Sanders v Glev Franchises Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Sanders v Glev Franchises Pty Ltd [2003] FCA 11

COSTS – principles relevant to an award of costs – whether Court should depart from the ordinary rule

Federal Court of Australia Act 1976 (Cth), s 43
Federal Court Rules, O 65 r 15

Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 referred
Latoudis v Casey (1990) 170 CLR 534 referred
Cummings v Lewis (1993) 41 FCR 559 referred
Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602 referred
Verna Trading Pty Ltd v New India Assurance Pty Ltd [1999] 1 VR 129 referred

JOHN EDWARDS SANDERS & ANOR v GLEV FRANCHISES PTY LTD & ORS
VG 418 of 1992

KENNY J
14 JANUARY 2003
MELBOURNE


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VG 418 OF 1992

BETWEEN:

JOHN EDWARD SANDERS
First Applicant

CHRISTOPHER ZIENKIEWICZ
Second Applicant

AND:

GLEV FRANCHISES PTY LTD
First Respondent

GABRIEL CHRISTOU
Second Respondent

LEO REYES
Third Respondent

JUDGE:

KENNY J

DATE OF ORDER:

14 JANUARY 2003

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.The application dated 6 November 1992 be dismissed.

2.The applicants pay the respondents’ costs of the proceeding brought by them (including reserved costs), such costs to be taxed in default of agreement.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VG 418 OF 1992

BETWEEN:

JOHN EDWARD SANDERS
First Applicant

CHRISTOPHER ZIENKIEWICZ
Second Applicant

AND:

GLEV FRANCHISES PTY LTD
First Respondent

GABRIEL CHRISTOU
Second Respondent

LEO REYES
Third Respondent

JUDGE:

KENNY J

DATE:

14 JANUARY 2003

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

introduction

  1. In reasons for judgment delivered on 29 October 2002, the Court proposed to dismiss the application in this proceeding, since the applicants had not made out their case that the respondents were liable to them in damages for misrepresentations made in the course of negotiations prior to the making of a franchise agreement.  At [350] of these reasons, I stated:

    In the ordinary course, the applicants would be required to pay the respondents’ costs.  There may, however, be considerations that, in the circumstances of the case, support a costs order of a different kind.

    Accordingly, the parties were afforded an opportunity to make written submissions concerning, amongst other things, the question of costs and the disposition of the respondents’ cross-claim.

  2. The parties filed written submissions on 13 November 2002.  The applicants submitted that the Court should exercise its discretion by making no order as to costs.  The respondents submitted that the applicants should be ordered to pay the respondents’ costs of the proceeding on a party and party basis. 

    the law with respect to costs

  3. Section 43 of the Federal Court of Australia Act 1976 (Cth) provides:

    (1)Subject to subsection (1A), the Court or a Judge has jurisdiction to award costs in all proceedings before the Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect…

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Details
Case
[2003] FCA 11
Decision Date

CaseChat Overview and Summary

The case of Sanders v Glev Franchises Pty Ltd involved the applicants, Sanders, who commenced proceedings against the respondents, Glev Franchises Pty Ltd, in 1992. The applicants alleged misrepresentations as to future matters by the respondents. The respondents denied these allegations and counterclaimed for damages. The case proceeded through multiple amendments to statements of claim and defences and had a protracted history of procedural delays. The applicants sought costs based on the respondents' failure to respond to allegations, their late pleading of reasonable grounds, and the overall delay in the proceedings. The respondents argued that they did not unreasonably prolong the proceedings or delay the hearing.

The court considered the applicants' submissions that the respondents' failure to respond to allegations and their late pleading of reasonable grounds warranted a costs order in the applicants' favour. The court also noted the significant delay in the proceedings, which had caused the applicants serious prejudice. The respondents argued that they had not unreasonably prolonged the hearing or delayed the matter coming to hearing and that the normal order that costs should follow the event should apply. The court had to determine whether the applicants' submissions justified a departure from the usual order regarding costs and whether the delay and failure to respond warranted costs being awarded to the applicants.

In deciding the matter, the court acknowledged the procedural history of the case, which included delays and multiple amendments to pleadings. The court determined that the applicants had not provided adequate particulars of their statement of claim, leading to a stay of the proceedings. The applicants' application to lift the stay was successful, and the case proceeded to trial. However, the court found that the respondents had not unreasonably prolonged the proceedings or delayed the matter coming to hearing. The court concluded that the usual order regarding costs should apply and dismissed the applicants' application for costs. The court ordered that the applicants pay the respondents' costs of the proceeding, including reserved costs, to be taxed in default of agreement.

In summary, the court dismissed the applicants' application for costs and ordered that the applicants pay the respondents' costs of the proceeding, including reserved costs, such costs to be taxed in default of agreement.

Orders

Orders of the court

1. The application dated 6 November 1992 be dismissed.

2. The applicants pay the respondents’ costs of the proceeding brought by them (including reserved costs), such costs to be taxed in default of agreement.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

KENNY J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: KENNY J

The applicants submitted that the Court should have regard to the following matters in connection with the question of costs. First, there was, so the applicants submitted, “a failure, over a prolonged period, on the part of the respondents to respond adequately or at all to the applicants’ allegations that there had been misrepresentations as to future matters”. Secondly, according to the applicants, the respondents did not plead reasonable grounds nor indicate that they may have made some of the representations pleaded against them until their further amended defence and cross-claim filed in June 2000. Thirdly, the litigation had a protracted procedural history, and the delay between the commencement of the proceeding in 1992 and the hearing of the application had caused the applicants serious prejudice. The respondents submitted, however, that:[T]hey did not unreasonably prolong the hearing of the proceedings (or delay the matter coming to hearing) or fail on any issue at hearing which might be considered to be distinct or separate such as to warrant a departure from the normal order that costs should follow the event.consideration of parties’ submissions Some procedural history To varying extents, the parties’ submissions on costs relied on the curial history of the proceeding. Whilst it is unnecessary to set this out at length, it is helpful to mention some matters. The applicants commenced the proceeding on 6 November 1992. Their solicitors at the time were B J Fennelly & Associates. They were was replaced by another firm of solicitors in May 1994, and it was not until 11 November 1994 that the firm, Slater & Gordon, assumed responsibility for the proceeding on the applicants’ behalf. By motion, notice of which was dated 3 May 1994, the respondents sought an order that the proceeding be dismissed, alternatively stayed, pursuant to O 10 r 7 of the Rules upon the ground of the applicants’ failure to provide adequate particulars of their statement of claim. On 30 June 1994, a Judge of the Court in fact ordered that (1) the proceeding be stayed pending further or other order; and (2) the applicants pay the respondents’ costs of their motion “such costs to be taxed in default of agreement prior to the conclusion of the proceeding”. By motion, notice of which was dated 26 September 1995, the applicants applied for an order to lift the stay. The Court so ordered on 16 November 1995. After a second further amended statement of claim had been filed and served on 22 February 1996, the Court directed, on 3 May 1996, that the proceeding be placed in the list of cases to be fixed for hearing. In written submissions dated 21 March 1997, the respondents submitted that the proceeding should not be listed for trial until judgment was delivered in matter VG 439 of 1993 (Kaytonruby Pty Ltd v Glev Franchises Pty Ltd [1998] FCA 650). The Court acceded to this submission. The trial in matter VG 439 of 1993 commenced in August 1996 and did not conclude until April 1997. The trial judge gave judgment in that matter in August 1998.