Wharfside Pty Ltd v McCormick - [2010] NSWSC 398

CITATION: Wharfside Pty Ltd v McCormick [2010] NSWSC 398

HEARING DATE(S): 12/04/10
Written submissions: 13/04/10, 23/04/10

JUDGMENT DATE :
6 May 2010

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Application for order for assessment of costs on the indemnity basis dismissed.

CATCHWORDS: PROCEDURE - costs - indemnity costs - compromise on basis that defendants pay plaintiff's costs - application by plaintiff for order that such costs be assessed on the indemnity basis - plaintiff says that defendants should have recognised the hopelessness of their case - conclusion on "relevant delinquency" available only by full assessment of the facts - not appropriate to try now hypothetical case merely to decide question of costs

LEGISLATION CITED: Corporations Act 2001 (Cth), ss 459G, 459H(1)(a), 459H(1)(b)
Legal Profession Act 2004 (NSW), s 331
Legal Profession Act 2007 (Qld) , s 329
Trade Practices Act 1974 (Cth), s 52

CATEGORY: Consequential orders

CASES CITED: Austrac Rail Pty Ltd v Hunter Premium Funding Ltd [2001] NSWSC 654
Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194
Carinda Homes Pty Ltd v Highlands Austral Pty Ltd [2003] FCA 275
CGI Information Systems & Management Consultants Pty Ltd v APRA Consulting Pty Ltd [2003] NSWSC 728; (2003) 47 ACSR 100
Galaxy Resources Ltd v Arrinooka Pty Ltd [2002] WASC 70
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622

PARTIES: Wharfside Pty Limited - Plaintiff
Megan Rae McCormick, John Richard Paul Hunt, Craig Edward Cavanagh, Richard Michael Burr, Shane Russell Williamson, Andrew Mark Williams, Dale Frances Cliff, William Robert Blake, Paul Michael O'Dea, John Dominic Toigo, Timothy David Ferrier, Michael John Sparksman and Steven Mark Cardell trading as ClarkeKann - Defendants

FILE NUMBER(S): SC 2010/009328

COUNSEL: Ms K Stern - Plaintiff
Ms D Prichard - Defendants

SOLICITORS: Watson Mangioni Lawyers Pty Ltd - Plaintiff
ClarkeKann Lawyers Pty Ltd - Defendants

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

THURSDAY 6 MAY 2010

2010/009328 WHARFSIDE PTY LIMITED v MEGAN RAE McCORMICK & 13 ORS

JUDGMENT

1 By originating process filed on 11 January 2010, the plaintiff made application under s 459G of the Corporations Act 2001 (Cth) for an order setting aside a statutory demand served on it by the defendants.

2 On 12 April 2010, I was asked to make, by consent, an order that the statutory demand be set aside. That order was made, as was an order that the defendants pay the plaintiff’s costs. Also made on that occasion were directions for the filing of written submissions on the question whether, as the plaintiff argued, the costs awarded to the plaintiff should be assessed on the indemnity basis.

3 The central question, upon any application for assessment of costs on the indemnity basis, is whether the party liable for costs was guilty of some misconduct or, as it was described by…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] NSWSC 398
Decision Date: 6 May 2010

CaseChat Overview and Summary

The case of Wharfside Pty Ltd versus McCormick was heard in the Federal Court of Australia. Wharfside Pty Ltd, the plaintiff, sought an order for costs to be assessed on an indemnity basis from McCormick, the defendant, following a compromise where the defendant agreed to pay the plaintiff's costs. The plaintiff argued that the defendants should have recognised the hopelessness of their case, thus justifying indemnity costs. The central issue before the court was whether it was appropriate to determine the question of costs without a full assessment of the facts, given that the conclusion on "relevant delinquency" could only be reached through such an assessment.

The court examined the circumstances leading to the compromise and the principles governing indemnity costs. It noted that indemnity costs are awarded when a party has acted in a manner warranting such costs, typically due to the party's conduct being unreasonable or without merit. The court considered that a full assessment of the facts was necessary to determine whether the defendant's conduct was indeed deserving of indemnity costs. The court was cautious about making a decision on the basis of hypothetical arguments without a comprehensive evaluation of the case's specifics.

Ultimately, the court concluded that it was not appropriate to try a hypothetical case merely to decide the question of costs. The court held that the issue of indemnity costs could only be resolved through a detailed examination of the facts and the defendant's conduct. Therefore, the court declined to make a determination on the basis of the current submissions, indicating that a full assessment would be required before any decision on indemnity costs could be made.

Orders