PG Nominees Pty Ltd v WBHO Infrastructure Pty Ltd (Costs)
[2020] VSC 149
•31 March 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
EMPLOYMENT AND INDUSTRIAL LIST
S ECI 2019 01160
BETWEEN:
| PG NOMINEES PTY LTD (ACN 623 480 473) ATF RYAN FAMILY TRUST | Plaintiff |
| v | |
| WBHO INFRASTRUCTURE PTY LTD (ACN 089 434 220) | Defendant |
AND BETWEEN:
| WBHO INFRASTRUCTURE PTY LTD (ACN 089 434 220) | Plaintiff by First Counterclaim |
| PETER RYAN | Plaintiff by Second Counterclaim |
| v | |
| PG NOMINEES PTY LTD (ACN 623 480 473) ATF RYAN FAMILY TRUST | First Defendant by First Counterclaim |
| PETER RYAN | Second Defendant by First Counterclaim |
| WBHO INFRASTRUCTURE PTY LTD (ACN 089 434 220) | Defendant by Second Counterclaim |
---
JUDGE: | Ierodiaconou AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF RULING: | 31 March 2020 |
CASE MAY BE CITED AS: | PG Nominees Pty Ltd v WBHO Infrastructure Pty Ltd (Costs) |
MEDIUM NEUTRAL CITATION: | [2020] VSC 149 |
---
PRACTICE AND PROCEDURE – Costs – Whether costs should be reserved – Whether costs should be taxed immediately – On what basis costs should be paid – Indemnity basis – Defendant’s application to withdraw an admission – Plaintiff consented to the withdrawal of the admission – Whether unreasonable conduct – Sharma v Parbhakar [2015] VSC 632 applied – Supreme Court (General Civil Procedure) Rules 2015 (Vic) rr 25.02(4), 63.20.1 – Civil Procedure Act 2010 (Vic) ss 7, 9, 19, 22, 28.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Clarke QC with Mr H Kirimof | Bartlett Workplace Lawyers and Consultants |
| For the Defendant | Mr S R Senathirajah QC with Ms R Preston | Corrs Chambers Westgarth |
TABLE OF CONTENTS
Should costs be reserved?................................................................................................................. 1
On what basis should costs be paid?............................................................................................. 3
Defendant’s submissions............................................................................................................. 3
Plaintiff’s submissions.................................................................................................................. 4
Analysis.......................................................................................................................................... 5
Should costs be taxed immediately?.............................................................................................. 8
Defendant’s submissions............................................................................................................. 8
Plaintiff’s submissions.................................................................................................................. 9
Analysis.......................................................................................................................................... 9
Conclusion......................................................................................................................................... 11
HER HONOUR:
There is a dispute between the parties regarding the costs consequential to a ruling concerning the defendant’s withdrawal of admission in its further amended defence and counterclaim.[1] The defendant seeks its costs on an indemnity basis to be taxable immediately. The plaintiff says that costs should be reserved, or failing that, costs should be on a standard basis and not taxable immediately.
[1]PG Nominees Pty Ltd v WBHO Infrastructure Pty Ltd [2020] VSC 48 (‘ruling’).
For the following reasons, I will make orders that costs be on an indemnity basis. I reject the plaintiff’s submission that costs should be reserved. I reject the defendant’s submission that costs should be taxable immediately.
The parties provided written submissions, and the plaintiff’s solicitor deposed an affidavit.[2]
[2]The defendant’s submissions filed 20 March 2020, the plaintiff’s written submissions filed on 20 March 2020 and 27 March 2020, and the affidavit of Hui Meng Ong, the plaintiff’s solicitor, sworn on 19 March 2020 (‘the Ong affidavit’).
Turning now to examine each issue.
Should costs be reserved?
The plaintiff says that costs should be reserved for three reasons which are set out below. I will address each of them in turn.
First, the plaintiff says that it may transpire at trial that the application was dishonestly advanced. The truthfulness of Mr Duggan of the defendant, who gave instructions to the defendant’s solicitor, was squarely put in issue. The issue of whether or not those instructions were truthful is an issue for trial. It may transpire at trial that the instructions are false. If that occurs, the defendant will have succeeded upon its application based on evidence of false instructions.
In the ruling, I held that the plaintiff had consented to the withdrawal. I held that even if that were not the case, there were a range of reasons why leave should be granted to the defendant to withdraw its submission. Whilst there was evidence I accepted in its solicitor’s affidavit, there were three other reasons for the finding: see [40]–[48] of the ruling.
Second, the plaintiff says that the defendant adopted the wrong procedure and effectively obtained an interlocutory declaration which is a remedy unavailable at law. The plaintiff says that given the finding the defendant’s application to withdraw the admission was unnecessary, the effect of the ruling is merely to confirm a pleading already filed. This is, in effect, an interlocutory declaration as to the right to rely on that pleading. Interlocutory declarations are not a known remedy at law.
In the ruling, I held that the plaintiff had consented to the withdrawal. Given that, it was unnecessary for the defendant to be given leave to withdraw its admission.[3] (I then made a finding in the alternative as to why I would have granted leave anyway.) I did not find, as is submitted by the plaintiff, that the defendant’s application was unnecessary. It was necessary to bring the application itself given the dispute that arose between the parties. I held that the application was made in a timely manner, soon after the issues were identified, and after attempts to resolve the dispute by solicitors were unsuccessful.[4] This submission otherwise seeks to revisit the substance of the ruling. It is inappropriate to do so here.
[3]Ruling [75].
[4]Ruling [84].
Third, the plaintiff says that the defendant was granted an indulgence. Indirect reference[5] is made to r 63.17 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) which provides a presumption that the costs of amendment are costs in the proceeding. The Court retains a discretion to otherwise order.
[5]Reference to my paper: ‘Costs Orders in Interlocutory Applications, Employment and Industrial List, Supreme Court of Victoria’ (2018) [17]–[20]. It is published on the Court website.
Rule 63.17 of the Rules relates to the costs of amendment. The application was for withdrawal of admission pursuant to r 25.02(4) of the Rules. These types of applications do affect the pleadings. However, the costs in dispute are the costs of the application, not the costs thrown away by the pleadings.
On what basis should costs be paid?
Defendant’s submissions
It was unreasonable of the plaintiff to insist that the defendant was not entitled to withdraw its admission despite: having consented to the withdrawal, failing to plead its reply properly having regard to the withdrawal, and maintaining its unreasonable position of denying the defendant was entitled to the withdrawal.
There were multiple opportunities given to the plaintiff to move from its obstructionist position.
Correspondence from the defendant’s solicitors to the plaintiff’s solicitors by letter dated 27 August 2019[6] stated that if the plaintiff continued its position of denying the defendant was entitled to withdraw its admission then the defendant would have no choice but to make an application to the Court and would seek the associated costs against the plaintiff on an indemnity basis.
[6]Exhibit ‘JTT-11’ to the affidavit of John Thomas Tuck, the defendant’s solicitor, sworn on 12 November 2019 (‘the Tuck affidavit’).
Correspondence from the defendant’s solicitors to the plaintiff’s solicitors dated 3 September 2019[7] and 10 September 2019[8] provided detailed explanation of how the admission came to be made, why the Court would grant leave to withdraw the admission, reiterated that the defendant would seek costs on an indemnity basis if the issue progressed to Court, and concluded: “We trust that good sense will prevail, and we need not further waste the parties’, nor the Court’s, time and resources on an application of this nature; the result of which will invariably be in our client’s favour”.[9]
[7]Exhibit ‘JTT-13’ to the Tuck affidavit.
[8]Exhibit ‘JTT-15’ to the Tuck affidavit.
[9]Ibid [12].
Correspondence from the defendant’s solicitors to the plaintiff’s solicitors dated 14 October 2019[10] gave the plaintiff a final opportunity to consent to the withdrawal, failing which it would make an application to the Court and seek an order for payment of costs on an indemnity basis.
[10]Exhibit ‘JTT-16’ to the Tuck affidavit.
The defendant’s position was unreasonable and in breach of its obligations under the Civil Procedure Act 2010 (‘the CPA’). Reference is made to the paramount duty to the Court in section 16(a) of the CPA to further the administration of justice including in relation to any interlocutory application or proceeding. Reference is made to sections 18–20, 22, 25(b) and 28 of the CPA.
The plaintiff continued to maintain its unreasonable position even after detailed written submissions were filed. Those submissions sought costs on an indemnity basis.
Unsurprisingly, it was held that the plaintiff had consented to the withdrawal of admission. Also unsurprisingly, it was held that had there been no consent, leave to withdraw the admission would have been granted. Amongst other things, the plaintiff did not challenge the truthfulness of the explanation by the defendant solicitor for the withdrawal of submission.
Plaintiff’s submissions
The submissions it made above equally support the usual and standard costs of taxation. Following the ruling, the plaintiff made an offer to pay the costs of the application on a standard basis in order to avoid incurring further costs regarding this dispute.[11]
[11]Exhibit ‘HMO-2’ to the Ong affidavit.
There are no special circumstances that apply to the plaintiff so as to justify making an indemnity costs order. On the other hand, the defendant has made an application which ought never have been made. If the defendant is awarded indemnity costs it will have achieved an outcome that through the defendant’s own error, the plaintiff is left to suffer greater prejudice by the award of costs. The plaintiff is a small special purpose company that is the alter-ego of the ex-employee (albeit a senior one). An order for indemnity costs in the circumstances would be unfair and unacceptable.
Analysis
The applicable principles are not in dispute. I adopt the following outline of general principles.[12]
Whether or not costs should be awarded on the more generous basis of assessment, as an indemnity, is in the discretion of the court. The principles upon which this discretion is exercised are well known and in essence, an applicant is required to demonstrate that the circumstances of the case are such that the standard basis for taxation of costs is not appropriate and that the exceptional jurisdiction of awarding indemnity costs over and above the ordinary basis for taxation should be invoked. Usually this is where the party has engaged in unmeritorious or deliberate or high-minded or other improper conduct or has commenced or continued a claim in circumstances where the plaintiff, had they been properly advised, should have known that it had no chance of success.
[12]Sharma v Parbhakar [2015] VSC 632 [2] (J Dixon J).
As to the plaintiff’s submission that it would be unfair to burden it given it is a small company that is the alter-ego of an ex-employee, that is not a relevant factor.
The CPA is applicable. Section 7(1) provides:
Overarching purpose
(1) The overarching purpose of this Act and the rules of court in relation to civil proceedings is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.
Section 9 of the CPA provides:
Court’s powers to further the overarching purpose
(1)In making any order or giving any direction in a civil proceeding, a court shall further the overarching purpose by having regard to the following objects—
(a)the just determination of the civil proceeding;
(b)the public interest in the early settlement of disputes by agreement between parties;
(c)the efficient conduct of the business of the court;
(d)the efficient use of judicial and administrative resources;
(e)minimising any delay between the commencement of a civil proceeding and its listing for trial beyond that reasonably required for any interlocutory steps that are necessary for—
(i)the fair and just determination of the real issues in dispute; and
(ii)the preparation of the case for trial;
(f)the timely determination of the civil proceeding;
(g)dealing with a civil proceeding in a manner proportionate to—
(i)the complexity or importance of the issues in dispute; and
(ii)the amount in dispute.
(2)For the purposes of subsection (1), the court may have regard to the following matters—
(a)the extent to which the parties have complied with any mandatory or voluntary pre‑litigation processes;
(b)the extent to which the parties have used reasonable endeavours to resolve the dispute by agreement or to limit the issues in dispute;
(c)the degree of promptness with which the parties have conducted the proceeding, including the degree to which each party has been timely in undertaking interlocutory steps in relation to the proceeding;
(d)the degree to which any lack of promptness by a party in undertaking the proceeding has arisen from circumstances beyond the control of that party;
(e)the degree to which each person to whom the overarching obligations apply has complied with the overarching obligations in relation to the proceeding;
(f)any prejudice that may be suffered by a party as a consequence of any order proposed to be made or direction proposed to be given by the court;
(g)the public importance of the issues in dispute and the desirability of a judicial determination of those issues;
(h)the extent to which the parties have had the benefit of legal advice and representation.
(3)This section does not—
(a)limit any other power of a court to make orders or give directions; or
(b)preclude the court from considering any other matters when making any order or giving any direction.
There are special circumstances here that warrant an order for indemnity costs.
First, the plaintiff’s position was inconsistent with the consent order made on 16 August 2019 giving leave for the filing and service of the further amended defence and counterclaim in a form which included the withdrawal of the admission. In the circumstances, the defendant’s position that the plaintiff had in fact consented to the withdrawal was bound to be accepted. It was unreasonable for the plaintiff to say it had not provided consent for the withdrawal given the consent order.
Second, by raising its opposition to the withdrawal in its reply, and maintaining that position, the plaintiff placed the defendant in the position of having to make an application to the Court which should have been wholly unnecessary given the consent orders.
For completeness, I reject the plaintiff’s submission that the defendant received an indulgence of the Court and the plaintiff is being forced to shoulder the costs burden of the defendant’s error. It was the plaintiff’s conduct in opposing the withdrawal after the making of the consent orders, not the defendant’s conduct, that is unreasonable and attracts the indemnity costs order.
As it submits, the defendant gave the plaintiff multiple opportunities to change its position (referred to in the correspondence above), provided an explanation for its position, and gave notice to the plaintiff of its intention to seek indemnity costs orders should the plaintiff fail to do so. Despite this, and even after receiving the detailed submissions of the defendant, the plaintiff maintained its unreasonable position. This was inconsistent with sections 19 and 22 of the CPA.
Sections 19 and 22 of the CPA follow.
Overarching obligation to only take steps to resolve or determine dispute
For the purpose of avoiding undue delay and expense, a person to whom the overarching obligations apply must not take any step in connection with any claim or response to any claim in a civil proceeding unless the person reasonably believes that the step is necessary to facilitate the resolution or determination of the proceeding.
Overarching obligation to use reasonable endeavours to resolve dispute
A person to whom the overarching obligations apply must use reasonable endeavours to resolve a dispute by agreement between the persons in dispute, including, if appropriate, by appropriate dispute resolution, unless—
(a)it is not in the interests of justice to do so; or
(b)the dispute is of such a nature that only judicial determination is appropriate.
The breaches of sections 19 and 22 are relevant factors to take into account. I do so pursuant to section 28 of the CPA. Section 28 provides:
Court may take contravention of overarching obligations into account
(1)In exercising any power in relation to a civil proceeding, a court may take into account any contravention of the overarching obligations.
(2)Without limiting subsection (1), in exercising its discretion as to costs, a court may take into account any contravention of the overarching obligations.
Should costs be taxed immediately?
Defendant’s submissions
Costs should be taxable immediately. The Court may take a contravention of overarching obligations into account in exercising costs.
In some circumstances, orders for costs to be taxable immediately can be made even in circumstances where the application is not a discreet step in the proceeding, and there is no prospect of considerable delay. Here, there was a delinquency or unsatisfactory conduct because the position adopted and maintained by the plaintiff was without a proper basis in circumstances where it had already consented to the withdrawal of admission. It should have known the Court would find it had done so. Instead, the plaintiff, who was legally advised, elected to waste the resources of the defendant and the Court on a frivolous and unjustified position including that it had not consented to the withdrawal when it clearly had, that the Court should look behind the evidence of the defendant’s solicitor and determine the issue of which version of the ESP Rules actually applied in circumstances where that issue has to be determined at trial.
There were multiple opportunities for the plaintiff to make good its position and obviate the need for curial intervention. It did not do so.
Plaintiff’s submissions
Rule 63.20.1 of the Rules is applicable. Its purpose is to avoid: multiple taxations, apparent unfairness by requiring a party who is ultimately successful in having to pay the costs of a party ultimately unsuccessful at an early stage, and interlocutory proceedings being used as a weapon to exhaust the financial resources of a party. Each of these purposes is achieved by the rule in the current case.
The power to order costs be taxable forthwith may be exercised where there is an element of unreasonableness in the conduct of the successful party. That is not the case here. Although the ruling held that the plaintiff consented to the withdrawal, it was the defendant who issued the summons. The plaintiff rejects the defendant’s submission that the plaintiff’s position was without a proper basis in circumstances where it had consented to the withdrawal. It was the defendant who had failed to get its house in order and repeatedly amended its pleadings. Consequently, the plaintiff has incurred costs thrown away.
The defendant has not demonstrated, nor was there a finding, that the plaintiff’s conduct was unsatisfactory, unreasonable, reprehensible or involving a want of competence or diligence. Nor has the defendant demonstrated that there is likely to be any delay in the proceeding. Nor that the application concerned a discreet issue. Rather, the determination of the evidentiary issues has essentially been deferred until trial.
Analysis
Rule 63.20.1 of the Rules is applicable:
Taxation of costs on interlocutory application or hearing
If an order for costs is made on an interlocutory application or hearing, the party in whose favour the order is made shall not tax those costs until the proceeding in which the order is made is completed, unless the Court orders that the costs may be taxed immediately.
Although there is a discretion to ‘otherwise order’, I decline to exercise that discretion.
The well-accepted principles in Dale v Clayton Utz (No 3)[13] are applicable.
Courts have recognised that the demands of justice may require a departure from the ordinary rule for one or more of three broad reasons:
(a)Because of the conduct of the unsuccessful party;
(b)Because of the likely delay before the final completion of the proceeding; and
(c)Because the interlocutory application involves a separate or discrete issue.
[13][2013] VSC 593 [65] (Hollingworth J).
These categories are not closed.[14]
[14]Fanissa Pty Ltd v Versace [2016] VSC 416 [25]–[26] (Hargrave J as he then was) (‘Fanissa’).
Here, the plaintiff has acted in an unsatisfactory manner. However, it would not be just or appropriate to order that costs be taxable immediately for the following reasons.
First, the issues raised in the application are not discreet. Indeed, the defendant did not contend they were. The application concerned a dispute about pleadings. Although there are circumstances when a pleadings dispute may attract an order that costs be taxable immediately,[15] this is not one. The dispute overlaps with what is likely to be a crucial issue at trial, namely which version of the ESP Rules apply. It would be unfair to the plaintiff to succeed at trial on this issue and be unable to set off the costs of this application against a costs order in its favour.
[15]Fanissa [32]–[33].
Second, neither party contended there would be delay. Indeed, the parties have already agreed to the next timetable steps.
Third, as the plaintiff submits, the further amended statement of claim was the defendant’s third iteration of its statement of claim. The plaintiff is likely to have incurred costs thrown away. Ordering immediate taxation of costs now risks multiplicity of taxation.
Conclusion
I will make the following order: the defendant’s costs of and incidental to its summons filed on 15 November 2019 be paid by the plaintiff on an indemnity basis.
0
2
0