Orwin v Rickards (Ruling No 2)

[2019] VSC 374

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
PROFESSIONAL LIABILITY LIST

S CI  2017 02935

MIRIAM MARLIN ORWIN

Plaintiff

v

MICHAEL AIDAN RICKARDS

SUSAN ILIAS

PAUL CONNOR

First Defendant

Second Defendant

Third Defendant

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JUDGE:	OSBORN JA
WHERE HELD:	Melbourne
DATE OF HEARING:	30 April 2019, 1 May 2019, 2 May 2019, 3 May 2019, 6 May 2019, 9 May 2019, 10 May 2019
DATE OF RULING:	7 June 2019
CASE MAY BE CITED AS:	Orwin v Rickards (Ruling No 2)
MEDIUM NEUTRAL CITATION:	[2019] VSC 374

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PROCEDURE – Application for indemnity costs – Plaintiff discontinued claim against second defendant on second day of trial – Whether plaintiff acted ‘unreasonably’ in bringing claim against second defendant – Ferny Sky Pty Ltd v Capital Finance Australia [2006] VSC 366 applied – Application refused.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A Schlicht	Vasilaras + Co Lawyers
For the First Defendant	Mr P Cawthorn QC with Ms M Smallwood	Lander and Rogers
For the Second Defendant	Dr A Dinelli	Minter Ellison

HIS HONOUR:

1. The background to this matter is set out in my primary judgment.[1]

   [1]Orwin v Rickards [2019] VSC 375.

1. Following the filing of a defence by the first defendant raising a defence of proportionate liability, the plaintiff raised a claim of breach of duty against the second defendant. 

1. The defence relevantly stated:

Paul Beresford Connor and Susan Ilias are concurrent wrongdoers within the meaning of the terms in s 24AH of the Wrongs Act 1958 (Vic).

Particulars

…

Susan Ilias

1On 22 December 2009 the first defendant engaged Ilias to review and advise on a version of the domestic relationship agreement, and Ms Ilias provided her advice and proposed amendments to the agreement on or about 22 and 23 December 2009. 

2On 22 December 2009 the first defendant said to Ilias that he was ‘not quite certain as to where the Agreement falls as regards relevant legislation.’ 

3Ilias failed to advise the first defendant that the agreement should be drawn up pursuant to the Family Law Act and/or failed to identify the alleged deficiencies to the domestic relationship agreement as pleaded at paragraphs 10 and 11 of the statement of claim.

1. The matters raised by the first defendant were not within the direct knowledge of the plaintiff. 

1. Having regard to the drastic potential consequences of the defence of proportionate liability it was not unreasonable of the plaintiff to then make a claim against the second defendant. 

1. On the second day of the trial in this matter, the plaintiff sought leave to discontinue its claim against the second defendant pursuant to r 25.02(2)(b) of the Supreme Court (General Civil Procedure) Rules (‘the Rules’).  At this stage the plaintiff’s claim had been opened and the issues clarified to some extent.

1. The application was not opposed but the second defendant sought its costs of the proceeding on an indemnity basis.

1. There is no dispute that the second defendant is entitled to its costs pursuant to r 63.15 of the Rules.  But the application for costs on a special basis is contested. 

1. The general principles governing the Court’s discretion in circumstances such as the present case were addressed by Whelan J (as his Honour then was) in Ferny Sky Pty Ltd v Capital Finance Australia.[2] 

   [2][2006] VSC 366.

1. A key consideration is whether the plaintiff acted reasonably in commencing and maintaining a claim against the second defendant in the circumstances in which she did.[3] 

   [3]Ibid [25]; Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd [2013] VSCA 237 [538]–[551] (Warren CJ, Osborn JA and Macaulay AJA).

1. In my view the conduct of the plaintiff in the present case has not been demonstrated to be unreasonable.  Nor has it been shown to have involved the making of allegations which ought never to have been made. 

1. I accept the second defendant’s submission that the plaintiff had available the first defendant’s entire file at the time the claim was made against the second defendant.  But nonetheless the plaintiff was entitled to take a conservative approach to the overall probabilities affecting the potential claim against the second defendant.  An additional factor relevant to my discretion is that no claim for costs on an indemnity basis was foreshadowed until the day on which the proceeding against the second defendant was withdrawn with the leave of the Court. 

1. In all the circumstances, I would refuse the application for indemnity costs but award the second named defendant her costs against the plaintiff on the ordinary basis.