Mayart Pty Ltd v Knight (No 2)
[2021] VCC 15
•21 January 2021
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-18-04868
| MAYART PTY LTD (ACN 007 001 176) AS TRUSTEE FOR THE MAYART PROPERTY TRUST and OTHERS | Plaintiffs |
| v | |
| PHILIPPA CHRISTINE KNIGHT and OTHERS | Defendants |
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JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers | |
DATE OF JUDGMENT: | 21 January 2021 | |
CASE MAY BE CITED AS: | Mayart Pty Ltd & Ors v Knight & Ors (No 2) | |
MEDIUM NEUTRAL CITATION: | [2021] VCC 15 | |
R U L I N G ON COSTS
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Subject: COSTS
Catchwords: Costs application by successful plaintiff – whether costs should be awarded on a full indemnity basis rather than the standard basis – relevant principles, whether trial materially prolonged by actions of third defendant meriting costs sanction by award of full indemnity costs – costs awarded on standard basis.
Legislation Cited: Civil Procedure Act 2010 – ss28 and 29
Cases Cited:Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189; United Petroleum Australia Pty Ltd v Herbert Smith Freehills (No 2) [2018] VSC 501; Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd [2013] VSCA 237; Kalibrate Asset Management Solutions Pty Ltd v IBM Australia Limited (No 2) [2018] VCC 414; Amato v JAS Property Developments (Costs Ruling) [2020] VSC 215; Bass Coast Shire Council v King [1997] VR 5, 29
Judgment: The third defendant must pay the plaintiffs’ costs of the proceeding to
be assessed on the standard basis in default of agreement.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Dr M Wolff | Noble Lawyers |
| For the Defendants | Mr M Knight (in person) |
HIS HONOUR:
Background
1 In this proceeding, I published reserved reasons which determined the plaintiffs’ claim in its favour against the third defendant, Mr Michael Knight – [2020] VCC 1929.
2 Following that determination, the parties were agreed that the issue of the costs of the proceeding should be determined “on the papers”. The plaintiffs filed their submissions, prepared by their counsel, Dr Wolff, on 8 December 2020 and Mr Knight filed his submissions dated 17 December 2020.
3 Dr Wolff, on behalf of the plaintiffs, contended that his clients should be awarded their costs against Mr Knight on a full indemnity basis. Mr Knight said that “no order for costs should be made on any basis and in any event only on a party-party basis.” It will be seen that whilst Mr Knight does not distinctly admit liability for costs on the standard basis, his written contentions and those filed on behalf of the plaintiffs concentrate upon the issue of whether an award of costs should be made upon an indemnity basis. The parties therefore effectively assumed the well-established principle in the law of costs that, at least where a proceeding is finally determined, the victorious party should be entitled to an award of its costs against the unsuccessful party in accordance with the principle that “costs follow the event”.
4 It follows that the plaintiffs are entitled to an award of costs against the unsuccessful third defendant, Mr Knight, at least on the standard basis.
Contentions on behalf of the plaintiffs
5 In support of his contention that there should be an award of costs in favour of his clients on a full indemnity basis, Dr Wolff referred to ss28 and 29 of the Civil Procedure Act 2010 and the well-known and frequently cited judgment of Harper J (as he then was) in Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189. He said that an award of costs on a full indemnity basis could be made against a party who or which commenced or continued proceedings for an ulterior motive or in wilful disregard of known facts or clearly established law, where such a party made allegations which ought never to have been made or unduly prolonged the proceeding by groundless contentions. He referred to United Petroleum Australia Pty Ltd v Herbert Smith Freehills (No 2) [2018] VSC 501 [17].
6 Dr Wolff said that amongst the objects of the Civil Procedure Act was one to “reform and modernise the practice, procedure and processes relating to civil proceedings in the Supreme Court and other courts.” (Plaintiffs’ Outline on Costs, paragraph 5, citing Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd [2013] VSCA 237 [550])
7 According to Dr Wolff, an award of indemnity costs might be appropriate where a party’s conduct has caused lost time to other parties or where a party has commenced or continued an action in circumstances where, properly advised, it should have known it had no chance of success (citing Kalibrate Asset Management Solutions Pty Ltd v IBM Australia Ltd (No 2) [2018] VCC 414)
8 Dr Wolff continued by mounting a critique of Mr Knight’s conduct as third defendant in the proceeding. (Outline, paragraphs 7-14)
9 Dr Wolff referred, first, to the evolution of Mr Knight’s defence and his attempts to have it amended, many of which were rebuffed by Judge Cosgrave in interlocutory proceedings. He referred to the late introduction of a defence of abandonment.
10 Next, Dr Wolff took me to a number of remarks which I had made as to the evolution of Mr Knight’s defence from the document with which the trial commenced, which was designated as the “Administratively Amended Defence”, and further, through Mr Knight’s opening statement before the commencement of evidence, his conduct during the examination and cross-examination of the plaintiffs’ witnesses, and the evidence which he, Mr Knight himself, gave and his closing statement following the conclusion of the trial evidence.
11 According to Dr Wolff, this survey demonstrated a series of steps taken by Mr Knight in breach of his obligations as a litigant, as imposed by the Civil Procedure Act 2010. He said that Mr Knight had failed to act honestly at all times, had made frivolous and vexatious allegations and engaged in abuse of the process. He said that Mr Knight had “continued his defence for some ulterior motive or because of some wilful disregard of the known facts or clearly established law.” He said that he had made allegations that ought never to have been made and caused a loss of time by securing “the undue prolongation of the proceeding by groundless contentions.” (Outline, paragraph 14)
12 According to Dr Wolff, the principles which he invoked applied not merely to plaintiffs pressing on with hopeless proceedings, but also to defendants mounting defences without a proper basis. He referred to the judgment of Forbes J in Amato v JAS Property Developments (Costs Ruling) [2020] VSC 215 [17]-[18]. According to Dr Wolff, Mr Knight had made baseless allegations and filed and maintained defences in various forms, which were always hopeless. He said, “The third defendant has caused the plaintiffs to expend well over $100,000 on litigation that he [Mr Knight] had in his power to avoid needlessly extending. Moreover, there never was a proper basis for any of the factual or legal allegations he has at various times pleaded”. (Outline, paragraph 18) Dr Wolff said that there should be an order that the costs are payable immediately.
Contentions by Mr Knight
13 Mr Knight did not generally disagree with the statements of principle advanced on the question of indemnity costs by Dr Wolff. He referred to the well-known judgment of Harper J (as he then was) in the Ugly Tribe case and a costs ruling by Warren J (as she then was) in Heike Jindra v Tech-Rentals Pty Ltd (No 2) [2000] VSC 132 [3], where her Honour reviewed many of the well-known authorities on the subject of costs awards on a full indemnity or solicitor-client basis.
14 Mr Knight said that the discretion to make an award of costs on a full indemnity basis was “an unlimited one although it must be exercised judicially and not unreasonably.” (Bass Coast Shire Council v King [1997] VR 5, 29) Next, he referred to the summary of the matters enlivening the jurisdiction to award indemnity costs in the well-known case of Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 per Sheppard J.
15 Mr Knight concluded: (Submissions, paragraph 9)
“There has been nothing remarkable regarding the conduct of this proceeding. The Plaintiffs have filed no less than 4 claims over a 2 year period and finally abandoned their entire claim as set out in their further further amended statement of claim filed on the first day of trial. The Plaintiffs have wasted to the courts [sic] time and resources by failing to properly plead or pursue the facts of the case which remain uncertain to this day as set out in His Honours [sic] reasons.”
Conclusions
16 As noted above, in the circumstances, the plaintiffs are entitled to an award of costs in their favour as against Mr Knight, at least on the standard basis. The question is whether the award should be made on the uplifted “full indemnity” scale.
17 To make that award based upon the interlocutory sparring between the parties is problematic. First, I was not involved in this proceeding at all prior to the commencement of the trial. I therefore have no direct memory or acquaintanceship with the interlocutory battles which, it appears, raged between the parties to the extent that there may have been breaches by anyone of obligations under the Civil Procedure Act 2010 or, more generally, conduct which, in accordance with well-established principle, might attract adverse costs consequences. One might expect the appropriate costs orders to have been pronounced already by the judges and judicial registrars who dealt with these interlocutory matters. I have not carried out a review of costs orders made at the interlocutory stage to verify the correctness of this supposition. It may be thought appropriate, in particular circumstances, for a judge or judicial registrar dealing with an interlocutory matter by one means or another to defer a final adjudication upon its costs’ consequence. In the present case, however, the interlocutory warfare was not solely, or perhaps even to the major extent, between the plaintiffs and Mr Knight. There was a summary judgment application by the defendant, RVA, which was determined in favour of RVA, such that it was dismissed from the proceeding by a determination of Judge Woodward – [2019] VCC 1369. When this matter came on for trial before me, RVA had been dismissed, and the first defendant, Mrs Knight, had dropped out because she had gone bankrupt upon her own petition. Whilst a very lengthy Further Amended Statement of Claim remained for consideration by the Court, overwhelmingly, most of its paragraphs had been superseded or rendered redundant by these various interlocutory matters.
18 Because of the previous complexity of the plaintiffs’ claim, Mr Knight had sought to press defences of laches and acquiescence which, in a broad sense, were appropriate or not plainly misconceived in the face of a lengthy suite of equitable relief sought by the plaintiffs. The case opened at trial, however, was a pure case for recovery of monies pursuant to a loan agreement and guarantee. It contained no applications for equitable relief. The defences based on laches and acquiescence therefore fell away. It was in that context that I permitted Mr Knight, albeit ultimately unsuccessfully, to rely upon the same general matters in support of a common law defence of abandonment.
19 The purpose of retelling again this procedural background is to demonstrate that, whilst the final hearing of this proceeding was embarrassed by unnecessary, and perhaps redundant detail, these matters cannot be blamed solely on Mr Knight.
20 Where Mr Knight can, I think, justifiably be faulted is that he rendered himself a “moving target” by his evolving defences. This process of evolution undoubtedly protracted the trial, with the need for Dr Wolff to introduce further documentary evidence and cross-examination. It is always difficult to distinguish between, on the one hand, a merely “losing” claim or defence from, on the other hand, a claim or defence which ought never to have been advanced. Whilst some of the defences pressed by Mr Knight undoubtedly fell into the second category, I am not persuaded that their being raised and pressed extended the duration of the trial to a sufficient degree as to justify awarding costs against Mr Knight on a full indemnity basis.
21 The costs award should be on the standard basis. Since, subject to any application for leave to appeal, this proceeding is now complete, the costs order which I propose making will take effect forthwith without the need for any particular direction to this effect.
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