Taylor v Santos Ltd & Ors No. Scgrg-96-2015 Judgment No. S430

TAYLOR V SANTOS LTD & ORS

[1999] SASC 430

JUDGE BURLEY. By application dated 18 May 1999 the plaintiff sought leave to administer interrogatories directed to the second, third and fourth defendants. The application came on for hearing on 6 August 1999 when Mr Wells QC appeared for the plaintiff and Mr Gray QC appeared for the defendants. I heard Mr Wells’ submissions in support of the application and Mr Gray’s submissions in opposition. The application was then adjourned to 18 August 1999 to enable Mr Wells to put submissions in reply. When the hearing resumed on 18 August 1999, Mr Wells sought an adjournment of the application for leave to interrogate because he wished to submit an amended set of proposed interrogatories. The application for an adjournment was opposed. Having heard the submissions of both counsel on the question of an adjournment I formed the view that, as a matter of fairness, the plaintiff should either pursue the application in relation to the proposed interrogatories then before the Court or withdraw the application. On that basis I refused the application for an adjournment. The plaintiff did not pursue the application for leave to interrogate (Document 126). I then dismissed the application and awarded costs to the defendants. The defendants sought costs on an indemnity basis. I reserved that question on the basis that I would hear submissions in that regard later that day.
Submissions were unable to be completed on that day and so the application for costs on an indemnity basis was adjourned to 27 August 1999. On that occasion I gave leave to the defendants to complete their submissions in reply by way of written submission. I indicated to Mr Wells that if it were considered that the submissions in reply unjustifiably went beyond matters of reply, the matter could be brought on at the request of the plaintiff’s solicitor. Written submissions in reply were received on 6 September 1999.
On 15 September 1999 my secretary received a letter dated 14 September 1999 from the plaintiff’s solicitors seeking to have the matter re-listed so that the extent of the submissions in reply could be dealt with. I refused to bring the matter on again because the plaintiff’s solicitors had taken more than a week to ask for the matter to be re-listed. I considered that excessive in the circumstances given that this matter has had a past history of prolonged interlocutory proceedings.
I mention that the letter dated 14 September 1999 from the plaintiff’s solicitors to my secretary referred to a direction from me that the parties seek an appointment on or before 17 September 1999. It was said that that direction related to the question of bringing the matter on for the consideration of the extent of the defendants’ written submissions in reply. Having re-read the transcript of what took place on 27 August 1999 I can only say that the plaintiff’s solicitors were mistaken in their interpretation of the directions I gave. The direction related to outstanding applications to be dealt with by me other than the completion of the application whereby the defendants sought costs to be taxed on an indemnity basis.
At the conclusion of Mr Wells’ submissions in opposition to the defendants’ application, I indicated to Mr Gray, subject to any submissions that he might wish to put to the contrary, that I did not intend to take into account submissions from either party which had the effect of re-arguing the application for leave to administer interrogatories. I did this on the basis that the Court would not normally allow a matter which has either not been pursued or has been abandoned part-way through to be argued in full merely for the purposes of deciding what order for costs ought to be made. I took that approach because, although the submissions to that point by both counsel had not convinced me that I should in effect, allow re-argument of the abandoned application, Mr Gray might have wished to put by way of reply submissions to support such an approach. However, having indicated my intention not to do so to Mr Gray, subject to any further submissions he might wish to put on the point, Mr Gray accepted that what I had put was an appropriate way to proceed. Consequently, in deciding the question of whether or not costs should be allowed on an indemnity basis, I propose to look at the interrogatories so that I might form a view as to their sufficiency and then apply to whatever conclusion I reach as to their sufficiency, the principles relating to whether or not costs should be awarded on an indemnity basis.
I will continue to use the expression “indemnity costs” in the manner in which that expression is defined in SCR 101.07(e). It means (SCR 101.07(6)(d)) “costs as a complete indemnity against the costs incurred by the party in respect of the litigation provided that they are not to include any amount shown by the party liable to pay them to have been incurred unreasonably in the interests of the party incurring them”.
The proposed interrogatories are respectively Exhibits PND1, PND2 and PND3 to the affidavit of Mr Dugan sworn on 18 May 1999.
Having read the interrogatories, I consider them to be fundamentally flawed. Some of the questions contain the following defects:
......... They ask about the content of written documents.
......... They lack context where there is no reference to the relevant part of the statement of claim.
......... They assume a positive answer to other questions.
......... They are too broad in their scope.
......... They are vague.
......... They assume facts which have not been established by previous answers.
......... They may be “fishing”.
......... They may be oppressive.
......... They may require the respondent to attend the office of the plaintiff’s solicitors to inspect the documentation in order to answer the question.
......... They are a request for particulars.
......... They ask for details of conversations with the plaintiff without specifying what the plaintiff alleges he said during such conversations.
I turn to a consideration of the relevant principles applicable to the exercise of the discretion to award indemnity costs. Mr Gray referred me to p1049 of “Principles and Practice of Costs” where the learned authors state:-
“Solicitor and client costs may be awarded where a party should have known it had no chance of success [Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397]. Such costs have also been awarded in cases where the trial judge indicated that:
(a).... the case was misconceived;
(b).... the plaintiff had lost on virtually every issue;
(c).... the relief claimed in the summons was defective;
(d).... the difficulties in the plaintiff’s claim had been pointed out prior to trial;
(e).... the party’s case was falsely and deliberately concocted;
(f).... the party prevaricated in the witness box to prolong the litigation;
(g).... fragmentary and unconvincing evidence was adduced by a party with a lack of substance in its case and like grounds;
(h).... there was re-litigation of issues already determined.
The case does not necessarily have to be ‘hopeless’ in order to attract an order for solicitor and client costs; it will be sufficient if the party persists with the proceeding without apparent regard to significant deficiencies in the evidence to be called ...”
Mr Gray submitted that paragraphs (a), (b), (c), (d) and (g) above were material considerations on this application.
I must bear in mind that most, if not all, of the cases referred to by the learned authors deal with cases that went to trial. It seems to me that some of the matters referred to have the same application to interlocutory applications as they do to a trial. These include paragraphs (a), (d) and (g). I do not think that paragraph (b) applies because the application for leave to interrogate has not been determined by me. I have declined to deal with the merits of the application merely to decide whether or not costs ought to be allowed on a solicitor/client basis: Tobin v Tobin & Anor (1977) 75 LSJS 9.
As to paragraph (c), I do not think that this has any bearing on the question. In relation to (d), there was correspondence between the parties where the defendants’ solicitors asserted that the interrogatories were not proper interrogatories, but no detail was provided.
As to paragraph (g), it was contended that there was insufficient evidence adduced to support the contention that the interrogatories were necessary. This is to be linked with paragraph (a). Under this factor, it was submitted that the interrogatories were entirely inadequate.
Both parties referred to Colgate Palmolive Co and Anor v Cussons Pty Ltd (1993) 118 ALR 248. In that case Sheppard J reviewed some of the authorities relating to the exercise of the discretion to award indemnity costs. His Honour cited various passages from a number of decisions:
“... I believe that it is appropriate to consider awarding ‘solicitor and client’ or ‘indemnity’ costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law.”

Per Woodward J in Fountain Selected Meats (at 401).

“... I accept that the discretion conferred ... is not so circumscribed that an order of this character may be made only against an ethically or morally delinquent party.”

Per Gummow J in Council of the Municipality of Botany v Secretary, Department of the Arts, Sport, The Environment, Tourism andTerritories (1992) 34 FCR 412 at 415.

“Although there is said to be a presumption in such cases that the action was commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law, it is not a necessary condition of the power to award such costs that a collateral purpose or some species of fraud be established. It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case.”

Per French J in J-Corp Pty Ltd v Australian Builders Labourers Federation (Federal Court of Australia, February 1993, unreported) (at 5).

His Honour later formulated a number of principles that he thought were applicable to the exercise of the discretion to award indemnity costs. It is clear that there must be special circumstances before the Court will depart from the ordinary exercise of the discretion which leads to a taxation of the costs on a party and party basis. In this case, the essence of the defendants’ contention that it should be awarded indemnity costs was that the application for leave to interrogate was doomed to failure because there was no sufficient evidence which supported the application and because, in any event, the interrogatories themselves were entirely inadequate. Mr Gray submitted that such a conclusion must be drawn because on the first occasion that the Court resumed the hearing of the matter after the completion of the defendants’ submissions in opposition, the plaintiff sought to have the application adjourned so that the interrogatories might be re-drawn and further affidavit material supplied to support the application.
Such a submission has some substance in support of the defendants’ contention that indemnity costs ought to be awarded, even if the submission is viewed in light of the plaintiff’s qualification of it, namely that the application for an adjournment which led to the subsequent abandonment of the original application could only be taken to mean that the plaintiff accepted that the application was to some degree flawed by reference to both the affidavit material in support of the application and the sufficiency of the interrogatories. In my view, the abandonment of the application is evidence that the plaintiff did not want to pursue an application which was, in the plaintiff’s view, partially flawed.
Unlike the decisions referred to above, I do not have the advantage of having decided the application because it was withdrawn before it was completed. It makes it more difficult to make an assessment of the adequacy of the application. That is not a factor which should be adverse to the defendants, because it would be too easy for an applicant to avoid indemnity costs by withdrawing an application part-way through.
In my view, the appropriate approach to take short of deciding the application, which I think for sound policy reasons should not be undertaken, is to decide the question of whether or not indemnity costs ought to be awarded by reference to a perusal of the interrogatories. I have already identified a number of defects in the interrogatories. In setting out that list of defects I have not attempted to be comprehensive or, indeed, to describe the defects by reference to the principles applicable to the drawing of adequate interrogatories. It was not my function on the application itself to settle the interrogatories and that is more so the case on this application for indemnity costs. However, I have formed an overall view as to their sufficiency and have found, as I have said, that they are fundamentally flawed. I think that any litigant properly advised would have realized that pursuing an application for leave to administer those interrogatories ran the serious risk that the application would be refused. Instead of pursuing with the application to the end, the plaintiff has staged a strategic withdrawal. An adjournment was sought so that additional affidavit material could be filed and the interrogatories could be re-drawn. The application for an adjournment was refused and the plaintiff decided not to pursue the application. This was at a point where the application was complete but for submissions in reply. I think the decision to withdraw the application does not save the plaintiff from an order for indemnity costs.
For the above reasons there will be an order that the costs awarded by me on the dismissal of the application by Document 126 be taxed as between solicitor and own client. I will hear counsel as to the costs of this application.

[1999] SASC 430

8 October 1999