Pico Holdings Inc v Voss (No. 2)

[2004] VSC 312

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 7324 of 2001

PICO HOLDINGS INC.	Plaintiff
V
PETER DAVID VOSS	Defendant

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JUDGE:	Mandie J
WHERE HELD:	Melbourne
DATE OF HEARING:	26 August 2004
DATE OF JUDGMENT:	26 August 2004
CASE MAY BE CITED AS:	Pico Holdings Inc v Peter David Voss (No.2)
MEDIUM NEUTRAL CITATION:	[2004] VSC 312

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PRACTICE AND PROCEEDURE – costs – whether successful defendant should have costs on indemnity basis – whether defendant’s costs should be reduced having regard to the conduct of the defence.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M R Pearce	Gilbert + Tobin
For the Defendant	Mr J C Simpson	Mallesons Stephen Jaques

HIS HONOUR:

1. The primary question before the Court is the question of costs arising from the reasons for judgment herein.[1]  Prima facie costs should follow the event – this was not disputed but the defendant contended the costs, or some costs, should be awarded to him on an indemnity basis, while the plaintiff contended that the defendant should be paid only 50% of his costs on a party-party basis.

   [1]Pico Holdings Inc v Peter David Voss [2004] VSC 263

1. The first ground upon which the defendant contended that his costs should be paid on an indemnity basis from 8 July 2003 was the making of a “Calderbank offer” by letter dated 1 July 2003.  The substance of the offer made by the defendant’s solicitors was that the defendant would procure forthwith the transfer to the plaintiff of 180,000 shares in Dominion Wines Ltd in exchange for which various release orders and consent orders would be made, the prime release being that from the plaintiff to Mr and Mrs Voss and Wave Vistas Pty Ltd (formerly Turf Club Australia Pty Ltd).

1. The plaintiff responded to this offer by asking a series of questions including the question how the defendant would be able to procure the transfer of those shares in Dominion Wines Ltd.  The defendant made no satisfactory answer to the latter question simply indicating that he was not the owner of such shares and, no doubt by inference, that he could in some way procure them.  That in itself would have been calculated to raise considerable suspicion in the minds of the those controlling the plaintiff given their previous experience with the defendant and his companies which I have recounted in my reasons for judgment.  Moreover, in my opinion, it was not at all unreasonable of the plaintiff to refuse to entertain this offer, as it did, given the unhappy experiences of the plaintiff (recounted in the judgment) in relation to the failure by companies controlled by or associated with Mr Voss either to repay loans or to provide security or to provide unencumbered security, pursuant to a series of promises and representations (all broken).  I would not therefore in my discretion make any order for indemnity costs in favour of the defendant based upon the plaintiff’s refusal to accept the defendant’s said offer.

1. The defendant sought indemnity costs in relation to the whole of his costs of the proceeding on an alternative ground, namely, that the plaintiff had failed to discover a critical document[2] which Mr Webb indicated had been “culled” from the plaintiff’s file at some stage.  I am not prepared on the material to conclude that there was any deliberate conduct by Mr Webb or the plaintiff to conceal this document, a document which in any event supported aspects of the plaintiff’s case as well aspects of the defendant’s case.  I am certainly not prepared to order indemnity costs in relation to the failure by the plaintiff to discover this document.

   [2]The fax dated 2 September 2000 from Mr Webb to Mr Voss and Mr Robinson.

1. There is another reason why, in the Court’s discretion, I would not be prepared to order indemnity costs, wholly or partly, in favour of the defendant on either of the grounds above mentioned.  The reason is that the defendant failed on an issue which loomed fairly large at the trial: whether the September advance was the payment of “commission” or a loan and whether the September promissory note was a sham to deceive the plaintiff’s auditors.  The issue took up substantial time at the trial and was a serious allegation made against the plaintiff and Messrs Hart and Webb as to which the defendant failed to satisfy the Court.

1. The issue to which I have just referred was made the basis of a detailed argument on behalf of the plaintiff to support the contention that the defendant should receive only 50% of his costs.  The plaintiff submitted that the defendant had deliberately and dishonestly alleged matters which would have amounted to criminal offences in the United States of America by the plaintiff’s officers.  However, while I did not accept the evidence of the defendant I did not and do not find that he was deliberately dishonest.  How he came to the belief that he was assured by the plaintiff that the September advance would not be treated as a loan, despite the existence of the promissory note, I cannot say, but I formed the distinct impression that neither side was telling the Court the full story of what was discussed and what assurances were given.  I was simply not satisfied with the defendant’s version.  I do not regard the defendant’s failure to make out this aspect of his very vigorous defence of this proceeding as a basis for cutting back his entitlement to party-party costs. 

1. Accordingly, there will be an order that the costs of the defendant of this proceeding (including reserved costs) be taxed and when taxed paid by the plaintiff.

1. For reasons indicated in the course of the argument, the following further orders will be made.  There will be an order, pending appeal, granting a stay of execution upon the order for costs made in favour of the defendant conditional upon the plaintiff paying into Court the difference, if any, between the amount presently in Court as security for the defendant’s costs and the total amount of costs when taxed.  There will be a further order, pending appeal, adjourning the question of an inquiry as to damages arising from the Mareva orders sine die.  There will also be liberty to apply.