Ibrahim v PERI Australia Pty Limited

Judgment 1BEAZLEY P: The applicant seeks leave to appeal from a costs order made by Associate Justice Macready on 13 February 2013 when his Honour granted leave to the respondent to discontinue proceedings brought against the applicant and two other defendants relating to certain scaffolding that had initially been hired and later sold to the first defendant. There was a retention of title clause in the sale agreement between the respondent and the first defendant. The third defendant was the principal of the first defendant and had guaranteed payment of moneys due by the first defendant to the respondent. 2Apart from the payment of an initial sum of $10,000, the monthly hire charges were not paid nor was the sale price ever paid. The applicant, the second defendant in the proceedings, had obtained possession of the scaffolding and had used it for the purpose of building projects on various building sites. 3Both the hire arrangement and the sale to the first defendant had been at the request of the applicant, who purported to act as agent of the first defendant. 4There was a further hiring agreement between the respondent and the first defendant in respect to which the applicant also purportedly acted as agent for the first defendant. Hiring fees in respect of that agreement were also not paid. 5At all times the goods were in the possession or control of the applicant. Some of the goods, to a value of less than $20,000, were damaged whilst in his possession or control when a wall on a building site collapsed. In April 2012, the respondent engaged an agent to pursue the applicant for moneys owing under the various agreements with the first defendant. The agent had a telephone conversation with the applicant in which the applicant said he would pay the respondent in full after collecting insurance moneys relating to the damage he had sustained when the wall on a building site had collapsed. 6In another telephone call with the agent, the applicant said that he would pay the respondent as soon as he received moneys from his insurance claim. In that conversation, the applicant also promised to return the scaffolding. 7In June 2012 the respondent made an adjudication application under the Building and Construction Industry Security of Payment Act 1999 in respect of the sale of the equipment to the first defendant. The respondent was adjudicated to be entitled to an amount of just over $450,000. 8There was a further conversation on 12 June 2012 between the agent and the applicant. There is a dispute as to what was said in that conversation, but even on the applicant's version it is apparent that he was in possession or control of the scaffolding and was using it. Further, on the applicant's version, he promised to return the goods in September. The respondent did not wait for the promised return of the goods but commenced Supreme Court proceedings seeking an order for the delivery of the goods. Declaratory relief was also sought. 9The matter was listed in the duty judge's list on 18 July 2012 when an ex parte order for the preservation of the goods was made. This relief was extended at an inter parties' hearing on 20 July 2012. In the following week, steps were taken to return the goods to the respondent voluntarily, that is, it was not a requirement of the orders that had been made in the proceedings up to that date that the goods be returned. The applicant did not, in the course of the goods being returned, dispute the respondent's title, nor did the other two defendants. 10On the next return date, 27 July 2012, the court was advised that nearly all the goods had been returned. Directions were made on that date that the matter continue on pleadings. All goods had been returned by 2 August 2012 except those that had been damaged. 11Pursuant to the court's direction the respondent filed a statement of claim on 17 August 2012, claiming damages against the first and third defendants and alternatively claiming, as against the applicant, damages for breach of warranty of authority. 12The particulars of damage were specified in para 71 of the statement of claim as being loss of the use of the equipment, calculated at the plaintiff's standard rental charges and the value of goods not returned to the plaintiff and other damage, including delivery and collection costs, wear and tear, and the like. 13The applicant filed his defence to the claim against him on 27 August 2012. In that pleading, the applicant contended he had authority contrary to the first defendant's evidence in the interlocutory proceedings. 14On 15 November 2012, the respondent agreed to resolve its claim as against the first and third defendants on the basis of a payment of $15,000 with no order as to costs. On the same date, the respondent offered to the applicant that the proceedings against him be discontinued with no order as to costs. That offer was repeated on 19 November 2012 but was rejected by the applicant. 15The primary judge found, at [37] ff, that it was apparent from the affidavit evidence that had been filed that the goods had been used by the applicant and that the first and third defendants' involvement in the transactions had been because, at that time and, unbeknown to the respondent, the applicant was bankrupt. The first defendant had given evidence in an affidavit that he had never had possession of the goods, and that the return of the goods had been arranged as between the applicant and the respondent. 16The primary judge, in determining whether a costs order ought to be made in the applicant's favour, on the discontinuance, reviewed the case law including, relevantly, Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; 44 FCR 194; Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622; ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; 101 FCR 548; Fordyce v Fordham [2006] NSWCA 274; 67 NSWLR 497; and Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32. 17Although each of those cases related to different facts, the principles that are to be derived from them, in circumstances where a Court is requested to make a costs order, when proceedings have not been heard to termination include the following: whether a party acted reasonably in commencing the proceedings; whether a party had been successful in obtaining interlocutory relief; whether the party sued had acted reasonably; whether the responding party had acted reasonably in defending the proceedings; whether the proceedings terminated after interlocutory relief had been granted; and further, whether the primary judge was satisfied that the party seeking to terminate the proceedings prior to a full hearing had almost a certain chance of success. 18An applicant for costs where proceedings had not been heard to fruition need not prove each or every one of these matters but they are the factors that the courts have considered relevant to a determination as to whether to order costs. 19In making that determination, the Court takes into account the objective circumstances and not the subjective motive of the party seeking to discontinue, nor does the Court determine the dispute that the party sought to avoid by discontinuing. 20The primary judge found that the respondent had acted reasonably in commencing proceedings against the applicant and specified his reasons for that conclusion: see his Honour's judgment at [52] and [56]. His Honour considered that the applicant had effectively surrendered after the grant of interim relief, so that in accordance with the statements made in ONE.TEL, this would normally indicate that the successful party, albeit seeking leave to discontinue, should be awarded costs. 21His Honour refused an application by the respondent for indemnity costs given that the offers that were made had been made late in the proceedings. 22The applicant contends that, in coming to his conclusion, his Honour made two essential mistakes. First, contrary to what his Honour found, at [5], the applicant did not consent to the discontinuance. This submission is correct. 23In a letter dated 20 November 2012 from the applicant's solicitors to the respondent's solicitors, the applicant's solicitors wrote that the applicant had no objection to discontinuance but "his costs to date must be paid". That is not a consent to the discontinuance as such. 24The question that needs to be asked therefore in respect of that error is whether it was of such a nature as to impact on the exercise of his Honour's discretion. I do not think it does. There was in effect no challenge to the discontinuance provided that the applicant got his costs. What was in issue in the application before the Associate Judge on the discontinuance application was not whether the respondent should be granted leave to discontinue, but whether leave should be granted on condition that costs be paid. By that stage the respondent was seeking costs and likewise the applicant was resisting costs and seeking a costs order in his favour. 25It follows that although his Honour may not have been strictly correct in saying that the second defendant consented to the discontinuance, the question of discontinuance was not, in effect, in issue. What was in issue was the question of costs and that is what his Honour dealt with. 26The second challenge to his Honour's reasons was in respect of his Honour's finding, particularly at [60] of his judgment, that the applicant had surrendered to the respondent's claim and for that reason should pay the respondent's costs of the proceedings as against the applicant. 27This point does not succeed. It is clear that in his reasons, the Associate Judge had clearly in the forefront of his consideration of the matter the applicant's surrender at the interim stage of the proceedings. His Honour was aware that the matter had thereafter proceeded on pleadings: see judgment especially at [27], [31] and [32]. 28There was no error in his Honour considering that the interlocutory proceedings had constituted the main controversy between the parties up to that point and that there had been a surrender by the applicant in those proceedings, by the return of the goods. Thereafter, as the evidence established, the costs incurred on both sides were small, as compared to the total costs of the proceedings up to the point of discontinuance. 29The Court sees no error, therefore, in his Honour's exercise of discretion. The Court is also concerned that, if leave to appeal was granted, the amount potentially involved is very small. The respondent would have had a strong case for an order for costs of the proceedings up to the point where the goods had been returned. 30There is one other matter that should be recorded for the purposes of the record. The order made by his Honour was that the applicant pay the plaintiff's costs of proceedings against the applicant. As I understand that order, it is only the costs that were incurred as against the applicant that are covered by the order and a concession to that effect has been properly made by counsel for the respondent. Mr Finnane, very properly and fairly, accepted without any contention and what is, in any event, clear on the face of the record, that the order does not cover costs incurred in prosecuting the claim as against the first and third defendants. 31For that reason, and subject to the additional reasons that Justice Leeming wishes to add, the Court refuses leave to appeal. 32LEEMING JA: I agree with the reasons and conclusions of the President. I would add only this. First of all, that in the applicant's written submissions there were four further matters touched on; they were waiver following the compromise settlement with other parties, detinue, estoppel and possible abuse of process. None of those submissions were developed orally. They do not give rise, in my view, to any significant basis on which leave to appeal could be granted. 33Finally I agree with what the President has said about the proper construction of the order made by the Associate Justice. 34BEAZLEY P: The summons for leave to appeal is dismissed with costs.