Proprac Nominees Pty Ltd v Ian Anderson (No 2)
[2023] VCC 571
•18 April 2023
| IN THE COUNTY COURT OF VICTORIA AT Ballarat COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-21-03802
| PROPRAC NOMINEES PTY LTD (ACN 006 170 903) and DOUGLAS ERIC SCOTCHER | First plaintiff Second plaintiff |
| V | |
| IAN ANDERSON and ORS (according to the attached Schedule) | Defendants |
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JUDGE: | HER HONOUR JUDGE A RYAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | On the papers, written submissions filed 4, 5 and 11 April 2023 | |
DATE OF RULING: | 18 April 2023 | |
CASE MAY BE CITED AS: | Proprac Nominees Pty Ltd & Anor v Ian Anderson & Ors (No 2) | |
MEDIUM NEUTRAL CITATION: | [2023] VCC 571 | |
RULING
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Subject:PRACTICE AND PROCEDURE – COSTS
Catchwords: Whether plaintiffs should be ordered to pay costs incurred by a successful defendant – whether interest payable under s58 of the Supreme Court Act 1986
Legislation Cited: Supreme Court Act 1986; County Court Act 1958
Cases Cited:Currabubula Holdings Pty Ltd v State Bank of New South Wales [2000] NSWSC 232; Spotless Group Ltd v Premier Building and Consulting Pty Ltd (Rec Appt) [2008] VSCA 115; Ritter v Godfrey [1920] 2 KB 47; Verna Trading v New India Assurance Company Limited [1991] 1 VR 129
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr P H Caillard with | Nevetts Lawyers |
| Mr C Fitzgerald | ||
| For the Defendants | Mr M J Campbell | Heinz Law |
SCHEDULE OF PARTIES
BETWEEN
| Proprac Nominees Pty Ltd (ACN 006 170 903) | First plaintiff |
| And | |
| Douglas Eric Scotcher | Second plaintiff |
| V | |
| Ian Anderson | First defendant |
| And | |
| | |
| And | |
| Ian Anderson Earthmoving Pty Ltd (ACN 132 138 160) | Third defendant |
HER HONOUR:
1On 23 March 2023, I delivered reasons for judgment in this matter (“the principal reasons”)[1] . The first plaintiff, Proprac Nominees Pty Ltd (“Proprac”), succeeded in its claim for a debt against the first defendant, Mr Anderson. These reasons assume familiarity with the principal reasons and adopt the same terminology.
[1]Proprac Nominees Pty Ltd v Anderson [2023] VCC 403
2In the principal reasons, I proposed ordering that the defendants pay the plaintiffs’ costs of the proceeding, including any reserved costs, on the standard basis to be taxed in default of agreement.
3The parties were directed to confer and file a minute of consent orders or, failing agreement, to file and serve submissions regarding the orders to be made, including costs. The plaintiffs filed submissions on costs on 4 April 2023, attaching a proposed minute of order. The defendants filed submissions on 5 April 2023, together with a proposed minute of order. The plaintiffs filed a further submission in reply on 11 April 2023.
4Two issues fall for determination arising from the submissions. The first is whether the plaintiffs should be ordered to pay the costs of the third defendant, Ian Anderson Earthmoving Pty Ltd (“the Company”). The plaintiffs’ primary claim was for a debt arising under a loan agreement which they pleaded was entered into with either Mr Anderson or the Company. For the reasons identified in the principal reasons, the loan agreement entered into was between Proprac and Mr Anderson. Given the Company was found not to be a party to the loan agreement, the defendants argue the plaintiffs should pay the Company’s costs because it was a successful defendant.
5The second issue is whether interest should be paid on the judgment debt under s58 of the Supreme Court Act 1986.
Costs
6The plaintiffs argue, contrary to the defendants’ submission, that they should not be ordered to pay the Company’s costs. They accept the proposition that where multiple defendants have the same legal representation (as is the case here), a successful defendant amongst multiple defendants is entitled to its proportion of the costs incurred on behalf of all, plus the costs, if any, incurred exclusively on the successful defendants’ behalf. This rule of thumb is referred to in the plaintiffs’ submissions and was examined by Einstein J in Currabubula Holdings Pty Ltd v State Bank of NSW.[2]
[2][2000] NSWSC 232 at [89]-[106]
7The plaintiffs note the purpose of the rule is to achieve substantial justice in the awarding of costs as between a partially successful plaintiff and variously successful and unsuccessful defendants. The rule operates on the premise that that defendants are proportionately responsible for and liable for the joint costs involved in mounting the defence. However, the plaintiffs submit that the court is not obliged to apply the rule in every circumstance and will not do so where its application would involve an injustice.[3]
[3]per Redlich JA in Spotless Group Ltd v Premier Building and Consulting Pty Ltd (Rec Appt) [2008] VSCA 115 at [39]
8On the plaintiffs’ case, it is said that the application of the rule would involve an injustice to the plaintiffs. They contend it should not be applied for the following reasons:
(a) $850,000 was paid by the plaintiffs to an account held by the Company following Mr Scotcher’s agreement with Mr Anderson. Mr Anderson was the person with effective control of the Company and, soon after, the funds were stripped out at Mr Anderson’s direction.
(b) Each of the defendants had a common interest in defending the matter and, in substance, they maintained the same defences. These were that there was no loan as alleged by the plaintiffs, and that neither Mr Anderson nor the Company were liable for the amounts advanced. In the alternative, if one of them was liable, it was Mr Anderson.
(c) Prior to and during the trial, the defendants presented as a united front. They relied on the same witnesses, served the same notices of dispute, and all orders by consent in advance of the trial were agreed to jointly on behalf of both defendants.
(d) The plaintiffs’ alternative claim against the Company for monies had and received would have succeeded had the loan agreement failed.[4]
(e) Mr Anderson did not own or control a personal bank account and relied on funds given to him by his wife, Mrs Anderson, the appointed director of the Company.
[4]Principal reasons at [79]
9The plaintiffs’ submissions then went on in paragraph 9 to refer to examples of alleged non-compliance or delay by the defendants in respect of various pre-trial steps.
10The plaintiffs submit the order foreshadowed at paragraph 81 of the principal reasons is an appropriate form of order and would do justice in the circumstances of this case. Alternatively, the plaintiffs submit the court should order Mr Anderson pay the plaintiffs’ costs of the proceeding, including any reserved costs, on the standard basis to be taxed in default of agreement, and that the Company bear its own costs.
11The defendants contend the Company is entitled to an order for its costs having successfully defended the plaintiffs’ claim. The defendants’ submission referred to various authorities dealing with the issue of whether a wholly successful defendant should be deprived of its costs .
12In Ritter v Godfrey,[5] Atkin LJ observed:
“In the case of a wholly successful defendant in my opinion a judge must give the defendant his costs unless there is evidence that the defendant –
1. Brought about the litigation; or
2. Has done something connected with the institution or the conduct of the suit calculated to occasion unnecessary litigation expense; or
3. Has done some wrongful act in the course of the transaction of which the plaintiff complains.
These principles require further expansion.
[5][1920] 2 KB 47
By 1 it is meant he has so conducted himself as to lead the plaintiff reasonably to believe that he has a good cause of action against the defendant and so induce him to bring the action … 2 I think would include improper conduct in or connected to the litigation calculated to defeat or delay justice. Such conduct would also be included in 3 which, I think further extends to cases where the facts complained of although they do not give the plaintiff a cause of action disclose a wrong to the public …”
13These observations were not accepted without significant qualification by the Full Court of the Supreme Court in Verna Trading v New India Assurance Company Limited.[6] Although Kaye J accepted that criticism of the remarks made by Atkin LJ did not constitute rejection that:
“In an appropriate case any one of three circumstances described by Atkin LJ in Ritter v Godfrey might not constitute a proper basis for the exercise of discretion adversely to a successful defendant.”
[6][1991] 1 VR 129
14Kaye J then went on to observe:
“More compelling circumstances are required for the exercise of discretion as a result of which a successful defendant is not only denied his costs but is also compelled to pay the whole or part of the plaintiff’s costs in the proceeding. This is for the reason that proceedings are initiated by the plaintiff and the plaintiff fails to gain the relief which he sought.”
15The defendants noted the proceedings were originally commenced against Mr and Mrs Anderson but were subsequently amended to allege that a loan agreement had been made between the two plaintiffs and Mr Anderson and the Company. The claim against Mrs Anderson as a second defendant was discontinued.
16The basis for claiming against the Company was an allegation that Mr Anderson had functioned as a de facto director of the Company between at least March 2021 and July 2021. The defendants note that the question of whether he was a de facto director or not did not fall to be considered in the principal reasons, having regard to the findings that there was insufficient evidence to prove that there had been a loan agreement entered into with the Company. It was submitted that there was nothing in the Company’s conduct that would have reasonably led the plaintiffs to believe that either of them, or both of them, had a good cause of action against the Company.
17Additionally, there was nothing in the Company’s defence to the further amended statement of claim or its subsequent conduct to the litigation that was improper or calculated to defeat or delay justice to justify a departure from the normal position that costs should follow the event. Consequently, the defendants submit that there was no reason to deprive the Company of its costs following its successful defence to the claim.
18The defendants accept the same solicitors acted for both Mr Anderson and the Company and therefore, the Company would only be entitled to its proportion of the costs incurred on behalf of both defendants, plus the costs, if any, exclusively incurred on its behalf referring to the rule of thumb in Currabubula.
Consideration
19The claim against the Company under the loan agreement was unsuccessful. That being so, ordinarily the Company should have its costs. The question then is whether there is any proper basis for departing from the usual rule that costs follow the event.
20The rule of thumb referred to in Carrabubula can be displaced in appropriate circumstances. A court is not obliged to apply the rule in every circumstance of joint representation of defendants and will not do so where the application would involve an injustice. The rule calls for each successful or partially successful defendant to obtain only their proportion of the joint costs in defending the action is in the ordinary and straightforward case.[7] The test is as always where do the interests of justice best lie.
[7] Spotless Group Pty Ltd v Premier Building and Consulting Pty Ltd & Anor [2008] VSCA 115, [42]
21In my view, the interests of justice do not favour an award to costs to the Company for the following reasons. The evidence showed the funds were directed to be paid into the Company’s bank account at the direction of Mr Anderson. Mrs Anderson gave evidence that the Company’s bank account was the only internet bank account they had. The funds then were immediately paid out at Mr Anderson’s direction to discharge a debt he owed a third party. Although Mr Anderson was not a director of the Company, it was clear from the evidence that he told Mrs Anderson, who was the director, what to do with the funds which passed in and out of the Company’s bank account at his direction. The Company was to some extent the alter ego of Mr Anderson. The joining of the Company was to address the matter of standing as to the correct borrower. I do not consider the plaintiffs should have to pay the Company’s costs having regard to this factual background.
22The plaintiffs would have succeeded in their alternative claim for moneys had and recovered against the Company had it been necessary to decide this claim, which is a further reason its joinder was appropriate. I have also considered, in the exercise of my discretion, the fact that the defendants repeatedly refused to comply with orders made in the course of the litigation, including a failure to provide a written outline of submission before trial. I do not consider it would be a fair outcome for the plaintiffs to have to pay the Company’s costs in these circumstances given its dilatory conduct during the litigation. In my view, a just result would be an order that the Company bear its own costs of the proceeding.
23I also consider Mr Anderson should be ordered to pay the costs of both plaintiffs. The defendants seek an order that he pay only Proprac’s costs. There was a genuine dispute about who was the correct lender based on the pleadings. The defence mounted by the defendants was that there was no loan and the monies advanced were repayment of moneys owed by Mr Scotcher to Mr Anderson. That defence failed. Having regard to the way the case was run and defended, I consider it was proper for Mr Scotcher to have been joined as a plaintiff. In my view, a fair result is that he should also have his costs of the proceeding from Mr Anderson. It is unlikely in any event, that the joinder of Mr Scotcher would have resulted in any additional costs being incurred over above the costs incurred by Proprac in pursuing the claims. I also take the view that the blatant disregard for orders made by both defendants as outlined in the plaintiffs’ submissions, is yet another reason Mr Anderson should held be responsible for both plaintiffs’ costs of the proceeding.
Interest
24During the course of the trial, counsel for the plaintiffs, when questioned, said that his client would be seeking interest from the date of the writ. This entitlement arises under s60 of the Supreme Court Act. Since the principal reasons were given, the plaintiffs now seek interest under s58 of the Supreme Court Act as the judgment was for a debt or sum certain which has been recovered.[8]
[8] The County Court has power under s50 of the County Court Act 1958 to award interest under s58 or s60 of the Supreme Court Act 1986
25In the proposed minute of order provided by the plaintiffs, the plaintiffs sought an order that Mr Anderson pay Proprac interest on the judgment sum in the form calculated in paragraph 2 of the proposed minute. The interest was calculated from 7 September 2021 to the date of the entry of judgment.
26The defendants make no submissions in opposition to this claim for interest, and simply state they do not admit the claim made for interest.
27The debt under the loan agreement was a fixed sum and was due to be repaid by 30 April 2021. The amount of interest claimed pursuant to the debt is from 7 September 2021. It is beyond doubt that by 7 September 2021, if not before, the debt was due and payable and remained unpaid.
28In the circumstances and having regard to the fact that the defendants have not put forward any grounds as to why interest under s58 should not be awarded, I am of the view that Proprac is entitled to interest in accordance with the calculations set out in the plaintiffs’ proposed minute of order. I will therefore order that interest on the judgment debt be awarded from 7 September 2021 to the date of entry of judgment, being 18 April 2023, fixed in the sum of $160,026.
Conclusion
29I will make the following orders:
(1)Judgment is entered for the first plaintiff against the first defendant for the sum of $991,675, together with interest fixed in the sum of $160,026.
(2) The plaintiffs’ claim against the third defendant is dismissed.
(3)The first defendant pay the plaintiffs’ costs of and incidental to the proceeding, including any reserved costs, on the standard basis to be taxed in default of agreement.
(4)The third defendant bear its own costs of the proceeding.
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Certificate
I certify that these 8 pages are a true copy of the Reasons for Ruling of Her Honour Judge A Ryan delivered on 18 April 2023.
Dated: 18 April 2023
Associate to Her Honour Judge A Ryan
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