Vintage Developments Pty Limited v GHD Pty Limited

Federal Court of Australia|2007-03-07|Before: Bennett J

REASONS FOR JUDGMENT 1 The applicants (together 'Vintage') moved the Court for leave to amend their application and statement of claim to clarify the capacity in which the second applicant, Errol Investments Pty Ltd, brings these proceedings. Their application was partially successful: Vintage Developments Pty Limited v GHD Pty Limited (No 2) [2006] FCA 1437 ('Vintage (No 2)'). Vintage and the second ('Hunter Valley') and third ('Mr Johnston') respondents disagree as to who should pay the costs of Vintage's motion for leave to amend the pleadings. Vintage accepts that, as the party seeking leave to amend, it is appropriate that it bear some liability for costs. Vintage also acknowledges that it is liable to pay costs incurred prior to 15 September 2006, further to an agreement between the parties. Vintage's submission is that it should only be liable thereafter to pay 75% of Hunter Valley's costs and 50% of Mr Johnston's costs. 2 In the ordinary course, an applicant for leave to amend is liable for the costs of amendment. Whether or not Hunter Valley or Mr Johnston's costs should be reduced depends on whether their conduct in contesting the amendments was reasonable.

Vintage (No 2) 3 Two sets of amendments were the subject of argument in Vintage (No 2). Vintage also sought by its motion a declaration as to the effect of actions taken before and after the second set of amendments. That order was not pressed at the hearing of the motion. 4 The first set of amendments reflected the capacity for Errol Investments to bring the proceedings as trustee for the Shellharbour Unit Trust, rather than on its own behalf. Leave to so amend was granted: Vintage (No 2) at [14]. The amendments were necessary because the solicitor who drafted the application and statement of claim in these proceedings had not seen the Shellharbour Trust Deed at the time of so doing. 5 Much of the debate in Vintage (No 2) concerning the first set of amendments related to the date upon which those amendments should take effect. Hunter Valley and Mr Johnston submitted that the Court should "otherwise order" that the first set of amendments take effect from the date of their making, rather than the date on which the documents to be amended, the application and statement of claim, were filed. An "otherwise order" was sought as the limitation period against Hunter Valley and Mr Johnston had expired. I rejected the submission (Vintage (No 2) at [27]). 6 Leave was also sought to substitute Errol Investments with Errol Nominees Pty Ltd, upon the replacement of Errol Investments by Errol Nominees as trustee of the Shellharbour Unit Trust. The purpose of this second set of amendments was to give effect to a multi-party transaction unrelated to these proceedings. Detailed submissions were put to the Court. Leave was refused as the occasion to make the order for substitution sought had not yet arisen (Vintage (No 2) at [50]). 7 One further matter was the subject of extensive submissions. Mr Johnston had been joined to these proceedings pursuant to leave granted by the Court on 11 May 2006 (Vintage Developments Pty Limited v GHD Pty Limited [2006] FCA 531 ('Vintage (No 1)'). In Vintage (No 2), Mr Johnston submitted that Vintage's motion was the first time Vintage had applied to the Court for an order to amend the application and statement of claim in a way that pleaded a case against him. It was said to follow, despite the decision in Vintage (No 1) where similar arguments were canvassed and rejected, that the proposed second further amended statement of claim disclosed a new (and statute barred) cause of action against Mr Johnston. That submission was not adopted by Hunter Valley and I rejected it (Vintage (No 2) at [32]). An appeal by Mr Johnston from the decision in Vintage (No 1), after the publication of reasons in Vintage (No 2), was dismissed by the Full Court: Johnston v Vintage Developments Pty Limited [2006] FCAFC 171.

Consideration 8 It is necessary to consider the position of Hunter Valley and Mr Johnston separately.

Hunter Valley 9 Vintage submits that it should only be liable to pay 75% of Hunter Valley's costs incurred after 15 September 2006 because: · Vintage was granted leave to make the first set of amendments and successfully defended Hunter Valley's submission as to the date on which the amendments should take effect; · Hunter Valley put itself to unnecessary expense in seeking irrelevant information by its notice to produce dated 26 September 2006. That information, if relevant at all, related only to an application for security for costs not the subject of the hearing. 10 Vintage's evidence on its motion to amend was voluminous. The amendments were sought as a matter of urgency to give effect to a transaction involving Errol Investments, which transaction was unrelated to these proceedings. The amendments were to correct mistakes or omissions in the pleadings and to give effect to Vintage's own commercial arrangements. There can be no doubt that, subject to an unreasonable position taken by Hunter Valley, Vintage is liable for the costs of amendment. 11 The position taken by Hunter Valley in contesting the amendments was not unreasonable. It was common ground that the limitation period had expired and arguable that the amendments should take effect on the date of filing the amended documents. Moreover, Hunter Valley was successful in contesting the second set of amendments. There is no justification for reducing payment of Hunter Valley's costs to 75% of costs incurred after 15 September 2006. 12 Whether the documents sought by Hunter Valley's notice to produce dated 26 September 2006 are relevant to Vintage's motion for leave to amend is a matter to be determined, if necessary, by a taxing officer.

Mr Johnston 13 Vintage submits that, in correspondence between the parties, Mr Johnston also sought irrelevant information and that his costs should be reduced for that reason. As with Hunter Valley, that is a matter for taxation. 14 More persuasive is Vintage's submission that Mr Johnston's costs should be reduced by reason of the raising of arguments previously put and rejected in Vintage (No 1). This fact was noted at [31] in Vintage (No 2) and discussed at [7] above. Mr Johnston submits that it was necessary to canvass those arguments. I disagree. A procedural irregularity arose by reason of Vintage's failure to seek leave to amend the pleadings to include the cause of action against Mr Johnston (Johnstonat [26]; Vintage (No 2) at[32]). However, I had decided in Vintage (No 1) at [33]that the further amended statement of claim could be considered a fresh pleading as against Mr Johnston and that it was not established, for the purposes of an application for joinder, that the claim was statute barred. Vintage (No 2) was not the appropriate forum for that reasoning to be challenged. Those submissions ought to have been reserved for the Full Court hearing in Johnston. 15 I note that Mr Johnston was unsuccessful in the Full Court and ordered to pay Vintage's costs. 16 Vintage's liability to pay Mr Johnston's costs of Vintage (No 2) should be reduced. As the majority of his submissions concerned matters raised in Vintage (No 1), it is appropriate that those costs are reduced. Vintage has sought a reduction of 50%. In the circumstances, that in reasonable.

Conclusion 17 No reduction in the costs payable to Hunter Valley is justified. Vintage is to pay 50% of Mr Johnston's costs incurred after 15 September 2006. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.

Associate: Dated: 7 March 2007 Counsel for the Applicants: R P L Lancaster and D Kell

Solicitor for the Applicants: Baker & McKenzie

Solicitor for the First Respondent: Colin Biggers & Paisley

Solicitor for the Second Respondent: Horton Rhodes

Solicitor for the Third Respondent: Shand & Associates

Date of Hearing: 13 October 2006 and 24 October 2006

Date of Final Submissions: 17 November 2006

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