Streicholz Fabrik Pty Ltd v Taylor (No 2)
[2023] VSC 592
•6 October 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2022 00619
BETWEEEN:
| STREICHOLZ FABRIK PTY LTD (ACN 006 624 353) (and another according to the attached Schedule) | Plaintiffs |
| and | |
| GREGORY JOSEPH TAYLOR (and another according to the attached Schedule) | Defendants |
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JUDGE: | Attiwill J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 6 October 2023 |
DATE OF RULING: | 6 October 2023 |
CASE MAY BE CITED AS: | Streicholz Fabrik Pty Ltd v Taylor (No 2) |
MEDIUM NEUTRAL CITATION: | [2023] VSC 592 |
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COSTS – Defendants applied, inter alia, for judgment pursuant to r 23.01 of the Supreme Court (General Civil Procedure) Rules 2015, summary judgment and to strike out of parts of the plaintiffs’ statement of claim pursuant to r 23.02 – Parties had mixed success – Court is capable of determining where the justice lies between the parties as to costs – Apportionment of costs necessary to do justice between the parties - Order that the defendants pay 75% of the plaintiffs’ costs of the application.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr S Goubran KC with Mr C Hibbard | MinterEllison |
| For the Defendants | Mr B Fragos (solicitor) | Moray & Agnew |
HIS HONOUR:
The issue before the Court is the appropriate order for costs arising from the Court’s determination of the applications made in the defendants’ amended summons. The parties accepted at the hearing on 6 October 2023 that it was appropriate for the Court to make a single order addressing the costs of the defendants’ amended summons. On 19 May 2023, the Court delivered its ruling on the defendants’ applications in paragraphs 1–3 and 10 of the defendants’ amended summons. The background is set out in the ruling, and I will assume familiarity with it. Definitions and terms used in these reasons are the same as those used in the ruling.
On 2 June 2023, the Court:
(a) refused the application in paragraph 1 for judgment pursuant to r 23.01 of the Supreme Court (General Civil Procedure) Rules 2015 (the Rules);
(b) refused the applications in paragraphs 2 and 10 for summary judgment;
(c) allowed the application, in part, in paragraph 3 to strike out the statement of claim pursuant to r 23.02 of the Rules;
(d) ordered the parties’ costs concerning paragraphs 1 to 3 and 10 of the amended summons are reserved. They were reserved to enable the other applications in the amended summons to be determined.
On 14 July 2023, the Court:
(a) dismissed the defendant’s application in paragraph 4 of the amended summons as this was only an alternative to the applications in paragraphs 1 to 3 and the Court had allowed, in part, the application in paragraph 3;
(b) dismissed the defendants’ application in paragraph 5 of the amended summons for the plaintiffs to file and serve a further tender bundle. The Court provided a short ruling;
(c) allowed the defendants’ application in paragraph 6 of the amended summons and ordered that the plaintiffs pay the defendants’ costs thrown away by reason of the amendment of the statement of claim and the abandonment of the claims in paragraphs 5, 6, 7 ,12 and 13 in the amended statement of claim. As a result, the Court dismissed the application in paragraph 7 as this was only an alternative to the application paragraph 6 of the amended summons;
(d) gave leave to the plaintiffs to file and serve a further amended statement of claim in the form attached to the order made that day. The Court also ordered the plaintiffs to pay the defendants’ costs of, and occasioned by the amendment to the amended statement of claim.
Plaintiffs’ submissions
The plaintiffs relied upon their submissions filed 26 May 2023, 10 July 2023 and 3 October 2023 and submissions made at the hearings on 14 July 2023 and 6 October 2023. The plaintiffs made the following key submissions:
(a) in an application such as the present, which involved numerous issues and where one party (ie, the plaintiffs) had material but not total success, it is appropriate for the Court to take a pragmatic approach to awarding costs;[1]
[1]Plaintiffs’ submissions filed 26 May 2023, [12].
(b) according to that approach, the defendants should pay 80% of the plaintiffs’ costs;
(c) in the circumstances of the application it is appropriate to avoid the complications that are likely to arise on a taxation of costs or on an apportionment of costs on an issues basis;[2]
[2]Plaintiffs’ submissions filed 26 May 2023, [12].
(d) the defendants should pay the plaintiffs’ costs in relation to the application for judgment pursuant to r 23.01. The defendants’ failure was a conclusive determination of the issue. It is not an instance where the Court cannot determine which side should in justice bear the costs. Further, it is relevant to the Court’s discretion that the defendants made two serious allegations as part of this application that were not substantiated and were dismissed;[3]
[3]Plaintiffs’ submissions filed 26 May 2023, [6]-[7].
(e) the defendants should pay the plaintiffs’ costs in relation to the application for summary judgment as, given the nature of the claims the subject of the application, it ought to have been apparent to the defendants that summary judgment was inappropriate;[4]
(f) the defendants should pay the plaintiffs’ costs in relation to the r 23.02 application in respect of the implied term as the plaintiffs were successful in defending that application.[5] Further, the plaintiffs’ subsequent reformulation of the implied term case in the further amended statement of claim (after the ruling of 19 May 2023) has no bearing on the question of the costs in respect of the r 23.02 application;[6]
(g) the only reason costs were incurred in relation to preparing evidence was because of the application pursuant to r 23.01 and the applications for summary judgment. It would be unjust for the plaintiffs to be visited with the costs of dealing with evidentiary issues raised by the defendants by reference to the defendants’ partial success in its r 23.02 application, which did not involve or require evidence.[7]
[4]Plaintiffs’ submissions filed 26 May 2023, [8].
[5]Plaintiffs’ submissions filed 26 May 2023, [9].
[6]Transcript of proceeding 14 July 2023, 72.4-7.
[7]Plaintiffs’ submissions filed 26 May 2023, [10].
Defendants’ submissions
The defendants relied upon their submissions filed 26 May 2023, 6 July 2023 and 3 October 2023 and submissions made at the hearings on 14 July 2023 and 6 October 2023. The defendants made the following key submissions:
(a) the costs of the applications for judgment pursuant to r 23.01 and summary judgment should be costs in the cause in accordance with the ‘common’ or ‘normal’ practice. The costs of the parties of the defendants’ summons should be costs in the cause. These issues will arise again at trial and the Court is not presently in a position to determine where the justice lies between the parties on the issue of the costs;[8]
(b) the defendants initially submitted that the plaintiffs should pay the defendants’ costs of the r 23.02 application in relation to the parts of the amended statement of claim which the defendants were successful in striking out.[9] However, they later submitted that the costs of the r 23.02 application should be costs in the proceeding, as with the costs of the r 23.01 and the summary judgment applications;[10]
(c) despite the mixed success on the amended summons, any success enjoyed by the plaintiffs has been undone by the reformulation of the implied term and abandonment claims in the further amended statement of claim. The defendants further submitted that the Court should take into consideration that these reformulated claims in the further amended statement of claim lack evidence and are not sustainable.
[8]Defendants’ submissions filed 26 May 2023, [22]-[23].
[9]Defendants’ submissions filed 26 May 2023, [24].
[10]Defendants’ submissions filed 3 October 2023, [11].
Relevant law
Pursuant to s 24(1) of the Supreme Court Act 1986, the costs of the defendants’ amended summons are in the discretion of the Court. This discretion must be exercised judicially. As recently observed by Connock J in Business Service Brokers Pty Ltd v Optus Mobile Pty Ltd (No 2):[11]
… when exercising its discretion to award costs the court is also to have regard to the objects set out in s 9(1) of the CPA and may have regard to the matters referred to in s 9(2). The court is also subject to the obligation in s 8(1) of the CPA regarding the overarching purpose referred to in s 7.
[11][2021] VSC 547, [36].
Rule 63.20 provides:
Where an interlocutory or other application is made in a proceeding and—
(a) no order is made on the application; or
(b) the order made is silent as to costs—
the costs are the parties’ costs in the proceeding, unless the Court otherwise orders.
In Dale v Clayton Utz (No 3)[12] Hollingworth J said:[13]
Rules 63.20 and 63.22 both reflect the fact that interlocutory applications usually do not conclude a proceeding, so the court is often not in a position at that stage of the proceeding to determine where the justice lies between the parties in any costs order. However, both rules empower the court to “otherwise order” in an appropriate case. The court’s discretion to “otherwise order” is not circumscribed in any way by the rules, but must be exercised judicially.
[12][2013] VSC 593.
[13]At [13] (citations omitted).
In Diakou v Rouse[14] the Court of Appeal observed:[15]
Section 24(1) of the Supreme Court Act 1986 confers on the Supreme Court a wide discretion in deciding questions of costs. However, that discretion must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation. There are well-established principles that provide guidance for the exercise of the discretion and avoid it being exercised in an arbitrary or inconsistent manner.
One such well-established principle is that costs usually follow the event, that is, that the unsuccessful party is usually ordered to pay the successful party’s costs. Recently, in Northern Territory v Sangare, the High Court said the following about that principle:
A guiding principle by reference to which the discretion is to be exercised — indeed, “one of the most, if not the most, important” principle — is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party. The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome. For example, a successful defendant may be refused its costs on the ground that its conduct induced the plaintiff to believe that he or she had a good cause of action.
[14][2019] VSCA 199.
[15]At [48]-[49] (citations omitted).
Similarly, in Thurin v Krongold Constructions (Australia) Pty Ltd[16] the Court of Appeal summarised the principles applicable to the exercise of the discretion as follows:[17]
In exercising its discretion, the Court is entitled to look to the realities of the litigation and it will attempt to do “substantial justice” between the parties. Accordingly, while the general position is that costs should follow the event, such an order may not be appropriate in every case. In particular, where there is a multiplicity of issues, and mixed success has been enjoyed by the parties, the Court may take a pragmatic approach in framing the order for costs, taking into consideration the success (or lack of success) of the parties on an issues basis.
[16][2022] VSCA 252.
[17]At [12] (citations omitted).
Similarly, in Allen v G8 Education Ltd (No 3)[18] Nichols J said:[19]
…
(b)The ordinary rule is that costs follow the event. That rule is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. It recognises that if the litigation had not been brought or defended by the unsuccessful party, the successful party would not have incurred the expense which it did. In this way the indemnity principle is compensatory in nature: costs are awarded to indemnify the successful party against the expense to which they have been put by reason of the legal proceedings.
(c)Where one party has clearly succeeded the discretion will ordinarily be exercised in accordance with the guiding principle that cost follow the event. Conduct on the part of a successful party in relation to the litigation may provide a reason to depart from the ordinary rule.
(d)Rule 63.20 of the Supreme Court (General Civil Procedure) Rules 2015 sets out the default position that costs of an interlocutory application are costs in the proceeding unless the Court otherwise orders. That rule reflects the fact that interlocutory applications do not usually result in the final determination of the proceeding, with the result that the Court will not be in a position to assess where the justice lies between the parties until the conclusion of the proceeding. Section 24 of the Act confirms that the Court retains a broad discretion concerning costs and may depart from the default position in an appropriate case.
[18][2022] VSC 302.
[19]At [5] (citations omitted).
Analysis
The plaintiffs succeeded in opposing the application in paragraph 1 of the amended summons. The Court did not give judgment to the defendants pursuant to r 23.01. This was a very substantial and discrete application. It took a substantial amount of time in preparation and at the hearing. This is reflected in the material filed on this application, the transcript of the hearing and the ruling. The substantive issues upon this application will not be further addressed at the trial. This application was also based, in part, upon alleged abuses of process. This concerned very serious allegations, including that the plaintiffs’ case was invented. The defendants made a forensic decision to make the application based upon the evidence at that time and did not succeed.
The plaintiffs also succeeded in opposing the applications in paragraphs 2 and 10 of the amended summons. The Court did not give summary judgment to the defendants. These were also very substantial and discrete applications and took a substantial amount of time in preparation and at the hearing. This is reflected in the material filed on these applications, the transcript of the hearing and the ruling. The defendants made a forensic decision to make the applications based upon the evidence at that time and did not succeed. I also do not accept the defendants’ submission that there will be further consideration of the matters raised in the summary judgment applications and the Court will be better informed at a later stage. This is because:
(a) the summary judgment applications did not succeed, in substantial part, as the causes of action in the amended statement of claim were based upon a substantial number of disputed facts. I refer, for example, to the ruling of 19 May 2023 at [159]-[177], [192] and [203]. The defendants made the forensic decision to apply for summary judgment despite there being disputed facts, especially on the claim for abandonment; and
(b) the cause of action based upon abandonment was struck out and has now been substantially repleaded, including pleading a new date of the alleged abandonment.
The defendants’ succeeded, in part, in the application in paragraph 3 of the amended summons. The Court struck out the cause of action based upon abandonment. This was a significant claim. The Court did not give leave to replead but ordered any proposed further amended statement of claim be provided by 23 June 2023. This was also a very substantial and discrete application. It took a substantial amount of time in preparation and at the hearing. This is reflected in the submissions filed on this application, the transcript of the hearing and the ruling. Pursuant to r 23.04(2) no evidence was admissible on the application insofar as it concerned whether the pleading offended against r 23.02. The substantive issues upon this application will not be further addressed at the trial.
The evidence filed by the parties was relevant to the applications in paragraphs 1, 2 and 10 of the amended summons. As I have already said, the plaintiffs succeeded in opposing these applications. This evidence was substantial. I refer to my ruling of 19 May 2023 at [8] and [9].
The Court subsequently gave leave for the filing of a further amended statement of claim. The further amended statement of claim included a new plea based upon abandonment. This included a new date of the alleged abandonment. The further amended statement of claim also included amendments to the plea based upon the implied term. The filing of the further amended statement of claim does not mean, as submitted by the defendants, that the plaintiffs’ success on the defendants’ amended summons has been undone. The defendants made the forensic decision to make the applications for judgment pursuant to r 23.01 and summary judgment when they did and they failed on these applications. By also making the application to strike out parts of the amended statement of claim they, in effect, put the plaintiffs on notice of their complaints. It is not surprising that the plaintiffs subsequently took notice of some of these complaints, and also matters raised by the Court in its ruling, and reformulated its claims on the implied term. The amendments substantially concern particulars. In addition, the Court has already ordered that the plaintiffs pay the defendants’ costs of, and occasioned by, the further amendment to the amended statement of claim. This includes the amendments to the claims on the implied term. I do not accept that the issue of whether the plaintiffs’ present claims lack evidence or are not sustainable is relevant to the question of the costs of the defendants’ amended summons. In any event, the defendants submissions were not developed in any detail and, in addition, the Court is not presently in a position to determine whether the plaintiffs’ present claims lack evidence or are not sustainable.
The application in paragraph 4 of the amended summons was only an alternative to the applications in paragraphs 1 to 3.
The plaintiffs succeeded in opposing the application in paragraph 5 of the amended summons. It was not a substantial matter. This is reflected in the very short ruling of the Court on 14 July 2023. This is not a significant factor in the circumstances.
The defendants succeeded on the application in paragraph 6 of the amended summons. It also was not a substantial matter. It concerned the costs of the plaintiffs previously abandoning parts of their statement of claim. This is also not a significant factor in the circumstances.
In summary, there has been mixed success on the defendants’ amended summons. The Court is in a position to determine where the justice lies between the parties as to costs. It is not appropriate for the costs to remain reserved or for the parties’ costs to be their costs in the proceeding. The plaintiffs have been substantially successful on the defendants’ amended summons. The defendants did, however, have substantial success in striking out a substantial part of the amended statement of claim.
In my view, having regard to all of the circumstances, this is a case in which an apportionment of costs is necessary to do justice between the parties. This is primarily a matter of impression and evaluation rather than arithmetical precision. Taking a pragmatic approach in framing the order for costs and the parties’ success and lack of success on an issues basis, I have determined that the plaintiffs are entitled to 75% of their costs, taxed on a standard basis in default of agreement. An apportionment is also appropriate to avoid the costs and complications that are otherwise likely to arise on a taxation of costs if costs are ordered on each application in the defendants’ amended summons. I am satisfied that this accords substantial justice between the parties.
As a result, I will exercise my discretion to order that the defendants pay 75% of the plaintiffs’ costs of the defendants’ amended summons with such costs to be taxed on a standard basis in default of agreement.
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SCHEDULE OF PARTIES
| STREICHOLZ FABRIK PTY LTD (ACN 006 624 353) | First Plaintiff |
| ALAN DOUGLAS MCKINNON HAMILTON | Second Plaintiff |
| - and - | |
| GREGORY JOSEPH TAYLOR | First Defendant |
| HEADLAND PROPERTIES PTY LTD (ACN 006 632 506) | Second Defendant |
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