Volvo Finance Australia Pty Limited v Waterfront Enterprises Pty Limited (in liquidation)

[2019] NSWSC 1182

Supreme Court

New South Wales

Medium Neutral Citation:	Volvo Finance Australia Pty Limited v Waterfront Enterprises Pty Limited (in liquidation) [2019] NSWSC 1182
Hearing dates:	03 September 2019
Date of orders:	03 September 2019
Decision date:	09 September 2019
Jurisdiction:	Common Law
Before:	Lonergan J
Decision:	The plaintiff is to pay the fourth defendant's costs thrown away by the vacation of the hearing date and those costs are payable forthwith
Catchwords:	COSTS – whether order should be made that costs thrown away by vacation of hearing date be payable forthwith – fourth defendant’s preparation wasted as new pleadings and evidence required – fourth defendant an individual – plaintiff a financial organisation and in better position to bear ongoing costs – order relevant to discrete aspect of the proceedings – order made
Legislation Cited:	Uniform Civil Procedure Rules 2005 (NSW), r 42.7
Cases Cited:	Fiduciary Limited v Morningstar Research Pty Ltd (2002) 55 NSWLR 1; [2002] NSWSC 432 Traderight (NSW) Pty Ltd & Ors v Bank of Queensland Ltd (No 2) [2008] NSWSC 589
Category:	Costs
Parties:	Volvo Finance Australia Pty Limited (Plaintiff) Waterfront Enterprises Pty Ltd (in liquidation) (First Defendant) Jason Spencer (Second Defendant) Waterfront Group Pty Ltd (Third Defendant) Barry Saad (Fourth Defendant)
Representation:	Counsel: E Anderson (Plaintiff) G Carolan (Fourth Defendant)   Solicitors: Dowd & Co Lawyers (Plaintiff) MCK Lawyers (Fourth Defendant)
File Number(s):	2018/125351
Publication restriction:	Nil

EX TEMPORE Judgment

1. On 2 September 2019, on the plaintiff's application, I vacated the hearing date that had been allocated to this matter for two days commencing on 2 September 2019.

2. The hearing date had been allocated on 12 April 2019 by the Registrar of this court, on the basis that the parties were ready for trial, subject to finalising service of expert and lay evidence, in the plaintiff's case by 16 May 2019 and in the defendants' case by 6 June 2019.

3. On 23 August 2019, the Registrar emailed the parties to check to ensure that the matter was ready to proceed on 2 September. No issue was raised.

4. I should note that the only active party in what remains of the proceedings is the fourth defendant, Mr Saad. Counsel for Mr Saad opposed the vacation of the hearing. In the circumstances that I have outlined, however, I formed the view then, that the plaintiff required vacation of the hearing date and an adjournment to allow the plaintiff to properly prepare its case.

5. The background to the proceedings is that the plaintiff, Volvo, commenced five sets of proceedings by summons in the District Court of New South Wales in April 2018, arising out of issues it had with a mercantile agreement between it and the first, second and third defendants involving five Mack truck and trailers. The relief initially sought was primarily possession of those vehicles. Various case management orders were made in the District Court. The first and third defendants are currently in liquidation and have been for some time. Neither the first, second or third defendants appear to have taken any active role at all in any of the proceedings.

6. In the middle of 2018 the proceedings were transferred to the Supreme Court, and in July 2018 an order was made for them to be consolidated.

7. On 27 July 2018 an Amended Summons was filed, which added the fourth defendant to the proceedings. In that context, a case in damages for conversion and detinue was framed against the fourth defendant in the alternative. It is fair to say that the pleading was inadequate to properly identify the factual basis, or otherwise, as to the case made by the plaintiff against the fourth defendant in conversion and detinue.

8. On 8 October 2018 a defence was filed on behalf of the fourth defendant, Mr Saad, that denied liability to the plaintiff.

9. There were directions hearings in the Supreme Court before the registrar on at least eight occasions between July 2018 and April 2019. Between April 2019 and the hearing date listed before me on 2 September, no issue was raised with the Court, or it seems between the parties, as to the plaintiff not being ready to proceed.

10. It became evident during the opening provided by counsel for the plaintiff that contrary to what was set out in the Amended Summons pursuant to which this trial was proceeding, no orders were being sought against the first, second or third defendant, no order for possession was sought, four of the five vehicles and three of the five trailers had in fact been returned to the plaintiff's possession, and the proceedings had in fact morphed into a far more limited undertaking of a case for damages for conversion and detinue against Mr Saad only.

11. The Amended Summons clearly had been overtaken by events that had occurred some time before, and included relief that no longer was being pursued. I also note that the relief was now a claim that should have been pleaded by way of a statement of claim, not a summons, although that was not the biggest of the plaintiff's difficulties as presented on 2 September.

12. A bigger problem was that extensive and appropriate objection had been taken to the affidavits upon which the plaintiff relied, including in relation to key conversations and documents that were not in proper evidentiary form and that included hearsay material as well as unattributed rumour and innuendo in an effort to form the basis of its case against the fourth defendant. It became blindingly obvious that the case was not ready to proceed and could not proceed, and if it did, the admissible evidence left in the plaintiff's case would almost undoubtedly have led to failure of its case against the fourth defendant.

13. After hearing argument regarding whether I should accede to the plaintiff's request for an adjournment, I determined that the matter should be adjourned, with the hearing date vacated, and I ordered that the plaintiff pay the fourth defendant's costs thrown away by the vacation of the hearing date.

14. I provided some time for the parties to assist the Court with submissions, and, if they chose to do so, affidavit evidence regarding whether I should exercise my discretion in favour of the fourth defendant's application for the costs thrown away by the vacation of the hearing date should be ordered to be payable forthwith.

15. Under rule 42.7 of the Uniform Civil Procedure Rules 2005 (NSW) the costs in respect of an interlocutory application or other step in any proceeding are generally not payable until the conclusion of the proceedings unless the court otherwise orders.

16. Counsel for the fourth defendant submitted that I should in effect “otherwise order” because it was obvious the matter could not proceed given the difficulties with the plaintiff's evidence. There have been extensive case management orders already. There will now have to be a freshly pleaded statement of claim with new lay evidence and potentially expert evidence from the plaintiff, and in effect, the plaintiff's conduct of the proceedings to this stage in respect of the fourth defendant has been unreasonable. It was emphasised that the plaintiff had warranted the matter was ready to proceed for hearing on the strength of the evidence served, but it is clear it was not.

17. The submission was also made on behalf of the fourth defendant that he had prepared for hearing based on the evidence served by the plaintiff and on the basis that because of the difficulties with the evidence served there was no case for the fourth defendant to answer, and that preparation has now been wasted and will need to be redone in light of fresh pleadings and fresh evidence.

18. The plaintiff opposes the application for costs to be payable forthwith. It argues that subrule 2 of 42.7 is not enlivened because the application does not relate to the type of costs that are identified in subrule 1 of 42.7. Further, the plaintiff submitted that the fourth defendant has not established that the conduct of the plaintiff was so unreasonable as to warrant an order for his costs thrown away to be paid forthwith. Thirdly, it was argued that because a party might ultimately be entitled to an order for costs in the substantive proceedings, any interlocutory proceedings that do not resolve final issues between the parties should not result in immediate payment of costs, given those matters ought to abide the outcome of the overall proceeding. Fourth, it was suggested that multiple costs assessments within a relatively short period of time, having regard to the close proximity of the hearing date, was undesirable. Fifth, it was suggested that there was no identifiable aspect of the proceedings that would support such an order, and finally, it was submitted that there will not be much of a delay given that the hearing date has been relisted for four months away, and there is no risk that the fourth defendant's costs order will not be satisfied, given that the plaintiff is a large financial corporation.

19. I was unpersuaded by the submissions of the plaintiff.

20. First, it is evident that rule 42.7 subrule 1 applies not only to an application but also to a step in any proceeding. I consider an order regarding costs thrown away in relation to a hearing date to be a separate step, and a clearly identifiable separate aspect of proceedings.

21. It seems to me that there is no need for me to a make separate finding as to unreasonable conduct on the part of the plaintiff, although the state of preparedness was self-evidently inadequate and led to the need for the adjournment.

22. An order for costs thrown away is not a type of costs order that ever abides the outcome of the overall proceedings, because that order is a standalone order, reflecting the circumstances that have arisen here, where, as correctly submitted on behalf of the fourth defendant, preparation was made directed to a pleading and evidence that has and will now been superseded and largely wasted. I note in this regard the fourth defendant is an individual, and is unlikely to have a budget for legal costs, whereas the plaintiff is a financial organisation, in a better position than the fourth defendant to bear the ongoing costs of litigation until its conclusion. In this respect I note the decision of Traderight (NSW) Pty Ltd & Ors v Bank of Queensland Ltd (No 2) [2008] NSWSC 589 at [8].

23. I have concluded that the costs order clearly is relevant to a discrete separately identifiable aspect of the proceeding of the type referred to by Barrett J in Fiduciary Limited v Morningstar Research Pty Ltd (2002) 55 NSWLR 1; [2002] NSWSC 432 at [11].

24. I note that the hearing date now allocated to the matter, together with the detailed timetable for preparation, was arrived at after exchange between the bench and counsel and I note as a result of efforts by me to ensure as much as possible that the matter obtained the earliest possible hearing date, despite needing that new hearing date because the matter was not ready to proceed on the plaintiff's part. If the matter had been returned to the usual list and managed through the registrar's list to readiness, it is most unlikely the matter would obtain a hearing date much before the middle of next year. Having said that, it is still unlikely that the matter will have a published judgment much before March or April next year, depending on the workload of the judge allocated the hearing date, which is, I note, just before the end of the court year and so there will be a delay.

25. Having regard to all the circumstances, I am of the view that the application made by the fourth defendant is a strong one and I accordingly modify the order number 12 that I made yesterday to read as follows:

“The plaintiff is to pay the fourth defendant's costs thrown away by the vacation of the hearing date and those costs are payable forthwith.”

**********

Decision last updated: 09 September 2019