Safari 4 X 4 Engineering Pty Ltd v Doncaster Motors Pty Ltd (No 2)
[2006] VSC 469
•6 December 2006
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 8249 of 2001
BETWEEN
| SAFARI 4 X 4 ENGINEERING PTY LTD (ACN 081 086 660) | Plaintiff |
| v | |
| DONCASTER MOTORS PTY LTD (ACN 094 027 960) | First Defendant |
| and | |
| SAMUEL MAXWELL KETTYLE | Second Defendant |
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JUDGE: | GILLARD J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 1 December 2006 | |
DATE OF JUDGMENT: | 6 December 2006 | |
CASE MAY BE CITED AS: | Safari 4 x 4 Engineering Pty Ltd v Doncaster Motors Pty Ltd & Anor (No. 2) | |
MEDIUM NEUTRAL CITATION: | [2006] VSC 469 | |
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Motion for judgment – Two defendants – Claim by one for indemnity against other – Form of judgment – Claim by second defendant that proceeding delayed and should not have to pay full interest and costs – Solicitor-client costs.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D. Clarke | Jones King Lawyers |
| For the First Defendant | Mr T. Messer | Hall & Wilcox |
| For the Second Defendant | Mr M.L. Grinberg | Tony Hargreaves & Partners |
HIS HONOUR:
This is a motion for judgment in a proceeding brought by a plaintiff against two defendants. The proceeding was concerned with the theft of an expensive BMW motor car. The plaintiff, Safari 4 x 4 Engineering Pty Ltd (“Safari”), was the owner of the vehicle and requested the defendant, Doncaster Motors Pty Ltd (“Doncaster Motors”), to carry out a service. Whilst it was in the latter’s possession, the vehicle was stolen. The plaintiff brought a proceeding against Doncaster Motors in bailment. The latter joined as a third party one Samuel Maxwell Kettyle, who was alleged to have been implicated in the theft. On the morning of the commencement of trial, the plaintiff obtained leave to join Mr Kettyle as second defendant. The third party proceeding was treated as a claim for indemnity by Doncaster Motors against Mr Kettyle.
After a six day trial, the Court reserved its decision. Prior to publishing its decision, the Court was informed that the proceeding between the plaintiff and Doncaster Motors had been compromised. Accordingly, the only issues left for decision were Safari’s claim against Mr Kettyle for conversion, and a claim brought by Doncaster Motors against Mr Kettyle for conversion, seeking an indemnity in respect of any amount it had to pay Safari and costs.
The motion for judgment was complicated, first, because the plaintiff did not obtain a judgment against the first defendant. It compromised its claim. The compromise involved the value of the vehicle, damages in the nature of interest and costs. The Court was informed that the plaintiff’s claim against Doncaster Motors was compromised in the sum of $300,000, inclusive of interest and costs. The full amount has been paid. The second complicating factor was the claim brought by Doncaster Motors against Mr Kettyle seeking an indemnity in respect of its liability to the plaintiff and also an indemnity in respect of all of its legal costs. Third, counsel for Mr Kettyle, Mr Grinberg, submitted that his client should not have to pay the full amount of damages in the nature of interest and the full amount of costs because, first, he was only joined very late in the proceeding and, second, there had been delay in bringing the proceeding to trial. Finally, there was the issue of the taxation of costs in respect to the claim brought by Doncaster Motors against Mr Kettyle. Doncaster Motors sought costs on a solicitor-client basis.
The proceeding was instituted by Safari against one defendant, Doncaster Motors Pty Ltd, on 9 November 2001. Mr Kettyle was joined as a third party by Doncaster Motors on 9 June 2005. He was joined as a second defendant on the application of the plaintiff on the first day of the trial, being 10 November 2006.
The Court found that Mr Kettyle was implicated in the theft.[1] It is now necessary to determine the orders that are to be made in the judgment.
[1]See Safari 4 x 4 Engineering Pty Ltd v Doncaster Motors Pty Ltd & Anor [2006] VSC 460.
The first paragraph of the orders deals with the claim brought by the plaintiff against the first defendant, which was compromised. The parties sought by consent an order that the claim brought by the plaintiff against that first defendant be dismissed with no order as to costs. It should be noted in the “Other Matters” set out in the judgment that the amount of the compromise was $300,000, inclusive of interest and costs. The Court found that the amount of damages which the plaintiff was entitled to recover against the second defendant was the sum of $204,096.95. The amount of interest that the plaintiff would have been entitled to receive from the first defendant on that sum was $118,697.74, being interest calculated from 9 November 2001 until 30 November 2006. This was calculated on the rate fixed from time to time under the Penalty Interest Rates Act 1983 – see s 60 Supreme Court Act 1986.
There is no difficulty with the judgment in favour of the plaintiff against Mr Kettyle. There should be judgment in the sum of $204,096.95, together with damages in the nature of interest of $1,107.15. The interest was calculated in accordance with the penalty rate from the date of his joinder, namely 10 November 2006, until 30 November 2006. There was no dispute as to the calculation.
The claim brought by Doncaster Motors against Mr Kettyle was for an indemnity. Doncaster Motors sought the full amount of the damages it suffered as a result of Mr Kettyle stealing the vehicle. This would not only be damages and interest payable by it, but would also include costs incurred. The third order that should be made is in the form of a declaration that Doncaster Motors is entitled to be indemnified by Mr Kettyle for the amount of $300,000 which it has paid in compromise of the plaintiff’s claim against it. That is the total liability of Doncaster Motors to the plaintiff Safari. Accordingly, in my view, there should be judgment for Doncaster Motors against Mr Kettyle in that sum, namely $300,000. The amount represents something less than what the plaintiff would have been entitled to if it had obtained a judgment against Doncaster Motors. That judgment would have been for $204,096.95 together with $118,697.74 damages in the nature of interest. On top of that, the defendant Doncaster Motors would have been liable for costs, which, conservatively, would have been in excess of $60,000. Accordingly, the compromise, when realistically analysed, represented something less than full recovery.
The plaintiff sought costs from Mr Kettyle in respect of the proceeding brought against him by the plaintiff, which commenced on 10 November 2006. In my opinion, it is entitled to such an order. Other than amending its statement of claim and perhaps calling some witnesses, the costs that the plaintiff incurred in respect of its proceeding against the first defendant, Doncaster Motors, would cover the claim brought by it against Mr Kettyle. It will be a matter for the Taxing Master to consider what proportion, if any, of its total costs on a party-party basis should be paid by Mr Kettyle. Other than the costs of joinder, the costs most likely will be small.
It is trite to observe that a plaintiff is not entitled to recover a greater sum than its total loss. Accordingly, any question of the plaintiff seeking to execute its judgment against Mr Kettyle may be problematic because of the fact that the claim brought by the plaintiff against Doncaster Motors was compromised on an “all in” basis. However, that is not a matter for the Court’s consideration on the motion for judgment.
It was argued on behalf of Mr Kettyle that he should not have to indemnify Doncaster Motors for the full amount of the interest or the full amount of costs paid by it to Safari. Both the amount of the damages in the nature of interest and the total costs increased with the passage of time, and it was said on his behalf that he had no control over the proceeding. However, I think it is open to the Court to infer that the delay in bringing the proceeding on for trial was because of the stand taken by Mr Kettyle in arguing that the BMW that was stolen was his vehicle and, accordingly, opposing any transfer of title to Safari and later its insurer. This resulted in an interpleader summons being issued, which was heard on 12 April 2005. It was shortly after the outcome of that proceeding that Mr Kettyle was joined as a third party. Further, by looking at the claim for the costs of recovering the vehicle which formed part of the plaintiff’s claim against Mr Kettyle, it is very apparent that the issue of ownership arose as early as 16 October 2003 (nearly three weeks after the BMW was seized by the police) and it is very clear that it was not finally determined until April 2005, at which stage Mr Kettyle abandoned his claim.
I do not accept the contention that the delay has been brought about by any inappropriate conduct of the lawyers acting for the plaintiff Safari or for Doncaster Motors. I reject the submission put on behalf of Mr Kettyle that he should not be liable for the full amount of interest that has been paid by Doncaster Motors to Safari in the compromised sum. The same observation can be made in respect to the costs. I am not persuaded that the costs have been increased because of any misconduct or lack of care on the part of the lawyers acting for Safari and Doncaster Motors.
That brings me finally to the last matter in issue, being the order sought by Doncaster Motors that Mr Kettyle pay its costs of defending the proceeding and the costs of the proceeding brought against him, including the third party proceeding, on a solicitor-client basis.
I have discussed the principles which guide a court where an application is made for costs to be paid on some other basis than party-party. One of the cases in which I summarised the principles was CGU Workers’ Compensation (Vic) Ltd v Carousel Bar Pty Ltd (No. 2).[2] It is unnecessary for me to repeat the principles. They can be briefly summarised as follows:
·The general power to order costs in this Court is found in s. 24(1) of the Supreme Court Act 1986 and gives the Court a wide discretion.
·Order 63 of the Rules of Court deals with the costs issues and Rule 63.28 empowers the Court to make an order that an unsuccessful party pay costs on a solicitor-client basis.
·The general rule is that costs should be paid on a party-party basis, unless there are particular circumstances which justify a special order for costs.
[2][1999] VSC 237.
The Court has found that Mr Kettyle was guilty of converting the vehicle by being a party to its theft. In my view, that is a classic example of where the Court should order costs on a solicitor-client basis. Such circumstance are special circumstances. Doncaster Motors should not be out of pocket because of the criminal conduct of Mr Kettyle. In my opinion, Mr Kettyle should pay Doncaster Motors’ costs of defending the proceeding and the costs of bringing the proceeding against him on a solicitor-client basis
The Judgment of the Court is as follows:
Other Matters:
The Court was informed that the plaintiff and first defendant had agreed to compromise the proceeding. The terms of the compromise, so far as material, were that the first defendant pay to the plaintiff the sum of $300,000 inclusive of interest and costs. The Court was further informed that the said sum of $300,000 had been paid by the first defendant to the plaintiff.
The Judgment of the Court is:
(1)That the claim of the plaintiff against the first defendant is dismissed (with a right of reinstatement) and with no order as to costs.
(2)That there be judgment for the plaintiff against the second defendant in the sum of $204,096.95 together with damages in the nature of interest of $1,107.15.
(3)The Court declares that the first defendant is entitled to be indemnified by the second defendant against the amount of $300,000 being the sum paid by the first defendant in compromise of the plaintiff’s claim against it including interest and costs.
(4)That there be judgment for the first defendant against the second defendant in the sum of $300,000.
(5)That the second defendant pay the plaintiff’s costs of the proceeding against him on and from 10 November 2006.
(6)That the second defendant pay the first defendant’s costs of defending the proceeding and the costs of its proceeding against the second defendant, including the third party proceeding, and any reserved costs, such costs to be taxed on a solicitor-client basis.
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