ITP The Income Tax Professionals Pty Limited v Catherine Suilolovao Tuita and Fisipuna Lakepa Tuiaki

Procedural history

1. On 15 April 2015, the plaintiff filed a Statement of Claim pleading that it had agreed to provide credit to the first and second defendants in the amount of $650,000 and that the defendants had failed to repay any of the monies owed. It was further pleaded that the first defendant granted the plaintiff a mortgage over a property in Glendenning, folio identifier 24/808732, to secure her obligations to repay the plaintiff. The plaintiff proposes to exercise its power of sale in respect of that property.
2. On 8 September 2015, the solicitor for the first defendant sent an extensive request for particulars to the solicitor for the plaintiff.
3. On 11 November 2015, the solicitor for the plaintiff served a proposed amended Statement of Claim on the solicitor for the first defendant. The amendments provided more detail and corrected some typographical errors, including the street number of the Glendenning property. In a covering email, the solicitor for the plaintiff explained that the amendments were of such a nature that it was not feasible to mark them up as required by Rule 19.5 of the UCPR.
4. On 17 November 2015, the solicitor for the first defendant sent an email to the solicitor for the plaintiff indicating that the first defendant did not consent to the amended Statement of Claim being filed and noting that "…the defects in the pleaded case are now only more apparent." No particulars as to why the amended Statement of Claim was said to be defective were provided. Nor was any attempt made to reach agreement as to how the matter should proceed, such as ascertaining whether the plaintiff would be willing to pay the first defendant's costs thrown away if she were to consent to the amendment sought.
5. On 18 December 2015, the first defendant filed a Notice of Motion seeking an order for further particulars. The affidavit affirmed in support of the Notice of Motion annexed the request for particulars dated 8 September 2015. No mention was made in that affidavit to the fact that an amended Statement of Claim had been served on the first defendant. Nor was there any mention made to the fact that the plaintiff's solicitor had indicated in the email attaching the amended pleading that documents to which the pleading referred would be forwarded to the first defendant shortly. The provision of those documents would satisfy most, although not all, of the outstanding particulars sought.
6. On 11 February 2016, the plaintiff served those documents on the first defendant. The first defendant was also informed at that time that the plaintiff would seek leave to join the Free Wesleyan Church of Tonga District Australia Incorporated as the third defendant. In the covering letter enclosing those documents the plaintiff referred to s. 56(3) and (4) of the Civil Procedure Act 2005 and the requirement for the parties to bring about the just, quick and cheap resolution of the real issues in the proceedings. The letter went on to state that, if the first defendant did not identify the grounds upon which the amendment to the pleading was opposed and the plaintiff was therefore forced to prosecute a Notice of Motion seeking leave to amend, indemnity costs would be sought "…on the basis of the unreasonable withholding of material relevant to resolution of the dispute the subject of the proceedings." The plaintiff filed such a Notice of Motion later that day, returnable on 18 February 2016.
7. On 17 February 2016, the solicitor for the first defendant wrote to the solicitor for the plaintiff identifying the basis for the first defendant's opposition to the amendment. This letter was tendered on the hearing of the Motion before me and marked Exhibit A. The basis for the opposition was said to be that the proposed pleading did not constitute an amendment but rather a new proceeding altogether. In support of this assertion reliance was placed upon a failure to mark up the amendments, a typographical error regarding the street address of the property, a failure to serve the second defendant and the addition of the third defendant.
8. At the first return date of the Motion on 18 February 2016, the Registrar stood the Motions over for hearing on 6 April 2016 and made orders for the filing of written submissions. The plaintiff's submissions were to be filed on or before 21 March 2016 and the first defendant's submissions were to be filed on or before 31 March 2016. In the event, the plaintiff's submissions were not filed until 30 March 2016 and the first defendant's submissions were not received by my Associate until approximately 9.30am on 6 April 2016, the day of the hearing of these motions.

The submissions of the parties as to costs

1. Ms Sinclair on behalf of the first defendant sought the costs of the Motion and costs thrown away. She submitted that costs ought to be ordered on an indemnity basis or, in the alternative, in a fixed amount set by the Court. The basis for being entitled to indemnity costs was said to be that, after receiving the proposed amended Statement of Claim in November, the plaintiff did not move the Court to grant leave to file that document until 11 February 2016. Furthermore, Ms Sinclair submitted that the service of a proposed amended Statement of Claim was triggered by the first defendant's request for particulars.
2. Ms Sinclair further submitted that, contrary to the usual rule that costs follow the event, the first defendant was entitled to the costs of the Motion because it was not until the filing of the plaintiff's written submissions on 30 March 2016 that the first defendant knew that the plaintiff would agree to pay her costs thrown away by the amendment.
3. Ms Sinclair conceded that the first defendant was not prejudiced by the filing of the amended pleading.
4. Mr Tobin of counsel, who appeared for the plaintiff, submitted that the plaintiff was entitled to indemnity costs because it had been compelled to bring the matter before this Court by the first defendant's failure to identify the basis for her opposition to the filing of the amended pleading. He drew my attention to the letter from the plaintiff's solicitor to the first defendant's solicitor dated 11 February 2016, in which the first defendant was put on notice that indemnity costs would be sought if the plaintiff were not provided with some basis for her opposition to the amendment. Mr Tobin accepted that such indication was in fact provided in the letter dated 17 February 2016 tendered before me, but submitted that the letter was only received after the filing of the present application.
5. Mr Tobin further submitted that, on the principles as set out in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, this was not a case in which indemnity costs should be ordered against the plaintiff.

Findings as to costs

1. Indemnity costs can be ordered where a party has acted unreasonably in the conduct of litigation, including by causing undue delay: Wentworth v Rogers [1999] NSWCA 403. Some of the circumstances warranting an order for indemnity costs are set out in Colgate-Palmolive Co v Cussons Pty Ltd at 233-4 per Sheppard J. They include matters in which a party makes allegations of fraud knowing them to be false or makes irrelevant allegations of fraud, commences or continues proceedings for some ulterior motive or in wilful disregard of known facts or clearly established law, or imprudently refuses an offer of compromise.
2. The question is always whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis: Colgate-Palmolive Co v Cussons Pty Ltd at 234.
3. The plaintiff has been successful on its Motion. I can see no justification for departing from the general rule that costs follow the event in this matter. It could not be said that the plaintiff has acted unreasonably. The high point of the submission on behalf of the first defendant alleging any unreasonable delay was that the plaintiff's Motion was not filed until 11 February 2016, despite the proposed amended pleading having been served on 11 November 2015. When the matter came on before me, the sole remaining basis for opposition to the Motion was that the first defendant only became aware that the plaintiff would agree to pay her costs thrown away when she received the plaintiff's submissions on 30 March 2016.
4. Nor is there any basis for the plaintiff to be ordered to pay the first defendant's costs thrown away on either an indemnity basis or in an amount fixed by the court. It was not until 17 February 2016, after the filing of a Motion on behalf of the plaintiff seeking leave to file the amended pleading, that any basis for the first defendant's opposition to the filing of that document was communicated to the solicitor for the plaintiff. The reasons set out in that letter were untenable and not consistent with the just, quick and cheap resolution of the real issues in the proceedings.
5. Although the plaintiff did provide notice to the first defendant in its letter dated 11 February 2016 that it would seek indemnity costs if compelled to ask the Court's leave to filed the amended Statement of Claim, the chronology of events shows that the Notice of Motion seeking such leave was filed that same day. The first defendant then responded on 17 February 2016, after the Motion had been filed. It was then not until 30 March 2016 in its written submissions that the plaintiff indicated, apparently for the first time, that it would be willing to pay the first defendant's costs thrown away. The evidence before me also confirms that the plaintiff did not provide the documents to which the pleading referred to the first defendant until 11 February 2016, despite indicating it would do so on 11 November 2015. In these circumstances, I do not propose to order that the plaintiff's costs of the Motion be paid on an indemnity basis.
6. It is most unfortunate that the parties could not have resolved these issues without the need for the filing of motions.

ORDERS

1. I make the following orders: 1. Grant leave to the plaintiff to file the proposed amended Statement of Claim attached to the affidavit of Jeremy David Noonan sworn on 11 February 2016. 2. The plaintiff pay the first defendant's costs thrown away by virtue of the proposed amendment assessed on the ordinary basis. 3. The first defendant pay the plaintiff's costs on the Motion assessed on the ordinary basis.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 April 2016