Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd

Federal Court of Australia|1993-02-19|Before: Foster J, Einfeld J, Olney J, Sackville JJ

s regard his Honour made the following orders, which I number in accordance with the orders taken out: "(5)The applicant cross-respondent provide security in the sum of $40,000.00 in such form as the Registrar shall approve for the respondent cross-claimant's costs of the proceedings up to the commencement of the trial, with liberty to the respondent cross-claimant to apply to vary the amount of such security upon the matter being placed in the list of cases ready for hearing. (6)The proceeding and cross-claim be stayed until such time as the security ordered by order (5) hereof has been given by or on behalf of the applicant cross-respondent."

His Honour also ordered that applicant cross-respondent pay the respondent cross-claimant's costs of the application for security of costs. The appellant brought an appeal against these orders. The appeal was obviously incompetent as it was brought from an interlocutory order without the leave of the Court required by s 24(1A) of the Federal Court of Australia Act 1976. It also failed to specify the grounds of appeal in accordance with Order 52 Rule 13(2)(b). These defects were brought to the attention of the applicant's solicitors by the respondent's solicitors via a letter dated 3 May 1995. This letter ended with the following paragraph: "For these reasons we invite your client to discontinue its appeal within seven days of the date of this letter, failing which our client will file a motion seeking an order that the appeal be dismissed as incompetent under Order 52 Rule 18 of the Federal Court Rules, and will use this letter in support of seeking an order that your client pay our client's costs of appeal on an indemnity basis."

On 16 May the respondent filed a notice of motion returnable on 1 June for dismissal of the notice of appeal and for an order that the appellant pay the respondent's costs of the motion on an indemnity basis. The applicant then sought, by notice of motion returnable on the same day, to obtain leave to appeal from the decision of Justice Olney. The matters came before Justice Olney, who referred them to the Full Court. He referred the questions whether leave should be granted so that the appeal and application for leave could be considered at the same time. He ordered that: "(a)The appellant's application for leave to appeal be referred to the Full Court; (b)The appellant pay the respondent's costs of the day; (c)The respondent's application for dismissal of the appeal be referred to the Full Court; and (d)The costs of the respondent's application be reserved."

Thereafter ordinary steps were taken to bring the appeal and associated proceedings to the state of readiness where it could be set down for hearing. It was, in fact, listed for hearing today. However, on 6 October the appellant's solicitors advised that the appellant was abandoning the application for leave to appeal and the appeal, and that abandonment has been persisted in today and consequential orders have already been made. The respondent has brought a notice of motion seeking the costs of the two notices of motion to which I have referred. It seeks that those costs be paid to it on an indemnity basis. In support of the notice of motion it is submitted that the appeal and application for leave were demonstrably hopeless from their inception. Reliance has been placed on a number of authorities. For the purpose of these short reasons it is sufficient only to refer to two statements of principle. The first is to be found in the judgment of Justice Woodward in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397. His Honour said, at 401: "I believe that it is appropriate to consider awarding solicitor and client' or indemnity' costs whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law."

His Honour's reasons were referred to by Justice French in J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers, Western Australian Branch & Anor (Unreported, 19 February 1993). His Honour said: "Although there is said to be a presumption in such cases that the action was commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law, it is not a necessary condition of the power to award such costs that a collateral purpose or some species of fraud be established. It is sufficient, in my opinion, to enliven the discretion to award such costs that for whatever reason a party persists in what should, on proper consideration be seen to be a hopeless case."

Justice Olney gave a careful judgment in which he dealt fully with the principles applicable to the question of the ordering of security for costs and, if I may say so with respect, clearly exposed his reasons for making the orders that he gave. It should, of course, be remembered that his judgment was given in the exercise of a discretion. No reason was ever advanced prior to the hearing today as to why the exercise of that discretion could conceivably be said to have miscarried. Some suggestion has been raised in the course of this hearing as to the existence of an arguable point of appeal. In my view it has been raised far too late to be of any assistance to the appellant in this matter, even if it has any substance. In my view the appeal was basically hopeless and should not have been persisted in. It was abandoned at the eleventh hour after the respondent had necessarily incurred considerable cost. I should add that not only is this a case which appears to have been hopeless, but it is an appeal which has never been put in the proper form and at no stage, despite the correspondence between the parties, has the appellant identified an arguable issue. In my view the case falls outside the kind of case referred to by Kirby P in Huntsman Chemical Co Australia Ltd & Anor v International Pools Australia Pty Ltd & Ors (1994-5) NSWLR 242 at 247. I am of the view that this is an appropriate occasion for the awarding of indemnity costs. Some discussion has taken place as to whether the costs order should embrace the costs of the engagement of senior counsel to appear on the arguing of this notice of motion. In my view this question is accommodated in the form of the order which I propose, and which follows the order made by Woodward J Fountain at 401. The order I propose is that the appellant pay the respondent's costs of each of the motions on a full indemnity basis, except insofar as they are of unreasonable amount and have been unreasonably incurred. I certify that this and the preceding five (5) pages are a true copy of the reasons for judgment herein of the Honourable Justice Foster. Associate: Date: 11 OCTOBER 1995

IN THE FEDERAL COURT OF AUSTRALIA ) ) No. VG511 of 1995 VICTORIA DISTRICT REGISTRY ) ) No. VG57 of 1993 GENERAL DIVISION ) BETWEEN:MARKET SERVICES INTERNATIONAL PTY LTD Appellant AND:NUTRI-METICS (INTERNATIONAL) AUSTRALIA PTY LTD Respondent CORAM: EINFELD, FOSTER & SACKVILLE JJ DATE: 11 OCTOBER 1995 PLACE: MELBOURNE REASONS FOR JUDGMENT (Extempore) SACKVILLE J: I agree with the orders proposed by Justice Foster and His Honour's reasons for those orders. I have nothing to add to what His Honour has said. I certify that this page is a true copy of the reasons for judgment herein of the Honourable Justice Sackville. Associate: Date: 11 OCTOBER 1995 A P P E A R A N C E S COUNSEL FOR THE APPELLANT: A. GARANTZIOTIS INSTRUCTED BY: ARTHUR ROBINSON & HEDGEWICKS COUNSEL FOR THE RESPONDENT: DR BUCHANAN QC INSTRUCTED BY: ALLEN ALLEN & HEMSLEY DATE OF HEARING: 11 OCTOBER 1995 DATE OF JUDGMENT: 11 OCTOBER 1995

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