Xpak Pty Ltd v Scibilia
[2013] VCC 1294
•10 October 2013 (revised 11 October 2013)
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE | Revised (Not) Restricted |
COMMERCIAL LIST
EXPEDITED CASES DIVISION
Case No. CI-12-04579
| XPAK PTY LTD | Plaintiff |
| v. | |
| MICHAEL SCIBILIA & ORS | Defendants |
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JUDGE: | His Honour Judge Anderson | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 10 October 2013 | |
DATE OF JUDGMENT: | 10 October 2013 (revised 11 October 2013) | |
CASE MAY BE CITED AS: | Xpak Pty Ltd v. Scibilia & Ors | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 1294 | |
REASONS FOR JUDGMENT
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Catchwords: Costs – Plaintiff failed at trial against the fifth defendant but succeeded against the fourth defendant – Whether fourth defendant should pay or indemnify the plaintiff in respect of the fifth defendant’s costs – Relevance of the fourth defendant’s defence and its conduct of the trial – Fourth defendant to indemnify part of the plaintiff’s liability for the fifth defendant’s costs.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Ravech | Tisher Liner FC Law |
| For the First, Second and Third Defendant | No appearance | |
| For the Fourth Defendant | Mr M McNamara | Obst Legal |
| For the Fifth Defendant | Mr P Crofts | Ferdinand Zito & Associates |
HIS HONOUR:
1 There are a number of issues which arise from the judgment I delivered on 4 October 2013 which require further decision. They are:
a. the amount in respect of which judgment should be entered for the plaintiff against the fourth defendant, whether 50% of $180,000 or $171,000;
b. whether the costs the fourth defendant must pay to the plaintiff should include the plaintiff’s costs of supplementary submissions made following the completion of the trial in respect of whether the claim was an apportionable claim, or whether the plaintiff should pay the fourth defendant’s costs of those submissions;
c. whether there should be a stay in respect of the judgment against the fourth defendant for 14 days;
d. in relation to the costs of the fifth defendant:
i. whether they should be borne by the plaintiff or by the fourth defendant;
ii. the basis upon which those costs should be ordered; and
iii. whether any costs to be paid by the fourth defendant should include the costs of the fifth defendant’s counterclaim.
Plaintiff’s damages against the fourth defendant
2 In respect of the damages assessed against the fourth defendant, I consider that the fourth defendant should pay 50% of damages assessed at the total sum of $180,000. This was the amount which was disbursed by the plaintiff following the execution of the loan documents, although $9,000 of that sum was disbursed back to the plaintiff as three months’ pre-paid interest.
3 During the course of argument at the trial, plaintiff’s counsel Mr Ravech appeared to concede that the total amount of the plaintiff’s loss was $171,000. I consider that the loss caused by the fourth defendant as a consequence of its misleading and deceptive conduct should be the total sum of $180,000. The fourth defendant was aware that this sum would be disbursed if a solicitor’s certificate was given. If damages are assessed at that sum, the plaintiff will recover the principal sum disbursed. The award of statutory interest on the judgment sum from the date of the issue of the writ will not duplicate any part of the principal sum recovered as damages.
Costs of further submissions
4 At the trial, the issue determined was essentially whether the claim against the fourth defendant was an apportionable claim and, if it was, the degree of responsibility for which the fourth defendant should be held liable.
5 Plaintiff’s counsel sought the opportunity, following final submissions, of putting in writing matters that had been raised, largely during the course of final argument. The issue related to the decision of Young CJ in Eq in Vella v Permenant Mortgages Pty Ltd [2008] NSWSC 505, the case at first instance finally determined by the High Court in Hunt & HuntLawyers v Mitchell Morgan Nominees Pty Ltd & Ors [2013] HCA 10. The filing of further submissions was initially opposed by fourth defendant’s counsel.
6 I indicated to the parties through my associate that I would receive whatever further written submissions the parties wished to make. In my view, the submissions filed were simply an amplification of matters raised at the trial and it was entirely for the parties as to whether they wished to clarify the submissions they had made at the end of the trial in relation to what was effectively the primary issue that remained between the parties for decision.
7 In these circumstances, I consider that although the fourth defendant should pay the plaintiff’s costs, that the costs of the supplementary submissions submitted by the parties following the completion of the trial should be borne by the parties themselves and not be part of the costs to be paid by the fourth defendant. Similarly, the plaintiff should have no liability in respect of the fourth defendant’s supplementary submissions.
Stay of execution
8 There will be a stay of 14 days in respect of the judgment against the fourth defendant.
Fifth defendant’s costs
9 At the completion of evidence at the trial, it was apparent that neither the plaintiff nor the fourth defendant wished to proceed with any argument which might detrimentally affect the position of the fifth defendant.
10 At the commencement of the trial, the plaintiff had indicated it would not seek any relief against the fifth defendant. However, the fourth defendant stated that it wished to pursue the issue as to whether the fifth defendant had executed the loan documents.
11 The fifth defendant gave evidence at the trial. She was cross-examined by fourth defendant's counsel on the basis that she had attended before the employee solicitor of the fourth defendant, and signed the loan documents. The employee solicitor had given evidence, led by fourth defendant’s counsel Mr McNamara, that she positively identified the fifth defendant as the person who attended before her and signed the loan documents.
12 However, at the completion of the evidence of the fifth defendant, Mr McNamara upon instructions conceded that no submissions would be made by his client that the loan documents had been executed by the fifth defendant.
13 In these circumstances, it was not necessary to decide any issue relating to the fifth defendant, except in a formal way, because the other parties before the Court, the plaintiff and the fourth defendant, were not disputing the role of the fifth defendant.
14 Originally, the plaintiff did not sue the fifth defendant, and had taken the view that the fifth defendant was also a victim of the fraudulent conduct of her husband, the first defendant, and a female companion who purported to act as the fifth defendant in the meeting with the solicitor.
15 In response to the original statement of claim, both the first defendant, the fraudster, and the fourth defendant, did not admit that the loan documents had not been signed by the fifth defendant. This put the plaintiff in a difficult position. Subsequently, leave was granted upon the plaintiff's application for the fifth defendant to be joined as a defendant to the proceeding.
16 Although the fourth defendant's pleading was a non-admission, effectively it was equivalent to a denial. No basis was given as to why the allegation in the plaintiff's statement of claim, in relation to the non-signing of the loan agreement by the fifth defendant, could not be admitted.
17 At the trial, it was the fourth defendant who insisted that this issue be the subject of evidence, and after that evidence was received, the fourth defendant was not prepared to make submissions on the basis that the fifth defendant had signed the loan agreement.
18 I consider in the circumstances, that:
a. it was reasonably necessary for the plaintiff to have joined the fifth defendant as a party to the proceeding. If it were found that the fifth defendant had, in fact, signed the loan agreement, the plaintiff could not have succeeded against the fourth defendant;
b. the fourth defendant was in part responsible for the joinder of the fifth defendant as a result of the non-admission in its defence. The fourth defendant did not concede the point until the completion of evidence at the trial.
19 Accordingly, I consider that the fourth defendant should bear some responsibility for the costs of the fifth defendant. The position is complicated by three matters:
a. the plaintiff and fourth defendant's counsel submit that the most appropriate order, if I propose to make an order against the fourth defendant, would be to make a direct order in relation to the fifth defendant's costs against the fourth defendant, rather than ordering the fourth defendant to indemnify the plaintiff in respect of costs payable by the plaintiff to the fifth defendant;
b. the fourth defendant and the fifth defendant reached agreement at the trial that, if a costs order were later to be made in respect of the fifth defendant's costs against the fourth defendant, the costs should be assessed on a party/party basis rather than on an indemnity basis;
c. the fifth defendant had filed a counterclaim for the removal of caveats affecting properties which were part of the security for advances made on the basis that the fifth defendant was a party to the loan agreements.
20 The fifth defendant sought costs on an indemnity basis against the plaintiff. The proceeding was issued with a pleading which stated that the fifth defendant had not executed the loan agreement and suggested that she was also a victim of fraud. The amendment was subsequently made after the plaintiff was made aware of the contents of a handwriting expert's report obtained by the fifth defendant. The report indicated that it was unlikely the fifth defendant was the signatory to the loan agreement and associated documents. Later, the plaintiff obtained its own expert report to the same effect. In a letter dated 9 August 2013, the fifth defendant's solicitors rehearsed the arguments that would be presented at trial to exonerate the fifth defendant. I consider, in the circumstances, that it is appropriate for the fifth defendant's costs to be paid on an indemnity basis.
21 It is my view that the fourth defendant should make some contribution to the fifth defendant’s costs. However, I do not want to make an order which would impose a further burden on the parties to have the fifth defendant's costs taxed on two bases, first, on an indemnity basis to determine the amount the plaintiff should pay to the fifth defendant, and secondly, on a party/party basis to determine the quantum of costs the fourth defendant should pay towards the fifth defendant’s costs.
22 I consider that the most appropriate solution is to make the following order in relation to the fifth defendant's costs:
a. the plaintiff must pay the fifth defendant's costs to be taxed on an indemnity basis in default of agreement;
b. the fourth defendant must indemnify the plaintiff in respect of a sum equivalent to 25% of the costs ordered to be paid by the plaintiff to the fifth defendant;
c. the costs of the fifth defendant should include the costs of the counterclaim by the fifth defendant against the plaintiff.
23 I consider that the fifth defendant's counterclaim was an essential part of the response by the fifth defendant to the claim made against it by the plaintiff, in order that all matters in dispute between those parties might be resolved in one proceeding. It was appropriate that the caveats lodged by the plaintiff pursuant to the security purportedly offered in the loan agreement should be removed, if it were found that the fifth defendant had not been a willing party to the loan agreement.
24 My initial thoughts were that the fourth defendant should be responsible for 50% of the fifth defendant's party/party costs. I have arrived at the figure of 25% of the fifth defendant’s indemnity costs as the fourth defendant’s share by allowing for the fact that it is generally accepted that party/party costs are equivalent to about 60% of indemnity costs.
25 In the circumstances, I have made an allowance to ensure that the amount that the fourth defendant is required to indemnify the plaintiff is likely to be no more than 50% of the sum which would be payable if the exercise were undertaken of assessing the fifth defendant's costs, both on an indemnity and party/party basis. I consider that the plaintiff, having joined the fifth defendant in the proceeding, should have primary responsibility for the costs. If, as a result of assessing the proportion of those costs that the fourth defendant has to bear, the proportion is somewhat less than it might have been if the parties were put to the expense of assessing costs on a dual basis, I consider that that is an expense that the plaintiff should bear.
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Certificate
I certify that the preceding 7 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 10 October 2013 and revised on 11 October 2013.
Dated: 11 October 2013
Philippa Gilkes
Associate to His Honour Judge Anderson
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