PCCEF Pty Ltd v Geelong Football Club Ltd (No 2)
[2018] VSC 309
•15 June 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2017 00030
| PCCEF PTY LTD (ACN 130 656 147) | Plaintiff |
| v | |
| GEELONG FOOTBALL CLUB LTD (ACN 005 150 818) | Defendant |
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JUDGE: | CROFT J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers (written submissions—7 June 2018) |
DATE OF JUDGMENT: | 15 June 2018 |
CASE MAY BE CITED AS: | PCCEF Pty Ltd v Geelong Football Club Ltd (No 2) |
MEDIUM NEUTRAL CITATION: | [2018] VSC 309 |
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COSTS – Application for special costs Order – Where application brought in disregard of uncontroversial legal principle – Special costs Order appropriate – J-Corp Pty Ltd v Australian Builders Labourers’ Federated Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 – Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd [2013] VSCA 237 – Supreme Court Act 1986 s 24 – Supreme Court (General Civil Procedure) Rules 2015 rr 63.28, 63.31.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | J C Hooper | Strongman & Crouch Solicitors |
| For the Defendant | P Bick QC with D F McAloon | B2B Lawyers |
HIS HONOUR:
Background
By summons dated 24 November 2017, PCCEF Pty Ltd (“PCCEF”) applied for leave to amend its originating motion and to reopen the trial to adduce new evidence to advance a new claim of rectification (“the Summons”); notwithstanding that this Court had both delivered judgment in respect of that originating motion and made final Orders to give effect to that judgment. Geelong Football Club Ltd (“the Defendant”) sought a special costs order in respect of its summons of 6 July 2017 and resisted the grant of leave to PCCEF to reopen the proceeding.
On 23 May 2018, I delivered reasons for judgment[1] in which it was concluded that the Summons must be dismissed; including because the Court lacked any jurisdiction to grant the relief sought. In the course of delivering the Reasons mention was made of the preliminary view that the Defendant ought to have its costs of and incidental to the Summons paid on an indemnity basis because the Summons was brought in disregard of clearly established law.[2]
[1]PCCEF v Geelong Football Club [2018] VSC 258 (“the Reasons”).
[2]Reasons, [68].
Stressing that this was a preliminary view on costs in the course of publication of the Reasons, the costs issue was addressed as follows:[3]
[3]Reasons, [68].
The parties have not made submissions on the costs of PCCEF’s application for leave to re-open. However, I am of the preliminary view that the application for leave to re-open was brought by PCCEF in disregard of clearly established law,[4] and consequently that the Defendant ought to have its costs of and incidental to PCCEF’s summons paid on an indemnity basis. In this respect, my preliminary view is that:
[4]See Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233–4; J-Corp Pty Ltd v Australian Builders Labourers’ Federated Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 at 303; Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd [2013] VSCA 237, [542]–[546].
(a)it is clear from the authorities to which reference has been made that this Court would only have power to revisit its own Orders if that power was conferred by statute;
(b)the CPA does not expressly confer such a power, and the argument that it does so by implication is very weak;
(c)no other suggested statutory basis for the power of this Court to revisit its own Orders was suggested; and
(d)the circumstances identified by PCCEF in its application fell well short of “truly exceptional circumstances”.
The Defendant contends that this position should be maintained but PCCEF takes a different position.
PCCEF resists a special costs order—commonly referred to as an indemnity costs order—on the basis that the Summons was not issued or persisted with in disregard of clearly established law and that for the more particular reasons it advanced the Court should not depart from the usual order as to costs.
Applicable legal principles
In determining whether an application was made in disregard of clearly established law, it is relevant to consider whether a party persisted in “what should on proper consideration be seen to be a hopeless case”.[5] This consideration may be informed by whether the applicant, properly advised, should have known that it had “no chance of success”.[6]
[5]J-Corp Pty Ltd v Australian Builders Labourers’ Federated Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 at 303 [5], as cited in Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd [2013] VSCA 237, [544].
[6]J-Corp Pty Ltd v Australian Builders Labourers’ Federated Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 at 303 [5].
In considering the Court’s discretion to award costs on an indemnity basis, courts have drawn a distinction between cases that might properly be characterised as “very weak” as opposed to “hopeless”.[7]
[7]See, for example, Cultus Petroleum v OMV Australia [1999] NSWSC 435, [5].
Application of legal principles
The Application was without merit
PCCEF contends that despite the Court’s preliminary finding that its claim was very weak, its application was supported by tenable arguments. Thus it is said that the application was not entirely without merit and did not have no prospect of success.
First it is said that there was a genuine reason for making the reopening application, being Mr Michael Vickers-Willis’ discovery of documents from his former solicitors’ archived files.[8] Those documents, PCCEF contends, provided a reasonably arguable basis for rectification. In this respect, PCCEF observes that the Defendant did not put on any evidence with respect to the proposed rectification claim and, further, that the further evidence sought to be adduced supported the common intention propounded in the plaintiff’s proposed rectification claim, at least at a certain point in time.[9]
[8]See Affidavit of Michael Vickers-Willis (7 December 2017), [29]–[34].
[9]Reasons, [44].
Continuing, PCCEF says that if the documents in the archived files had been accessed and reviewed by its former legal advisors in advance of the trial of this proceeding (as the Court found it was “plain” they should have done),[10] it is likely that a rectification claim would have been seriously considered by PCCEF’s former legal advisors. With the benefit of hindsight, PCCEF also says that it is likely to have been pleaded in a statement of claim.
[10]Reasons, [49].
Having regard to these matters, PCCEF submits:[11]
There was a tenable basis to argue that any decision not to plead the rectification claim was not based on proper material.[12] Despite the Court’s finding, it was arguable that the failure to conduct a rudimentary search of obviously relevant files in archive by professional advisors so that an informed forensic decision could be made not to bring the rectification claim, in circumstances where the client was pressing his professional advisors to include such relevant information in the claim, was a truly exceptional circumstance. Further, the relevant circumstances extended beyond the forensic error to the avoidance of a potential multiplicity of proceedings, both against the defendant and the plaintiff’s former legal advisers.
Thus it is said that marginal cases can succeed[13] and the application was not so weak as to make it unreasonable to bring the reopening application;[14] particularly, it is said, where the long term commercial consequences of the outcome of the proceeding were so significant to PCCEF.
[11]Plaintiff’s Submissions on Costs (7 June 2018), [8].
[12]Transcript (3 May 2018), 11–2.
[13]Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd (No 2) [2005] FCA 401, [2].
[14]It has been observed that “the law reports are replete with cases which were thought to be hopeless before investigation but were decided the other way after the court allowed the matter to be tried”: Medcalf v Mardell [2003] 1 AC 120 at 139 [42].
These submissions on the part of PCCEF do not, however, provide what, in my view, is anything like a comprehensive or representative summary of the position reached by the Court with respect to the PCCEF application for re-opening. On the other hand, the Defendant’s submissions do provide a relevantly comprehensive and representative summary of the position reached with respect to the application:[15]
[15]Defendant’s Outline of Submissions Regarding Costs of Application by Plaintiff to Re-Open (7 June 2018), [8]–[9].
8.The Club’s Outline of Submissions in response to PCCEF’s Summons observed that not only were the circumstances relied upon by PCCEF not “truly exceptional”, they were not exceptional in any real sense. The Court duly found that the circumstances relied upon “fell well short of “truly exceptional circumstances”.”[16] Indeed, in addition to the Court lacking jurisdiction to grant the relief sought, PCCEF satisfied none of the criteria for re-opening. This was in circumstances where:
[16]Reasons, [68(d)].
(a) the evidence sought to be adduced did not make it reasonably clear that PCCEF’s claim would have succeeded had it been adduced;[17]
[17]Reasons, [27(a)]; [42].
(b) the fresh evidence was not “fresh”;[18] and
(c) no inadvertent error was established.[19]
9.In short, PCCEF’s application to re-open was entirely unsuccessful in every respect. Properly advised, PCCEF should have known that the application for re-opening was destined to fail.[20] Further, it is noteworthy that, contemporaneously with pursuing PCCEF’s Summons, PCCEF instituted proceedings in the Court of Appeal in respect of the Court’s judgment (which could not sensibly have been advanced if re-opening had been permitted). The Court can infer from its collateral pursuit of an appeal that PCCEF appreciated that PCCEF’s Summons had little or no prospect of success.
[18]Reasons, [27(b)]; [40].
[19]Reasons, [27(c)].
[20]See for instance, North West Melbourne Recycling Pty Ltd v Commissioner of State Revenue (No 2) [2017] VSC 726, [4]; Specialist Australian Security Group Pty Ltd (in liquidation) v Onwatch Pty Ltd [2017] VSC 184, [41].
Application in disregard of uncontroversial legal principle
PCCEF contends that there was a tenable argument in favour of jurisdiction to entertain its application; relying first on the operation of the Civil Procedure Act 2010 and then on more general considerations:[21]
10.When the decision was made to issue the Summons, there was a tenable argument that the Civil Procedure Act 2010 (Vic) (CPA) provided a statutory basis for the power of the Court to revisit its own Orders after final orders were perfected. Until his Honour’s Reasons, there was not clearly established law to the contrary. Neither the defendant nor the Reasons have identified any prior decision in which the Court considered whether the CPA conferred upon the Court a power to revisit its own orders once perfected. Until his Honour’s Reasons, there was no authority giving section 49(2) of the CPA a restrictive interpretation in the context of a Court revisiting its own orders once perfected. Rather, it appeared open to construe the word ‘may’ in section 49(2) of the CPA, and the circumstances set out in that subsection, as being inclusive, as opposed to exhaustive.[22] The plaintiff respectfully submits that, given the novel CPA point had not been tested, or at least judicially considered, the reopening application does not fall into the hopeless category.
11.Further, in relation to whether clearly established law existed as to the Court’s power to revisit its own orders once perfected, at the time the Summons was issued, and for some time thereafter, there was uncertainty (including at intermediate appellate level) as to the Court’s powers at common law to revisit its own orders in certain circumstances. For instance, in Clone Pty Ltd v Players Pty Ltd (in liq),[23] the trial judge and a majority of the Full Court of the Supreme Court of South Australia held that the Court had power to revisit its perfected orders in circumstances of malpractice falling short of fraud.[24] That finding was overturned on appeal in the High Court of Australia,[25] in which judgment was delivered by the High Court of Australia following the filing of the Summons.
[21]Plaintiff’s Submissions on Costs (7 June 2018), [10]–[11].
[22]For example, see section 47 of the CPA and decisions such as Knight v F P Special Assets Ltd (1992) 174 CLR 178 and Shi v Migration Agents Registration Authority [2008] HCA 31 that support the proposition that the CPA powers should be construed broadly.
[23][2015] SASC 133; [2016] SASCFC 134.
[24]This was not a category recognised under Bailey v Marinoff.
[25][2018] HCA 12; Reasons, [19].
It is possibly a more generous description than is warranted to describe the Civil Procedure Act arguments raised by PCCEF in support of its application as “very weak”; particularly in light of the fundamental failure of any jurisdictional base for the Court to entertain its application. This failure is discussed in detail in the Reasons, so it is not necessary to repeat it now. Moreover, the reference to the unusual and presently irrelevant basis for reopening perfected orders on the basis of malpractice falling short of fraud is of no assistance to the position of PCCEF. Consequently, I accept that the position reached with respect to the disregard of uncontroversial legal principle is conveniently and accurately set out in the Defendant’s submissions:[26]
5.The circumstances in which an indemnity costs order may be justified include where a proceeding is commenced or continued in disregard of clearly established law.[27]
6.It was observed in the Club’s Outline of Submissions that PCCEF’s Amended Submissions (filed in support of PCCEF’s Summons) identified no previous instance of a Court permitting a party to re-open its case at a time when, as in the present case, judgment had been delivered and resultant orders had been made. This failure was not surprising in circumstances where the Court was, at the time of PCCEF’s Summons being filed, functus officio and lacked the necessary jurisdiction to grant the relief sought. As the Court has observed, PCCEF’s argument that the Civil Procedure Act 2010 (Vic) (CPA) conferred, by implication, a power to overcome this lack of jurisdiction was “very weak”.[28]
7.Despite being confronted with this insurmountable impediment to the relief that it sought, PCCEF persisted with its application, requiring the Club to incur costs associated with PCCEF’s Summons (including in relation to considering PCCEF’s relatively extensive affidavit evidence, preparing written submissions in reply and appearing at a contested hearing on 3 May 2018). PCCEF’s conduct generally in the period following the delivery of judgment on 9 June 2017 (recounted by the Court at paragraphs 5-9 of the Reasons) disclosed a strategy of seeking to avoid that judgment, apparently without due regard to the associated cost of the action taken or the underlying merit of the positions adopted. Viewed in the context of that conduct, pursuit of the re-opening application via PCCEF’s Summons can be viewed as one of a series of acts of litigious brinkmanship that were inimical to the overarching purpose of the CPA.
[26]Defendant’s Outline of Submissions Regarding Costs of Application by Plaintiff to Re-Open (7 June 2018), [5]–[7].
[27]Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd [2013] VSCA 237, [545]; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [7].
[28]Reasons, [68(b)]. “…it is inescapable that the CPA does not by implication have the radical effect of conferring on this Court jurisdiction to hear further evidence after the making of final Orders”: Reasons, [13].
Moreover, there is no basis for the Court to decline to make an indemnity or special costs order on the basis adopted in Alfio Peter Bulic v Commonwealth Bank of Australia Ltd.[29] However, the arguments raised were, as indicated, not tenable and, even accepting that the arguments were not made for any ulterior purpose there is no basis for “excusing” the usual consequences with respect to costs in circumstances like the present. Moreover, the presence of Mr Vickers-Willis at the hearing is not an ameliorating factor in all the circumstances.
[29][2007] FCA 307; and see Plaintiff’s Submissions on Costs (7 June 2018), [14].
Undue prolongation of the proceeding
PCCEF submits that it was not unreasonable to persist with the application to hearing when the jurisdictional point was raised for the first time by the Defendant at the hearing of the Summons.[30] However, this and other aspects of this submission rather miss the point in the present context. The application to reopen was an application made and pursued by PCCEF. It is also an application which would, with a moment’s consideration, lead it to consider jurisdictional issues. It would be surprising if the words “functus officio” would not enter the mind of a lawyer considering such an application. And there were other aspects of the pursuit and maintenance of the application by PCCEF, as the Defendant submits:[31]
10.Reasons for judgment were delivered in this proceeding on 9 June 2017. Over five months later, on 24 November 2017, PCCEF’s Summons was filed. In the intervening period, PCCEF (and/or its controllers) engaged in conduct that the Court has correctly characterised as “entirely unjustifiable”, forming part of “a strategy which had no relation to the real issues in dispute between the parties” that offended the overarching purpose of the CPA.[32] As was observed in the Club’s Outline of Submissions in response to PCCEF’s Summons, had PCCEF wished to seek leave to re-open its case, it should have, immediately after appointing new solicitors, applied to correct the name of the plaintiff in the proceeding and applied to re-open on appropriate evidence. It chose to make no such application until 24 November 2017.
11.While PCCEF’s Summons was founded upon groundless contentions and destined to fail, it nevertheless served to further prolong the proceeding (noting that the Reasons were delivered on 23 May 2018, almost twelve months after delivery of the Court’s original judgment). The prolongation of the litigation (which was commenced by PCCEF, not the Club) in such circumstances provides a further basis for the Court to make an order that the Club’s costs be paid on indemnity basis.[33]
[30]Plaintiff’s Submissions on Costs (7 June 2018), [12].
[31]Defendant’s Outline of Submissions Regarding Costs of Application by Plaintiff to Re-Open (7 June 2018), [10]–[11].
[32]Reasons, [64].
[33]Reasons, [58(c)]; Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [7].
Conclusion
For the preceding reasons, the appropriate costs order in relation to PCCEF’s Summons is that which was contemplated by the preliminary view expressed in the Reasons. The Defendant ought to have a special costs order with respect to its costs of and incidental to the Summons.
Moreover, as indicated in the preceding reasons there is no basis for the Court declining to make a special costs order.
The proceeding will now be finally disposed of by the making of orders to the following effect:
(a) The Plaintiff is to pay the Defendant’s costs of and incidental to the Defendant’s summons dated 6 July 2017 on the basis of a special costs order.
(b) The Plaintiff’s summons dated 24 November 2017 is dismissed.
(c) The Plaintiff is to pay the Defendant’s costs of and incidental to the Plaintiff’s Summons dated 24 November 2017 on the basis of a special costs order.
The parties are to bring in orders accordingly.
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