Czerwinski v Syrena Royal Pty Ltd

Supreme Court of Victoria|2000-04-12|Before: Warren J

COSTS - unsuccessful application under Corporations Law, s.247A - lack of genuine purpose - statutory power sought to be used to overcome a claim for legal professional privilege in related proceedings - whether costs on a solicitor/client basis.

On 7 April I delivered judgment dismissing an application brought by the plaintiff seeking access to records of the company, Syrena Royal Pty Ltd pursuant to s.247A of the Corporations Law. As a result of the dismissal of the application the respondent seeks an order that the applicant's costs be paid on a solicitor/client basis. Order 63 Rule 28 of the Supreme Court Rules provides that costs are to be taxed on a party/party basis, a solicitor/client basis or such other basis as the court may direct. Rule 30 provides for costs on a solicitor/client basis. Otherwise, Rule 31 provides that except as provided by the Rules or any order of the court costs are to be taxed on a party and party basis.

It is a well established principle that the ordinary rule is that in litigation where a court orders costs to be paid by one party to another party the usual order is for payment of such costs on a party and party basis: Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225, 230 and 232; Re Wilcox, ex p. Venture Industries Pty Ltd & ors (1996) 141 ALR 727. However, the discretion of the court to order costs and the basis for the making of such an order is always "absolute and unfettered" and a court may depart from the usual practice in the course of exercising the judicial discretion: Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202; (1988) 81 ALR 397, 400; Re Wilcox, supra.

A review of the authorities reveals that there are a number of grounds whereby the court in the exercise of the discretion should award solicitor and client costs. These grounds may be briefly set out as follows:

1. Where the bringing of the application was high handed: AGC Limited v De Jager [1984] VicRp 40; (1984) VR 483, 502.

2. If the application had no chance of success: Colgate-Palmolive Company v Cussons Pty Ltd, supra, 231.

3. If the application was hopeless: J. Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (No. 2) [1993] FCA 42; (1993) 46 IR 301, 303.

4. If the application was unnecessary: Regata Developments Pty Ltd v Westpac Banking Corporation, unreported judgment of the Federal Court, 5 March 1993.

5. If the application was not brought for a bona fides purpose but to achieve an ulterior purpose: Regata Developments Pty Ltd, supra.

6. If the application was commenced in wilful disregard of known facts or contrary to well established law: Fountain Selected Meats, supra.

7. If the justice of the case warrants solicitor and client or indemnity costs: Andrews v Barnes (1887) 39 Ch D 133.

8. If there are special or unusual features that warrant the exercise of the discretion to order solicitor and client or indemnity costs: Fountain Selected Meats, supra, 400.

In summary, my findings in relation to the conduct of the applicant were that she purported to utilise the power under s.247A of the Corporations Law in order to overcome and obviate difficulties presented by the claim for legal professional privilege in other proceedings in this court. In so doing, I found that the applicant did not institute the proceeding for a genuine purpose rather, for an ulterior purpose. The law in relation to s.247A is well established. It is a provision that can be relied upon by a party who has a real interest or investment to protect and seeks access to documents for a legitimate and proper purpose (see Re Claremont Petroleum N.L. (No. 2) (1990) 8 ACLC 548; Claremont Petroleum N.L. v AGL (1990) 1 ACSR 504; Quinlan v Vital Technology Australia Ltd (1987) 5 ACLC 389; Intercapital Holdings Limited v MEH Limited & ors (1988) 13 ACLR 595).

On the basis of my findings in my reasons in the substantive application and applying the principles enunciated in the authorities I am satisfied that the application was commenced when it had no chance of success, was unnecessary but above all else was not prosecuted for a bona fide purpose of protecting and enforcing a legal right rather in order to achieve an ulterior or extraneous purpose. In those circumstances I am satisfied that it is appropriate to exercise the discretion and order that the applicant pay the costs of the respondent on a solicitor/client basis.

At a glance

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Judgment (15 paragraphs)

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Cases Cited (4)