Vanessa Crump & Ors v Equine Nutrition Systems Pty Ltd t/as Horsepower & Anor

Supreme Court of NSW|2004-11-16|Before: Bergin J, Rolfe J, Kirby P

CITATION : Vanessa Crump & Ors v Equine Nutrition Systems Pty Ltd t/as Horsepower & Anor [2004] NSWSC 1080 HEARING DATE(S) : 1, 11, 16 November 2004 JUDGMENT DATE : 16 November 2004 JURISDICTION: Common Law Division JUDGMENT OF : Bergin J DECISION : Plaintiffs to pay defendants' costs thrown away by the vacation of the trial date on an indemnity basis; Defendants' application for an order that costs be payable forthwith refused.

CATCHWORDS : [COSTS] - Whether conduct of the plaintiffs justifies awarding costs to the defendants on an indemnity basis to the defendants - Whether the court should depart from the usual rule that costs are payable at the conclusion of proceedings Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Limited (1992) 30 NSWLR 359 CF Heath Underwriting and Insurance (Australia) Pty Ltd v Barden & Ors (unreported, NSWSC, Rolfe J,13 December 1993) Drabsch v Switzerland General Insurance Co Ltd [2000] NSWSC 489 Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1 CASES CITED : GSA Industries Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710 Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 Oshlack v Richmond River Council (1998) 193 CLR 72 Rosniak v Government Insurance Office (1997) 41 NSWLR 608 Trimboli v Royal Insurance Australia Limited (unreported, NSWCA, Kirby P, Hope and Priestley JJA, 2 October 1985) W Dazenko Structural and General Engineering Pty Ltd v Fraser Hrones and Company Ltd (unreported, NSWCA, Mahoney, Meagher, and Handley JJA, 5 October 1990) Vanessa Crump (First Plaintiff) Bernard Crump (Second Defendant) PARTIES : Rodney Crump (Third Plaintiff) Equine Nutrition Systems Pty Ltd t/as Horsepower (First Defendant) George Weston Foods Ltd t/as Millmaster Feeds (Second Defendant) FILE NUMBER(S) : SC 20670/01 A.J.McQuillen; B. Quinn (Plaintiffs) P.R. Garling SC; F. Assaf (Defendants) COUNSEL :

G H Healey & Co (Plaintiffs) SOLICITORS : Phillips Fox (Defendants)

1 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20670/01 Vanessa Crump and Ors v Equine Nutrition Pty Limited and Anor

JUDGMENT 1 This is an application by the defendants for an order that the plaintiffs pay their costs thrown away by reason of the vacation of a trial date on an indemnity basis. 2 This matter was listed for hearing for five days to commence on 1 November 2004. It is a matter that is not free from complexity and there are, it seems to me, some perhaps novel claims for damages for psychiatric injury allegedly caused by the plaintiffs' witnessing the demise of one horse and the illness of some others as a result of the horses consuming defective product manufactured by the second defendant and sold by the first defendant. 3 Late on the eve of the trial, Friday 29 October 2004, Counsel for the plaintiff, Mr A McQuillen, contacted my Chambers and applied to have the matter placed in the List that evening to make an application that the trial date be vacated. That application was not acceded to and the application was made on the morning of the first day of the trial, when Mr McQuillen appeared for the plaintiff and Mr Garling SC appeared for the defendant. 4 Mr McQuillen advised the Court that he had only recently been briefed and that he had advised the plaintiffs that their case was not ready to proceed. Mr Garling SC accepted that Mr McQuillen had formed that view and accepted that the plaintiffs were not ready to proceed but formally opposed the vacation of the hearing date on behalf of the defendants. I vacated the trial date and listed the matter before the List Judge on 12 November 2004 to obtain a new trial date. The matter has now been listed for three weeks commencing on 2 May 2005. Mr McQuillen accepted that as a condition of the vacation of the trial date his clients would have to pay the defendant's costs thrown away by reason of that vacation. 5 I also required the parties to enter into settlement discussions between 1 November and 4 November when I next listed the matter before me. On 4 November 2004 I was advised that those discussions were not successful, and by consent I made orders for the further preparation of the trial and listed the matter for argument at 9:30 on 11 November 2004 in respect of the defendant's application for indemnity costs. I directed that the plaintiffs file and serve an outline of submissions by 12 noon on 10 November 2004. That Order was not complied with. On 11 November 2004 the plaintiffs filed further evidence in respect of the application for indemnity costs and handed up to the Court an outline of submissions. Having regard to the shortness of time then available I stood the matter over further to 9:30am this morning when I heard further submissions from the plaintiffs. 6 It was on 14 May 2004 that Justice Whealy set this matter down for hearing on 1 November 2004. That was over the plaintiffs' objection, however Whealy J granted the plaintiffs leave to approach the Court to make an application to vacate the trial date. The plaintiffs had five and a half months to apply for the vacation of the trial date. Instead, as the defendants submitted, they waited until the day of the hearing, thus inconveniencing the defendants, their legal representatives, and the Court. For the purposes of this application I intend to focus on the inconvenience and cost to the defendants and their legal representatives. 7 The defendants submitted that the plaintiffs advanced no reasonable ground for the vacation of the trial date except that they were not properly prepared for the trial to commence. That is so. It is conceded that the plaintiffs had previously failed to comply with interlocutory directions and orders. The defendants relied upon correspondence from the plaintiffs' solicitor, Mr GH Healey, between 14 July 2004 and 29 October 2004. On 14 July 2004 during argument in relation to a Motion seeking orders that the plaintiffs attend for medical examinations, Mr Healey informed the Court that the plaintiffs wished to maintain the hearing date. In a letter of 1 October 2004 to the defendants solicitors, Messrs Phillips Fox, Mr Healey wrote: … You can be assured that neither the Plaintiffs nor anyone within this practice, wish for there to be any unnecessary adjournment application. Accordingly, the Plaintiffs have instructed Ms Clarke and this practice to do all possible to make the matter ready for Hearing on 1 November 2004. 8 Letters from Mr Healey to Messrs Phillips Fox on 6 and 7 October 2004 advised the defendants' solicitors which of the defendants' expert witnesses were required for cross-examination. On 15 October 2004 there was further correspondence relating to a subpoena issued to the second defendant. On 21 October 2004 further expert reports were served on the defendants' solicitors with advice that both Senior and Junior Counsel then briefed for the plaintiffs had become unavailable and that: The writer confirms her advice to your Ms Pepper of Counsel that we are presently confirming who will now be appearing for the plaintiffs in this matter.

9 On 27 October 2004 there was further correspondence between the parties in respect of certain objections to documents. On 28 October 2004 the plaintiffs' solicitor wrote to the defendants' solicitors suggesting the matter should be listed "administratively" to advise the Court of a revised time frame. On that evening there was a further letter from the plaintiffs' solicitors to Phillips Fox referring to the proposed video link hearing and once again the mention of listing the matter administratively. Later that evening a further letter was sent to the defendants' solicitors enclosing by way of service a further expert report. Finally, late in the afternoon of 29 October 2004, the plaintiffs' solicitors wrote to the defendants' solicitors advising that the matter was not ready and that an attempt would be made to make an application to the Court. 10 The defendants submitted that up to 29 October 2004 the correspondence strongly suggested that the matter was ready for hearing and that they could not have been expected to do anything but prepare fully for the hearing, including to ensure that Counsel were available for the full period of the hearing. It was also submitted that the defendants had to ensure that witnesses were available and to make appropriate arrangements for that to occur. 11 There is in evidence on this application a detailed chronology of the litigation prepared by Katherine Dennyse Lawrence, a solicitor with Phillips Fox. The chronology discloses that the plaintiffs were ordered to file and serve medical reports by 1 March 2002. That did not occur until 25 March 2003. It is submitted that the chronology also discloses that the plaintiffs took nearly three years to present a Statement of Claim in final form and it was noted that Counsel for the plaintiffs indicated on 1 November 2004 that further amendments may still be required. On 7 April 2004 the plaintiffs were ordered to provide Part 33 particulars. The plaintiffs are still in breach of that order. When asked why it was that the plaintiffs had not prepared themselves for trial between the date the matter was set down for hearing by Whealy J and the date of the hearing, Mr McQuillen advised the Court that he was instructed that a major factor was the awaiting of the outcome of negotiations to settle the matter. Unfortunately those instructions appear to be incorrect. It seems to me that the explanation given by the plaintiffs through their counsel for failure to ready themselves for trial is without foundation. 12 Notwithstanding the leave granted by Whealy J, the plaintiffs failed to approach the Court until the eve of the date for hearing or the first day of the hearing. 13 The defendants submitted that a costs order on a party/party basis will not necessarily be sufficient to cure the prejudice suffered by them arising from the vacation of the trial dates. In this regard reliance was placed upon what Handley JA said in W Dazenko Structural and General Engineering Pty Ltd v Fraser Hrones and Company Ltd, unreported, 5 October 1990, as follows: The reasons why orders for costs alone are not necessarily sufficient to cure prejudice to a litigant arising from the adjournment of litigation were expressed clearly and forcibly by Cullen CJ in Conroy v Conroy [1917] 17 SR 680 at 684-685 as follows: "It was contended that where a postponement is applied for, and any prejudice to the other side can be compensated for by costs, it is a denial of justice to refuse the postponement. That has never been, and could not justly be adopted as a rule of practice without some qualification. To adopt such a principle in that unqualified form would involve this consequence that a litigant who is a man of means could always purchase his own time for the hearing of a case brought against him, and a party without means must await his adversary's convenience for the decision of his rights. The mere power of paying the other litigant's legal advisors' and witnesses' expenses is not any advantage to the other litigant. The money does not go into his pocket. He may in the meantime be in the position of one who is kept out of his rights to suit the convenience of his debtor or someone who owes him an obligation". 14 Reliance was also placed upon what was said by Samuels JA in GSA Industries Pty Ltd v NT Gas Ltd (1990) 24 NSWLR 710 at 716 that the "emollient effect of an order for costs as a panacea may now be consigned to the Aladdin's cave which Lord Reid rejected as one of the fairy tales in which we no longer believe".

15 The defendants submitted that this is an appropriate case to award indemnity costs either pursuant to Part 52A rule 32 or else pursuant to the inherent jurisdiction on the basis that there has been some "relevant delinquency" on the part of the plaintiffs and their legal advisors; Oshlack v Richmond River Council (1998) 193 CLR 72 at [44] per Gaudron and Gummow JJ. The conduct relied upon by the defendants to establish the "relevant delinquency" is: (a) numerous and repeated non-compliance with Court timetables; (b) the plaintiffs' solicitors leading the defendants to believe that the matter was ready for hearing until the eve of the trial; (c) the failure of the plaintiffs to foreshadow an adjournment application sooner and the substantial costs incurred by the defendants in the preparation of the matter which could have been avoided had there been an earlier application; and (d) the application for the vacation of the hearing on the day of the hearing. There seems to me to be some overlap in these stated categories of conduct particularly categories (c) and (d). The conduct in category (a), although admitted to is, as Mr McQuillen put it, "history" and should not be a matter for consideration in this application. It is relied upon to demonstrate the serial nature of the plaintiffs' delinquency. That delinquency was further demonstrated when the plaintiffs failed to comply with the directions I made on 4 November 2004. 16 It seems to me that the relevant delinquency is the conduct in categories (b) to (d). It was submitted that an award of costs on an indemnity basis would mark the Court's disapprobation of what has occurred and would compensate the defendants. In this regard reliance was placed upon Trimboli v Royal InsuranceAustralia Limited NSWCA, unreported, Kirby P, Hope and Priestley JJA, 2 October 1985, a case in which an application for adjournment of the hearing of a two day appeal was made on the eve of the hearing date. In that case the Court said at 4: The inconvenience to the respondent is a consideration to be weighed in the present motion as is the inconvenience to counsel for the respondent who have set two days aside, prepared the appeal and stand ready to present it. 17 In granting the adjournment the Court said at 5: However, orders should be made which mark the Court's disapprobation of what has occurred and to compensate the respondent for the costs otherwise thrown away by the adjournment of the hearing … the respondent's costs should be paid on a solicitor and client basis and before the matter is again listed for hearing. 18 In Drabsch v Switzerland General Insurance Co Ltd [2000] NSWSC 489 the delinquent party had informed its opponent that it would apply for an adjournment of the fixture, but upon it being suggested by the opponent that such adjournment should be applied for "straight away", announced that such application was not to be made. That party then changed its mind the week before the hearing and made application for an adjournment. Hamilton J ordered that "the costs be paid on an indemnity basis in all the circumstances, particularly bearing in mind the increase of costs thrown away caused by their late change of course". 19 In CF Heath Underwriting and Insurance (Australia) Pty Ltd v Barden, unreported, 13 December 1993 O'Keefe CJ Comm D ordered indemnity costs in a case in which the application was made two days before the hearing date. 20 The plaintiffs submitted that there are no rare, exceptional or extremely unusual facets to the vacation of the trial date such as to set it apart from the normal case: Hobartville Stud Pty Ltd v Union Insurance Co Ltd (1991) 25 NSWLR 358 at 370 per Giles J. It was submitted that the Court requires evidence of unreasonable conduct or abuse of the process of the Court as a foundation upon which an order for indemnity costs might be made: Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Limited (1992) 30 NSWLR 359 at 362; see also Rosniak v Government Insurance Office (1997) 41 NSWLR 608 at 616 per Mason P. 21 It was submitted that the plaintiff had sought an indulgence of the Court and that the general rule that the costs thrown away should be paid by the plaintiff should be applied but on a party/party basis. It was also submitted that where there is a valid explanation for delay attending an application for adjournment, such as attempting to resolve the matter, it is open to the Court to reserve the costs to the ultimate hearing or make them costs in the cause. I am not satisfied in this case that there was a valid explanation for waiting until the eve of the trial and indeed the first day of the trial to apply for the vacation of the trial date. It was very high-handed in my view to write to the defendants' solicitors in the terms that the plaintiffs' solicitors did without disclosing the true situation, that this case was far from ready to proceed to trial. I must assume that the solicitors would have known that the case was not ready to proceed as the alternative of ignorance is unthinkable. 22 The plaintiffs suggested that, had the defendants written to them advising or warning that they proposed to seek indemnity costs in the event of any adjournment, the plaintiffs would have had notice of such an application. That submission is a little curious having regard to the fact that there was no notice given to the defendants that any application for adjournment would be made. It seems to me quite futile for solicitors to be writing letters warning of an indemnity costs application when they have not been given any notice at all that the plaintiffs intended to seek the vacation of the trial date and indeed the solicitors letters suggested quite the opposite. 23 I am satisfied that the delay in seeking the vacation of the trial date was totally unreasonable and that some, and perhaps the majority, of the costs thrown away might have been avoided had the plaintiffs acted reasonably, made a proper assessment of their readiness, and notified the defendants in a reasonable fashion. I am satisfied that this case is one in which indemnity costs should be ordered. 24 I order that the plaintiffs pay the defendants' costs thrown away by the vacation of the trial date on an indemnity basis. 25 The defendants seek the payment of the costs thrown away forthwith. The plaintiff resists that application. Part 52A rule 9 provides for an order for the payment of costs forthwith if it appears to the Court that: (a) a party has been subject to unreasonable delay or default on the part of any other party; (b) the proceedings are unreasonably protracted; or (c) justice otherwise demands it. In making its submissions in support of this application the defendants surmised that it may be another year before this matter is finalised. That last submission was made before it was known that the matter has now been set down for trial on 2 May 2005 for three weeks. 26 In Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1 Barrett J, at 4, referred to factors that have caused courts to depart from the normal rule that costs are payable at the conclusion of the proceedings. They were: (a) where the aspect or application represents the determination of a separately identifiable or discrete matter; (b) where there is some unreasonable conduct by the party against whom costs have been awarded: and (c) where the final determination of the proceedings may be some time away. 27 The vacation of the trial date is a discrete matter but the assessment by both parties of what costs have truly been thrown away will be far better made after the trial in May 2005. There was unreasonable conduct by the plaintiffs in applying for the adjournment so late but that was the basis of the award of indemnity costs. I do not regard it as appropriate to visit that matter upon the plaintiffs twice in the same application. The trial date is now known and is sooner than anticipated in the defendants' submissions. I am not satisfied that justice requires anything other than payment of the costs at the usual time. 28 The plaintiffs are to pay the defendants costs thrown away by reason of the vacation of the trial date on an indemnity basis. The defendants application for an order that those costs be payable forthwith is refused. I am not satisfied that the costs of the hearings of this application should be paid on an indemnity basis because the plaintiffs have successfully resisted the order that the costs be paid forthwith, however the plaintiffs are to pay the defendants costs of the hearings on 1, 11 and 16 November 2004 on a party/party basis. I make no order as to costs in respect of the appearance on 4 November 2004. **********

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