Solowij & Ors v the Parish of St Michael & Ors (No 2) No. Scciv-00-649

SOLOWIJ & ORS v PARISH OF ST MICHAEL & ORS (NO 2)
[2003] SASC 48

WILLIAMS J. On 12 December 2002 I delivered reasons for my judgment whereby I decided that the plaintiffs had not established that a parish meeting was conducted in an oppressive manner. In all other respects I decided that the issues raised by the plaintiffs were not justiciable. On 20 January 2003 after receiving written submissions I heard the parties upon the question of costs which now stands for determination.
The defendants contend that they should be entitled to their costs upon an indemnity basis because my decision confirms the stance that they have always taken as to nonjusticiability of the principal issue. The defendants contend that when a party properly advised has persisted with a claim which that party should have known to have no prospects of success then indemnity costs should be awarded. (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants) (1988) 81 ALR 397).
In my opinion this principle is not applicable to the present case. I consider that based on the views of two judges of the High Court (constituting a statutory majority) in Wylde v Attorney-General (1948) 78 CLR 224 the plaintiffs were entitled to bring their complaints to the court. In the absence of the decision of the New South Wales Court of Appeal in Scandrett v Dowling (1992) 27 NSWLR 483 my task would have been much more difficult. However, I was persuaded to apply the law as it was enunciated in that case and to distinguish the earlier decision of the High Court. I consider it was fairly arguable that the principal complaint made by the plaintiffs was justiciable; there is a fine line between those rules of an association which a court will enforce and those which will not be treated as intending to give rise to a legally enforceable agreement. I disagree with the defendants’ submissions on this point.
The defendants criticise the plaintiffs because no expert evidence was called and they also complain about the plaintiffs’ approach to proposals for mediation. In the circumstances of this case I do not consider that these factors should influence my discretion as to costs. It is a matter for judgment as to whether to call particular evidence (if it be available). The underlying issue is a difficult one. I have drawn attention to the canonical principle of “economy” in my earlier judgment which would enable the parties to accommodate each other in a spirit of compromise. Nevertheless parties should not be deterred from approaching the courts to determine an issue which they have such difficulty in otherwise resolving.
The plaintiffs complain that the defendants have failed unreasonably to admit facts and documents when formally called upon so to do. As a consequence the plaintiffs submit that they should have the costs of the time consuming exercise at trial which formal proof required. I reject this submission. In my opinion the legal representatives of the parties (both plaintiffs and defendants) made proper efforts to avoid waste of time. However, the need to obtain satisfactory translations imposed particular pressures. I can understand the difficulties of both sides in obtaining instructions and presenting agreed documents in the English language. I can also appreciate the difficulties which the plaintiffs must have faced in searching out the Ukrainian documents relevant to the presentation of the defendants’ case as it unfolded.
In my opinion the plaintiffs (or those who have indemnified them) as the unsuccessful party ought to bear the substantial burden of the costs. However, the defendants did press some issues which were not capable of being resolved in the absence of persons whose interests were affected. There is some force in the plaintiffs’ written submission that the defendants’ case would have lost nothing if they had chosen not to pursue certain topics (and in particular the appointment of the Metropolitan Constantine). However, where to draw the line might involve a matter of fine judgment and I will not condemn the defendants in costs by reason of the comprehensive way in which the defendants’ case was presented. In accordance with the principles identified by Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 at 16 the defendants ought to be entitled to explore its defence upon the assumption that I would treat the claim as justiciable; the defendants ought to be entitled to pursue matters of defence fully and without being dissuaded by the risk of costs from canvassing doubtful material which might have some relevance to the decision. For example, in order to understand the defendants’ stance it was relevant to obtain an appreciation of the arrangements involving the Ecumenical Patriarch. Nevertheless there are some topics to which I have already referred where (after making allowance for the principle in Cretazzo) it is appropriate that the plaintiffs should receive some allowance.
Although my own impression of the trial enables me to identify an appropriate allowance with respect to counsel fees, a more difficult question is to identify how this ought to flow through to the solicitors’ costs. Recognising this difficulty I have decided that justice will be done by taking a broad axe approach. I have therefore decided that the defendants should be entitled to receive an amount equal to three quarters of their taxed costs.
There is a further question as to whom should be responsible for these costs. When the proceedings were in contemplation the Consistory of the Diocese gave to the plaintiffs a general indemnity for costs. Moreover there was evidence at trial as to the substantial participation of the Consistory in the conduct of the action.
In the course of my earlier judgment I said:
“Although the plaintiffs have personally given instructions for these proceedings, evidence has been led which satisfies me that the Consistory has taken an active interest in the proceedings and that its participation goes beyond mere acceptance of a responsibility for the costs of the proceedings. I am satisfied that the interests of the Diocese (via the Consistory) have been brought to account in the plaintiffs’ instructions and in the conduct of the case to the extent that the Consistory is effectively (although not formally) represented before me. I consider upon that evidence that the case which the Diocese would advance as a party has been put before me and all relevant records have been discovered as being in the special circumstances within the power of the plaintiffs.”
On 21 March 2002 the defendants’ solicitors wrote to the plaintiffs’ solicitors drawing attention to the principle in Vestris & Anor v Cashman & Anor (1998) 72 SASR 449 per Lander J at 468 where His Honour refers to the discretion of a trial judge to award costs against non parties in accordance with Knight v FP Special Assets Ltd (1992) 174 CLR 178. Lander J said:
“It is not desirable to lay down any rules which would fetter the exercise of a trial judge to make such an order but some guidance as to the exercise of the discretion can be obtained from the decided cases.
In exercising the discretion regard would be had to whether the non-party could have been joined as a party earlier in the proceedings and thereby obtained the protection of the Rules Of Court; whether the non-party has had any warning that an application for costs against that party would be made; whether, in those circumstances, the non-party could have applied to be joined in the proceedings and thereby had the capacity to influence the proceedings or the non-party could have protected itself by making an offer in accordance with the Rules; whether if a warning had been given the non-party could have terminated the proceedings by discontinuance, negotiation, payment or otherwise; whether the party who would otherwise be usually liable for costs can meet an order for costs and if relevant the reason why that party cannot meet an order for costs; whether it was apparent at any earlier stage in the proceedings, and if so when, that the party could not meet costs; whether the moving party should have sought an order for security for costs; the relationship, if any, between the non-party and the party who would usually be liable for costs; whether the non-party has caused the proceedings; whether the non-party has funded the proceedings; whether the non-party stood to benefit by the litigation and if so how; whether the non-party had a direct or indirect financial interest in the litigation; and whether there has been any improper conduct on the part of the non-party.
None of the matters will necessarily be decisive. Indeed the presence of one or more of those matters does not inexorably lead to the conclusion that an order for costs should be made against a non-party. In Bischof v Adams (supra) the mere fact that a person may benefit from the litigation was not enough.
An order will be made against a non-party only if the justice of the case requires that an order be made.
In Knight v F P Special Assets Ltd (supra) at 694 Mason CJ and Deane J identified a category of case where some of these factors would lead to an order for costs if the justice of the case required the making of an order.
At 192/193 they said:
“For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.””
And at 469:
“The order will be made when, in the circumstances of the particular case, it is just and equitable that a non-party pay the costs of a party to the litigation.”
On 26 February 2001 the solicitor for the plaintiffs made an affidavit in support of an application by Ukrainian Autocephalic Orthodox Church in Australia and New Zealand ACN 000638559 (“the company”) to be joined as a plaintiff in the action. After disclosing that he was advising the company as well as the present plaintiffs the solicitor’s affidavit continued:
“8I respectfully request that the Court should exercise its discretion to admit the joinder of the proposed plaintiff to this action for the following reasons:
8.1That proposed plaintiff (which is the Diocese of the Defendant) has a real interest in these proceedings in that:
(a)    it is alleged that the defendants have usurped the authority of the Governing Bishop and Governing Authorities of the Diocese of the proposed plaintiff to determine the religious subordination of the Parish;
(b)    it is alleged that in breach of the Constitution of the first defendant, the defendants have failed to comply with the lawful directions of the Diocesan Council of the proposed plaintiff concerning the question of the religious subordination of the Parish;
(c) the first defendant is arguably dealing with Parish property (which under the Constitution is ultimately held on trust for the proposed plaintiff) in a matter inconsistent with the power and authority of the first defendant and in a matter inconsistent with the lawful directions of the proposed plaintiff;
(d)    the relevant entity in respect of the determination of the jurisdiction and religious and ecclesiastical subordination of the Parish is the Diocese of the proposed plaintiff through the Governing Bishop and Governing Authorities of the Diocese. It is proper that the proposed plaintiff’s separate interests be heard and considered by the Court in these proceedings.
8.2Common questions of law and fact are involved which effect these proceedings, namely, whether or not the defendant has breached its constitution by changing its religious subordination as pleaded in the statement of claim. That question of fact, will be the same in respect of any proceedings between the current member plaintiffs and the Diocese and the defendants.
8.3The joinder of the proposed plaintiff will ensure that all proper persons with an interest in the litigation are before the Court.
8.4Further costs would be incurred if there were separate actions taking place between the proposed plaintiff and the defendants and the current plaintiffs and the defendants in that the Court would be hearing disputes over the common factual and legal issues.”
A draft amended statement of claim was submitted in which the company was described as “the second plaintiff”. The following allegations as now relevant are made in that draft:
“The Second Plaintiff
2The Second Plaintiff is incorporated pursuant to the Corporations Law of New South Wales.
3The activities of the Second Plaintiff are governed by:
3.1Its Memorandum and Articles of Association; and
3.2Its Constitution (‘the Diocesan Constitution’)
4Pursuant to the Articles of Association of the Second Plaintiff, the management of the Second Plaintiff is vested in the Consistory (‘Consistory’) which is also, under the clause 29 of the Diocesan Constitution the executive organ of the Diocese of the Second Plaintiff (‘the Diocese’).
5Pursuant to clause 56 of the Articles of Association the affairs of the Second Plaintiff and its Consistory shall be conducted in accordance with the Diocesan Constitution which provides inter alia:
5.1that the Diocese is a constituent part of the Ukrainian Autocephalic Orthodox Church in Diaspora (‘UAOC in Diaspora’)
….”
The application for joinder of the company was resisted and eventually was not pursued.
In all the circumstances it is my view that the company should now be joined as a party for the purpose of making an order for costs against it in accordance with Vestris v Cashman. Notice has been given to the company. In view of the state of instructions of the solicitor for the plaintiffs it is unnecessary that an order be made requiring the company as a stranger to show cause why an order should not be made. The plaintiffs’ solicitors as solicitors also for the company accept that if I am disposed to make an order applying Knight’s case then the company as representative of the consistory is the appropriate body against which an order should be made. I treat the submissions which have been already made as providing sufficient opportunity for the company to be heard before a formal costs order is made.
In reaching my conclusion I have had regard to the guidance provided by Balcombe LJ in Symphony Group v Hodgson [1994] QB 179 at 192-194 and the judgment of the Full Court in Australasian Academy of Natural Medicine v Walters (Judgment No [2003] SASC 56 - 24 February 2003). However there is only one immutable rule in relation to costs and that is that there are no immutable rules (see Lloyd LJ in Taylor v Pace Developments [1991] BCC 406 at 408 cited by Balcombe LJ supra).
The order will be that the company and the plaintiffs be jointly and severally responsible to meet the award of costs although as between themselves the personal plaintiffs will be entitled to an indemnity from the company. The fact of the indemnity has been acknowledged from the bar table although the indemnity has not been produced.
The orders will be as follows:
1Order that the company be joined as a party to the proceedings as an additional defendant.
2Order that the plaintiffs and the defendant company pay to the personal defendants three quarters of their party and party costs of action to be taxed.
3Direct that order 2 above is made on the footing that although the plaintiffs and the defendant company are to be jointly and severally liable to the defendants that order will be without prejudice to the right of the plaintiffs to obtain indemnity from the defendant company in accordance with the arrangements made between the plaintiffs and the defendant company.
This order does not affect any orders for costs which have already been made during the course of the proceedings.

[2003] SASC 48

17 March 2003