Owners Corporation& Ors v Carter (No 2)

[2021] VCC 1535

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMON LAW DIVISION

Revised
Not Restricted
 Suitable for Publication

GENERAL LIST

Case No. CI-19-04315

OWNERS CORPORATION 29175 and ORS (as per attached Schedule of Parties)	Plaintiffs
v
GERALD CARTER	Defendant

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JUDGE:	HIS HONOUR JUDGE PILLAY
WHERE HELD:	Melbourne
DATE OF HEARING:	In Chambers
DATE OF RULING:	25 October 2021
CASE MAY BE CITED AS:	Owners Corporation& Ors v Carter (No 2)
MEDIUM NEUTRAL CITATION:	[2021] VCC 1535

RULING
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Subject:COSTS

Catchwords:              Whether to award indemnity costs – Whether special circumstances exist – Whether the Court should depart from the normal course

Legislation Cited:      Civil Procedure Act 2010 (Vic)

Cases Cited:Ugly Tribe Co Pty Ltd v Sikola & Ors [2001] VSC 189; Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No. 5) (2014) 48 VR 1

Ruling:  Application dismissed

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr A M Donald	Holman Webb Lawyers
For the Defendant	Mr M McKenzie	Ellinghaus & Lindner

HIS HONOUR:

1This proceeding came before the Court on 18 August 2021. On 23 September 2021, the Court handed down judgment in favour of Mr Carter. Orders were made in which the issue of costs was reserved. The Defendant now seeks its costs on an indemnity basis. The Plaintiff accepts it ought pay the Defendant’s costs, but argues this should be on a standard basis. This issue is now before the Court for decision. The parties have provided extensive written submissions. Both parties agree that there is no need for oral submissions and the Court should determine this matter on the papers.

2The issue in dispute and the facts of the matter are set out in the judgment and do not need to be repeated. Mr McKenzie, who appeared for Mr Carter, submits that the Defendant should be awarded costs on an indemnity basis due to the conduct of the Plaintiffs. In particular, Mr McKenzie points to four factors said to enliven such an award. First the addition of numerous parties, second the abandonment of the allegations of there being installed a “commercial quality” deep fryer in breach of building regulations, third the introduction of the argument of non-delegable duty and allied with this the Plaintiffs’ persistence of its case in the face of the answers to interrogatories which showed Mr Carter had no knowledge that the deep fryer was left on. The Defendant submits that these factors in combination or individually create a special circumstance, giving rise to the ability of the Court to award indemnity costs.

3Mr Donald, who appeared for the Plaintiffs, submits that the Court should not deviate from the ordinary rule, that there are no special circumstances at play to warrant such a departure from the norm, and that as a result the Defendant’s costs should be ordered to be paid on a standard basis.

Principles

4The general principles are not in dispute and have been set out by the parties. I will not repeat them here, save for a brief summary.

5Section 65C(1) Civil Procedure Act 2010 (Vic) states:[1]

“In addition to any other power a court may have in relation to costs, a court may make any order as to costs it considers appropriate to further the overarching purpose.”

[1]Civil Procedure Act 2010 (Vic), s 65C(1)

6The overarching purpose is the just, timely, efficient and cost effective resolution of disputes. Where a claim has been made without a proper factual or legal basis, there is a contravention of the overarching purpose because a party has been put to the time and expense of defending an unfounded allegation.[2]

[2]Civil Procedure Act 2010 (Vic), s 7(1)

7At common law the general principles as to award of indemnity costs were stated by Harper J, in Ugly Tribe v Sikola[3]. His Honour held that special circumstances were required before there was a departure from the general rule that costs are awarded on a standard rather than indemnity basis.[4] The Court then provided a non exhaustive list of what may constitute special circumstances. The most pertinent to this particular case is “the commencement or continuation of proceedings in wilful disregard of known facts or clearly established law”.[5]

[3]Ugly Tribe Co Pty Ltd v Sikola & Ors [2001] VSC 189

[4]Ibid, at paragraph [7]

[5]Ibid, at paragraph [7(vi)]

8Dixon J, in Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No. 5)[6] (“Dura Constructions”) noted that proper basis is shown by way of the legal practitioner demonstrating a reasonable belief based on the factual and legal material available at the time the allegation is made.[7]

[6]Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No. 5) (2014) 48 VR 1

[7]Ibid, at paragraph [87]

Analysis

9Dealing with each of the matters raised by the Defendant in turn. First, while the addition of the numerous parties to the proceeding necessitated amendment it did not fundamentally alter the allegations in negligence or quantum. Nothing turns on this point.

10Second, and more substantively is the Defendant’s argument that from the commencement of the proceeding the Plaintiffs made an allegation that the lease was breached, and there was negligence on behalf of the Defendant, arising from there being a “commercial quality” deep fryer installed in breach of Victorian building regulations. An Amended Statement of Claim persisted with this allegation. Even when the Plaintiffs’ solicitor wrote on 17 March 2021 to provide further and better particulars to the Defendant of the pertinent allegation in this regard (paragraph [10] of the Amended Statement of Claim) no particulars were provided as to this broad allegation and nothing was particularised as to paragraph [14], being the allegation of the breach in regulations. In his Answers to Interrogatories, filed 5 October 2020, the Defendant identified a small plug in domestic deep fryer. Further, when the Plaintiff received the expert report of Mr Cousins, dated 25 June 2021, which identified the fryer as a domestic appliance it did not seek to amend the pleadings to remove this allegation. Ultimately, at the time of trial the allegations of a “commercial quality” deep fryer and a breach of building regulations was abandoned entirely. Counsel for the Plaintiffs admitted candidly that the Plaintiffs accepted that the fryer was a domestic piece of equipment.

11In the end, nothing much turned on this point as the Plaintiffs continued to assert that even a domestic fryer, used in the way it was, constituted a breach of the lease and a breach of the contended for duty. It is to be noted that there is no material before the Court on which it is said that there was or was not a proper basis for the allegation made in the pleadings about a “commercial quality” deep fryer in breach of the regulations. Thus, while it might be argued there was no proper basis for those allegations the practical effect on the conduct of the case was negligible. For example, there was no expert material received on the point that had to be considered by the Defendant. Furthermore, the letter from Mr Hall to the Defendant made clear on what basis the breach was alleged and there is no reliance on the allegation that there was a commercial deep fryer – but rather a focus on the deep fryer being unattended. By itself then, I do not consider this a sufficient basis to depart from the usual rule.

12Turning to the third and fourth matters the Defendant raises, being the late introduction of the non-delegable duty of care cause of action and the continuation of the proceeding when the Defendant had sworn answers to interrogatories that he did not know the fryer was on and unattended. I consider that it was appropriate for the Plaintiffs to persist in their claims in spite of the Answer to Interrogatories given by the Defendant. It is a fundamental right of a party to test the evidence in a proceeding and in this case the cross examination elicited answers from the Defendant that strengthened the Plaintiffs’ case on both the non delegable duty point and also the breach of lease point. These are not grounds to depart from the usual rule.

13For the reasons above, I cannot be satisfied that special circumstances exist to warrant a departure from the normal course. I will order that the Plaintiffs pay the Defendant’s costs of the proceedings on a standard basis to be taxed in default of agreement. For the avoidance of doubt, and in light of the fact that the Plaintiffs issued and persisted with their pleadings as to the “commercial quality” deep fryer and breach of regulations argument to a point beyond Mr Cousins’ report, I order that the costs of submissions as to costs also be costs in the proceedings.

Schedule of Parties

CI-19-04315

Owners Corporation 29175	First Plaintiff
Gary Ricardo	Second Plaintiff
Leanne Davey	Third Plaintiff
Stephen Morris	Fourth Plaintiff
Jenny Morris	Fifth Plaintiff
Eugenia Sottile	Sixth Plaintiff
Alessandria Marziale	Seventh Plaintiff
Carmel Savoia	Eighth Plaintiff
Terrance Morris	Ninth Plaintiff
Rita Morris	Tenth Plaintiff
-and-
Gerald Carter	Defendant