McVeigh (Trustee) in the matter of Piccolo v National Australia Bank Ltd

[2000] FCA 558

FEDERAL COURT OF AUSTRALIA

McVeigh (Trustee) in the matter of Piccolo v National Australia Bank Ltd
[2000] FCA 558

COSTS – indemnity costs – whether ulterior motive – suggestion by ultimately unsuccessful party that successful party should take a particular course of action to avoid result – whether “intimidation” – contractual right of another party to obtain total costs – whether special circumstance

Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233

IN THE MATTER OF JOHN PETER PICCOLO; DEAN ROYSTON McVEIGH v NATIONAL AUSTRALIA BANK LIMITED & ANOR (NO 2)
V 200 of 1999

HEEREY, FINKELSTEIN and KENNY JJ
9 MAY 2000
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V200 OF 1999

RE:

BETWEEN:

JOHN PETER PICCOLO
A Bankrupt

EX PARTE: DAN ROYSTON MCVEIGH (trustee of the Bankrupt Estate of John Peter Piccolo)
Appellant

AND:

NATIONAL AUSTRALIA BANK LIMITED
First Respondent

POOLE LEVY & APPEL PTY LTD
Second Respondent

JUDGES:

HEEREY, FINKELSTEIN and KENNY JJ

DATE OF ORDER:

9 MAY 2000

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.        The Notice of Motion dated 4 June 1999 is dismissed.

2.        The second respondent pay the appellant’s costs of the motion. 

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V200 OF 1999

RE:

BETWEEN:

JOHN PETER PICCOLO
A Bankrupt

EX PARTE: DAN ROYSTON MCVEIGH (trustee of the Bankrupt Estate of John Peter Piccolo)
Appellant

AND:

NATIONAL AUSTRALIA BANK LIMITED 
First Respondent

POOLE LEVY & APPEL PTY LTD
Second Respondent

JUDGES:	HEEREY, FINKELSTEIN and KENNY JJ
DATE:	9 MAY 2000
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

THE COURT:

1. Pursuant to leave granted when we delivered the substantive judgment in this matter the second respondent Poole Levy & Appel Pty Ltd has filed written submissions in support of a contention that the appellant should be ordered to pay its costs on an indemnity basis.  The appellant has filed written submissions in reply. 

2. The principles applicable to the discretion to award indemnity costs are not in dispute.  We need do no more than refer to the discussion by Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233.

3. The first ground relied on by the second respondent is that the appeal had “little prospect of success” and was “continued for an ulterior motive”.  The first limb of this proposition must be immediately rejected.  The judgments delivered by each of the members of the Court show that the appeal warranted detailed consideration and indeed one member dissented in the result.  In the appellant’s written submissions it was said that the advice of senior counsel was relied on and in response the second respondent contended that this amounted to a waiver of privilege with the result that the advice should be disclosed.  However the arguability of the appeal emerges sufficiently from the judgments and we think it unnecessary to pursue this question of privilege further.

4. The “ulterior motive” is said to be that of “intimidating Mr Piccolo and his supporters to increase the amount offered under a composition pursuant to s 73 of the Bankruptcy Act”.  However, the appeal was arguable and would, if successful, have achieved a legitimate commercial benefit as a direct result of the Court’s order.  For a litigant with a genuinely arguable claim or appeal to point out to an opposite party that the prospects of success should encourage the latter to take some particular course of conduct is not “intimidation” nor conduct which would ordinarily lead to an order for indemnity costs.

5. The second ground relied on is said to arise from an “unusual circumstance”, namely that the first respondent would recover from the second respondent the difference between its party and party costs (paid by the appellant) and its total costs.  Under clause 22 of the loan conditions the second respondent covenanted to pay or reimburse the first respondent on demand all costs, charges and expenses which it may incur in connection with the loan or any security held securing the loan, including “charges for legal advice or assistance as between solicitor and client”.  But this was a contractual obligation freely entered into by the second respondent as a condition of obtaining its loan. 

6. We agree with the submission of the appellant that the application by the second respondent to be joined as a party to the proceeding for the purpose of arguing that the first respondent should receive an award of indemnity costs was unnecessary.  The first respondent was quite capable of arguing such a case on its own behalf.  Not surprisingly it has not made any such submission.  Accordingly we order that the second respondent pay the appellant’s costs of the notice of motion dated 4 June 1999 and order that the motion be dismissed.

I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey, Finkelstein and Kenny.

Associate:

Dated:             9 May 2000

Counsel for the Appellant:

Mr B Shaw QC with Mr K Baker

Solicitor for the Appellant:

Cannizzo, Lau & Associates

Counsel for the First Respondent:

Mr A Archibald QC with Mr T North

Solicitor for the First Respondent:

Russell Kennedy

Counsel for the Second Respondent:

Solicitor for the Second Respondent:

No appearance

No appearance

Date of Hearing:

27 August 1999

Date of Judgment:

9 May 2000