Rosegum Corporation Pty Ltd v Young, in the matter of Rosegum Corporation Pty Ltd

1. The plaintiffs pay forthwith the defendants' costs of the plaintiffs' interlocutory applications dated 5 May 2016 and 20 June 2016, to be assessed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BACKGROUND TO SPECIAL COSTS APPLICATION 1 On 4 June 2015, the plaintiffs filed a statement of claim to which the first and second defendants filed a defence on 3 July 2015. Between June and September 2015 parties, other than the first and second defendants, conferred on various procedural matters. On 2 October 2015, the third defendant filed a defence to the statement of claim. 2 On 22 October 2015, by consent, the parties agreed to orders for discovery by categories and for inspection and mediation. Mediation took place on 2 December 2015 and was adjourned to 8 February 2016. On 1 February 2016, the plaintiffs wrote to the defendants foreshadowing an application to amend the statement of claim in terms of a 49 page draft amended pleading. That draft removed allegations of insolvent trading, which had been made in the original claim, and introduced detailed allegations of 'breach of duties' claims. Notably, the draft was not marked up to conveniently identify the proposed amendments. 3 Such a marked-up version was provided in early February 2016, but took the form only of striking out the entire original statement of claim and replacing it with a new statement of claim. On 5 February 2016, the plaintiffs provided a two page written summary of the nature of the proposed amended claim, in particular, relying upon claims for 'equitable compensation' and 'a claim under s 197 of the Corporations Act' and the breaches of duties case. There were numerous exchanges between the parties over a period of 10 months in relation to this proposed amendment and, ultimately, the defendants persuaded the plaintiffs to completely remove from the claim any equitable claims, claims for breaches of duties or breaches of trustee's duties and claims under s 197 of the Corporations Act 2001 (Cth). 4 A case management hearing was listed for 9 March 2016, but was adjourned to allow ongoing conferral in relation to the proposed amended statement of claim and on security for costs of the action. There was no response from the plaintiffs until a proposed amended pleading was provided in early April 2016, which was again not marked up in any way to identify the amendments. It again took the form only of striking out the entire original claim and replacing it with a new statement of claim. A case management hearing listed on 14 April 2016 was adjourned to 21 April 2016 to allow further conferral in relation to this proposed amended claim and security for costs. Such conferral occurred again by way of correspondence and telephone exchanges. 5 On 5 May 2016, the plaintiffs pursued a foreshadowed interlocutory application for leave to amend the statement of claim and for separate trials. On 24 May 2016, the hearing of that application proceeded. The first and second defendants engaged senior counsel for the purpose of settling documents for the hearing and for the appearance in court. 6 On 30 May 2016, I delivered judgment on the application and made orders dismissing the application in its entirety, but granting the plaintiffs leave to file a further application for leave to amend the statement of claim: Rosegum Corporation Pty Ltd v Young, in the matter of Rosegum Corporation Pty Ltd [2016] FCA 604 (Rosegum No 1). Costs were reserved. 7 On 16 June 2016, the plaintiffs circulated a further proposed amended claim of some 54 pages and on 20 June 2016, they filed another interlocutory application to amend the claim in the terms of the draft annexed to an affidavit also filed on that day. On 14 July 2016, in an attempt to avoid the hearing of a further interlocutory application, attempts were made to resolve the pleadings issues by provision of particulars, as had been offered by counsel for the plaintiffs at the previous hearing. 8 The plaintiffs' second application was listed for mention on 21 July 2016, but before that date the second plaintiff died. A short hiatus ensued to allow an opportunity to consider the appropriate response to this event. Communications ensued with further drafts being provided by the plaintiffs, which were rejected by the defendants. The plaintiffs' second application to amend was listed for hearing on 13 October 2016. The defendants had necessarily prepared for that hearing as it was, in substance, a strike out application. 9 By this stage, the plaintiffs had changed solicitors and counsel. They advised of an intent to remove the breaches of duties claims from the current proposed amendments, in consequence of which it was thought that there may be a possibility of settling the pleadings disputes. The interlocutory application was listed again for 1 December 2016 and conferral ensued in relation to the pleadings. Written submissions were filed by both parties, but again, the second interlocutory application was abandoned with the plaintiffs effectively conceding all of the defendants' objections and proffering a further amended pleading. Ultimately, that further pleading was accepted. 10 The defendants seek costs for this very unsatisfactory exercise in refining the plaintiffs' pleadings. The plaintiffs accept that they are liable to pay the defendants' costs of the two interlocutory applications in question. The only issue in dispute is whether those costs should be paid forthwith, as the defendants seek, or at the conclusion of the proceeding.