//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2005] VSC 472
Supreme Court of Victoria
2005-12-02
HARPER J
Original judgment source is linked above.
COSTS - Application to strike out Second Substituted Statement of Claim - Pleading struck out - Whether costs should be paid on a solicitor/client or indemnity basis
1 On 13 September 2005, I delivered a judgment in an application, made separately by each defendant, for (among other things) an order pursuant to r.23.02 of the Supreme Court (General Procedure) Rules 1996 that the plaintiffs' second substituted statement of claim (being the pleading which then stood as their statement of claim) be struck out on the grounds that it may prejudice, embarrass or delay the fair trial of the proceeding. The relevant summons was in each case issued on 11 May 2005.
2 I allowed each application, and ordered that the whole of the statement of claim be struck out. The plaintiffs then sought leave to appeal. This was, on 16 November, refused by the Court of Appeal. The defendants now seek their costs of the hearing before me. They submit that these should be assessed on an indemnity basis.
3 The defendants rely on the fact that the plaintiffs have attempted on multiple occasions to plead their case: according to the defendants, the relevant figure is eight; the plaintiffs submit that the true number is five, or at the most six. Each of these attempts has ended in failure. On this basis, the defendants submit that, at a point before the second substituted statement of claim was produced, a line was crossed. It thereafter became neither fair nor just that, while the plaintiffs continue their attempts to put their pleading in order, the defendants - to the extent of the difference between party/party and indemnity costs - be out of pocket. The injustice of any order other than an order for indemnity costs is made particularly acute, so the defendants submit, when one takes into account the gap between the second substituted statement of claim and a statement of claim properly pleaded. The Court of Appeal described the former as "in truth ... in its present form ... not merely impossible to comprehend but ... almost impossible to plead to and ... likely to lead to further difficulties, confusion and delay if it were permitted to proceed as the basis of the plaintiffs' claim."[1]
4 The plaintiffs submit that, because only part of each summons has been determined, no order for costs should now be made. I reject this submission. The Court of Appeal and I have dealt with a discrete application. The application has concluded with the defendants being granted the relief they sought. It is true that, in their several summonses of 5 May, the defendants also sought summary judgment. That relief, if - following the issue of a fresh statement of claim - the defendants persist with their claim for it, might not be granted. But of course, if the next statement of claim is properly pleaded, the application may never be made. I see no reason why the question of costs in relation to the matters the subject of my judgment of 13 September should not now be determined.
5 The plaintiffs also submitted that, although the Court of Appeal refused their application for leave to appeal, they were nevertheless justified in taking the proceeding to that Court because I had (as that Court summarised the plaintiffs' contention)[2] "made holdings which preclude the plaintiffs from repeating those claims in any new statement of claim." As the Court went on to point out, however, it is generally accepted that ordinarily no such preclusion can arise from an interlocutory finding, "certainly where, as here, the judge has not explicitly based his conclusion as to the embarrassing form of the pleading on a finding or findings that certain of the causes of action cannot be sustained". I add that, as far as I am aware, I did not implicitly base my findings on any such conclusion either. On the contrary, I referred to what, as the Court of Appeal noted, I described as "undoubtedly good causes of action"; and so, the Court concluded, "we would not assume that [the judge] was necessarily shutting out any kind of claim, if only it can be properly pleaded." That passage accurately encapsulates my position.
6 The plaintiffs went on to further submit that any order for costs must take properly into account the fact that my judgment was the subject of criticism by the Court of Appeal. The plaintiffs identified seven instances. As I understand it, the plaintiffs submit that, not having received any adjustment of the costs awarded against them by the Court of Appeal because counsel did not at the time have the benefit of the Court's reasons, some adjustment should be made to the costs before me by way of compensation.
7 The relevance of these criticisms to the question of costs was, it seems to me, a matter for the Court of Appeal. Each criticism was the subject of argument before that Court, and some were the subject of its judgment. Even with the judgment at hand, I cannot assess the impact they had on that hearing; and, of course, they were not the subject of any submissions to me before I delivered the judgment which the Court of Appeal had under consideration. I do not even have the benefit of a transcript of what took place in the Court of Appeal. I only relevantly know, first, what is said in its judgment, and, secondly, that at the conclusion of the hearing before that Court, counsel for the defendants sought their costs. Counsel for the plaintiffs was asked to state the plaintiffs' position. He did not, in response, oppose a costs order in favour of the defendants. Such an order was then made.
8 It was submitted by the plaintiffs in the hearing before me yesterday that counsel for the plaintiffs had not, when he responded to the Court of Appeal's inquiry, then read that Court's reasons for judgment. I accept that he had not. Nevertheless, given the arguments put on behalf of the plaintiffs, it might well have been anticipated that the Court of Appeal would do as it did: namely, refuse leave but comment, albeit by way of obiter dicta, favourably on some of the plaintiffs' submissions. In those circumstances, it was open to counsel to seek time to read the reasons for judgment before coming to a position on the question of costs.
9 Be that as it may, I cannot re-create the hearing before the Court of Appeal so as to make an informed assessment of the impact of the criticisms which that Court held to be valid. I was not there. Moreover, none of those criticisms are binding - upon me or the parties. The Court of Appeal stressed in this regard that "what is said must strictly be obiter dicta".[3] The plaintiffs' submissions to me were based upon the proposition that all seven of the criticisms were conclusive. But, if I am to embark upon the exercise that the plaintiffs would have me undertake, I am bound in fairness to the defendants to make my own assessment of them. That would be invidious.
10 It seems to me that the defendants ought not to be placed at a financial disadvantage by the inability of the plaintiffs properly to plead there case. On any view, they have made multiple attempts to get it right without having succeeded in doing so. The defendants should not be out of pocket because the plaintiffs have put forward a statement of claim which, had the defendants been required to draw a defence to it, would have presented them with an exercise which the Court of Appeal described as "confusing, almost bewildering".[4]
11 In Russo Stores Pty Ltd v Safeway Stores Pty Ltd[5] the applicants persistently failed to plead a statement of claim which contained sufficient material facts to support a cause of action that may, possibly, have existed. After the fourth attempt, an application was made by the respondents for indemnity costs. The application was successful. Goldberg J quoted from the judgment of French J in J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers[6]:
" '... 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 jurisdiction to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case.' "
"Right from the start the applicants were put on notice of the deficiencies in the statement of claim. Each succeeding statement of claim did not cure the deficiencies and on each occasion the further statements of claim were propounded substantial reasons were advanced by the respondents as to why the pleading was deficient. The applicants could not help but have known of the problems they faced yet they persisted in propounding inadequate and deficient statements of claim."
12 In my opinion, an application of these principles to the circumstances of this case warrants an order for indemnity costs. It is true that the case is not "hopeless" in the sense that the pleading discloses no viable cause or causes of action. The second substituted statement of claim was, however, found by the Court of Appeal to be, in effect, a pleading which was not only confusing but to which it would have been almost impossible to plead.
13 I should, in order to avoid problems in the future, state that I respectfully accept the points made in paragraph [12] of the Court of Appeal's judgment as well as the propositions, to be found in the following paragraph, that there may be duplication of allegations and that, if each of the Confidentiality Undertaking and the two employment agreements (whether separately or in some combination) imposed separate obligations on the parties to them, then they might form the basis of additional or alternative claims. I accept, in addition, that an undertaking given by way of deed might have a different significance from obligations imposed by employment agreements. I do note, however, that I said in paragraph [63] of my judgment that while the pleading of inconsistent allegations is permissible where the pleading makes it clear that the allegations are pleaded in the alternative, the pleading of inconsistent allegations is otherwise forbidden by r.13.09. That being so, if the differences between the Confidentiality Undertaking and the employment agreements, or one or other of them, are of such substance as to create incompatibility, then those differences should be pleaded as alternatives.
14 The plaintiffs took the view that in my judgment of 13 September I ruled that certain of their contractual causes of action could not be pleaded. I meant no such thing. As I said in paragraph [64], it may be that the Confidentiality Undertaking contains terms that are additional to, while not being in conflict with, those in the employment agreements. I then noted, in paragraph [66], that the part which the Confidentiality Undertaking has to play in the proceedings must be carefully considered. I did not intend by that to rule that the Undertaking necessarily had no part to play. Rather, I wished to point out that at any one time there can be only one set of terms of any agreement, albeit that it may be appropriate in cases of doubt to plead different terms in the alternative. Of course the terms of a single agreement may appear in a multiplicity of documents. That does not detract from the proposition, set out in paragraph [66] of my judgment, and to which I adhere, that - subject to any difference arising from the fact that the Confidentiality Undertaking is a deed - it is merely repetitious and therefore undesirable to plead (for example) that Mr Scott breached the Confidentiality Undertaking by disclosing confidential information to unauthorised persons, and breached the employment agreements by failing to maintain the confidentiality of confidential information. I further observe that, if the difference between a deed and an agreement not under seal is material, and is a difference upon which the plaintiffs wish to rely, it may be appropriate to specify that difference in the statement of claim.
15 For the reasons set out above, I order that the defendants' costs of and incidental to the application made by paragraph 3 of the summons dated 11 May 2005 of the first defendant and paragraph 3 of the summons dated 11 May 2005 of the second defendant, including the costs of the application made on 1 December 2005, be taxed on an indemnity basis and, when taxed, be paid by the plaintiffs to the defendants.
[1] [2005] VSCA 263 at para.[3]
[2] At para. [7].
[3] At para. [10].
[4] At para.[6].
[5] [1998] ATPR |P41-641 at 41,098
[6] [1993] FCA 42; (1993) 46 IR 301 at 303
Liberty Financial Pty Ltd
Scott
(1993) 46 IR 301