Thomson v Ronstan International Pty Ltd (No 2)

[2000] VSC 294

SUPREME COURT OF VICTORIA

COMMON LAW DIVISION

Not Restricted

No. 5230 of 1997

PETER THOMSON	Plaintiff
v
RONSTAN INTERNATIONAL PTY LTD (ACN 068 111 053)	Defendant

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JUDGE:	Balmford, J.
WHERE HELD:	Melbourne
DATE OF HEARING:	23 June 2000
DATE OF JUDGMENT:	29 June 2000
CASE MAY BE CITED AS:	Thomson v Ronstan International (No. 2)
MEDIA NEUTRAL CITATION:	[2000] VSC 294

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COSTS – Circumstances under which solicitor and client costs may be awarded – Costs of two counsel – Costs in respect of unsuccessful claims.

Federal Court of Australia Act 1976; s 43(2)

Australian Conservation Foundationv Forestry Commission (1988) 81 ALR 166
Bass Coast Shire Council v King [1997] 2 VR 5
Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers – Western Australian Branch (1993) 46 IR 301
Oldaker v Currington [1987] VR 712
Re Elgindata Ltd (No 2) (1993) 1 All ER 232

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr C Golvan with Mr A Klotz	Rigby Cooke
For the Defendant	Mrs S Marks	Dunhill Madden Butler

HER HONOUR:

Introduction

1. Judgment in this matter was delivered on 7 June 2000 when I made findings summarised in the following terms:

·the following claims of the plaintiff are made out:

Nicro range   $17,932
Rigging range   $22,460
PNP and other products  $9,510
Additional 66 images  $8,980
Additional electronic enhancement            $114,700
Acrylic sheets  $7,501
US display stand   $12,626.86

·the plaintiff’s claim for interest under contract fails;

·the counterclaim is dismissed;     and

·an amount of $31,940 is to be set off against the moneys payable by the defendant to the plaintiff.

I invited submissions from counsel as to the orders to be made consequent upon those findings, and no formal orders have yet been made.   Those submissions have now been presented.   These reasons should be read with the reasons for judgment delivered on 7 June.

1. It was submitted for the plaintiff that the Court should make the following orders:

1.There be judgment for the plaintiff on his claim;

2.the defendant’s counterclaim be dismissed;

3.the defendant pay the plaintiff the sum of $254,739.59 being damages of $193,709.86 plus interest of $92,969.73 less the amount of $31,940 for a set-off;

4.the defendant pay to the plaintiff:

(a)his costs of the proceeding including any reserved costs;  and

(b)his costs for two counsel appearing at the trial and for preparation for trial;  and

(c)his costs for two days of the cross-examination of the plaintiff on the basis that such costs are to include all costs except insofar as they are of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, the plaintiff will be completely indemnified by the defendant for his costs of these days.

5.There be liberty granted to the plaintiff and defendant to apply to His Honour Justice Coldrey pursuant to the Appeal Costs Act 1998 for a certificate for his costs thrown away as a result of the trial of this proceeding being adjourned by the Court from 5 October 1999.

There should be indicated in Other Matters that it was conceded by the plaintiff that the order made by Mr Justice Beach on 29 February 2000 would cover the costs reserved in his Honour’s order made on 25 February 2000.

1. Counsel for the defendant indicated that she was in agreement with those orders save that:

(i)as to the third draft order, in her submission interest should be payable to the defendant on the amount of the set-off;

(ii)as to the fourth draft order, the defendant was not prepared to agree to items (b) or (c);     and

(iii)she submitted that the defendant should have its costs in respect of the unsuccessful claim by the plaintiff for penalty interest under the contract.

Interest on the set-off

1. As to the set-off, Mr Golvan, for the plaintiff, submitted that the claim for interest on the set-off had failed with the counterclaim.   However, the second further amended defence and counterclaim is sufficiently widely drafted to comprise an independent claim for statutory interest on the amount of the set-off.   In my view, it is fair that interest be paid on that amount from the date when the money was refunded to the plaintiff by The Craftsman Press, after which date the plaintiff had the use of that money.   I understood counsel to be in agreement that if I were to be of that view, then the date in question and consequent calculation could be agreed between the parties and notified to me.

Costs of two counsel

1. Mr Golvan stated that the following matters were factors leading to the decision of the plaintiff to retain two junior counsel rather than one:

§there were a large number of documents to be considered;

§the plaintiff was put to his proof in considerable detail;

§the junior of the two counsel had previously acted as solicitor for the plaintiff in this matter;

§an instructing solicitor was present in court on only four of the twelve days of sitting;

§comprehensive submissions as to fact and law were prepared.

1. In Oldaker v Currington [1987] VR 712 the question in issue was whether the retention of senior counsel had been justified. The Full Court (Murray, McGarvie and Marks JJ) said at 715-6:

The question to be asked is whether the retention of senior counsel was reasonably necessary for the attainment of justice or the enforcement of the plaintiff’s rights.  .  .  .  the question must be looked at from the point of view of the party who has to make the decision before the trial, at the time when it is proper, in the circumstances of the case, that counsel should be briefed.   It is necessary to guard against hindsight in deciding the question.

1. Looking at the present matter on this basis, and in the light of the matters raised by Mr Golvan, I am satisfied that, in all the circumstances of this case, it was appropriate that the plaintiff instruct two counsel, and that the defendant should bear the costs of those two counsel.

Solicitor-client costs

1. Order 4(c) of the draft is, in effect, a claim for solicitor-client costs of two days of the cross-examination of the plaintiff.   As Winneke P said in Bass Coast Shire Council v King [1997] 2 VR 5 at 29:

Although as a general rule, the court will order costs to be taxed and paid on a party and party basis (see r. 63.31 of the Rules of Civil Procedure) it none the less is invested with the discretion to order costs to be taxed and paid on a solicitor and client basis (see r. 63.32 of the Rules).   That discretion is not limited to the particular circumstances described in the rule:  see per Batt J Regal Life Insurance Ltd v Pacific Financial Resources Pty Ltd (unreported, 16 November 1994).   The discretion to award costs on a solicitor and client basis is, thus, an unlimited one although it must be exercised judicially and not unreasonably.

1. In Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248, Sheppard J in the Federal Court considered at some length the authorities as to the principles relating to the award of indemnity costs. Section 43(2) of the Federal Court of Australia Act 1976 provides that, in that court:

(2)Except as provided by any other Act, the award of costs is in the discretion of the Court or a Judge.

1. Sheppard J set out at 254 the following passage from the judgment of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401:

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.   Such cases are, fortunately, rare.   But when they occur, the court will need to consider how it should exercise its unfettered discretion.

1. At 255 Sheppard J cited the comment of Gummow J in Council of the Municipality of Botany v Secretary Department of the Arts, Sport, the Environment, Tourism and Territories (1992) 34 FCR 412 at 415, after referring to what Woodward J had said in Fountain Selected Meats to the effect that the discretion was not so circumscribed that an order might be made only against an ethically or morally delinquent party.   And he cited the similar view of French J expressed in J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers - Western Australian Branch (1993) 46 IR 301 at 303 as follows:

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.

1. Before summarising some of the circumstances which the cases showed had been thought to warrant the exercise of the discretion, His Honour noted at 257 that:

Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule.   But as French J said (at 8) in Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court of Australia, decided on 3 May 1991):  “the categories in which the discretion may be exercised are not closed”.

1. He proceeded to list some of the circumstances which have been thought to warrant the exercise of the discretion, including:

evidence of particular misconduct that causes loss of time to the Court and to other parties  .  .  .  ; the fact that the proceedings were commenced or continued for some ulterior motive  .  .  .  or in wilful disregard of known facts or clearly established law  .  .  .;  the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions…

He concluded:

Other categories of cases are to be found in the reports.   Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis.   The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order.   The costs are always in the discretion of the trial judge.

1. The principal submission of Mr Golvan on this matter was that the cross-examination of the plaintiff was excessive.   I would point out that, in finding that I had only one minor criticism to make of the plaintiff’s evidence, I expressly took into account the fact that he was cross-examined for four days, so that the length of the cross-examination in the end favoured the plaintiff.   While it may be said that the cross-examination was excessive, I do not find, in all the circumstances of this case, that its length was such as to justify the claim for solicitor-client costs.

Costs of the claim for penalty interest

1. The claim for penalty interest under the contract was a separate legal issue on which the plaintiff failed.   Mrs Marks relied on Re Elgindata Ltd (No2) [1993] 1 All ER 232, cited from as authority for the proposition that a successful plaintiff may be deprived of some or all of his costs where he raised issues or made allegations that failed, thereby causing a significant increase in the length of the proceedings. That was not the case here; the issue in question contributed little to the length of the proceedings, involving as it did no question of fact. In the circumstances, the claim for penalty interest, although it failed, was not unreasonable.

1. I would refer to the judgment of Burchett J in Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166 where His Honour, considering the case of a successful defendant who had failed in respect of some issues, said at 169:

It does not necessarily follow that the costs orders otherwise appropriate should be affected.   A party against whom an unsustainable claim is prosecuted is not to be forced, at his peril in respect of costs, to abandon every defence he is not sure of maintaining, and oppose to his adversary only the barrier of one hopeful argument:  he is entitled to raise his earthworks at every reasonable point along the path of assault.   At the same time, if he multiplies issues unreasonably, he may suffer in costs.   Ultimately, the question is one of discretion and judgment.

1. With appropriate changes, the same can be said of a plaintiff, who is not to be forced, at his peril in respect of costs, to bring up in assault only those guns which he considers strong enough to breach the earthworks of his adversary;  he is entitled to employ also other weapons which may in the end prove less effective.   I did not find the plaintiff to have multiplied issues unreasonably.

Conclusion

1. For the reasons given, when the calculation referred to in paragraph 4 above is available, there will be the following orders after allowing for the agreed amount of interest on the set-off:

1.There be judgment for the plaintiff on his claim.

2.The defendant’s counterclaim be dismissed.

3.The defendant pay the plaintiff the sum of $    x         made up as follows:

Damages$193,709.86

Interest thereon   $92,969.73

$286,679.59

Less set-off  $31,940

Interest thereon

Total  x         

4.The defendant pay to the plaintiff his costs of the proceeding including:

(a)any reserved costs;  and

(b)his costs for two counsel appearing at the trial and for preparation for trial.

5.There be liberty granted to the plaintiff and defendant to apply to His Honour Justice Coldrey pursuant to the Appeal Costs Act 1998 for a certificate for costs thrown away as a result of the trial of this proceeding being adjourned by the Court from 5 October 1999.

There will be indicated in Other Matters that it was conceded by the plaintiff that the order made by Mr Justice Beach on 29 February 2000 would cover the costs reserved in his Honour’s order made on 25 February 2000.