Murdoch v Lake [2014] QCA 269

SUPREME COURT OF QUEENSLAND

CITATION: Murdoch v Lake [2014] QCA 269

PARTIES: MALCOLM ALEXANDER STEPHEN MURDOCH (appellant) v STEPHEN MAURICE LINTON LAKE (respondent)

FILE NO/S: Appeal No 10070 of 2013 / SC No 9994 of 2010

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal – Further Orders

ORIGINATING COURT: Supreme Court at Brisbane

DELIVERED ON: 21 October 2014

DELIVERED AT: Brisbane

HEARING DATE: 23 April 2014

JUDGES: Morrison JA and Peter Lyons and Boddice JJ / Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS: 1. The orders made by Margaret Wilson J on 15 October **2013 are set aside.**2. The respondent pay 75 per cent of the appellant’s costs of and incidental to the appellant’s application filed on 22 April **2013.**3. The respondent pay the appellant’s costs of and incidental to the respondent’s application filed on 24 April **2013.**4. **The respondent pay the appellant’s costs of and incidental to the appeal.**5. The monies paid into court by the appellant as security, pursuant to the order of Boddice J made on 9 December 2013, together with accretions (if any) be paid out to the appellant. 6. The appellant have leave to amend the claim and statement of claim in accordance with the drafts in Exhibit JHP7 to the affidavit of Joel Hunter Pitman filed 12 September 2014.

CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL PRACTICE AND PROCEDURE – QUEENSLAND – POWERS OF COURT – COSTS – where the parties have made further submissions in respect of costs – where the appellant was granted leave to file an amended claim and a fourth amended statement of claim – where there were two applications before the learned primary judge – where there were multiple grounds of appeal, some of which were not solely found in one party’s favour – where each party disagrees as to how costs should be awarded – where costs of a proceeding follow the event – where the Court of Appeal may make an order as to the whole or part of the costs of an appeal – whether if a party is successful only upon a portion of their claim, it should bear the expense of litigation for the proportion of which it was unsuccessful / Supreme Court Act 1995 (Qld), s 221 / Trade Practices Act 1974 (Cth), s 52 / Uniform Civil Procedure Rules 1999 (Qld), r 280, r 293, r 681, r 684, r 766(1)(d) / Alborn & Ors v Stephens & Ors [2010] QCA 58, followed / Murdoch v Lake [2013] QSC 268, related / Murdoch v Lake [2014] QCA 216, related / Sequel Drill & Blast Pty Ltd v Whitsunday Crushers Pty Ltd (No 2) [2009] QCA 239, considered / Sochorova v Commonwealth of Australia [2012] QCA 152, followed

COUNSEL: No appearance by the appellant, the appellant’s submissions were heard on the papers / No appearance by the respondent, the respondent’s submissions were heard on the papers

SOLICITORS: Morgan Conley Solicitors for the appellant / Hopgood Ganim for the respondent

[1] MORRISON JA: On 29 August 2014 the Court delivered its reasons allowing the appeal. At that time it gave the parties an opportunity to agree on a form of order to be made in respect of the amendment of the claim and statement of claim, and to make submissions on costs. The parties have now done so.

[2] In relation to the claim and statement of claim the parties have agreed that the appellant should have leave to file an amended claim and a fourth amended statement of claim in the form of the documents in Exhibit JHP7 to the affidavit of Joel Hunter Pitman filed 12 September 2014.

Costs

Proceedings before the learned primary judge

[3] Two applications were heard at the same time by the learned primary judge. The first in time was the appellant’s application for leave to amend the statement of claim. That application was filed on 22 April 2013. The second was the respondent’s application filed on 24 April 2013. It sought to strike out a number of paragraphs in the third amended statement of claim. In addition, it sought relief under r 293 of the Uniform Civil Procedure Rules (“UCPR”), for summary judgment, or alternatively relief under UCPR r 280, namely that the proceedings be dismissed for want of prosecution.

[4] At the hearing before the primary judge the respondent’s application in respect of the third amended statement of claim was redundant, as it had been overtaken by the proposed fourth amended statement of claim. The parties described the third amended statement of claim as having been “abandoned”.

[5] Thus, before the primary judge the principal issues were those agitated by the appellant for leave to amend, and by the respondent for summary judgment or dismissal for want of prosecution. The respondent’s applications were essentially based upon the proposition that after four attempts the appellant could still not plead an intelligible case. Considering this failure along with the lapse of time, the respondent submitted that the appropriate order was to grant judgment or to dismiss for want of prosecution.

[6] The issues in the proposed new pleading, which were agitated before the primary judge, can be identified from several paragraphs in the new pleading:¹

(a) paragraph 17 – pleaded the provision of monies under an arrangement (involving a company, CapX) by which the respondent was to acquire an interest in certain preferred shares issued by GBST Holdings Pty Ltd (“GBST”);

(b) paragraph 18 – pleaded conduct by the respondent by which he arranged the affairs of GBST so as to create a cash deficiency in December 2002, in order to facilitate the issue of the shares in GBST;

(c) paragraph 19 – pleaded an agreement or arrangement between various parties, under which GBST would pay dividends to certain parties, and pursue an initial public offering;

(d) paragraph 20 – pleaded that the appellant was unaware of the matters in paragraphs 17, 18 and 19, at the time the appellant executed a deed of settlement giving up rights in proceedings against, inter alia, GBST;

(e) paragraph 21 – pleaded that the failure to reveal the matters in paragraphs 17, 18 and 19 was misleading or deceptive under s 52 of the Trade Practices Act 1974 (Cth);

(f) paragraph 22 – pleaded that had the appellant known of the truth of the matters in paragraphs 17, 18 or 19, he would not have executed the deed of settlement and would have pursued the other proceedings; and

(g) paragraph 25 – pleaded loss to the appellant by reason of the respondent’s conduct.

[7] Paragraphs 17, 19, 20, 21, 22 and 25 all reflected, to one degree or another, allegations which had been made in the earlier statement of claim. The issue whether paragraphs 17 and 19, in particular, raised new causes of action (out of time) was at the heart of the hearing before the primary judge.

[8] Paragraph 18 was in a somewhat different category. It alleged, for the first time, that the respondent had taken particular steps in arranging the affairs of GBST, so as to create a cash deficiency in December 2002. That was said to have been relied on as a justification for the GBST preference share issue in favour of entities connected with the respondent.

[9] The learned primary judge’s reasons expressed difficulties with each of paragraphs 17, 18, 19, 21 and 25 of the proposed fourth amended statement of claim. Paragraphs 17 and 19 were disallowed on the basis that they raised new causes of action involving CapX, and there was no substantive factual basis to include the reference to CapX. Paragraph 25 was disallowed on the basis that it did not demonstrate a causative link between the impugned conduct and the alleged loss. Paragraph 18 was disallowed on the basis that it did not properly plead a cause of action for misleading or deceptive conduct under s 52 of the Trade Practices**Act 1974 (Cth). Further, it had been contended that the matters in paragraph 18 arose out of substantially the same facts as had been previously pleaded, a contention rejected by the learned primary judge.

[10] The learned primary judge’s ultimate conclusion was expressed in this way:

“The allegation of misleading or deceptive conduct in the fourth amended statement of claim is based on three arrangements, all of which are different from the understanding previously pleaded. The plaintiff is really seeking to introduce three new causes of action all of which are statute barred. I am unpersuaded that any of them is based substantially on the same facts as the cause of action previously pleaded. Accordingly, the application for leave to file and serve the fourth amended statement of claim should be refused.

The plaintiff commenced this proceeding in September 2010. In seeking leave to file and serve the fourth amended statement of claim he effectively abandoned the cause of action on which the proceeding was based, and sought to introduce new causes of action which are statute barred. As counsel for the defendant submitted, it should be taken that the fourth amended statement of claim represents the best case he is able to propound. There is no suggestion he could reformulate his case in some other way that it would not be out of time.”²

[11] That conclusion having been reached, the primary judge turned to the respondent’s application. The only aspect of that application which was dealt with was the claim to dismiss the proceedings for want of prosecution. In that respect her Honour did dismiss the claim for want of prosecution concluding that:

“The gravamen of the application to dismiss the proceeding is the plaintiff‘s failure to plead a cause of action which is not statute barred. As counsel for the defendant submitted, the plaintiff has now had several attempts at pleading his claim. He has abandoned the chain of causation that led to loss in the original pleading. It should be taken that the draft fourth amended statement of claim represents the best case that he is able to propound. It pleads causes of action for which the relevant limitation period has expired, and which do not arise out of substantially the same facts as the cause of action originally pleaded. Resolution of the factual controversies inherent in determining his claim as so pleaded would, it seems, depend to a significant extent of credibility – a task which usually becomes more difficult as more time passes.”³

The position on appeal

[12] Before this Court the appellant did not seek to sustain paragraph 18 of the draft pleading. There was, therefore, no challenge to the correctness of the primary judge’s order disallowing that paragraph.

[13] As to the balance of the paragraphs that were the subject of the appellant’s application, for the reasons given on 29 August 2014, her Honour’s orders have been set aside and the appellant has been granted leave to amend. The orders dismissing the proceedings for want of prosecution have also been set aside.

[14] Both parties now agree that the costs orders made by the learned primary judge on 15 October 2013, should also be set aside.⁴

The parties’ contentions

[15] The appellant submits that the respondent should pay its costs of the appeal. Regarding the application for leave to amend, the appellant submits that the respondent should pay 75 per cent of the appellant’s costs, “having regard to the relative success” of each side.⁵ As for the respondent’s application for dismissal for want of prosecution, the appellant submits that the respondent should pay the appellant’s costs.

[16] The respondent contends that there was a degree of success, in that paragraph 18 of the proposed pleading was disallowed and then abandoned, and references to CapX in paragraph 19 (and the particulars to paragraph 19) were later abandoned. The contention is that the respondent “should pay 50 per cent of the costs of the appeal and the appellant should pay the majority of the costs of the hearing below”.⁶ The respondent points out that the appellant was seeking an indulgence, in terms of needing leave to appeal, and was unsuccessful on some issues that were not contested on appeal. The ultimate contention is that the appellant should pay 75 per cent of the respondent’s costs of the hearing below.

Discussion

[17] There can be no doubt about the court’s power to award costs pursuant to s 221 of the Supreme Court Act 1995 (Qld). UCPR r 681 expresses a general rule about costs in these terms:

“(1)Costs of a proceeding, including an application in a proceeding, are in the discretion of the court but follow the event, unless the court orders otherwise.

(2) Subrule (1) applies unless these rules provide otherwise.”

[18] A specific rule in relation to appeals appears in UCPR r 766(1)(d), which provides that the Court of Appeal:

“(d)may make the order as to the whole or part of the costs of an appeal it considers appropriate.”

[19] The usual rule is that the costs of a proceeding follow the event. That rule embodies the general principle that, subject to certain exceptions, a successful party in litigation is entitled to an award of costs in its favour. This is reflected in r 766(1)(d), even though it is not expressly stated. In Sequel Drill & Blast Pty Ltd v Whitsunday Crushers Pty Ltd (No 2)⁷ the court said of r 766:

“Although r 766(1)(d) does not express the general principle under which a successful appellant is usually given costs in its favour, that general principle remains applicable.”

[20] When one refers to the usual rule as being that the costs of a proceeding follow the event, the “event” was explained by Muir JA in Alborn & Ors v Stephens & Ors:⁸

“[8]The ‘event’ is not to be determined merely by reference to the judgment or order obtained by the plaintiff or appellant, but is to be determined by reference to ‘the events or issues, if more than one, arising in the proceedings.’⁹ However, a party which has not been entirely successful is not inevitably or even, perhaps, normally deprived of some of its costs.”¹⁰

[21] The statement that a party which has not been entirely successful is not inevitably or even, perhaps, normally deprived of some of its costs, has been adopted since.¹¹

[22] Finally, mention should be made of r 684 UCPR which provides:

“684****Costs of question or part of proceeding

(1) The court may make an order for costs in relation to a particular question in, or a particular part of, a proceeding.

(2) For subrule (1), the court may declare what percentage of the costs of the proceeding is attributable to the question or part of the proceeding to which the order relates.”

[23] The court’s discretion to order costs is an unfettered one, but one which “must be exercised without caprice, having regard to relevant considerations and established principles”.¹²

[24] Further, it must be borne in mind that costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party.¹³ The power to deprive a successful party of some of its costs, or alternatively order that party to pay costs, has been long recognised and accepted. In Sochorova v Commonwealth of Australia¹⁴ the Court of Appeal referred with evident approval to the decision of Toohey J in Hughes v Western Australian Cricket Association (Inc):¹⁵

“1.Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order.

2.Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed.

3.A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party’s costs of them. In this sense, ‘issue’ does not mean a precise issue in the technical pleading sense but any disputed question of fact or law.”¹⁶

Costs of the appeal

[25] The respondent enjoyed a measure of success in respect of the challenge to paragraph 18 of the proposed fourth amended statement of claim. The learned primary judge disallowed that amendment, and there was no challenge to that order on appeal. The consequence is that the appellant has been entirely successful on the appeal, and there is no reason why he should not be awarded his costs of the appeal. The respondent should be ordered to pay the appellant’s costs of and incidental to the appeal.

Costs of the applications before the primary judge

[26] The appellant’s success on appeal meant that the learned primary judge’s order dismissing the proceedings for want of prosecution was set aside. That application, therefore, has wholly failed, and there is no reason why the respondent should not pay the costs of that application. There will therefore be an order that the respondent must pay the appellant’s costs of and incidental to the application filed on 24 April 2013.

[27] That leaves the question of the appellant’s application before the primary judge, for leave to amend the statement of claim. In that respect the appellant was seeking leave to amend a number of paragraphs, as outlined above. One of them, paragraph 18, can rightly be considered to be discrete from the others. A measure of time and effort was taken to oppose the grant of leave in respect of paragraph 18, and successfully so. In that respect one can properly categorise the issues concerning paragraph 18 as an “event’ for the purposes of r 681 UCPR. However, whilst consideration of the issues concerning paragraph 18 did not occupy the bulk of the proceedings, equally it was not a trivial issue, with the appellant spending about 20 per cent of the hearing before the primary judge dealing with just paragraph 18.

[28] Given the discrete nature of the allegations in paragraph 18, it seems appropriate that the respondent’s success be recognised in the order for costs. At the same time, the order should recognise that the appellant was substantially successful in the application for leave to amend.

[29] In all the circumstances the appropriate order is that the respondent pay 75 per cent of the appellant’s costs of and incidental to the application filed on 22 April 2013.

Orders

[30] The orders are as follows:

1. The orders made by Margaret Wilson J on 15 October 2013 are set aside.

2. The respondent pay 75 per cent of the appellant’s costs of and incidental to the appellant’s application filed on 22 April 2013.

3. The respondent pay the appellant’s costs of and incidental to the respondent’s application filed on 24 April 2013.

4. The respondent pay the appellant’s costs of and incidental to the appeal.

5. The monies paid into court by the appellant as security, pursuant to the order of Boddice J made on 9 December 2013, together with accretions (if any) be paid out to the appellant.

6. The appellant have leave to amend the claim and statement of claim in accordance with the drafts in Exhibit JHP7 to the affidavit of Joel Hunter Pitman filed 12 September 2014.

[31] PETER LYONS J: The reasons for judgment of Morrison JA identify the relevant considerations for determining costs questions in this appeal. In my view, the effect of r 681 of the Uniform Civil Procedure Rules 1999 is more correctly stated in Sequel Drill & Blast Pty Ltd v Whitsunday Crushers Pty Ltd (No 2)¹⁷, than in some of the passages cited by his Honour. However, in my respectful opinion, his Honour's reasons reflect an appropriate application of the relevant principles. Accordingly I agree with the orders proposed by his Honour.

[32] BODDICE J: I have read the reasons of Morrison JA. I agree with those reasons and the orders proposed by his Honour.

Footnotes

1. What follows is a summarised account; there is no necessity to set out all the detail. ↩

2. [2013] QSC 268, at [80]-[81]. ↩

3. [2013] QSC 268, at [93]. ↩

4. Appellant’s submissions, paragraph 7; respondent’s submissions, paragraph 2. ↩

5. This submission recognises the respondent’s success in respect of paragraph 18 of the proposed pleading. ↩

6. Respondent’s submissions, paragraph 7. ↩

7. Sequel Drill & Blast Pty Ltd v Whitsunday Crushers Pty Ltd (No 2) [2009] QCA 239 at [3]. (“Sequel Drill & Blast”). ↩

8. Alborn & Ors v Stephens & Ors [2010] QCA 58 at [8]. ↩

9. Interchase Corporation Ltd (in liq) v Grosvenor Hill (Qld) Pty Ltd (No 3) [2003] 1 Qd R 26 at 60; Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 615; and Byrns v Davie [1991] 2 VR 568 at 570, 571. ↩

10. Waterman v Gerling (Costs) [2005] NSWSC 1111; Todrell Pty Ltd v Finch (No 2) [2007] QSC 386. ↩

11. Allianz Australia Insurance Ltd v Swainson [2011] QCA 179, at [4]; [2013] QCA 336, at [3]; [2013] QCA 395, at [13].