Shaw v Yarranova Pty Ltd & Anor

Supreme Court of Victoria|2010-04-15|Before: HARPER J

COSTS -Application for freezing order - Application based upon respondent's failure to pay judgment debts compounded by his breach of an undertaking - No justification for failure to pay judgment debts - Application by successful applicants for their costs on an indemnity basis - Application granted.

1 On 21 October 2009, I gave judgment for the applicants, who by a summons filed on 29 September 2009 sought freezing orders against the respondent. At the same time, I also dismissed the respondent's summons of 7 October in which he sought (i) the lifting of a stay, granted by Judd J and affirmed on appeal, of a judgment of Daly AsJ (in which her Honour made an assessment of damages to be paid by the respondent); (ii) the amendment under the "slip" rule of an order made by Judd J; and (iii) leave to appeal orders made by Wood AsJ at various times but most recently in February 2008. Finally, I granted the relief sought by the applicants in a summons filed on 14 October 2009 by which they sought to set aside three subpoenas filed on 9 October last year.

2 The applicants' success in obtaining the relief they sought in the case of each summons issued by them, and in defending the respondent's summons of 7 October, is now the foundation of an application by them for the payment by the respondent on an indemnity basis of their costs of and incidental to each such summons. It is an application resisted by the respondent, who submits that I should make no costs orders at all.

3 The principal application before me was that for the freezing order sought by the summons of 29 September. It was originally returnable before Vickery J in the Practice Court on 30 September 2009. His Honour granted an interim order, and otherwise adjourned the 29 September summons to the Judge sitting in the Practice Court on Friday 16 October. I was that Judge. However, the business of the Court did not allow me to fully hear the application on that day, and it was accordingly adjourned to Monday 19 October. Again, the Court's business did not allow completion of all the matters raised by the combination of applications; and, indeed, it was not until Wednesday 21 October that the hearing was complete and I was in a position to give judgment.

4 In my opinion, which I expressed in my judgment, the respondent's position was, on every issue raised by each summons, hopeless. He owed money to the applicants for costs orders made against him. He accepted that this was so, although he disputed the amount. He did not accept that he had deliberately and without justification obstructed every effort of the applicants to be paid. But that was the fact. He was of course entitled, subject to any lawful restriction on that right, to appeal (or, where appropriate, seek leave to appeal) against the orders for costs. He had in some cases exercised that right, but having done so and lost, nevertheless continued to withhold that to which the applicants were entitled. He supplemented that withholding by continuing to challenge the final orders of the Court. Other costs orders had not been the subject of an appeal; but, when this litigation came before me they could not be, because by then the time for bringing an appeal had expired. Undeterred by this reality, and without offering any explanation, the respondent continued to resist attempts to have him pay his debts.

5 A freezing order is not designed to provide security for an applicant's claim. In this case, however, the contumelious refusal of the respondent to discharge his obligations was made significantly worse by the breach of an undertaking given to Judd J on 2 June 2009, and by breach of the terms of a settlement.

6 That settlement was reached on 27 March 2008. The respondent failed to honour its terms. The undertaking was not to encumber certain property without the consent of the applicants, or unless it were for the sole purpose of discharging the respondent's indebtedness to them. It was breached when, without informing them of his intentions and without reducing his indebtedness, the respondent mortgaged a property in Upwey. This was done shortly before the date set for a sheriff's auction of the property.

7 The other surrounding circumstances are also instructive. On 24 August 2009, Kings AsJ had extended the period of validity of the warrant pursuant to which that sale was to be effected; the respondent had sought a stay of her Honour's order pending an appeal; and J Forrest J had dismissed his application for that stay. When the fact of the mortgage became known, the sheriff's sale had to be abandoned.

8 In these circumstances, it seemed to me that the applicants were fully justified in applying for a freezing order; while, for his part, the respondent had no justification for opposing it so long as he failed without excuse to pay his judgment debts. I made the freezing order accordingly.

9 The Court may order costs on a solicitor/client basis, or on an indemnity basis, whenever a party has been subjected to high handed and unmeritorious conduct and it is just that the innocent party not be out of pocket thereby.[1]

10 In Murdaca v Maisano,[2] Nettle JA, referring to the frequently cited passage from the judgment of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchant Ltd[3], said:

As Woodward J put it, it is appropriate to consider awarding solicitor/client costs or indemnity costs whenever it appears that a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts or the clearly established laws.

11 In this case, the respondent knew that judgment debts had been entered against him, that he had appealed unsuccessfully against some and that others were so old that the time within which an appeal could be brought had long since expired, and that he had in breach of an undertaking mortgaged one of his properties without informing the applicants or paying them out - or paying them anything. He knew that the applicants were anxious to recover that which they were owed. He nevertheless continued to oppose the defendants at every point, and to seek relief of his own, with unmeritorious arguments.

12 An example is his persistence in seeking from me the amendment by resort to the slip rule of an order made on 2 June 2008 by Judd J. The respondent would not accept that, the application being opposed, it should be made to Judd J and not to some other judge. He would not accept that the "mistake" he identified was not obvious, or that its correction was not clearly warranted. Much time was thereby expended without justification. An application was eventually made by the respondent to Judd J. His Honour on 4 December 2009 dismissed it, with costs on an indemnity basis.

13 The respondent resists the application for costs on the basis that the applicants' materials and submissions were "unnecessarily tedious", irrelevant, contained material and allegations "dating back many years" and did that for which I had admonished him during the hearing before me: it re-agitated "past proceedings or dead issues". He also contends that it was unfair to expect him "to have to respond to such an oppressive and detailed application in such a short time".

14 The latter submission was made during the principal hearing. I rejected it then,[4] and reject it now. The respondent was on 30 September 2009 served with the papers which were before Vickery J, and as he frequently points out in his submissions on costs, albeit by way of complaint at the time taken to conclude the principal hearing, he had from then until 21 October to prepare his response. In any event, the material about which complaint is made, though voluminous, was necessarily so. Applications for a freezing order should never be made lightly, and are never taken lightly by the Court. Applicants must discharge a burden of proof which, though to the civil standard, is set so as to be commensurate with the seriousness of the application.[5] The applicants in this case were seeking a freezing order in unusual circumstances, since such orders are not intended to provide security for an applicant's claim although this application might on first examination appear to have that disqualifying characteristic. Had an order been made on insufficient material, the respondent would have been entitled to say that justice was not done. The quantum of material relied upon by the applicants, and about which the respondent complains, was necessary to ensure that his interests were protected.

15 The respondent contends that the applicants were allowed to re-agitate past proceedings or dead issues, whereas he was not. The answer, in my opinion, is that the applicants were not re-agitating past issues; indeed, the opposite is true. They were intent on seeking to satisfy me that the issues were indeed past, that they were well beyond re-agitation, but that the respondent had sought and was still seeking to re-agitate them; and that this was impermissible. It seemed and seems to me that in this the applicants were and are correct.

16 After a thorough examination of the applicants' case, I concluded that judgment debts existed, that they had not been paid, and that the respondent was wilful in his refusal to pay. Nothing the respondent put to the Court hinted at any substantial opposition to these conclusions. Had there been any indication of a defence of substance, the respondent would of course have been allowed to put it.

17 A party to litigation against whom costs orders are made must obey them. Of course that is subject to the right to appeal, or (more relevantly) to the right to seek leave to appeal. But once that right has been exhausted, the orders must be obeyed. I am satisfied that the respondent, an intelligent man, knew this. By his wilful disobedience to the orders of the Court, he put the applicants to the expense of obtaining the further orders which that disobedience warranted. The applicants should not be out of pocket thereby. This, it seems to me, is a case which fits squarely into that category of cases about which Woodward J spoke in Fountain Selected Meats. I therefore proceed on the basis that the applicants are entitled to more than party/party costs.

18 On a taxation on a solicitor and client basis all costs reasonably incurred and of reasonable amount shall be allowed.[6] On a taxation on an indemnity basis all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred; and any doubt shall be resolved in favour of the party to whom the costs are payable.[7]

19 I am of course conscious of the fact that the respondent is a litigant in person. I have taken this fact into account. As a general rule a court will be more reluctant to make an order for solicitor/client or indemnity costs against a litigant in person than against a represented litigant.[8] Nobody, however, has the right to waste public money, and deplete the financial resources of other parties to litigation, by the knowingly fruitless pursuit of a hopeless cause or the wilful opposition to a wholly justifiable claim. As Robson J said in Vink v Tuckwell:[9]

By the same token, litigants in person can cause great hardship and expense to other parties, through making allegations and claims ... that could not reasonably or even properly be made, and through making proceedings much longer and much more expensive than they would otherwise be ...

20 In my opinion, the proper basis for a taxation of costs in this case is that of solicitor and client. I think that, given the respondent's status as an unrepresented litigant, it is appropriate that the burden of justifying what costs are reasonable, and therefore what costs the respondent should pay, be on the applicants.

21 Subject to what appears in paragraph [22] below, I include in this order the costs of and incidental to the summonses filed on, respectively, 29 September 2009 (by the applicants), 7 October 2009 (by the respondent) and 14 October 2009 (by the applicants). In each case the respondent's opposition to or (in relation to the summons of 7 October) support of the summons lacked any properly arguable basis.

22 I do not include in the order the costs of 16 and 19 October. The attendance of the parties on those days was unprofitable, but that was not their fault. Rather, it was a consequence of the pressure of court business. By contrast, the fact that the hearing occupied more than one day lies at the feet of the respondent. He should therefore bear the costs of Tuesday 20 October and Wednesday 21 October 2009.

23 I shall, for the reasons given above, order that the applicants' costs of and incidental to the summonses filed on, respectively, 29 September 2009, 7 October 2009 and 14 October 2009 (save for the costs of the applicants' appearance on Friday 16 October 2009 and on Monday 19 October 2009) be taxed on a solicitor and client basis and, when taxed, be paid by the respondent.

[1] AGC v De Jager [1984] VR 489, 502 (Tadgell J); Spencer v Dowling [1996] VSC 51; [1997] 2 VR 127, 164 (Callaway JA); Australian Electoral Commission v Towney (No. 2) (1994) 54 FCR 382, 388-390 (Foster J); Murdaca v Maisano [2004 VSCA 123, [38]-[40] (Nettle JA).

[5] Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336.

[6] Rules of the Supreme Court 2005, r 63.30.

[7] Rules of the Supreme Court 2005, r 63.30.1.

[8] Macedon Shire Ranges v Thompson [2009] VSCA 209, [17].

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