Viscariello v Macks (No 3)

Case [2021] SASC 69

SUPREME COURT OF SOUTH AUSTRALIA

(Civil: Application)

VISCARIELLO v MACKS (No 3)

[2021] SASC 69]

Reasons for Decision of Auxiliary Judge Norman a Master of the Supreme Court  

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - TAXATION AND OTHER FORMS OF ASSESSMENT - PRINCIPLES OF TAXATION OR ASSESSMENT - INDEMNITY COSTS

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - TAXATION AND OTHER FORMS OF ASSESSMENT - PRINCIPLES OF TAXATION OR ASSESSMENT - WASTED COSTS OR EXPENSES

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - TAXATION AND OTHER FORMS OF ASSESSMENT - PROCEDURE AND EVIDENCE - TIME FOR TAXATION OR ASSESSMENT

The applicant is taxing his costs against the respondent.

In the course of the taxation the respondent sought orders that the applicant not be entitled to claim any costs and that he be precluded from doing so by virtue of the costs indemnity rule. The respondent’s application was set down for argument on 17 December 2020, however, on that day the respondent indicated that he wished to withdraw the application. The applicant sought that he be awarded the costs of that application on an indemnity basis and that those costs be taxed forthwith.

Held, per Norman AUJ, allowing the application in part:

1.There is no specific power under the Uniform Civil Rules 2020 (SA) (UCR) to award costs in consequence of the discontinuance of an interlocutory application.

2.Under the provisions of s 40(1) of the Supreme Court Act 1935 (SA), UCR 194.6, and the Court’s inherent power, the Court has power to award costs against a party issuing but then withdrawing an interlocutory application.

3.      The costs of the respondent’s application (FDN 336) are awarded to the applicant.

4.      These are to be on the standard costs basis.

5.      The applicant’s application for indemnity costs is refused.

6.      The applicant’s request that these costs be taxed forthwith is refused.

Supreme Court Act 1935 (SA) s 40(1); Supreme Court Civil Rules 2006 (SA) rr 107(4), 264(2); Uniform Civil Rules 2020 (SA) rr 2.1, 51.2(1), 141.3 (2), 191.1, 194(1), 194.3(1)(a)-(c), 194.4(1), 194.4(2), 194.4(3), 194.4(5), 194.4(8), 194.5(1)-(2), 194.6(1)-(2), referred to.

Clone v Players (No 3) [2020] SASC 29; Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Fountain Selected Meat (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397; ONE.TEL Ltd v Commissioner of Taxation (2000) 101 FCR 548; Oshlack v Richmond River Council (1998) 193 CLR 72; Pentroth Pty Ltd v Kirschild Pty Ltd [2006] 96 SASR 129; Preston v Nikolaidis (No 2) [2021] NSWSC 174; Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622; Sergi v Sergi (No 2) [2019] NSWSC 1221; Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 187; Yates Property Corporation Pty Ltd v Boland (No 2) (1997) 147 ALR 685, applied.
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AGLC
Viscariello v Macks (No 3) [2021] SASC 69
Case
[2021] SASC 69
Decision Date

CaseChat Overview and Summary

In Viscariello v Macks (No 3), the South Australian Supreme Court examined the issue of costs arising from the withdrawal of an interlocutory application. The proceedings were part of a protracted and multifaceted legal battle initiated by the applicant, Viscariello, against Macks, the respondent, in his capacity as an administrator and liquidator of certain companies. Viscariello sought declarations and damages, alleging breaches of statutory duties by Macks, who was also accused of acting with improper motives and unprofessionally. The case had already traversed several stages, including an initial judgment, an appeal, and subsequent judgments on costs. The latest issue before the court involved costs stemming from the respondent's withdrawn interlocutory application.

The primary legal issue before the court was whether it had the power to award costs following the withdrawal or abandonment of an interlocutory application. This question hinged on interpreting statutory provisions and rules governing costs and interlocutory applications. Specifically, the court examined section 40(1) of the Supreme Court Act, which grants the court discretion in awarding costs, and the Uniform Civil Rules (UCR) pertaining to costs and interlocutory applications. The court also considered whether the UCR provided for specific costs consequences upon the withdrawal of such applications.

The court concluded that while the UCR did not explicitly address costs consequences following the withdrawal of an interlocutory application, the court's inherent power, coupled with section 40(1) of the Supreme Court Act, allowed it to award costs in such circumstances. The court found that the discontinuance of an interlocutory application is akin to the discontinuance of a claim, and thus, the applicant is liable for costs up to the date of notice of discontinuance on a standard costs basis, subject to the court's discretion. Consequently, the court awarded the costs of the respondent's withdrawn application to Viscariello on a standard costs basis, declining to award indemnity costs or expedite the taxation of these costs.

Orders

Orders of the court

176. 1. I find that there is no specific power under the UCR to award costs in consequence of the discontinuance of an interlocutory application.

176. 2. Under the provisions of s 40(1) of the Supreme Court Act, UCR 194.6, and the Court’s inherent power, the Court has power to award costs against a party issuing but then withdrawing an interlocutory application.

176. 3. The costs of the respondent’s application (FDN 336) are awarded to the applicant.

176. 4. These are to be on the standard costs basis.

176. 5. The applicant’s application for indemnity costs is refused.

176. 6. The applicant’s request that these costs be taxed forthwith is refused.

176. 7. I will hear from the parties as to any further orders in relation to this application at the next directions hearing fixed for Tuesday, 8 June 2021 at 10 am.

Background

Background to the litigation

The respondent also filed supplementary written submissions on 31 March 2021 (FDN 365) for which I gave him leave nunc pro tunc to do so but also gave the applicant leave to file reply submissions which were subsequently filed on 9 April 2021 (FDN 367).BackgroundThe proceedings The proceedings were commenced by the applicant in 2006 and had a long and complex history. He had sued the respondent in his capacity as an administrator and liquidator of certain companies, seeking declarations and damages, and alleging, inter alia, that he had been in breach of various statutory duties in these roles. It was alleged that the respondent had been motivated by personal motives, wishes and intentions that caused him not to act in the best interests of the creditors, members and contributories of the companies and to act unprofessionally, and that he had acted with an improper purpose. The Judge at first instance found that in conducting the liquidation the respondent had breached provisions of the Corporations Act 2001 (Cth) and issued declarations to that effect. An appeal and cross-appeal followed and in Macks v Viscariello[1] the Full Court held that the trial Judge had the power to make declarations pursuant to s 31 of the Supreme Court Act 1935 (SA) but varied a declaration made concerning a breach of s 180 of the Corporations Act, and set aside findings that:·the respondent had acted with the four substantial and actuating collateral purposes from June 2005;·he had breached ss 181 and 182 of the Corporations Act from June 2005;·the proceedings were, from June 2005, an abuse of process;·the Judge did not err in allowing the amendments to the pleadings after the delivery of his reasons; and·issues of allegations of a breach of ss 181 and 182 on the exercise of the Court’s discretion should not be remitted for trial. [1] (2017) 130 SASR 1 (Lovell J, and Corby and Slattery AJ). The applicant’s cross‑appeal was dismissed.Costs orders in the proceedings In a further judgment of the Full Court dated 17 October 2018,[2] standard costs orders made in the proceedings on previous occasions were confirmed. Further, subject to those orders, the respondent was ordered to pay to the applicant:·25 percent of the costs and disbursements of the trial;·25 percent of the costs of applications before the Court for which the costs order of the Court would remain by virtue of the Full Court’s reasons; and·costs in the cause, to be adjudicated if not agreed. [2] Macks v Viscariello (No 2) [2018] SASCFC 106. At a subsequent hearing on 26 July 2019, Auxiliary Judge Roder directed, inter alia, that the applicant was to make a genuine offer for costs to the respondent pursuant to r 271(1A) of the Supreme Court Civil Rules 2006 and that thereafter the subsequent provisions of r 271 applied to the process of adjudication. On 30 June 2020, the applicant filed and served a claim for costs. This was subsequently exhibited to the sixth affidavit of Ms Umoff filed on 10 August 2020 (FDN 337).The respondent’s application seeking preclusion of a claim for costs by the applicant and the prosecution of that application

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Finally, regard should be given to the parties’ financial resources, and whether the scope of the enquiry as to costs would divert their parties’ attention from the substantial proceedings.[63][63] LexisNexis, Legal Costs South Australia (at January 2019) Principles and Practice of Costs, Costs Rules for Particular Events [2315].ConsiderationDoes the Court have power under the UCR to award costs following the withdrawal or abandonment by a party of an interlocutory application which it has issued? First and foremost, I have regard to s 40(1) of the Supreme Court Act which provides that costs are in the discretion of the Court. It is a presumptive costs rule that the costs of an interlocutory application are “costs in the cause”,[64] but this is subject to an order of the court to the contrary.[65][64] UCR 194.4(5).[65] UCR 194.4(1). The UCR rules as to interlocutory applications, Chapter 9, do not in themselves provide costs consequences following the withdrawal or abandonment of such applications. In the context of a discontinuance of an action itself, an applicant discontinuing is liable to pay costs up to the date of notice of the discontinuance on a standard costs basis,[66] subject to the courts discretion to order otherwise. The wording of UCR 141.3(2) is as follows:If an applicant withdraws a claim under this rule, the applicant is liable to pay the costs of a respondent against whom the claim is discontinued up to the date of service of the notice of discontinuance on the standard costs basis and any interested party named in the claim must bear their own costs.[66] UCR 141.3(2). The word “claim” is defined in UCR 2.1 asclaim means a claim as described in rule 51.2 and, unless the context otherwise indicates, includes a cross claim UCR 51.2(1) in turn provides:Subject to subrules (3) to (5), a claim is a proceeding in which the applicant claims—(a)a remedy for a common law or equitable cause of action; or(b)a statutory remedy of a type available for a common law or equitable cause of action (such as damages, compensation, injunction, restitution, specific performance, rescission, rectification or declaration) for a statutory cause of action analogous to a common law or equitable cause of action.Examples—A claim for damages under section 236 or compensation under section 237 or an injunction under section 232 as a result of misleading conduct in breach of section 18 of the Australian Consumer Law is a statutory cause of action.A claim for recovery of monies under section 588FF on avoidance of an unfair preference under section 588FA of the Corporations Act 2001 (Cth) is a statutory cause of action. The predecessor to UCR 141.3(2) was the former r 107(4), which was found to be applicable in the context of a withdrawn interlocutory application in Clone Pty Ltd v Players Pty Ltd (No 3).[67][67] At [100], referring to Pentroth Pty Ltd v Kirschild Pty Ltd [2006] 96 SASR 129 at [24]-[25] (White J). However, that former r 107(4) was in different terms to UCR 141.3 (2). It provided:Unless the parties agree or the Court orders to the contrary, the party against whom the action, or a claim or defence in the action, is discontinued is entitled to costs arising from the action, or the claim or defence (as the case may require) up to the time of receiving notice of the discontinuance.