Makland Constructions Pty Ltd v Page Steel Fabrications Pty Ltd
[2023] VCC 327
•10 March 2023
| IN THE COUNTY COURT OF VICTORIA AT Melbourne COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-19-05803
| Makland Constructions Pty Ltd & Ors | Plaintiffs |
| v | |
| Page Steel Fabrications Pty Ltd | Defendant |
---
JUDGE: | Her Honour Judge Burchell | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | Written submissions dated 1 and 3 March 2023 | |
DATE OF RULING: | 10 March 2023 | |
CASE MAY BE CITED AS: | Makland Constructions Pty Ltd & Ors v Page Steel Fabrications Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2023] VCC 327 | |
RULING
---
Subject:COSTS
Catchwords: Non-compliance with Court orders – breach of overarching obligations – whether costs should be paid on a standard or indemnity basis – application for indemnity costs granted
Legislation Cited: County Court Act 1958 (Vic) s78A(1); Civil Procedure Act 2010 (Vic) ss20, 24 & 25; County Court Civil Procedure Rules 2018 r63A.30
Cases Cited:Diakou v Rouse [2019] VSCA 199; Aljade and MKIC v OCBC [2004] VSC 351; Oshlack v Richmond River Council (1998) 193 CLR 72; Colgate-Palmolive Co & Anor v CussonsPty Ltd (1993) 46 FCR 225; IMC Aviation Solutions Pty Ltd v Altain Khuder LLC [2011] VSCA 248; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189; 24 Hour Fitness Pty Ltd v W & B Investment Group Pty Ltd [2015] VSCA 216; Banksia Securities Ltd v Insurance House Pty Ltd (Costs) [2020] VSC 234
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Griffin Law Firm | |
| For the Defendant | P S Noonan | Hughes Legal |
HER HONOUR:
Introduction
1The plaintiffs are in non-compliance with the Court Orders made on 17 November 2022 and 17 February 2023 (“17 November 2022 and 17 February 2023 orders”) in relation to the filing and serving of their witness statements in preparation for a trial fixed for 14 March 2023.
2The Court made orders on 27 February 2023 extending the timetable set out in the 17 November 2022 orders and allowing the parties to file and serve submissions in respect of the issue of costs due to the plaintiffs’ non-compliance with the 17 November 2022 and 17 February 2023 orders.
3The defendant seeks an order that the plaintiffs pay the following costs on an indemnity basis:
(a) the defendant’s costs of the proceeding from 1 January 2023 to 22 February 2023 (both inclusive), save for the costs of the preparation, filing and service of the first witness statement of Lynne Piacentini;
(b) any reply witness statement of Lynne Piacentini, which may be filed by the defendant in reply to the plaintiffs’ witness statement filed 23 February 2023; and
(c) the parties’ submissions on costs filed 1 March 2023 and 3 March 2023.
4I note that the defendant, in its submissions, states that the plaintiffs filed their witness statement on 23 February 2023. The plaintiffs, in fact, filed their witness statement on 28 February 2023. Any references to this date in the defendant’s submissions will hereafter be corrected to 28 February 2023.
5It is common ground between the parties that the plaintiffs should be required to pay the costs thrown away by reason of their non-compliance with the 17 November 2022 orders.
6The issues to be determined are:
(a) whether there are any special or unusual features or special circumstances in this case such that I should exercise my discretion to depart from the usual costs order; and
(b) what work is captured by costs thrown away by reason of the plaintiffs’ non-compliance with Court orders.
7For the reasons set out below, I will make the orders that the defendant seeks.
Plaintiffs’ submissions
8The plaintiffs accept that they should be required to pay the costs thrown away by reason of their non-compliance with the 17 November 2022 orders. While that non-compliance was, in large part, due to matters outside their control (due to the health of the director of the plaintiffs), and the costs are likely to be small (being limited to a few letters), they acknowledge that the responsibility lies with the plaintiffs rather than the defendant.
9However, the plaintiffs submit that the defendant asks the Court to go considerably further and seeks all costs thrown away, including the costs of the reply witness statement. The plaintiffs argue that the reply witness statement is plainly not a cost thrown away. In any event, the question of whether it is a cost thrown away is properly a matter for determination at taxation.
Defendant’s submissions
10The defendant details the procedural steps taken by the parties, noting, among other things, that:
(a) on 8 November 2022, the plaintiffs sought the vacation of the trial date of 21 November 2022 as the plaintiffs’ director had suffered some sort of “significant medial issues”, possibly some sort of stroke;
(b) the Court made orders on 17 November 2022 relisting the trial for 14 March 2023 and resetting the timetable for evidence and trial preparation; and
(c) the plaintiffs were in non-compliance with the 17 November 2022 and 17 February 2023 orders in relation to the filing and serving of their witness statements.
11The defendant submits that the proceeding is now where it ought to have been on about 7 February 2023, namely:
(a) the plaintiffs have filed their witness statements;
(b) the defendant will now have to respond to matters raised in the plaintiffs’ witness statement (originally scheduled for 11 February 2023);
(c) the plaintiffs’ draft Court Book index due on 21 February 2023 (and consequently the Court Book) has not been provided and the plaintiffs remain in default of that aspect of the orders of 17 November 2022.
12The defendant states that there can be no dispute that the Court has a broad discretion on costs.[1] The defendant relies on the decision of Diakou v Rouse [2019] VSCA 199, where the Court of Appeal observed:[2]
“Section 24(1) of the Supreme Court Act 1986 confers on the Supreme Court a wide discretion in deciding questions of costs. However, that discretion must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation”.
[1] County Court Act 1958 (Vic) s78A(1).
[2] Diakou v Rouse [2019] VSCA 199 at [48]–[49].
13The defendant notes the following in support of the orders sought above:
(a) from 17 November 2022 until the plaintiffs filed their witness statement on 28 February 2023, the following work was undertaken by the defendant in relation to this proceeding (there is no suggestion any other work was undertaken):
(i)the defendant prepared, filed and served the witness statement of Lynne Piacentini; and
(ii)the defendant’s legal team undertook additional attendances occasioned by the plaintiffs’ defaults, exacerbated by the plaintiffs’ solicitors’ failure to respond to correspondence, including correspondence to the plaintiffs’ solicitors, correspondence with the Court and related attendances to consider the appropriate course and obtain instructions;
(b) the former costs would have been incurred in any event. The latter costs ought not to have been incurred. They were incurred solely due to the plaintiffs’ defaults and the plaintiffs’ solicitors’ repeated failure to communicate. There is no basis on which the defendant should be required to bear any part of those costs. They should be borne by the plaintiffs alone, i.e. on an indemnity basis;
(c) since 28 February 2023, the following additional costs have been incurred by reason of the plaintiffs’ defaults:
(i)a second witness statement of Lynne Piacentini will be required, to address matters raised by the plaintiffs’ witness statement filed 28 February 2023, whereas only one witness statement of Ms Piacentini would otherwise have been required; and
(ii)the costs submissions.
14The defendant argues that the plaintiffs ought similarly to pay the costs of those matters, as they were also caused by the plaintiffs’ defaults and ought not to have been necessary. While making a vague acknowledgement of their responsibility, the plaintiffs submit that the issue ought to be put off to the taxation. However, while the taxation can (if necessary) assess matters such as whether any particular costs were reasonably or properly incurred for the purposes of a standard or indemnity costs order, it is not the appropriate forum to make the assessment of the principal question of responsibility for those costs and the basis of the taxation; on the contrary, that issue is more properly and more efficiently addressed by this Court.
Legal Framework
15It is common ground that as a general rule, the Court will order costs to be taxed on the standard basis.[3] The discretion to make a special costs order is an unlimited one, though it must be exercised judicially and not unreasonably, and the circumstances should be “special”.[4] The usual order as to costs is that costs follow the event, and the successful party is entitled to an award of costs in its favour.[5]
[3] County Court Civil Procedure Rules 2018 (“Rules”) r63A.30.
[4] Aljade and MKIC v OCBC [2004] VSC 351 at [10].
[5] Oshlack v Richmond River Council (1998) 193 CLR 72 at [97].
16In Colgate-Palmolive Co & Anor v Cussons Pty Ltd,[6] Justice Shepherd set out many categories of circumstances which will warrant the making of a special costs order:
(a) the making of allegations of fraud knowing them to be false;
(b) the making of irrelevant allegations of fraud;
(c) evidence of particular misconduct that causes loss of time to the court and to other parties;
(d) the fact that the proceedings were commenced or continued for some ulterior motive or with wilful disregard of known facts or clearly established law; and
(e) the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions.
[6] (1993) 46 FCR 225 at [23]– [24].
17In IMC Aviation Solutions Pty Ltd v Altain Khuder LLC,[7] the Court of Appeal also stated that:
“Special circumstances may be found where, for instance, the unsuccessful party has made serious unfounded allegations, pursued the proceeding for an ulterior purpose, wasted the court’s time, committed a contempt of court or engaged in some other improper conduct. But in each case it is a question to be determined in the light of the particular facts and circumstances”.
[7] [2011] VSCA 248 at [325].
18In Ugly Tribe Co Pty Ltd v Sikola,[8] Justice Harper noted that special circumstances may justify the award of costs on an indemnity basis. The categories of circumstances are not closed, but include:
(a) the making of an allegation, known to be false, that the opposite party is guilty of fraud;
(b) the making of an irrelevant allegation of fraud;
(c) conduct which causes loss of time to the court and to other parties;
(d) the commencement or continuation of proceedings for an ulterior motive;
(e) conduct which amounts to a contempt of court;
(f) the commencement or continuation of proceedings in willful disregard of known facts or clearly established law; and
(g) the failure until after the commencement of the trial, and without explanation, to discover documents, the timely discovery of which would have considerably shortened, and very possibly avoided, the trial.
[8] [2001] VSC 189 at [7], applied in 24 Hour Fitness Pty Ltd v W & B Investment Group Pty Ltd [2015] VSCA 216.
19Justice John Dixon recently stated the principles applicable to an award of indemnity costs in Banksia Securities Ltd v Insurance House Pty Ltd (Costs) as follows:[9]
“(a) Costs are to be assessed on a standard basis unless the circumstances of the case justify a departure from the usual course.
(b) The making of an indemnity costs order is in the unlimited discretion of the court, with such discretion to be exercised judicially and not unreasonably.
(c) The court may order indemnity costs where the circumstances warrant departing from the usual rule that costs be payable on a standard basis, including conduct that bears a ‘sufficient or unusual feature’ or some ‘relevant delinquency’”.
[9] [2020] VSC 234 at [15].
20Relevantly, under the Civil Procedure Act 2010 (Vic) (“CPA”), a person to whom the overarching obligations apply must:
(a) cooperate with the parties to a civil proceeding and the court in connection with the conduct of that proceeding;[10]
(b) use reasonable endeavours to ensure that legal costs and other costs incurred in connection with the civil proceeding are reasonable and proportionate;[11] and
(c) use reasonable endeavours in connection with the civil proceeding to act promptly and minimise delay.[12]
[10] CPA s20.
[11] Ibid s24.
[12] Ibid s25.
Analysis
21The plaintiffs submit that non-compliance with the 17 November 2022 orders was, in large part, due to the health of the plaintiffs’ director. However, the plaintiffs have not provided any medical evidence to support this.
22I accept that the defendant incurred costs it otherwise would not have due to the plaintiffs’ defaults and the plaintiffs’ failure to respond to correspondence until 23 February 2023. These costs incurred include:
(a) preparing a second witness statement of Lynne Piacentini to address matters raised by the plaintiffs’ witness statement filed 28 February 2023, whereas only one witness statement of Ms Piacentini would otherwise have been required; and
(b) providing submissions in relation to costs.
23In my view, the plaintiffs’ non-compliance with Court orders and lack of responsiveness amounts to conduct that has caused loss of time to the Court and to the defendant.[13]
[13] Colgate-Palmolive Co & Anor v Cussons Pty Ltd (1993) 46 FCR 225; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 at [7].
24The plaintiffs’ conduct also amounts to a breach of the overarching obligations under the CPA:
(a) the plaintiffs’ lack of response to the defendant’s correspondence regarding the filing and serving of witness statements amounts to a failure to cooperate with the defendant;
(b) the plaintiffs’ non-compliance with Court orders has resulted in costs which otherwise would not have been incurred, being costs related to this application and costs incurred by the defendant to produce a second witness statement of Lynne Piacentini. This amounts to failure to ensure that costs incurred in relation to the proceeding are reasonable and proportionate; and
(c) the plaintiffs’ non-compliance with the 17 November 2022 and 17 February 2023 orders demonstrate that the plaintiffs have not acted promptly and minimised delay.
25In my view, the circumstances justify a departure from the usual course of assessing costs on the standard basis.[14]
[14] Banksia Securities Ltd v Insurance House Pty Ltd (Costs) [2020] VSC 234 at [15].
Conclusion
26Accordingly, the plaintiffs ought to pay the following costs on an indemnity basis:
(a) the defendant’s costs of the proceeding from 1 January 2023 to 27 February 2023 (both inclusive), save for the costs of the preparation, filing and service of the first witness statement of Lynne Piacentini;
(b) any reply witness statement of Lynne Piacentini, which may be filed by the defendant in reply to the plaintiffs’ witness statement filed 28 February 2023; and
(c) the parties’ submissions on costs filed 1 March 2023 and 3 March 2023.
- - -
Certificate
I certify that these 9 pages are a true copy of the ruling of her Honour Judge Burchell delivered on 10 March 2023.
Dated: 10 March 2023
Andrea Ko
Associate to Her Honour Judge Burchell
0
9
0