International Skin Care Suppliers v Commonwealth Bank of Australia

Judgment 1The principal judgment in these proceedings was handed down on 29 November 2013: International Skin Care Suppliers v Commonwealth Bank of Australia [2013] NSWSC 1768. 2This judgment deals with costs. Definitions in the principal judgment are used here. 3On 29 November 2013 I directed the parties to exchange written submissions in brief form by 9 December 2013, setting out the orders for costs for which they contended. I directed that any response to those submissions served, be served by 13 December 2013. I directed that copies of submissions be delivered to my Associate. 4Written submissions were received from the Bank. None were received from any other party to the proceedings. 5As to its defence of the plaintiffs' claim, the Bank seeks the costs incurred from and including 20 February 2013 of meeting the clawback arrangement claim on the indemnity basis because, it says, from that time, that claim was exposed as being manifestly groundless, and in promoting it thereafter, baseless charges of dishonesty were levelled at the Bank. Otherwise, the Bank seeks the costs of its defence on the ordinary basis. 6The Bank seeks the costs of its Cross-Claim against the plaintiffs and the costs of its proceedings against the guarantors on the indemnity basis under the terms of the contractual documents which apply in each instance. UCPR Pt 42 r 42.1 provides: Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to whole or any part of the costs. 7The Bank has succeeded in its defence of the plaintiffs' claim, in its cross-claims against the plaintiffs in debt, in its claims against all personal guarantors, and in its defence of the female guarantors' cross-claims. 8Leaving aside the special orders sought, which are dealt with below, there is no reason why some other order other than that the unsuccessful parties in each instance pay the Bank's costs should be made. 9Under cll 4.1 and 4.3 of the Guarantee and Indemnity - Terms, to which each plaintiff, Michaelson, Ruskin and the female guarantors, bound himself, herself or itself in favour of the Bank, each must pay the costs incurred by the Bank on default, or in connection with the exercise of the Bank's rights under the Guarantee and Indemnity. Under cl 26, the costs in connection with legal advisers are to be on a full indemnity basis or solicitor and own client basis, whichever is higher. The Bank seeks indemnity costs, presumably as the higher. In addition, cll A19.1 to A19.3 of the Standard Terms applicable to the Rate Tracker and the Bridging Loan (principal judgment [515]) contain provisions to the same effect. 10There is no reason why effect should not be given to these contractual arrangements. The Bank is entitled to the costs of its cross-claim against the plaintiffs, and to the costs of its claims and defences against the guarantors, on the indemnity basis. 11Although the clawback arrangement claim was abandoned, I nevertheless dealt with it in [587]-[605] of the principal judgment. 12The indemnity costs order sought against the plaintiffs in connection with the clawback arrangement claim is sought in respect of the period commencing fourteen days after the service of the affidavits of Ogilvy and Porteous, all of which had been served by 20 February 2013. Those affidavits established that the CPL Group facilities were not included in the Specific Provisions List. 13After service of the affidavits, the plaintiffs pressed for and obtained orders by consent for further discovery from the Bank on the issue of the Bank's consideration of the CPL Group facilities in the context of the clawback provisions. This produced nothing. The plaintiffs then issued subpoenas directed to the same thing. This too produced nothing. These steps were taken on the advice of Senior Counsel and were complete before the hearing began on 26 August 2013. 14At that point, the plaintiffs had affidavits that the CPL Group facilities were not part of the review and the Bank had produced no further documents pursuant to discovery orders and subpoenas on the question. 15Whilst it may well have been the case that it should have been obvious earlier (indeed, far earlier) that the clawback arrangement claim was groundless, in my view, this was certainly the case by the time of the commencement of the hearing. During the hearing there was no challenge to the fundamental fact that the CPL Group facilities were not even part of the review. More than this, and significantly, there was no proper basis for the charges of dishonesty levelled at the Bank in the context of this manifestly groundless claim. 16In these circumstances, an order that the plaintiffs pay the Bank's costs on the clawback arrangement claim on the indemnity basis from 26 August 2013 is appropriate. 17Under Consent Orders made on 29 April 2011, 20 February 2012 and 9 August 2013, the plaintiffs have provided for security for the Bank's costs in the amount of $525,000. The Bank seeks an order that this amount be released to it. Clearly its costs will vastly exceed this amount. It is appropriate that I make the order sought. 18Four sets of proceedings have been determined, of which the Bank is plaintiff in three. It is fair to say that the bulk of attention was paid to the plaintiffs' proceedings. Hearing fees payable under the Civil Procedure Regulation 2012 (NSW) are usually paid by the plaintiff. In this case, if the plaintiff in each case paid the fee, the Bank would pay 75% of the total fees and the plaintiffs 25%. The Bank seeks an order that the plaintiffs pay 75% of the total, and it 25%. I do not consider this to be appropriate because the three sets of proceedings brought by the Bank could have been brought in one set of proceedings, indeed as cross-claims in the main proceedings. 19I make the following orders: 2010/326659