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[2004] VCAT 2348
General information, not legal advice.
Victorian Civil and Administrative Tribunal
2004-11-29
Original judgment source is linked above.
The Applicant's costs of opposing applications by Respondents One to Five
Respondents 1 to 5 failed in their bids to have the application struck out or dismissed as against them. Since I have not made an order under section 75(1), of the Act, the relevant provisions are in section 109 of the Act, not section 75(2). Section 109 provides that costs lie where they fall unless the Tribunal exercises its discretion to order otherwise. The Applicant has suggested this is an appropriate case for me to exercise my discretion to order costs. Section 109(3) sets out factors the Tribunal should consider in the exercise of its discretion to make an order for costs. I will not re-iterate them here but simply note that the relevant paragraphs are as follows:
(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.
The proceeding is commercial in nature and relatively complex. It involves a fairly large claim. This was at stake in the section 75 application. These circumstances indicate a costs order is appropriate generally. The First Respondent did not deny some dealings with the Applicant and some form of agreement with it. There is a dispute about the facts beyond that. Given that for a section 75 application to succeed a proceeding must be obviously hopeless obviously unsustainable or bound to fail I consider that the First Respondent's application pursuant to that section was relatively weak.
Similarly the Third to Fifth Respondents were implicated by statements and documents they do not deny. The extent of their involvement and whether they were parties to any agreement remain in dispute as matters of fact. It was submitted that the applications by the Third and Fourth Respondents were justifiable because they were not incorporated at the relevant time and no pre-incorporation agreement was pleaded. I found these factors less important than others in deciding the action against them should not be struck out.
Accordingly, the First and Third to Fifth Respondents should pay that part of the Applicant's costs which can be attributed to meeting their application under section 75.
18.
The Second Respondent's circumstances were different. On the material I saw, the Second Respondent's application under Section 75 had a greater likelihood of success and while it did not succeed that Respondent ought not, taking into account particularly section 109(3)(c), to meet any costs other than his own in this application. The Second Respondent's application was understandable given the paucity of supporting material provided by the Applicant for its claim.
It is not appropriate to reserve the Applicant's costs as the Tribunal is quite likely to be constituted differently for the hearing of the substantive application and there are relevant factors to which only the Tribunal as constituted for the section 75 hearing has access. It was submitted for the First Respondent that the Applicant's costs could not be apportioned and that Respondents Six to Nine had provided most of the material before the Tribunal. On reviewing my notes of the submissions made to me, I have formed the view that around one quarter of the time in hearing the section 75 applications was devoted to dealing with applications by Respondents One, Three, Four and Five, which all had the same representative. Accordingly I consider they are responsible for one quarter of the Applicant's costs and should pay one quarter of its reasonable costs of defending the strike-out applications, according to the relevant County Court Scale.
I turn now to the question of the indemnity sought by the Applicant from the First and Second Respondents for any costs of Respondents Six to Nine which the Applicant is to bear. The Applicant said it relied on the letter from the solicitors for Respondents One and Two. It need not have done so. The Applicant was free to conduct further enquiries about the actual ownership of the hotels, so that where the section 75 applications have succeeded because the wrong parties were named (that is in the cases of at least Respondents eight and twelve and also Respondents ten and eleven) the Applicant could not possibly expect any indemnity.
In the other instances, the section 75 applications succeeded because the Applicant claimed that Respondents One to Five, or some of them were agents, but asserted no facts which could sustain such a claim. There is no imaginable reason why the other Respondents ought to indemnify the Applicant for meeting the other parties costs in those circumstances.
The Respondents which succeeded in their applications to have the proceeding struck against them all sought indemnity costs. Pursuant to section 75(2) the Tribunal has a discretion to order that the Applicant pay an amount to compensate them for "costs, expenses, loss, inconvenience and embarrassment".
On the question of whether section 75(2) or section 109 of the Victorian Civil and Administrative Tribunal Act 1998 applied, Mr O'Brien directed my attention to cases decided in the Tribunal which indicated that section 75(2) should govern the costs situation to the exclusion of section 109(1) - the provision that "each party bear its own costs, subject to the rules set out in that section." If section 109 were the only relevant section I would still be of the view that this case is an appropriate one for the exercise of the Tribunal's discretion to make an order for costs, so I would not consider section 109(1) any further. If the costs order I make is characterised as an order pursuant to section 75(2), the other principles of section 109 offer guidance.
For Respondents Six to Nine it was argued that ignoring their letter of 2 August 2004 was unreasonable enough to warrant an indemnity costs order. I do not agree, the decided cases seem to require a greater degree of wilful disregard of known facts and law than occurred here. I am not persuaded that the Applicant's lack of reference to sufficient evidence was a "wilful disregard of known facts", in the words of His Honour Justice Shepard, to which I was referred. An order on a party party basis is however appropriate.
Similarly it was argued for Respondents Ten and Eleven that their solicitor's letter of 14 July 2004 made their position (including the fact that they were not the relevant proprietors) quite clear. Again, while I am of the view that this is an appropriate occasion for an order as to costs, the disregard of these assertions (albeit true) by the Applicant does not to my mind justify an order for indemnity costs.
The Twelfth Respondent is in a similar position. Its representatives wrote several times to the Applicant's representatives arguing that the claim was without merit. However, as the Applicant said in its submissions on costs, that is a not infrequent occurrence in litigation. Ignoring it does not amount to a justification of an order for indemnity costs. Similarly, refusing the offer to discontinue and "bear own costs" does not justify an order for indemnity costs, in my view.
Accordingly I am of the view that the Applicant should meet the reasonable costs of Respondents Six to Twelve.
The First, Third, Fourth and Fifth Respondents pay one quarter of the reasonable costs of the Applicant in the strike out hearing, such costs to be taxed in default of agreement on County Court Scale 'D'
The Applicant pay the reasonable costs of Respondents Six to Twelve, such costs to be taxed in default of agreement on the relevant County Court Scale as follows:
(a) for Respondents Six to Nine, County Court Scale 'C';
(b) for Respondents Ten and Eleven, County Court Scale 'A';
Herniman Associates Pty Ltd
Williams
The Applicant submitted first that a costs order ought not be made as this would be "unusual" in the Civil Claims List.
However, if orders were made, the Applicant submitted that Respondents one to five, which had failed in the bid to have the matter struck out, should pay the Applicant's costs.
Next the Applicant argued that since it had joined the Sixth to Twelfth Respondents on the basis of information given to it by the Solicitors for the First and Second Respondent then the costs of Respondents Six to Twelve should be met not by the Applicant but by the First and Second Respondent, or that at least they should indemnify the Applicant for any such costs.
The First, Third, Fourth and Fifth Respondents argued that it was appropriate for the Applicant to meet its own costs of opposing the applications for the summary dismissal, even where those applications had been unsuccessful. They argued it was not appropriate to apportion the Applicant's costs and ask them, the unsuccessful applicants for dismissal, to pay a portion. In any case, they argued, the Applicant's costs should be reserved. As to any possible apportionment, they pointed out that the bulk of the material dealt with by the Tribunal had been produced by Respondents Six to Nine.
It was further argued for Respondents Three and Four that their applications for summary dismissal though unsuccessful should be seen as appropriate since they were not incorporated at the time of formation of the agreement alleged by the Applicant in its substantive application.
For the Second Respondent, Mr Goudberg, also unsuccessful in his application for summary dismissal, it was argued that any costs of the Applicant should be reserved and that the Tribunal had acknowledged some weight in submissions made for Mr Goudberg so that a costs order against him would not be appropriate.
Concerning the indemnity sought by the Applicant for the costs of Respondents Six to Nine, the First respondent pointed out that the Applicant's letter to their solicitors (which led to the Applicant joining them as Respondents) merely asked for the names of the relevant hoteliers, not for information about who was liable to pay the Applicant's fees. The solicitors it was argued had not done anything to suggest it was appropriate for the Applicant to join Respondents Six to Nine. Further, Mr Dean for the First and Third to Fifth Respondents pointed out, the other Respondents (Six to Nine) had each put the Applicant on notice that they would seek costs if their applications for summary dismissal succeeded; they had "warned" the Applicant.
Mr Wells for the Second Respondent agreed with this, arguing that the Applicant's request to be indemnified for any costs of Respondents Six to Nine was "preposterous". He and Mr Dean suggested the Applicant should take responsibility for its decision to join Respondents Six to Nine.
Mr O'Brien for Respondents Six to Nine sought indemnity costs and/or compensation pursuant to section 75(2) of the Victorian Civil and Administrative Tribunal Act 1998 ("the Act"), to the level of indemnity costs. He contended that the Applicant's conduct in ignoring his client's warning letter of 27 August 2004 had been so unreasonable as t o merit an order for indemnity costs.
Mr O'Brien referred the Tribunal to cases decided in this Tribunal and elsewhere to support his submissions. He referred the Tribunal a decision of Justice Shepard in Colgage-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1998) 46 FCR 225 on the issue of when it is appropriate to depart from the "ordinary rule" of party party costs to impose indemnity costs. The passage to which he referred includes the following:
(1998) 46 FCR 225