Ubertini v Saeco International Group SpA (No 3)
[2013] VSC 506
•26 SEPTEMBER 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. S CI 2006 09429
| GIORGIO MASSIMO UBERTINI and UBERTINI INVESTMENTS PTY LTD (ACN 099 388 566) | Plaintiffs |
| v | |
| SAECO INTERNATIONAL GROUP SPA SOCIETA A SOCIO UNICO and SAECO AUSTRALIA PTY LTD (ACN 059 711 009) | Defendants |
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JUDGE: | ELLIOTT J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | SEPTEMBER 2013 | |
DATES OF WRITTEN SUBMISSIONS: | 10 SEPTEMBER 2013 (1st Defendant), 13 SEPTEMBER 2013 (Plaintiffs) | |
DATE OF RULING: | 26 SEPTEMBER 2013 | |
CASE MAY BE CITED AS: | UBERTINI v SAECO INTERNATIONAL GROUP SPA (No 3) | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 506 | |
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PRACTICE AND PROCEDURE – Costs – unsuccessful application at commencement of trial – plaintiffs seeking to avoid questions of liability – application late and without notice – delay in conduct of trial – application bound to fail.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr E N Magee QC with Mr T Mitchell and | Foster Nicholson Jones |
| For the 1st Defendant | Mr P Solomon SC with Mr P Herzfeld | Allens Linklaters |
| For the 2nd Defendant | No appearance |
HIS HONOUR:
A. Introduction
On 28 August 2013 I handed down my reasons for ruling that an application made by the plaintiffs at the commencement of the trial should, in substance, be dismissed (“the Ruling”).[1] The plaintiffs had contended that a concession was made on 10 November 2006, the result of which was that the only issue remaining for determination was the value of certain shares held by the plaintiffs.
[1]Ubertini v Saeco International Group SpA [2013] VSC 468.
The hearing was adjourned on 26 August 2013 so the parties could put evidence before the court and prepare submissions. The application was heard on 27 August 2013. The Ruling on 28 August 2013 stated why I concluded there was no relevant concession made by the 1st defendant, Saeco International Group SpA Societa A Socio (“Saeco International”).
I will adopt, without repeating, the matters set out in the Ruling. In summary, I found:
(1)There was no binding concession made by Saeco International on 10 November 2006 at the 1st directions hearing in this proceeding.
(2)In any event, if a concession were made, it could be properly withdrawn and I would grant leave to do so.
(3)What was stated on 10 November 2006 by Saeco International’s counsel, together with the conduct of the parties, did not give rise to any contract between the parties.
(4)Nothing in the conduct of counsel for Saeco International could be criticised in relation to the matters not drawn to the attention of the court at subsequent directions hearings.
(5)The orders made on 10 November 2006 did not indicate, whether they were made under order 50 or otherwise, that the issues of liability had been conceded by Saeco International.
(6)The conduct of the parties since 2007, up to and including immediately before the commencement of the trial on 26 August 2013, unequivocally demonstrated that all issues were at large between the parties.
(7)Nothing in the Civil Procedure Act 2010 (Vic) required the court to countenance not dealing with the real issues between the parties that were properly before the court.
B. The position of the parties on the question of costs
The plaintiffs accept that they ought to pay the costs of their unsuccessful application. They submit the costs should be awarded on a standard basis in the usual way.
Saeco International seeks costs on an indemnity basis. Saeco International also seeks a gross sum costs order in relation to those costs with the consequence that the costs will be payable immediately. Alternatively, Saeco International seeks an order that the costs be taxed immediately. I will deal with these in turn.
C. Costs on an indemnity basis
From 1 April 2013 the Supreme Court (General Civil Procedure) Rules 2005 have provided that costs may be awarded on a standard basis[2] or on an indemnity basis.[3] Ordinarily, if a costs order is to be made, it will be made on a standard basis. Generally speaking, something special or exceptional is required before costs will be awarded on an indemnity basis.[4]
[2]Rule 63.30.
[3]Rule 63.30.1.
[4]See, for example, Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [7], and the cases there cited.
As may be seen from the above summary, there were a number of bases upon which I found that the application must, in substance, be dismissed. In my view, there was little, if any, merit to a number of the plaintiffs’ submissions.
The most telling factor, to my mind, in considering whether or not costs ought to be awarded on an indemnity basis is the fact that the application was made notwithstanding conduct of the parties inconsistent with the success of the application, which had been engaged in for a duration of over 6 years.
As noted in the Ruling,[5] from February 2007, or at the very latest 29 June 2007, the parties conducted themselves on the basis that all questions raised on the pleadings were in issue between the parties. During the course of this period of more than 6 years, the plaintiffs were at all times represented by legal practitioners. It was, in my view, truly extraordinary to make the application of the kind that was made, effectively without notice, at the start of the trial. For the reasons stated in the Ruling (which I will not repeat), it ought to have been abundantly clear that the plaintiffs had proceeded on an informed basis, for a very extended period of time in the past, on the basis that all issues were at large.
[5]At [54]-[61].
In those circumstances, there was no realistic prospect that the plaintiffs could establish that a contract existed, or that there was some form of conduct giving rise to prejudice sufficient to preclude Saeco International from departing from any concession, which could possibly be ongoing and still binding.
The plaintiffs submit that the volume of work and the length of argument indicate that the submissions made on behalf of the plaintiffs were not plainly wrong or without prospects of success. I disagree. The volume of work and the length of argument can largely be explained on 2 bases. First, the period of time in question was over many years and there were many facts to be addressed. Secondly, the plaintiffs sought to raise a series of alternate arguments, none of which were successful. Indeed, the length of the argument might be said to be another reason why an exceptional costs order ought to be made. Rather than identifying the best or better submissions, the plaintiffs sought to raise each and every possible argument, including, in my view, some that were entirely without merit.
There are a number of further factors relevant to the exercise of the court’s discretion:
(1)The lack of notice to Saeco International, and to the court, was not properly explained. The affidavit which was ultimately filed in support of the application demonstrated the legal representatives of the plaintiffs became aware of this issue on 23 August 2013. Saeco International and the court should have been notified immediately that this was a potential issue.
(2)At the time the application was made there was no affidavit filed in support of the application. This then required an adjournment of the hearing for the necessary evidence to be put before the court.
(3)Even once the evidence had been filed on behalf of the plaintiffs, it was incomplete. Accordingly, Saeco International was required to supplement the evidence put before the court, so the court could be properly informed.
(4)The prosecution of the application involved unfounded allegations that the solicitors and counsel for Saeco International had wrongly failed to draw matters to the court’s attention on previous occasions. Such allegations should not be made unless there is a proper basis to do so. As stated in the Ruling,[6] there was no proper basis for such submissions to be made. I note that, in their written submissions in opposition to this costs application, counsel for the plaintiffs unreservedly withdrew their criticism previously made of Saeco International’s counsel in relation to the events on 29 June 2007.
(5)The application caused the commencement of the trial to be delayed by a day and a half.
[6]At [41]-[42].
The factors referred to in the previous paragraph, together with the fact that the application was bound to fail, make it appropriate that costs be awarded on an indemnity basis.
D. Gross sum costs order
Saeco International seeks an order pursuant to r 63.07(2)(c) of the Supreme Court Rules to the effect that a gross sum be specified instead of having the costs taxed in the usual way. The gross sum costs order is said to be sought to avoid the expense, delay and aggravation involved in a taxation of the costs.[7] As is discussed in more detail below, the costs claimed are effectively 1½ days for each of the barristers and solicitors involved.
[7]Beach Petroleum NL v Johnson(No 2) (1995) 57 FCR 119, 120F.
Plainly, ordering a gross sum for Saeco International’s costs in relation to the application will avoid the need for a taxation. This would result in some time and expense being saved. If I were satisfied that the evidence before the court properly established the amount sought was not inappropriate then I would, in the circumstances as described above, make the order sought.
Rule 63.30.1(1) provides that costs on an indemnity basis means “all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred”. The amount claimed was set out and particularised in an annexure to Saeco International’s written submissions. Senior and junior counsel each have claimed fees for 1½ days. I have no doubt those amounts have been reasonably incurred. Although I have no evidence, the amounts claimed do not appear to be unreasonable. Certainly no submission was put by the plaintiffs suggesting otherwise. But the claim also includes 1½ days for each of a partner, a senior associate and a junior lawyer of the firm representing Saeco International. As I have no evidence before me, I simply cannot be satisfied that the amounts claimed are not unreasonable or that they have not been, as least in part, unreasonably incurred. Accordingly, I decline to fix costs in the sums claimed.[8]
[8]I note that I was not asked to fix the costs at any lesser amount than the amount claimed.
E. Timing of taxation of costs
In the alternative Saeco International seek an order pursuant to rule 63.20.1 that it may tax its costs immediately. Such an order would be an exception to the usual position.[9] I can see no good reason for making such an order. The hearing of the case is now complete.[10] Once judgment is delivered any taxation of the parties’ costs may be dealt with in the usual way. It is likely it would be conducive of greater costs being incurred if any taxation of these costs were to be treated separately. In any event, it is likely to be far more practicable and fair for all costs issues to be dealt with together. In circumstances where these costs are being awarded after the hearing of the trial has been completed, that process will be available to the parties as the next step in the proceeding upon judgment being delivered.
[9]See r 63.20.
[10]Contrast Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1, 5 [13], where the application was determined and the discretion on costs was exercised well before the time at which the trial was to occur.
F. Order
I propose to make the following orders:
The plaintiffs pay the 1st defendant’s costs of and incidental to the plaintiffs’ application heard on 26 and 27 August 2013, on an indemnity basis, to be taxed in default of agreement.
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