Suttram Pty Limited v Michelin Australia Pty Limited

[2009] NSWDC 409

CITATION:	Suttram Pty Limited v Michelin Australia Pty Limited [2009] NSWDC 409
JUDGMENT DATE:	8 October 2009
JURISDICTION:	District Court of New South Wales
JUDGMENT OF:	Cogswell SC DCJ
DECISION:	The second defendant should pay the plaintiff's costs of these proceedings, on an ordinary basis up until 11 November 2007 and on an indemnity basis from 12 November 2007. The plaintiff is to bear its own costs of joining the first defendant. The second defendant should pay the plaintiff's costs of the Notice of Motion dated 14 August 2009 on an indemnity basis. The defendant should pay any costs incurred by the second defendant as a result of the filing of the third amended statement of claim. Each party is to pay its own costs for appearances on 10 July 2009, 14 August 2009. The plaintiff should pay the second defendant's costs thrown away for 21 August 2009 and 8 September 2009.
CATCHWORDS:	CIVIL LAW - costs - verdict and judgment entered for the plaintiff against the second defendant - submission that costs be paid on indemnity basis - general argument that the second defendant required strict proof of a number of issues and produced no evidence on various issues - whether special circumstances exist to vary start date of indemnity costs order
LEGISLATION CITED:	Civil Procedure Act 2005 s 98
CASES CITED:	Liverpool City Council v Estephan Estephan (Executor and Administrator of the late Jocelyn Estephan) [2009] NSWCA 161
PARTIES:	Suttram Pty Limited Michelin Australia Pty Limited
FILE NUMBER(S):	4530/09
COUNSEL:	Mr Sharpe (for Suttram) Mr Vincent (for Michelin Australia Pty Limited)

JUDGMENT

1. I have just heard submissions on the costs orders which should be made concerning these proceedings. I heard submissions from Mr Sharpe for the plaintiff and Mr Vincent for the second defendant on six separate topics relating to costs. I propose to give rulings on each of those topics supported by short reasons. I have entered a verdict and judgment for the plaintiff in the proceedings against the second defendant. Mr Vincent appropriately concedes that he cannot therefore resist an order for costs.

2. Mr Sharpe argues that the costs should be paid on an indemnity basis. There are two aspects of his argument. One aspect is that he argued that I should order that the costs of the whole proceedings be paid by the second defendant on an indemnity basis. That submission was based upon what he said was the conduct of the proceedings on the part of the second defendant. He referred me to the judgment of the Court of Appeal in Liverpool City Council v Estephan Estephan (Executor and Administrator of the late Jocelyn Estephan) [2009] NSWCA 161, in particular the judgment of Giles JA who considered the discretion of a court to award costs under s 98 of the Civil Procedure Act 2005 over [88] and following.

3. His Honour referred to some examples of circumstances where a judge may exercise a discretion to order costs on a basis otherwise than the ordinary basis. The examples appeared at [93]. Mr Sharpe puts the basis of his submission in helpful written submissions over [14] through to [19]. Generally he argued that the second defendant required strict proof of a number of issues and produced no evidence on various issues. The question for me is whether I should exercise my discretion to depart from an assessment of costs on the ordinary basis.

4. Mr Vincent argued that such a step would be extraordinary. He referred me to my judgment disposing of the proceedings, which he said contained no suggestion that his client or its representatives had conducted themselves unreasonably. Indeed he pointed out that the plaintiff had brought its proceedings against the second defendant relying upon four causes of action and that one only had succeeded and that succeeded because of a finding I made regarding one item of evidence, being an exhibit.

5. I accept Mr Vincent’s submissions. I found nothing in the conduct of the proceedings on the part of the second defendant which would warrant a costs order generally on any basis other than the ordinary basis.

6. The second issue agitated this afternoon between the parties is that the costs payable by the second defendant to the plaintiff should be paid on an indemnity basis according to Mr Sharpe from 18 January 2007. His submission is based upon the submission of an offer of compromise on the part of his client to the second defendant on that date. The offer of compromise was for a sum which was in fact exceeded by some $2,500 so far as the verdict was concerned.

7. Mr Vincent realistically acknowledges that given those circumstances, he needs to show that there are exceptional circumstances why the indemnity costs order should not date from 18 January 2007. Incidentally he concedes the force of the submission that he cannot resist an indemnity costs order in any event from 12 November 2007, when the plaintiff delivered to his client a further offer of compromise agreeing to settle at a sum which was well exceeded by the verdict.

8. So the question for me to resolve is whether there exist special circumstances for ordering the indemnity costs order to date from the later date rather than the earlier date of 18 January 2007. Mr Vincent argues that the special circumstances are to be found in the fact that there was very little difference between the amount offered to compromise the case and the verdict delivered. More significantly he argues that the defence itself was filed only on 3 January 2007. He pointed out that at the time that the offer of comprise was received on 18 January 2007, the plaintiff had not served the statement of Mr Weatherburn. Mr Weatherburn was the principal witness in the plaintiff’s case, being the director of the then plaintiff and operator and driver of the truck to which was fitted the tyre which I found to be defective.

9. A significant issue emerged in the proceedings concerning the description given by Mr Weatherburn of sensations he experienced at the time of the accident. In particular, a question arose as to a sensation described by Mr Weatherburn as “jiggling”. Mr Weatherburn’s statement was not served until 9 May 2007. Mr Vincent argues that his client was not in a position to explore this vital evidence and therefore be in a position to reasonably accept or reject the offer of compromise until receiving Mr Weatherburn’s statement. He fairly acknowledged that on receipt of that statement, his client had in its possession all relevant factual matters.

10. I accept of Mr Vincent’s submission despite Mr Sharpe urging me that I should construe section 98 of the Civil Procedure Act liberally. I do not regard my acceptance of Mr Vincent’s submission as necessarily confining my discretion. I regard it as a relevant matter that the second defendant in this case needed a piece of information that was particularly vital, namely, a detailed and current account by the driver of the truck of the sensations he experienced.

SHARPE: I'm sorry to interrupt your Honour, but I'm forced to do so.
HIS HONOUR: Yes, yes.
SHARPE: Sorry, it is incorrect to say that the defendant did not have Mr Weatherburn’s evidence.

HIS HONOUR: Well they had though.
SHARPE: Exhibit 3.
HIS HONOUR: Yes.
SHARPE: Exhibit 3 which was their statement they had in December 2003.
HIS HONOUR: Yes, that is right and they had the police I think did not they?
SHARPE: It said, he described a strange feeling with the steering just prior to the accident, the truck wriggled and started to slide. Now I accept that it does not say the term “jiggling” is not used.

HIS HONOUR: Yes.
SHARPE: But, in so far as I might be seen to be acquiescing in the fact, there was certainly a statement they had from Mr Weatherburn in 2003.

HIS HONOUR: Thank you, good, no, that is appropriate.

SHARPE: But there is no reference to the word “jiggling”.

HIS HONOUR: Thank you, that is appropriate Mr Sharpe.

11. The record will note Mr Sharpe appropriately pointing out the contents of an earlier statement by Mr Weatherburn which was in the possession of the second defendant. That does not affect my determination of this issue. I regard it as significant that the second defendant wanted to have an up to date statement of Mr Weatherburn taken through or on behalf of the plaintiff’s solicitors and served upon them as part of the litigation.

12. The next relevant offer of compromise was, I said, made on 12 November 2007 and I regard it as appropriate for me to order that the indemnity basis apply to costs from the later date.

13. Accordingly the first order which I make is this. The second defendant should pay the plaintiff’s costs of these proceedings. Those costs are to be on an indemnity basis from 12 November 2007. A third issue--

SHARPE: Sorry your Honour, would your Honour also, just to and on an ordinary basis up until that time.

HIS HONOUR: Yes that should be, yes.
SHARPE: So there can't be any confusion.
HIS HONOUR: Yes, that is fair enough.

14. I will just amend that order to read those costs should be on an ordinary basis up until 11 November 2007 and on an indemnity basis on and from 12 November 2007.

SHARPE: Thank you.

15. A third issue is whether the second defendant should pay the plaintiff its costs of joining the first defendant. The first defendant was a corporation from which the plaintiff purchased the tyres. Mr Sharpe argues that they had to join the actual seller of the tyres and as soon as they realised that they could not succeed against the seller of the tyres they discontinued the proceedings against the seller. He makes no claim that the plaintiff was, or became, liable in costs to the first defendant.

16. Mr Vincent argues that there is no authority to support the proposition advanced by Mr Sharpe. He points out that the causes of action against both defendants were very different, illustrating his submission by reference to the now third amended statement of claim. There is no authority Mr Vincent argues for the proposition that in circumstances where a plaintiff has joined another defendant, but not exposed itself to any need to be indemnified for a costs order when proceedings against that additional defendant were discontinued, that the unsuccessful remaining defendant should compensate the plaintiff accordingly.

17. I accept Mr Vincent’s submission in this regard. I do not see any need for the second defendant to pay the costs of the plaintiff in joining the first defendant.

18. The order which I make in that regard is this. The plaintiff is to bear its own costs of joining the first defendant.

19. I turn now to the costs of the motion which I disposed of this morning. The second defendant, by a Notice of Motion dated 14 August 2009, sought leave to re-open the proceedings in circumstances which I described in the judgement which I delivered this morning. The second defendant, both through Mr Parker SC who argued the motion and through Mr Vincent, acknowledged that because they were unsuccessful they must suffer an order for costs against them.

20. However, Mr Sharpe argues that the costs should be payable on an indemnity basis because the Notice of Motion was part of the overall proceedings. Mr Vincent argues that the motion was a separate proceeding which should not be regarded as a significant part of the major proceedings.

21. I do not accept that submission. To my mind Mr Sharpe is right. The Notice of Motion followed as a consequence of the result of the principal proceedings. The second defendant decided to apply to re-open the proceedings. It was unsuccessful in that application. The plaintiff resisted the application. To my mind there is no reason why that separate proceeding should not be regarded as covered by the indemnity costs order.

22. Hence the order I make on that issue is that the second defendant should pay the plaintiff’s costs of the Notice of Motion dated 14 August 2009, on an indemnity basis.

23. The fifth question concerns the plaintiff filing a third amended statement of claim. The plaintiff went into liquidation and the third amended statement of claim was filed in order to replace the plaintiff with its insurer.

24. Mr Vincent argues that the plaintiff should have to pay the costs of the amendment. Mr Sharpe acknowledges that the plaintiff should not get its costs of the amendment, but should not be ordered to pay the second defendant’s costs. He points out that the deed as a result of which the current plaintiff was able to be substituted as the plaintiff was not executed until 18 September 2009 and he, Mr Sharpe, told senior counsel for the second defendant immediately that it was available.

25. I regard however the issue of the need for amendment as an issue which clearly arose within the plaintiff’s camp and I do not see why the second defendant should have to bear any additional costs brought about by that amendment.

26. Accordingly the order which I make on the amendment of the statement of claim effected by the filing of the third amended statement of claim is that the plaintiff should pay any costs incurred by the second defendant as a result of that amendment.

27. Finally I turn to the costs of four appearances by the parties between the date of the judgment which was 21 May 2009 and yesterday when I commenced hearing the Notice of Motion. After delivering judgment, the proceedings were adjourned to 10 July 2009 in order to argue questions of costs and interest. Mr Sharpe argues that all of the parties had to turn up on that day in any event and that the costs of that day should be paid on an indemnity basis by the second defendant as part of its general costs liability.

28. Mr Vincent on the other hand argues that the case could not proceed on that day because a liquidator had been appointed to the plaintiff, so that the second defendant should in fact get his costs from the plaintiff.

29. I regard it as appropriate in those circumstances to order that each party pay its own costs for 10 July 2009.

30. The matter was then adjourned to 14 August 2009. On that day the second defendant filed in court its Notice of Motion to re-open the proceedings. There were also issues, Mr Sharpe pointed out, about whether or not the parties had to approach the Supreme Court since the plaintiff was in liquidation. Mr Vincent argued that the matter could not proceed on that day because of the status of the plaintiff. He acknowledged that a Notice of Motion had been filed on that day and that a copy in substance of the Notice of Motion and supporting affidavit had been made available to the plaintiff, no earlier than the day before.

31. It seems to me that there were a number of reasons why the proceedings could not proceed on that day. One was because of the plaintiff’s corporate status and the other was because of the late service of a significant application. Accordingly I will order each party to pay its own costs of 14 August 2009.

32. On that day the proceedings were adjourned to 21 August 2009, when Mr Sharpe realistically acknowledged that the matter could not proceed because of the necessity to explore the possibility that the Supreme Court might have to give directions or orders. He therefore did not resist a costs order for that day and the order which I will make is that the plaintiff should pay the second defendant’s costs thrown away for 21 August 2009.

33. On that day the matter was adjourned to 8 September 2009. On that day there was mention of the deed of assignment but it had not at that stage been executed. The Notice of Motion was still on foot and I listed it for hearing yesterday.

34. Mr Vincent argued that the assignment had not been perfected and that the plaintiff was therefore not in a position to proceed with the matter. He illustrates that by pointing out that the third amended statement of claim substituting the now plaintiff was not filed until 6 October 2009. I think there is force in that submission and shortly I will order the plaintiff to pay the second defendant’s costs of that day.

35. Accordingly, so far as the various mentions of the matters, I make the following orders.

36. In respect of 10 July 2009, each party is to bear their own costs.

37. In respect of 14 August 2009, each party is to bear their own costs.

38. In respect of 21 August 2009, the plaintiff is to pay the second defendant’s costs thrown away.

39. In respect of 8 September 2009, the plaintiff is to ordered to pay the second defendant’s costs thrown away.

VINCENT: Court pleases.
HIS HONOUR: Anything else gentlemen?
VINCENT: No your Honour.
HIS HONOUR: Is that it? Okay, good. Well thank you both for your assistance this afternoon too with that matter and I will now adjourn.

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