Redwin Industries Pty Ltd v Feetsafe Pty Ltd

[2002] VSC 448

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 8291 of 2001

REDWIN INDUSTRIES PTY LTD (ACN 086 450 473)	Plaintiff
v
FEETSAFE PTY LTD (ACN 092 523 389) AND MICHAEL PATRICK MCDONNELL	Defendants
AND BETWEEN
FEETSAFE PTY LTD (ACN 092 523 389)	Plaintiff by Counterclaim
v
REDWIN INDUSTRIES PTY LTD (ACN 086 450 473)	Defendant to Counterclaim

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JUDGE:	HABERSBERGER J
WHERE HELD:	Melbourne
DATE OF HEARING:	Written submissions
DATE OF ORDER:	18 October 2002
CASE MAY BE CITED AS:	Redwin Industries Pty Ltd v Feetsafe Pty Ltd
MEDIUM NEUTRAL CITATION:	[2002] VSC 448

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COSTS – Failure to make full and fair disclosure of material facts on ex parte application – Asset preservation order discharged on application of defendant – Delay in making application – Proceeding transferred to Supreme Court – Application for costs on a solicitor and client basis refused.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms L. Hannon	Keith R Cameron
For the Defendants	Mr D.T. Forbes	Zolis Barristers & Solicitors

HIS HONOUR:

1. On 10 October 2002, I gave judgment in this matter, including dealing with the question of costs.  However, Mr Forbes of counsel, who appeared for the defendants, pointed out that, although the question of costs had been dealt with in his written submissions, he had not made any oral submissions to me on this topic.  Ms Hannon of counsel, who appeared for the plaintiff, agreed that this was what had occurred.  I therefore deleted from my reasons for judgment the passages relating to costs and gave Mr Forbes the opportunity to consider whether he wished to make any oral submissions, in addition to his written submission, on the questions of costs.  Mr Forbes subsequently advised that he did not wish to add to his written submissions.

1. In respect of what, in the circumstances, was the appropriate order for the costs of this application, Mr Forbes submitted that where there had been non-disclosure of material facts, costs should be awarded on a solicitor and client basis.  He referred to the decision of McDonald J in Westpac Banking Corporation v Hilliard ("Hilliard [No. 2]"),[1] where his Honour analysed the wide discretion as to costs where an asset preservation order had been discharged due to non-disclosure of material facts on an ex parte application.  In his Honour’s view, justice required that there be an order for costs in favour of Ms McCready, who was not a party to the proceedings, on a more generous scale than on a party and party basis.  Accordingly, he ordered that the costs of Ms McCready be paid on solicitor and client basis.

   [1][2001] VSC 198

1. Section 24(1) of the Supreme Court Act 1986 empowers the Court to make an order for costs of and incidental to a matter and vests in the Court a wide discretion as to costs. The ordinary rule, as reflected in r.63.31 of the Supreme Court Rules, is that the Court will order costs in favour of the successful party to the application or proceeding on a party and party basis.  However, the Court, in the exercise of its discretion, may depart from the usual practice and order costs on a higher scale if the circumstances warrant it.  Categories of such cases have been identified by Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd[2] and Warren J in Czerwinski v Syrena Royal Pty Ltd (No 2)[3].

   [2](1993) 46 FCR 225 at 232-4

   [3][2001] VSC 135

1. In Hilliard [No. 2][4], McDonald J referred to cases such as Britannia Arrow[5] and Westwind Air v Hawker de Havilland[6] where, although an ex parte order had been discharged for non-disclosure of the material facts, costs of the application were only awarded on a party and party basis.  In these cases, the ex parte orders had been obtained against a party in the proceeding.  His Honour also referred to the decision in Project Development Co Ltd SA v KMK Securities Ltd,[7] where an innocent third party was held to be entitled to an order for costs on an indemnity basis.  In deciding to award Ms McCready her costs on a solicitor and client basis, his Honour stated that:

"It is just such a case as this that illustrates that there are categories of cases other than those identified by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd and by Warren J in Czerwinski that warrant the court making an order for costs against a party to proceedings on a "higher measure" than on a party and party basis."[8]

[4][2001] VSC 198

[5][1988] 1 WLR 1337

[6](1990) 3 WAR 71

[7][1982] 1 WLC 1470

[8][2001] VSC 198 at [17]

1. However, as McDonald J himself recognised in Hilliard [No 2][9], not every case of the discharge of an ex parte order for non-disclosure of the material facts will result in an order for costs on a solicitor and client basis.  It seems from the four decisions referred to in the previous paragraph that an order for costs on a party and party basis may be  considered to be appropriate where, as here, the successful applicants are parties in the proceeding and not an innocent third party.  More important, however, in my opinion, is the fact that in this case the delay by the firstnamed defendant, in applying to have the asset preservation order discharged, has resulted in the application having to be brought in this Court and not the Magistrates' Court and the application being considerably more complicated than it would have been had it been made promptly to the Magistrates' Court.  Therefore, in my opinion, the just order, in all the circumstances, is that there be an order that the plaintiff pay the firstnamed defendant's costs on a party and party basis. 

   [9][2001] VSC 198

1. I therefore order that the plaintiff pay the firstnamed defendant’s costs of and incidental to the defendants’ summons filed on 5 November 2001 and the firstnamed defendant’s summons filed on 18 January 2002.

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