Pesec v Consolidated Builders Ltd (No 6)
[2021] ACTSC 250
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Pesec v Consolidated Builders Ltd (No 6) |
Citation: | [2021] ACTSC 250 |
Hearing Dates: | On the papers |
DecisionDate: | 30 September 2021 |
Before: | McWilliam AJ |
Decision: | The plaintiff is to pay the defendant’s costs on the ordinary party and party basis. |
Catchwords: | COSTS – INDEMNITY COSTS – application for indemnity costs following plaintiff’s unsuccessful interlocutory application – whether circumstances justify departure from the general rule as to costs |
Legislation Cited: | Court Procedures Rules 2006 (ACT) rr 1721, 1752 |
Cases Cited: | Australian Capital Territory v Lewis [2016] ACTCA 34; 311 FLR 77 Campbell v Blackshaw (No 2) [2019] ACTCA 28 |
Parties: | Anthony Pesec ( Plaintiff) Consolidated Builders Limited ( Defendant) |
Representation: | Counsel R Markham ( Plaintiff) M O’Meara SC with I Ahmed ( Defendant) |
| Solicitors Adero Law ( Plaintiff) Clayton Utz ( Defendant) | |
File Number: | SC 179 of 2020 |
McWilliam AJ:
On 9 September 2021, I delivered judgment in relation to an interlocutory application brought by the plaintiff regarding costs orders that had previously been made in a separate dispute between the parties: Pesec v Consolidated Builders Ltd(No 5) [2021] ACTSC 225 (Pesec (No 5)).
The defendant (CBL) now applies for indemnity costs of the application, pursuant to rr 1721(1) and 1752(1)(b) of the Court Procedures Rules 2006 (ACT) (Rules). The general rule under r 1721 is that the costs of a proceeding or of an application in a proceeding are in the discretion of the Court. Pursuant to r 1752(1)(b) of the Rules, the Court may order that costs be assessed on an indemnity basis.
The principle to be applied in the judicial exercise of the Court’s discretion is that usually there must be some special or unusual feature that justifies the Court in departing from the usual position that costs should be ordered to be paid on a party and party basis: see Lewis v Australian Capital Territory (No 2) [2015] ACTSC 343 (Lewis (No 2)) at [28], affirmed on appeal in Australian Capital Territory v Lewis [2016] ACTCA 34; 311 FLR 77 at [70], and cited with approval more recently in Donohue v Volanne Pty Ltd (No 3) [2021] ACTCA 20 at [22].
The defendant drew attention to the case of Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 232-234, where Sheppard J “helpfully distilled a number of guidelines for the exercise of the Court’s discretion to award indemnity costs” (being the language used in Lewis (No 2) at [29] in extracting the relevant passage). Of those, Sheppard J’s list of some of the circumstances where an indemnity costs order may be warranted, was also more recently summarised by the Court of Appeal in Campbell v Blackshaw (No 2) [2019] ACTCA 28 at [15] (again, citing Lewis No 2)).
It is unnecessary to repeat the detail of the guidelines again here. Relevant to the present application, the circumstances where a court may consider the case warrants the making of an order for payment of costs other than on a party and party basis include:
(a)where proceedings have been pursued in wilful disregard of known facts or established law; and
(b)where the allegations ought not to have been made, or the proceedings have been unduly prolonged by groundless contentions.
Those are the matters on which CBL relies. It submits that the plaintiff unreasonably persisted in his application in the face of numerous explanations as to why it could not succeed, and thereby unreasonably put CBL to the costs of resisting the application.
The plaintiff opposes the application for indemnity costs on the basis that while he did not succeed, it was not a case where the application was hopeless, for various reasons set out in written submissions.
Further, the plaintiff argued it cannot be said that he unnecessarily prolonged the application in light of the following. The application was listed for hearing on 3 September 2021. The plaintiff sent correspondence on 31 August 2021 (being 3 days before the application was heard). The letter offered to dismiss the application in proceeding and for the parties to bear their own costs of the application. The offer was conditional on the parties agreeing to abide by any subsequent order in relation to the costs of the proceedings in question which arose from the outcome of an appeal that was at that time extant, but was subsequently dismissed: see Pesec v Consolidated Builders Limited [2021] ACTCA 25.
It is true the plaintiff was unsuccessful. It is also the case that there were aspects of the application that were unreasonably maintained, as submitted by CBL in its written submissions filed on the application. However, the key reason for the application failing was that set out in Pesec (No 5) at [42]-[47], namely that the Court was not satisfied there had been any unreasonable conduct on the part of CBL in relation to an alleged failure to produce documents referred to in an email from one of its directors.
In that regard, the Court accepted a submission made by CBL as to what inferences were to be drawn from the email. In particular, it was accepted that the email did not give rise to an inference that there had been any non-compliance with previous orders for preliminary discovery. That particular argument put by the plaintiff was wrong, but it was not hopeless.
Had the Court found otherwise, then there may have been questions about power and discretionary matters which defeated the application. Certainly, there was a disconnect between the actual order sought and the unreasonable conduct alleged. However, it is preferable not to address whether another costs order may have then been made if the plaintiff’s substantial point about the evidence had been accepted.
Moreover, the consideration of the plaintiff’s conduct does not occur in a vacuum: the plaintiff did offer to discontinue the application with each party to pay their own costs and abide by any subsequent orders made following the outcome of a subsequent determination of the Court of Appeal.
I note that the plaintiff did not include CBL’s response to his offer. In the interests of completeness and transparency, any reply should have been provided to the Court. However, it remains significant that the plaintiff did attempt to resolve the proceedings in an apparently reasonable way and that bears upon the present application, in circumstances where delinquency (namely unnecessary and undue prolongation of the application) was the effect of the submission being put by CBL against the plaintiff.
In light of the circumstances overall, I am not satisfied that the conduct of the plaintiff was so egregious as to warrant an order for indemnity costs.
Orders
Accordingly, the order of the Court is as follows:
1)The plaintiff is to pay the defendant’s costs on the ordinary party and party basis.
| I certify that the preceding fifteen [15] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Acting Justice McWilliam. Associate: Dominic Page Date: 30 September 2021 |
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