Sox Holdings Pty Ltd v South East Developments (Vic) Pty Ltd (No 2)
[2018] VCC 2228
•7 December 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
EXPEDITED LIST
Case No. CI-16-03285
| SPIRAL DEVELOPMENTS PTY LTD | Plaintiff |
| v | |
| SOX HOLDINGS PTY LTD | First Defendant |
| and | |
| SIMON ANTHONY MORRIS | Second Defendant |
| and | |
| SOX ENTERPRISES PTY LTD | Third Defendant |
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JUDGE: | HIS HONOUR JUDGE DEAN | |
WHERE HELD: | Melbourne | |
DATE OF JUDGMENT: | 7 December 2018 | |
CASE MAY BE CITED AS: | Sox Holdings Pty Ltd v South East Developments (Vic) Pty Ltd and Anor (No 2) | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 2228 | |
REASONS – COSTS
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Subject: COSTS;
Catchwords: Application for indemnity costs – no legitimate defence to the proceeding – ulterior motive – where defence to the claim was abandoned at trial
Legislation Cited: Civil Procedure Act 2010
Cases Cited:Sunland Waterfront Ltd & Ors v Prudentia Investments (BVI) Pty Ltd & Ors [2013] VSCA 237
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Strahan SC Ms E Nikou Madalin | Colin Biggers & Paisley |
| For the Defendant | Mr T Wodak | Lander & Rogers |
HIS HONOUR:
1 The plaintiff in proceeding CI-16-03285, Spiral Developments Pty Ltd, seeks an order pursuant to Order 63A.28 of the County Court Civil Procedure Rules 2018 that the defendants in the proceeding, Simon Anthony Morris, Sox Holdings Pty Ltd and Sox Enterprises Pty Ltd, pay the plaintiff’s costs in the proceeding including any reserved costs to be taxed on an indemnity basis in default of agreement. The parties filed written submissions in relation to the application.
2 On 19 November 2018, judgment was entered in favour of Spiral Developments Pty Ltd and an order for costs made. During the course of final submissions, it was foreshadowed by the plaintiff in the proceeding that if it was successful an order for indemnity costs in the terms that I have referred to would be sought.
3 I do not propose to recount the factual findings I made in relation to the proceeding and the circumstances in which the claim arose. It is, however, noteworthy that the proceeding was not defended[1] and during the course of the trial Morris gave the following evidence:
“Q: You now admit, just to be clear, that that money was due and payable and you have no defence to the claim for it?
A: No. I'm okay with that. I always was, even back then and right now.
Q: Just to clarify that, Mr Morris, do you say you’ve always been okay with paying that amount but you’ve nevertheless withheld it since early July 2016?
A: This is correct.”[2]
[1]Transcript (“T”) 2
[2]T339
4 A positive defence that the Deed of Variation giving rise to the claim should be set aside by reason of the misleading conduct of the plaintiff was not pursued.
5 It was submitted on behalf of the defendants that this course was followed for “commercial reasons”.[3] The “commercial reasons” for abandoning a defence to a claim for $427,500 together with interest were not identified. In the context of the litigation of multiple actions expected to occupy a number of hearing days, it is difficult to determine what those reasons may have been.
[3]T1
6 I do not accept, as is now submitted by the defendants, that the sum of the claim may be described as a “relatively modest quantum”[4] and that the defendants would in effect write off that sum relying on “the Set-Off Defence alone”.[5] This is especially so in light of evidence at trial that revealed the poor financial position of related entities owned by Morris.
[4]Defendants Costs submissions par 12
[5]Ibid par 13
7 I also do not accept that by not litigating the defence, the defendants narrowed the issues in the trial to any material degree. As made clear in the Reasons for Judgment,[6] the circumstances in which the Deed of Variation was entered and the liability arising pursuant to it, were closely related to the substantive issues in the trial and relied on by Spiral in defence to the Counterclaim.
[6][2018] VCC 1864
8 The order sought by the plaintiff would be a departure from the terms of the usual order that would be made and it is necessary for me to be satisfied that special circumstances exist that would justify that departure. The relevant principles I am to apply are set out in the judgment of the Court of Appeal in Sunland Waterfront Ltd & Ors v Prudentia Investments (BVI) Pty Ltd & Ors [2013] VSCA 237. One of the circumstances referred to by the Court of Appeal warranting the order sought is where the trial court is satisfied that the proceeding was continued for an ulterior motive or in the face of the known facts.[7]
[7]See para [545].
9 It is plain from the evidence given by Morris I have referred to, that he knew he and the defendants were indebted to the plaintiff in the sum sought and that there was no legitimate defence to the proceeding. At the time of trial, the moneys owing remained unpaid and continued to be unpaid following the announcement that the proceeding would not be defended.
10 I am satisfied that the reason for this was to improperly delay the making of the payment. In doing so, Morris and the defendants breached the obligations imposed on them by the Civil Procedure Act 2010 to act honestly and only to defend a claim if there is a proper basis to do so.[8]
[8]Sections 10, 17 and 18.
11 Whilst I accept that the defendants did not extend the trial itself in respect of the proceeding, I am nevertheless satisfied that it is appropriate in all the circumstances of the action for me to make the order sought in respect of costs by the plaintiff.
12 I publish my reasons.
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