paid to it. Leave is reserved to any party to apply to the Court on two days' notice for payment out of interest accrued on the moneys paid into Court.