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[2017] VSC 226
General information, not legal advice.
Supreme Court of Victoria
2017-05-05
CROFT J
Original judgment source is linked above.
PRACTICE AND PROCEDURE - VCAT - Application for summary dismissal - Application for costs on an indemnity basis - Scale of costs - Witness statements in lieu of pleadings - Powers of an acting judicial member - Reasons in preliminary form; VCAT Act 1998, ss 29, 75, 78 and 109 - Martin v Fasham Johnson [2007] VSC 54; Sharp v the Canonical Administrators of St Monica's College Ltd [2003] VCAT 42.
1 As a result of my appointment by the Chief Justice of the Supreme Court of Victoria under s 29 of the Victorian Civil and Administrative Tribunal Act 1998 ("the Act"), I am a member of a panel of Judges available for appointment as an acting member of the Victorian Civil and Administrative Tribunal ("VCAT"). Considering it desirable that I be appointed to hear and determine this proceeding, Justice Garde, the President of VCAT, appointed me as an acting judicial member of VCAT under s 29 of the Act.
2 Pizza Fellas Pty Ltd ("the Applicant"), as trustee of the Zazai trust, operated, as owner and franchisor, a chain of variously named pizza restaurants. Eat Now Pty Ltd ("Eat Now") and Menulog Pty Ltd ("Menulog") (collectively, "the Respondents") provide online listing and ordering services to restaurants in Australia. Eat Now and Menulog separately entered into contractual arrangements to provide online listing and ordering services for restaurants in which the Applicant had an interest, either as owner or franchisor. The Applicant alleges, among other things, that the Respondents diverted the Applicant's existing customers to the Respondents' websites, causing serious damage to the Applicant's brands and unfairly garnering extra commission for the Respondents.
3 This matter has a most unfortunate procedural history. It is complained of in the Respondents' Outline of Submissions, an account the veracity of which the Applicant did not impugn:[2]
Pizza Fellas advised it would endeavour to file and serve such material as soon as practicable.
4 The Applicant seeks leave to file its Proposed Further Amended Points of Claim dated 6 April 2017 ("PFAPOC"). The Respondent, by application dated 30 March 2017, seeks summary dismissal of the Applicant's claim pursuant to ss 75 and 78 of the Victorian Civil and Administrative Tribunal Act 1998 ("the Act") and that the Applicant pay the Respondents' costs of the proceeding pursuant to s 109 of the Act. Before turning to the PFAPOC and the two applications, it is necessary to address two issues: the effect of my being a Supreme Court judge sitting as an acting judicial member of VCAT and the finality of my reasons on costs.
5 By his Honour's letter of 3 February 2017, the President of VCAT appointed me as an acting judicial member of VCAT under s 29 of the Act. As such, I am empowered to exercise all the powers of a member of VCAT. While there is no mirror proceeding on foot in the Supreme Court of Victoria in this matter, before hearings in this matter, I have adopted the practice of constituting the Supreme Court pursuant to s 29(8) of the Act as well as constituting VCAT. While the Respondents relied on the powers of the Court under s 29 of the Act in their written submissions,[3] Senior Counsel for the Respondents expressly eschewed that course before me and stated that they did not seek to rely on the powers of the Court under s 29(8).[4] As I cannot see how my doing so could otherwise affect the position of the Applicant, I will not consider exercising such power here. While it is consequently unnecessary to decide the question, I am of the opinion that I am empowered to exercise the Court's inherent jurisdiction to regulate litigants before it; whether or not a VCAT proceeding is also involved. Additionally, I note that it was common between the parties that the Civil Procedure Act 2010 did not apply by virtue of s 4(3) of that Act.[5]
6 During the hearing of 21 April 2017, I indicated to the parties that I would hear further submissions on the Respondents' application for costs prior to making a final determination. In order to minimise the unfortunate expenditure of further costs in disputes over costs, I nonetheless express my views on this issue in the hope that this will enable this question to be resolved by agreement, or at least by a more efficient determination at a later date. Consequently, while these reasons express my final decision on the questions of whether to grant leave to file the PFAPOC and whether to summarily dismiss the Applicant's claim, my views on the question of costs are preliminary. Thus it is open for parties to make further submissions on the issue of costs if they are of the view that there are further matters which will disturb my present preliminary conclusions on this issue.
7 VCAT is not a court of pleadings and thus the rules of pleadings need not be applied with the same vigour to proposed points of claim that come before VCAT. Yet the purposes of pleadings apply with similar force to proceedings in VCAT. Pleadings give notice to the other party of one's case and thereby ensure procedural fairness. They also define the issues in dispute and in doing so promote efficiency in litigation. Thus it is in light of efficiency and procedural fairness that a decision whether to grant leave to file amended pleadings ought to be made. Yet pleadings are not the sole tool for achieving procedural fairness. Pleadings may be substituted or supplemented by means of issues statements or the requirement for written evidence in chief - on affidavit - with limited scope for supplementary evidence in chief. However procedural fairness is achieved in this context, it must accommodate the discovery of documents - one means being to require that any documents upon which it is intended to rely be annexed to witness statements.
8 While a respondent is entitled to demand that the case they are to meet be clearly set out, this right does not allow a respondent who is sufficiently aware of the case against them to complain of real but ultimately inconsequential deficiencies in pleadings. Indeed, continual opposition to proposed pleadings and spurious applications for summary judgment or summary dismissal are tools often employed by practitioners seeking to generate costs. Neither public nor private resources should be taken advantage of in this manner. Fortunately, such issues do not arise here and I am satisfied that the Respondents' approach with respect to pleadings issues is entirely justified.
9 In the three hearings before me, Senior Counsel for the Applicant has addressed many of the Respondents' complaints about each of the proposed further amended points of claim and in doing so, given notice to the Respondents of the nature of the Applicant's case. It is not ideal for a respondent to have to rely on oral indications from counsel to understand an applicant's case, but such indications do assist in providing notice of the case which must be met. There may be cases in which oral explanations will suffice to remedy what would otherwise be fatal or near fatal defects in pleadings. Here, while the Applicant's case has become clearer through oral submissions, the extent of the deficiencies requires that the clarifications must be manifested and made clear in writing in some effective way. This is especially so given that the Applicant's position has not been entirely consistent between its proposed pleadings. For example, prior to relying upon a gross margin calculation in its PFAPOC, it was conceded that gross margin was an inappropriate measure of loss.[6]
10 Consequently, orders will be made for affidavit evidence in chief to be prepared with all documents relied upon annexed. Any further discovery issues - as alluded to above - may need to be canvassed. There are two reasons for utilising affidavit evidence in chief in lieu of proper pleadings. First, to avoid the cost and delay flowing from a continuing struggle with deficient pleadings. Second, to allow the new and modified claims to be set out and notice given to the Respondents of the precise nature of those claims and the evidence which they will be required to meet. On this basis, albeit reluctantly, leave will be given to file the latest iteration of the Applicant's proposed further amended points of claim with or without presently proposed allegations akin to fraud; expressing no view, of course, as to the veracity of pleadings of this nature in the present context.[7] Nevertheless the present pleadings' failings may have significant costs consequences ultimately if it is found that the measures now necessary to address these deficiencies and to provide procedural fairness have resulted in work and costs which would otherwise have been unnecessary.
11 In oral argument before me, it has become clear that the quantification of damages has a number of aspects which might be thought to be doubtful. The Respondents' Outline of Submissions refers to a number of potential issues:[8]
(q) Pizza Fellas persists with its claim for the cost of digital marketing campaigns to be conducted to re-capture its lost customers. The quantum of this claim has reduced from $2,888,000 to $2,128,440, being the costs which are said will be incurred in carrying out 2 separate digital marketing campaigns.
(r) The claim is made in an information void. The respondents have no information regarding:
(i) the SEO work allegedly carried out by Pizza Fellas in respect of each of its websites before it entered into the agreements with the respondents - this allegation is made for the first time in paragraph 6(b) of the 6 April 2017 FAPOC but is not particularised;
- (ii) the digital marketing (including SEO) conducted by Pizza Fellas after the termination of the relationships with the respondents; or
- (iii) the quantum of orders received by Pizza Fellas via its websites after the termination of the relationships with the respondents.
Pizza Fellas has not made any discovery about any of these issues.
(s) Leaving aside issues about whether Dr Coker is able to give an expert opinion about digital marketing and the difficulty of proving who and what comprises Pizza Fellas' customers, the respondents submit that the Tribunal ought not grant leave to Pizza Fellas to pursue a claim for costs which have not yet been incurred given the obvious disparity between the amounts claimed and the size of Pizza Fellas' business and its profits. It is unreasonable for Pizza Fellas to claim more than $2 million to repair the online component of its business, which comprises only 30% of the business, when the entire business derived net profits of less than $250,000 in each of the 2014 and 2015 financial years.
12 These issues are a matter for trial. Senior Counsel for the Applicant correctly submitted that the Tribunal, when assessing the adequacy of pleadings, ought to assume that the claimant is capable of proving each and every allegation.[9] However, if the Respondents' criticisms of the Applicant's case are borne out at trial, they may provide a basis for a costs order under s 109(2) of the Act, and possibly on an indemnity basis.
13 At the hearings in the Supreme Court on 15 February, 3 March and 21 April 2017, Senior Counsel for the Respondents outlined a myriad of problems with the Applicant's various proposed points of claim. Two critical problems were the failure to plead the Applicant's relationship to the affected restaurants and the failure to provide adequate particulars of loss and damage. As of 2 March 2017, the Applicant had incurred legal costs of $539,767. The total sum claimed in the PFAPOC is $2,745,152.10.[10] Only $62,356.10 of the total claim reflects loss alleged to have been incurred to date, with the balance of the claim referring to either future losses which it is alleged would result as Pizza Fellas re-established its brand after terminating its agreements with Eat Now and Menulog or expectation damages. It is in light of these issues that the Respondents apply for the claim to be dismissed under either of s 75 or s 78 of the Act.
14 Sections 75 and 78 of the Act govern the circumstances in which a tribunal may strike out an applicant's claim. Section 75 relevantly provides:
(1) At any time, the Tribunal may make an order summarily dismissing or striking out all, or any part, of a proceeding that, in its opinion -
(a) is frivolous, vexatious, misconceived or lacking in substance; or
(1) This section applies if the Tribunal believes that a party to a proceeding is conducting the proceeding in a way that unnecessarily disadvantages another party to the proceeding by conduct such as -
(a) failing to comply with an order or direction of the Tribunal without reasonable excuse; or
(b) failing to comply with this Act, the regulations, the rules or an enabling enactment; or
(c) asking for an adjournment as a result of (a) or (b); or
(e) attempting to deceive another party or the Tribunal; or
(a) order that the proceeding be dismissed or struck out, if the party causing the disadvantage is the applicant of the proceeding; or
16 The two sections apply in distinct circumstances. As Pizer notes:[11]
Section 78(2) empowers the VCAT to determine a proceeding in favour of a party ("the first party") where another party is conducting the proceeding in a way that unnecessarily disadvantages the first party. Accordingly, this section forces the VCAT to focus on the way in which the proceeding is being conducted. Compare s 75, which requires the VCAT to focus on the merits of the proceeding.
[T]he VCAT must take care when dealing with an application under s 75, and a high degree of satisfaction is required before a proceeding will be summarily dismissed or struck out under that section:
• the test to be applied in determining an application under s 75(1) was set out by the High Court in Fancourt v Mercantile Credits Pty Ltd [1983] HCA 25; (1983) 154 CLR 87 at 99: namely, "the power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried": Lay v Alliswell Pty Ltd [2002] V ConvR 54-651; [2001] VSC 385 at [14] per Balmford J; Towie v Victoria (2008) 19 VR 640; [2008] VSC 177 at [30];
Second, it is not only "the most obvious and patent of defective cases" that may be summarily dismissed under s 75: cases that can be demonstrated as defective by "relatively elaborate analysis" also fall within the section: Chan v Kostakis [2003] VCAT 951 at [11]. See also General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 128-30 per Barwick CJ; Crompton v Victorian Workcover Authority [2013] VCAT 1010 at [19]. Nevertheless, it has been said that the determination of an application under s 75 does not "contemplate a detailed consideration of the evidence": Wood v Calliden Insurance Ltd [2008] VCAT 1339 at [15]. It has also been said that an application for summary dismissal is "not a mini-hearing of the merits" Morrison v Stonnington CC [2011] VCAT 1325 at [14].
Fourth, the correct approach to adopt on an application under s 75(1) is to assume that the applicant will be able to prove each fact alleged in the claim(s) in question. See, eg, Rainsford v Group 4 Corrections Services Pty Ltd [2000] VCAT 2497; Boek v Australian Casualty and Life Ltd [2001] VCAT 39; Lakobend Pty Ltd v Boroondara CC [2004] VCAT 1709 at [6]; AA v Ron Tribe & Associates Pty Ltd [2008] VCAT 586 at [11(c) and (d)]; Noonan v Owners Corporation No 2 PS 409115E [2011] VCAT 1934 at [17].
And finally, in Rosenthal Munckton & Shields Pty Ltd v McGregor [2005] VCAT 1702 the VCAT was not persuaded that it should take into account the financial impact of a trial on an individual when determining an application under s 75 to dismiss a proceeding against that person.
18 The Respondents submit that the Applicant's case "lacks substance and in many respects is misconceived",[15] that "misconceived connotes a misunderstanding of legal principle",[16] and that "lacking in substance connotes an untenable proposition of law or fact and is equivalent to the former r 23.03 (now s 62 of the Civil Procedure Act 2010)".[17] This analysis of s 75(1)(a) of the Act accords with Pizer's commentary,[18] and is correct.
19 In light of the above position at law, the Respondents make the following submissions on the facts:[19]
20 I am not unsympathetic to the Respondents' plight or its individual criticisms of elements of the PFAPOC. However, as is clear from the authorities referred to in Pizer as set out at [17], it is a very high threshold that must be satisfied in order for summary dismissal to be granted. It is not enough for particular elements of the claim to be bound to fail. As has been clear from my comments at each of the three hearings of this matter before me, I recognise that there are serious issues with the Applicant's claims as pleaded. However, without expressing any view onto the strength of the Applicant's case, it can be distilled from the submissions at each hearing of counsel for the Applicant that underlying the deficient pleadings is a case that provides real questions to be tried. While this process is no doubt frustrating to the Respondents, the appropriate remedy is costs, not a dismissal of these proceedings. Indeed, it may well be that it will very rarely, if ever, be appropriate to strike out a potentially meritorious claim, however poorly it is pleaded, so long as such pleadings are proposed in good faith.
21 In order for the power to dismiss the proceedings to arise under s 78(2) of the Act, one of the matters listed in s 78(1) of the Act must be made out. As can be seen from the Respondents' recounting of the procedural history of this matter, as extracted above at [3], the Applicant has on numerous occasions failed to comply with orders of the Tribunal, on at least one occasion without reasonable excuse. Indeed, the most recent Proposed Amended Points of Claim was filed on 6 April despite being due on 24 March 2017. While the Applicant's solicitor swore an affidavit attributing the delay to a change of jun[21]r counsel,21 such a change is not a reasonable excuse when Senior Counsel has been briefed for months. It is also likely, though unnecessary to decide, that other prerequisites in s 78(1) are satisfied.
22 It is also necessary to establish that issues arising within s 78(1) cause unnecessary disadvantage to the other party. The cost of defending proceedings which have been on foot for over a year and in which pleadings are still not settled is surely an unnecessary disadvantage. These costs are at least partially attributable to the failure of the Applicant to adhere to deadlines set by this Tribunal.
23 Despite the Applicant's conduct enlivening the power to dismiss these proceedings, in the circumstances I do not think that is the course to be preferred. The Respondents correctly set out the matters to which I must have regard in exercising the discretion:[22]
In Bell Corp Victoria Pty Ltd v Stephenson[23], Ashley J held that once the Tribunal forms the belief required by s 78(1), the following matters must be considered in the exercise of the discretion under s 78(2):
(a) the subject matter of the belief formed by the Tribunal for the purposes of s 78(1);
(b) the nature of the power conferred by s 78(2), which is different from the powers under ss 75 and 76 regarding proceedings which are frivolous, vexatious, misconceived, lacking in substance or otherwise an abuse of process and wanting prosecution respectively;
(c) the remedy should be of last resort and not first resort;
(d) the interests of case management should not be employed so as to shut a party out of litigating its case; the ultimate aim of the Tribunal must be the attainment of justice;
(e) a party should ordinarily be given an opportunity to be heard on the merits; that opportunity is not absolute and may be lost with a breach of the rules of natural justice; and
(f) the power to make a costs order under ss 109(2) and 78(2)(c) even though no order is made under ss 78(2)(a) or 78(2)(b).
24 The Applicant's failure to comply with orders is more than unsatisfactory and disappointing, but is not abhorrent or egregious. While I have suggested that I might strike the Applicant's claim out on the basis of deficient pleadings, no equivalent warning has been made with regard to the Applicant's conduct, be it breach of the Tribunal's orders or otherwise. As a remedy of last resort, it ought to be adverted to prior to its exercise unless the exceptional circumstances are present. Indeed, other than several costs orders and a security for costs order, all of which the Applicant has complied with, no other sanctions have been imposed upon them in relation to their conduct in this litigation. I am also mindful that the disadvantage suffered by the Respondents is wholly one of costs, which can be substantially remedied by a costs order. Taking these matters together, I am satisfied it would be inappropriate to dismiss these proceedings under s 78 of the Act.
25 In the present circumstances, there are three bases for an award of costs: ss 75(2), 78(2)(c) or 109(3) of the Act. Before turning to the legislation, I note that the Applicant does not dispute that the case put forth in its latest proposed points of claim has changed in some respects and that the result may be that at least some of the work already undertaken by the Respondents in defending the claim is wasted. Consequently, as leave to file further pleadings, including any amendment of original pleadings in VCAT, is to be granted, the Applicant will be required - as would be the position in commercial litigation in the nature of the present proceedings in a court - to pay costs thrown away. Indeed, I am expressly empowered to take such an approach by s 109(6) of the Act, which provides that "[i]f the Tribunal makes an order for costs before the end of a proceeding, the Tribunal may require that the order be complied with before it continues with the proceeding".
26 Section 75(2) empowers the Tribunal to make an order for costs if it dismisses or strikes out all or part of a proceeding under s 75(1) of the Act. As I do not presently believe it appropriate to strike out this claim, this section does not apply.
27 Section 78(2)(c) empowers the Tribunal, upon being satisfied that a matter listed in s 78(1) exists, to make an order for costs under s 109 of the Act. As I have already outlined, I am satisfied that a s 78(1) matter exists. Given that s 109 is operative without a trigger provision, the effect of s 78(2)(c) appears to be that the existence of a s 78(1) matter will be relevant in determining whether a costs order ought to be made under s 109 of the Act. This is borne out by the explanatory memorandum, which states:[24]
Clause 78 gives the Tribunal powers to deal with the conduct of a proceeding by a party to the disadvantage of another party. The presiding member may make an order for costs under section 109 or, if the offending party is the applicant, dismiss or strike out the proceeding, or, if the party is not the applicant, determine the proceeding in favour of the applicant as against that particular party or strike that party out of the proceeding.
Clause 109 provides that usually each party is to bear their own costs of a proceeding. However, at any time, the Tribunal may order a party to pay all or part of another party's costs. It may only do so if it is satisfied that this is fair, having regard to a variety of factors set out in sub-section (3). If the Tribunal considers that a party's representative is responsible for conducting the proceeding so as to disadvantage another party or unreasonably prolong it, the representative, after being given an opportunity to be heard, may be ordered to compensate another party for any costs unnecessarily incurred. If a costs order is made before the end of a proceeding, the Tribunal may refuse to continue with the proceeding until the order is complied with.
28 A similar conclusion was reached in Sharp v the Canonical Administrators of St Monica's College Ltd, where Deputy President McKenzie stated:[25]
[U]nder s 78(2)(c) my power to award costs against [the complainant] under s.109 of the VCAT Act is discretionary. Section 109 itself has the effect that I can only award costs against [the complainant] if it is fair to do so, having regard to the factors listed in s 109(3). Undoubtedly one of these factors is the same as the factor listed in s 78(1), namely that the party has conducted the proceeding in a way that unnecessarily disadvantages another party.
But the fact that I find this factor to exist in this case does not mean that I must automatically order costs against [the complainant] or that I cannot consider whether it is fair to order costs in the [r]espondents' favour. One of the other factors under s 109(3) that I must also consider is the nature of the proceeding...
Thus it is unclear if the existence of a s 78(1) matter is of any intrinsic significance, especially since those same matters largely appear in s 109(3)(a) of the Act. For this reason, it seems that the question of whether to award costs may be dealt with by analysis of the application of s 109 alone.
29 In s 109(1) of the Act, the starting point is that each party is to bear their own costs. Section 109(2) empowers to Tribunal to make a costs order and s 109(3) restricts the circumstances in which such an order may be made, relevantly providing:
(3) The Tribunal may make an order under subsection (2) only if satisfied that it is fair to do so, having regard to -
(a) whether a party has conducted the proceeding in a way that unnecessarily disadvantaged another party to the proceeding by conduct such as -
(i) failing to comply with an order or direction of the Tribunal without reasonable excuse;
(ii) failing to comply with this Act, the regulations, the rules or an enabling enactment;
(iii) asking for an adjournment as a result of (i) or (ii);
(v) attempting to deceive another party or the Tribunal;
(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceeding;
(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law;
(e) any other matter the Tribunal considers relevant.
30 In Martin v Fasham Johnson Pty Ltd, Bell J provided a helpful introduction to the award of costs under the Act:[26]
The Tribunal's costs discretion is broad in scope. It is subject to the express statutory requirements of ss 109(1)-(3), 111 (and 78(2)(c)). The considerations relevant to the exercise of the discretion may be discerned from the subject matter, scope and purpose of these provisions, interpreted in the context of the Act as a whole. The discretion must be exercised judicially, which means the Tribunal must act fairly, impartially and by reference to relevant considerations and not arbitrarily, capriciously or by reference to irrelevant considerations and not in a manner that frustrates the legislative intent.
31 In the circumstances, I am satisfied that it is fair to order that the Applicant pay the Respondents' costs. The Applicant has, as indicated above, failed to comply with orders of the Tribunal without reasonable excuse. It has, by the conduct outlined in [3], caused adjournments. But most importantly, it has been responsible for prolonging unreasonably the time taken to complete the proceeding. These proceedings have been on foot since 1 September 2015 and the points of claim are yet to be finalised. Before me, the Applicant has failed to produce satisfactory points of claim on two occasions, despite the most helpful and constructive criticism of opposing counsel. In the most recent pleading, entirely new claims were introduced and it may be that the whole or much of work done thus far by the Respondent is thrown away. The Applicant has dismissed six firms of solicitors and has currently engaged a seventh. In doing so, the Applicant has incurred legal costs of over half a million dollars, undoubtedly causing similar expenditure by the Respondent. What is more, it was not until August 2016 that the Applicant obtained the expert report of Dr Brent Coker which is now the basis for the quantification of the vast majority of its loss. Given Dr Coker's apparent lack of accounting expertise, it is possible that the Applicant may seek to adduce further expert evidence. Consequently, in view of these circumstances and the broader picture recounted above at [3], I am satisfied that it is appropriate to make an order for costs.
32 Under s 109(6) of the Act, the Tribunal may require that a costs order be complied with before the proceeding continues. Given the basis for making the costs order is essentially the failure of the Applicant to properly pursue its claim, I am satisfied that it is in the interests of justice to require costs to be taxed and paid forthwith, with the proceedings stayed until the completion of that process.
33 The Respondents sought indemnity costs on the basis that this case "should truly be considered exceptional and rare",[27] and noted that I had previously warned that "if [the Applicant] do[es]n't provide proper pleadings by 1 March, I will seriously consider just striking the whole matter out".[28] The case was said to be relevantly exceptional because of:[29]
[T]he sheer size of damages claimed relative to the ongoing failure to particularise any basis for those amounts, the introduction of new and very significant allegations of fact this late in the proceeding after all the evidence has been filed, including allegations not referred to in any of that evidence, and including a new allegation, effectively, of fraud, lacking any particulars.
34 There was some suggestion by Senior Counsel for the Respondent that indemnity costs ought to be awarded because the PFAPOC contains allegations of conduct akin to fraud, but insofar as they may have influence on costs, the matter was not pursued with any force. This is likely due to the ancillary nature of the allegation, the fact that leave was not granted to file the PFAPOC and that the allegation was first made in the PFAPOC, meaning its relevance to costs previously incurred is limited. Of course, the position on indemnity costs may ultimately be different if the Applicant decides to maintain the allegations akin to fraud in the proposed further amended statement of claim which it files.[30]
35 Senior Counsel for the Applicant submitted that the present case does not fall within the class of very exceptional cases in which indemnity costs are warranted in VCAT,[31] and specifically that s 78(1) of the Act cannot be enlivened by bona fide but unsuccessful attempts to amend deficient pleadings.[32]
36 It was common ground that indemnity costs may be awarded under the Act. Senior Counsel for the Respondents referred me to Pizer's commentary, the correctness of which the Applicant did not impugn, though this may have been as a result of the opportunity to address this issue at a later date. Pizer's commentary usefully extracts the following comments:[33]
37 I agree that the Applicant's conduct is unsatisfactory and more than disappointing for the reasons outlined by the Respondent. Yet given that the general rule in VCAT is that each party bear their own costs, and having regard to the authorities extracted in Pizer's commentary, it is clear that a very high threshold must be satisfied before indemnity costs are to be granted. I do not believe that threshold is reached in these circumstances.
38 In Martin v Fasham Johnson Pty Ltd, Bell J stated that the Tribunal must "select the appropriate scale by reference to considerations connected with the case and to compensate one party, not punish another".[34] The commercial complexity of this proceeding is clear from the allegations and claims made by the Applicant and was recognised by Justice Garde's referral of this matter to me just seven weeks before the 20 day trial was due to commence. Accordingly, it would be appropriate that the costs order be on a standard basis under the Supreme Court scale, due to the amount claimed and the commercial nature of this proceeding. This was the approach taken by Deputy President Lulham in his order of 14 July 2016, where costs of the day were awarded on a standard basis under the Supreme Court scale, to be assessed by the Costs Court.[35]
39 As I am not satisfied that the Applicant's claim is frivolous, vexatious, misconceived or lacking in substance, otherwise an abuse of process or that the Applicant's conduct is sufficiently reprehensible or prejudicial to justify summary dismissal, it follows that the Respondents' application for the claim to be dismissed or struck out under s 75 or s 78 of the Act is denied. On the basis that it is fair to do so having regard to the Applicant's conduct in this proceeding, I propose to order that the Applicant pay the Respondents' costs of and incidental to these proceedings save for where such costs have been paid pursuant to a previous order of this Tribunal, on a standard basis assessed on the Supreme Court scale, to be taxed and paid forthwith. On the basis identified in these reasons the Applicant has leave to file the PFAPOC, with or without the modification I have mentioned with respect to allegations akin to fraud, and the proceedings will be stayed pending taxation and payment of costs.
40 In the absence of any party indicating on or before 12 May 2017 that they wish to make further submissions on the issue of costs, these reasons will stand as final reasons on the issue of costs and parties will be required to bring in orders accordingly. Importantly, the above findings do not preclude further orders made in the exercise of case management powers, including inter alia requiring issues statements.
[2] Respondent's Outline of Submissions (13 April 2017) [8]-[64].
[3] Respondents' Outline of Submissions (13 April 2017), 20 [93].
[6] Transcript (21 April 2017), 110; see also, Respondents' Outline of Submissions (13 April 2017) 19 [85] as extracted below at [19].
[8] Respondents' Outline of Submissions (13 April 2017) 14-5.
[10] This figure reflects the amendments made before me by Senior Counsel for the Applicant, as well as the correct calculation of the total sum of the items in [1(a)] of the particulars of loss and damage in the PFAPOC, which was incorrectly calculated in the PFAPOC.
[11] Jason Pizer and Emrys Nekvapil, Pizer's Annotated VCAT Act (Thomson Reuters, 5th ed, 2015) 385.
[13] See also Transcript (21 April 2017), 52.
[14] Jason Pizer and Emrys Nekvapil, Pizer's Annotated VCAT Act (Thomson Reuters, 5th ed, 2015) 321-5.
[16] Respondents' Outline of Submissions (13 April 2017) 18 [emphasis omitted].
[17] Respondents' Outline of Submissions (13 April 2017) 18 [emphasis omitted].
[18] Jason Pizer and Emrys Nekvapil, Pizer's Annotated VCAT Act (Thomson Reuters, 5th ed, 2015) 327-9.
[19] Respondents' Outline of Submissions (13 April 2017) 19.
[21] Affidavit of Ines Brcic sworn 13 April 2017.
[22] Respondents' Outline of Submissions (13 April 2017) 16.
[24] Explanatory Memorandum, Victorian Civil and Administrative Tribunal Act 1998 13, 19.
[25] [2003] VCAT 42 at [23]-[24].
[26] Martin v Fasham Johnson [2007] VSC 54 at [27].
[28] Transcript (15 February 2017), 11.
[32] Transcript (21 April 2017), 126-7.
[33] Jason Pizer and Emrys Nekvapil, Pizer's Annotated VCAT Act (Thomson Reuters, 5th ed, 2015) 680-1.
[34] Martin v Fasham Johnson [2007] VSC 54 at [35].
[35] See also, Orders of 16 January 2017 where costs were awarded based on the Supreme Court scale, but note the Orders of 22 March 2016 where the costs awarded by Senior Member S Moraitis were fixed at $695.00.
Pizza Fellas Pty Ltd
Eat Now Pty Ltd [2017] VSC 226
(1983) 154 CLR 87
(2008) 19 VR 640
(1964) 112 CLR 125
(2005) 13 VR 483