Westcoast Clothing Company Pty Ltd v Freehill Hollingdale & Page [1999] VSC 309

Supreme Court of Victoria|1999-08-30|Before: Smith, J.

Westcoast Clothing Company Pty Ltd v Freehill & Ors

Interest - relevant considerations Costs - solicitor/client - surcharge - unreasonable conduct of defence and contribution proceedings.

Westcoast has sought interest on the damages awarded as follows:

(a) from the date of the writ, 29 February 1996, until 23 February 1998 at 13.2% per annum

(b) from 23 February 1998 until the date of judgment at 12.3% per annum

Westcoast argued that it is entitled to interest pursuant to s 60 of the Supreme Court Act 1986 unless "good cause is shown" to the contrary (Williams v Volta [1982] VicRp 74; [1982] VR 739 at 742). It argued that interest is awarded under that section to compensate the plaintiff for being held out of its money during the time the litigation takes to progress: Shoard v Palmer (1989) FLR 402. In that case Kirby, P. commented

"I do not consider that the `exigencies' of the list are properly taken into account to reduce the entitlement to interest. Indeed the provision by parliament of a statutory right to interest is doubtless occasioned by, amongst other things, a recognition that cases take time to come before courts for determination and that the parties who succeed should be protected by an award of interest in compensation." (419)

The defendants emphasised that the statute confers a discretion and that the court may refuse to give interest if good cause is shown to the contrary. The defendants appeared to accept that interest is payable from the date of the writ on the amount of damages awarded but sought to show cause to a limited extent. They argued that interest should not be allowed for the period between 11 September 1998 to 4 March 1999.

It appears that on 3 March 1998, the Listing Master ordered that the proceeding be listed for hearing on 11 September 1998. At a call over held on 14 August 1998 the date for trial was allowed to stand. On 11 September 1998 the trial did not take place. There is a dispute as to the precise reason for that result. It appears to be common ground that the plaintiff Westcoast delivered amended particulars of damage on 11 September 1998 which substantially increased the quantum of the claim sought by the plaintiff from the original $342,000, plus costs paid and bank guarantee fees, to a claim of $3,155,333 plus an unspecified amount for the loss of use of the money and, alternatively, interest. On 21 September 1998 the plaintiff served further particulars of loss and damage setting out the claim for interest and loss of use of the money totalling $6,247,049. Thus the combined amended particulars produced a claim totalling $9,402,382.

On 11 September 1998 the defendants sought costs for that day. Counsel for Westcoast opposed the application on the basis that the case could not have proceeded in any event because a Judge was not available. The cost of the adjournment were reserved by the Listing Master until the Directions Hearing on 5 October 1998 on the basis that by then the Listing Master would be in a position to know whether the proceeding would have been allocated to a Judge on 11 September 1998 or shortly thereafter.

The defendants argued that on 5 October 1998 the Listing Master ordered that the plaintiff pay the defendant's costs of 11 September 1998 and did so because of the late delivery of the amended particulars of loss and damage and because a Judge would have been available. They argued that it may be concluded that the trial did not proceed on 11 September 1998 solely because the plaintiff was not in a position to proceed with the trial.

The plaintiff disputed this analysis submitting that the trial did not proceed on 11 September 1998 because the plaintiff was not in a position to proceed with the trial but because a Judge was not available on that day in any event. Counsel for the plaintiff submitted that the costs order that was made on 5 October 1998 against Westcoast related only to costs of the day of the directions and not for the costs of the trial thrown away by the adjournment.

An examination of the authenticated orders on the file indicate that on 11 September 1998 the Listing Master made orders giving a number of directions for the further interlocutory steps in preparation for the trial and as far as costs were concerned merely stated "costs are reserved". The authenticated order of 5 October 1998 contains further directions for interlocutory steps and reserves the costs of that day. It also ordered, however,

"the reserved costs of 11 September 1998 of the defendants be paid by the plaintiffs"

A date was tentatively fixed by order for the hearing of the trial on 1 March 1999.

On the basis of the authenticated orders I would be inclined to think that the costs that were dealt with on 5 October 1998 related only to the directions aspect of the case and that, therefore, the position taken by Westcoast on the question of whether the case would have been heard or not on the original trial date is to be preferred.

In perusing the authenticated order of 5 October, I noticed that the Listing Master made orders about the costs of the transcript for the day of the hearing on 5 October 1998. A copy of that transcript is contained in the Court file and it appears to confirm that the costs order that the Master was making related only to the day of the directions and the cost of the directions as such. More importantly, the Listing Master states (p.21) that the parties would not have had a judge for their trial.

I am satisfied that the trial would not have commenced on that date in any event. In other words the defendants cannot exclude the "exigencies of the list" as a substantial cause of that period of delay. In those circumstances I am not persuaded that cause has been shown to the contrary and accordingly Westcoast is entitled to the interest claimed. On my arithmetic the amount recoverable to 30 August 1999 is $117,964.00

The debate before me proceeded on the basis that the Court has a general discretion in awarding costs under S.24 of the Supreme Court Act subject to and in accordance with Order 63 of the Supreme Court Rules. It is accepted that in the absence of special circumstances a successful litigant should receive its costs. Those costs will normally be awarded on a party/party basis.

The plaintiff applied for orders that costs be awarded to it on a solicitor/client basis or alternatively that orders be made pursuant to Rule 63.34 that the costs normally allowed on a party/party basis be increased by 30%. Westcoast drew attention to the following circumstances:

(a) the three defendants were in an unusual position of having been the plaintiff's legal advisers and having acted for it in the Western Australian proceedings

(b) the complexity of the litigation

(c) the manner in which the defendants prosecuted the proceeding and

(d) the fact that a large part of the proceeding was taken up by the three defendants arguing the question of contribution between themselves.

The defendants disputed the plaintiff's claim. In addition, they argued that costs should be awarded against the plaintiff in a number of areas. They listed the following:

(a) the defendants costs of 10 September 1998 and 5 October 1998

(b) costs relating to the amendments of the plaintiff's claim

(c) costs relating to the inadequate discovery given by the plaintiff

(d) costs relating to issues where the plaintiff was unsuccessful in its claim or abandoned its claim

(e) miscellaneous items comprising the costs incurred in bringing Tyrell to give evidence on behalf of the plaintiff in respect of the tax returns which evidence was irrelevant and the time and effort spent in trying to locate Eddy and discussing whether he would be called.

(a) The plaintiff pay the defendants' costs of 10 September 1998 and 5 October 1998.

(b) The defendants pay the costs of the plaintiff including reserve costs up to and including 4 March 1999 (the first day of the trial).

(c) The defendants pay 80% of the costs of the plaintiff for the trial after 4 March 1990.

(d) The plaintiff pay 20% of the costs of the defendants of the trial after 4 March 1999.

They also sought an order that the costs of the plaintiff incurred in respect of the application brought by the second defendant to have Justice Warren remove herself as the Trial Judge be paid by the second defendant. As to that issue, the parties have agreed that the appropriate order is that the second defendant pay the plaintiff's costs of that application. I will make that order.

Returning to the other issues, I will consider, first, the plaintiff's application for costs on a solicitor/client basis or at an enhanced rate. I will then consider the specific costs issues raised by the defendants.

The claim of the plaintiff for costs generally on solicitor/client basis or

In advancing the plaintiff's case, counsel referred to the lengthy cross-examination of Mr Bodis for several days in support of the defence case that the claim was a fraud. Reference was also made to the fact that Mr Brott was not called to give evidence. The plaintiff argued that each of the defendants had foreknowledge of the plaintiff's case having been its lawyers. Counsel referred to the fact that on one occasion Mr Brott advised that the case was worth at least $600,000. There was no suggestion in the defendant's files that Westcoast was unlikely to succeed or that Mr Bodis would not be believed on his oath. The defendants had access, it was said, to all the notes and memoranda of the plaintiff.

Counsel also submitted that on many occasions on a number of matters the defendants put the plaintiffs to strict proof despite the fact that they had previously acted for the plaintiff. By way of example, reference was made to the desire to have witnesses in person in court who could have given evidence on video link from Western Australia, the need to produce cheque butts and taxation returns and Mr Kumar's records.

As to the complexity of the case, attention was drawn to the fact that because of the original failure to prosecute the action it was necessary to reconstruct the case that would have been tried many years ago and that there was as a result difficulty in locating witnesses and running a trial within a trial. It was submitted that in those circumstances an increase in costs above normal party/party basis should be allowed (citing Jenkins v Coles [1993] VicRp 10; (1993) 1 VR 155 and Alucraft Pty Ltd v Grocon SC (Vic) Smith, J. 4838/1990 25 May 1994).

Counsel also estimated that the contribution proceedings were argued and presented for 14 days out of a total of 31 days or 32 days if the mediation day is counted. It was put that had the defendants not fought the contribution issue in the trial of the plaintiff's proceedings, they would have been significantly shorter and there would not have been a need for three counsel for the defendants. The plaintiff would have needed to do no more than establish that each of the defendants was negligent. Counsel noted that senior counsel for the second defendant was briefed only on the question of damages not on liability or contribution.

The defendants have made a number of points in response

First, they have argued that the plaintiff's claim in the proceeding bore no resemblance to the claim made against Sail America in the Supreme Court of Western Australia. Therefore, it was incorrect, it was said, for the plaintiffs to submit that each of the defendants had "full knowledge of the plaintiff's case". The defendants referred, in particular, to the increase in the damages claim from $342,000 to $9M in respect of which $6M was claimed for loss of use of money.

It is true that the claim was greatly inflated by the plaintiff and in that sense differed significantly from the case originally put in Western Australia and it changed some of the details of its case. Nonetheless the major question in both proceedings was the likely sales and that issue did not change.

The defendants also challenged the proposition that they had had access to all notes and memoranda of the plaintiff. Reference was made to the problems with discovery in both proceedings. The defendant submitted, that they had not received all documentary evidence that should have been available to substantiate the plaintiff's claim for damages.

It is true that documents of relevance were not available to the defendants but, to a large extent this applied to both proceedings. The defendants representatives in these proceedings were in a similar position to the defendants when they acted in the original proceedings so far as information and documents were concerned.

The defendants also submitted that they were entitled to challenge and assess the plaintiff's likelihood of success if only to determine the measure of the plaintiff's lost opportunity. They argued that far from having a thorough knowledge of the case, on the issue of liability in the first action it was clear that the matter had not been examined in any great detail - presumably by them when acting for the plaintiff.

In considering the above points, it should be noted that the defendants sought to meet the plaintiff's case in the trial of these proceedings by arguing, first, that the plaintiff could not have established liability against Sail America is the Western Australian proceedings. They relied on three grounds. The first was that it would have failed to satisfy a condition precedent that sales be made to retailers on the east coast. The second was that the plaintiff would not have been able to demonstrate that the trade marks were similar. The third point was that the dispute had been settled. These were all matters on which the defendants should have had full knowledge. Access to documentary material was not an issue. There was nothing in the contemporary documents to suggest that the defendants had any concern about these issues in the original action and no attempt was made in these proceedings to lead evidence of such concerns. A significant amount of time and costs were incurred in dealing with these issues including the calling of evidence from Mr and Mrs Soares in America.

Secondly, in meeting the plaintiff's case in these proceedings, the defendants launched a major attack upon Mr Bodis' credibility and of the plaintiff's case. There was nothing in the files to indicate that the defendants had any concern about his or the case's credibility and it was significant that Mr Brott, who knew Mr Bodis and the plaintiff's case well, was not called to give evidence.

I agree that in an adversary system, the right of parties to fight cases vigorously must be respected. Caution is required in considering whether the defence of a case by a party warrants any costs penalty. The approach of the defendants, however, went well beyond what I would regard as a robust defence of the case in a number of respects and unreasonably added to the length, difficulty and costs of the proceedings. On any view the plaintiff's original claim had to be worth something. Yet there has been no suggestion at any time in the proceedings before me that the defendants' accepted that there was a lost opportunity of any value. On the contrary, the defendants, took a most extreme position and sought vigorously and strenuously, particularly in their attack on Mr Bodis, to argue that the claim had no prospect of success - a view they had never expressed to the plaintiff while acting as its lawyers in the matter for some seven years.

I am satisfied, however, that the plaintiff bore some, but very slight, responsibility for the length, difficulty and cost of the present proceedings by the marked inflation of its claim. The increase in the amount of the claim from $342,000 to $9M could not be justified and probably played a part in stirring up the resistance of the defendants. The defendants submitted that on any view the plaintiff's claim for damages was grossly inflated and was never going to be allowed in the sum claimed. I agree, but that fact would have been obvious to all parties from the day the amended particulars were delivered. The plaintiff did not seriously suggest that each claim was cumulative.

Turning then to the issue of contribution, it must be borne in mind that all the evidence and submissions relevant to liability were relevant to contribution. The defendants disputed that 10 to 14 days was spent arguing these issues. Their counsel submitted that the second defendant did not cross-examine the other defendants on liability and contribution at all. That was a saving, but the reality was that the second defendant relied on each of the other defendants to carry the fight for him. It is true that the other defendants declined to put a proposal as to the appropriate amount. It is not correct, however, that little in the way of submissions was put by the defendants. Submissions were made. They were not prolonged and it is fair to say that one of the features of the conduct of the trial was the marked reluctance of the defendants to face up to the issue of liability and contribution. Nonetheless, several witnesses were called to give evidence which went solely or principally to liability and contribution. I refer to Mr Ley on the 30th, 31st March and 1st April, Mr Watts on part of the 7th, 8th and part of the 9th April. In addition, notwithstanding their coyness on the matter, opening and closing submissions were made on behalf of the defendants which dealt with the issues of liability and contribution on 29th March, 7th, 15th, 16th, 19th, 20th, 21st April. The plaintiff took up very little time on the liability question. It relied on and tendered the relevant files and addressed brief submissions.

In presenting its claim for solicitor/client costs the plaintiff has relied on authorities where costs on that scale were allowed against a party pursing a claim or defence that could not be made out. The defendants, in their joint written submissions, have not sought to address the issue by differentiating between themselves. Rather, they have argued that "it was by no means certain that negligence would be proved against any or all of the defendants." I find that proposition remarkable. I would have thought it inconceivable that negligence would not be found against the second and third defendants because of their indefensible delays and inconceivable that the defendants, and their legal advisers, were not alive to that reality. Brott's representatives made no serious attempt to defend his conduct. As to the first defendant there were issues to be debated about its responsibility as the agent of the Melbourne solicitors but even it must have expected that it would be found liable if only for a small percentage - as was the case. I refer, for example, to the delays noted in my reasons for judgment for which it was responsible and for which it apologised subsequently in correspondence to Brott.

In circumstances where the defendants had no realistic prospects of avoiding liability an obvious course open to them was to concede liability, fight the plaintiff's claim on quantum and then have a separate hearing of the contribution proceedings (assuming contribution was in dispute) without involving the plaintiff as a party and putting the plaintiff to the cost of those proceedings. Such a course of action would have saved the defendants substantial costs. In my view it was unreasonable not to adopt it. One wonders why the defendants chose not to adopt this course. They have not argued that it was necessary to have Mr Bodis involved in the contribution proceedings. If he was needed as a witness for those proceedings he could no doubt have been called as a witness had they been dealt with separately. It seems likely, however, that his evidence was not necessary in view of the fact that he was not seriously cross-examined about liability issues in any event. It is reasonable to conclude that the defendants made a tactical decision to add to the cost of the principal proceedings to apply pressure to the plaintiff. Whatever was the reason, the course adopted unnecessarily added a cost insult to the injury they had already caused their former client.

On the question of liability it seems to me that the time spent and the costs incurred were spent and incurred in the certain knowledge of defeat on that issue. On the question of contribution they were unreasonably and unnecessarily incurred (Australian Guarantee Corporation Ltd v Dejager [1984] VicRp 40; (1984) VR 483; Fountain Selected Meat (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202; (1988) 81 ALR 397; Rouse v Shepherd (No.2) (1994) 35 NSWLR 292; Colgate-Palmolive Pty Ltd v Cussons [1993] FCA 536; (1993) 46 FCR 225. I note that in the latter case, costs were allowed on an indemnity basis in relation to some issues and on a party/party basis in relation to others).

The defendants submitted, and I accept, that the approach of having the second defendant alone challenge the claim for quantum saved time and expense. They also submitted that it was the magnitude of the claim which caused the second defendant to retain senior counsel. It was put that the defence incurred that cost which could have been avoided. While accepting the reason for the employment of senior counsel, it does not follow that the costs incurred by the second defendant in doing so should be weighed in the balance, particularly when the defendants failed in so many of the attacks that they made.

It seems to me, that the plaintiff has made out a strong case for it to receive additional compensation on a solicitor/client basis for costs it incurred during that part of the proceedings concerned with liability and contribution between the defendants and for costs resulting from the manner in which the defence was conducted.

I do not consider that the delay in the original proceedings added to the complexity of conducting the proceedings to an extent that would justify any surcharge to the costs.

I will consider later the extent of the additional compensation that should be allowed after considering the costs claimed by the defendants and to which I now turn. If the plaintiff was doing no more than seeking its costs of the proceedings on a party/party basis I would have made no allowance for any of the items that follow and given the plaintiff its costs without deduction. In view of the fact, however, that the plaintiff seeks costs at a higher rate or with an additional surcharge, these items need to be considered in any final decision as to the appropriate costs orders.

The defendants submitted that on 10 September 1998 the plaintiff sought orders for the giving of evidence by video link in Perth. The application came on in the Practice Court before Beach, J.. The defendants argued that Beach, J. refused to hear the application because the plaintiff had not complied with orders for the exchange of witness statements. It was said that the plaintiffs served the defendants with approximately one half of Mr Bodis' witness statement and the defendants then exchanged witness statements that day. The balance of Mr Bodis' witness statement was not served that day. They argued that Beach, J. would not hear the application because of the failure to comply with directions for the exchange of witness statements.

The plaintiff on the other hand submitted that the reason the witness statements had not been exchanged on or prior to 10 September 1998 was that the defendants had not indicated that they were in a position to exchange them. The plaintiff sought that exchange at least to the extent of the principal witness statements and in particular those of witnesses from whom it was sought to give evidence in Western Australia. Counsel for the plaintiff drew my attention to the fact that Beach, J. specifically did not order costs against the plaintiff on that day but reserved them for the Master who in turn made no further order about them.

The defendants have not challenged the plaintiff's response. That being the case, it appears to me that the costs reserved on that day should not be the subject of an order in favour of the defendants but should be included in any order I make in favour of the plaintiff for reserved costs.

Turning to the 5th October 1998, the plaintiff had been ordered on 11 September 1998 to provide a supplementary affidavit of documents by 14 September 1998. On the 5th October 1998 as noted above, the Listing Master gave further directions dealing principally with further discovery to be provided by the plaintiff. She reserved the costs of the directions hearing. The defendants have sought the costs of that Directions Hearing because the directions arose from the default of the plaintiff in relation to discovery.

Counsel for Westcoast submitted that the Listing Master was asked to make an order that the plaintiff pay the costs of the directions hearing on that day but declined to do so and instead simply ordered that costs be reserved. It was submitted that the directions hearing was a necessary step in advancing the case to trial. Counsel submitted that the directions hearing on 5 October 1998 was brought on by the Master to ensure that the case would be ready to proceed to trial in February. Counsel also noted that the Listing Master made a number of extra directions in any event on that day.

An examination of the authenticated order made on 5 October 1998 and the matters referred to in it confirms that on 5 October 1998 the Listing Master dealt with the plaintiff's failure to give adequate discovery but also fixed a new trial date and adjourned the applications by the plaintiff and the defendants of 9 September 1998 seeking orders for evidence by video link. The Listing Master reserved the costs of the 5th October 1998 and the costs of the two applications of 9 September 1998 and reserved the costs of transcript. She adjourned the directions hearing to 23 November 1998.

It is apparent, therefore, that it is an over simplification on the part of the defendants to argue that the directions hearing was called on to ensure compliance with the obligation to give discovery. There were other matters to be dealt with including the need to fix a new trial date in view of the inability to have the matter allocated to a judge on the original listed hearing date. Further, the defendants themselves had some unfinished business namely the application for video link orders. Thus it seems to me appropriate in all the circumstances that the same consequences should flow in relation to the reservation of costs on this day. They should be covered in any order I may make in favour of the plaintiff for reserved costs. Thus the costs will in essence follow the event.

The defendants also raised a number of matters where it is said that costs of all parties were wasted by the plaintiff.

It referred firstly to a series of attempted amendments of the particulars of loss and damage on 4 March 1999, 11 March 1999, 17 March 1999 and 9 April 1999. The defendants sought the costs allegedly thrown away by reason of those amendments. The defendants have not identified any costs that were thrown away. Further, no costs orders were sought when leave was sought and obtained. The defendants have not pointed to any reservation of those costs. The defendants, however, were put to unnecessary costs in considering the amendment proposals. Some allowance should be made in their favour.

Next the defendants drew attention to the attempt by the plaintiff to amend the claim for exemplary damages and later to add a new paragraph 16 seeking exemplary damages. This was first raised on 5 March 1999. On 9 March 1999 the issue was raised whether an amendment would be permitted to allege as a further particular of negligence the failure of the defendants to claim exemplary damages against Sail America. Argument in the matter was stood over until 11 March 1999 when it was again raised and the matter further adjourned. On 17th and 18th March 1999 the issue was briefly raised. On 23rd March 1999 the application was heard and dismissed save for an amendment to include a further particular under par 32 of the amended statement of claim.

These matters consumed some time and cost in and out of court. The defendants did not address the question of costs at the time either by seeking costs orders then or having the costs reserved. Much of the time, however, was spent considering and debating proposed amendments that did not proceed or were not allowed. Some allowance should be made in the defendants' favour.

Counsel also referred to an issue that was raised on 23rd March 1999 and subsequently abandoned namely the proposed amendment of the statement of claim to add particulars of negligence; failure to advise that the damages recoverable were in excess of $400,000 and failing to seek adequate security in excess of that amount. I think it fair to proceed on the basis that some time and cost was wasted in and out of court by that exercise and that needs to be addressed.

Reference was made to another issue where time was, in my view, wasted by the plaintiff. That was a foreshadowed application to amend the particulars of negligence, initially, against the first and second defendants but then only against the first defendant, alleging negligence in the failure to advise of the "cost cap" in Western Australia, after some argument the matter did not proceed. This needs to be addressed also.

Next counsel for the defendants referred to costs incurred in relation to inadequate discovery by the plaintiff. On 2 March 1999 I ordered the plaintiff to make further discovery. The issue of that discovery was raised on 5 March 1999 and that of further discovery on 10 March 1999 and 11 March 1999. On 22 March 1999, Mrs McMahon gave evidence for the plaintiff in which she referred to documents which had not been discovered and the proceedings were adjourned to give the defendants time to inspect the documents. On 23 March 1999 I made a further order for the filing of an affidavit of documents relating to bank statements and the cash payments journals of the plaintiff. There was further discussion of discovery on 29 March 1999 and subsequently, as a result of the further discovery that was given, the defendants had Mr Bodis recalled to give evidence on 13 April 1999. It was put that those costs need not have been incurred if discovery had been given properly and in the ordinary way. It is true that there was an element of chasing "rabbits down burrows". Nonetheless, the plaintiff failed to give adequate discovery and the costs resulting, in and out of court, need to be addressed.

Next the defendants have submitted that there were costs incurred relating to issues lost or abandoned by the plaintiff.

(a) The claim for lost profit on anticipated subsequent orders which was formally abandoned on 21 April 1999.

(b) The claim for loss of profits from other items. The claim initially included seven items and then three were abandoned. The claim totalled $309,500. The claim was lost.

(c) Claim for out of pocket expenses. This was a claim for $19,000 which was unsubstantiated and did not succeed.

(d) The issue arising from the difference between solicitor client costs and party/party costs. In this instance the argument appears to be not so much that the claim was abandoned and lost but that the defendant was successful in that I subsequently found there was a gap of $50,000 between solicitor client and party/party costs which the plaintiff would have had to bear if successful in the Western Australian proceedings. This was an issue effectively won by the defendant.

(e) Exemplary damages. This again was an issue on which the defendant was successful. The plaintiff claimed $250,000

(f) Claim for interest in the Western Australian proceedings. Again the plaintiff was unsuccessful.

(g) The Hungerfords claim. This again is a claim in which the plaintiff was unsuccessful and the defendants successful.

In my judgment the majority of the claims and issues listed did not involve significant costs. An exception was the time spent on the issue (d) above relating to the difference between the solicitor/client costs and party/party costs. A substantial body of evidence was led on this issue and there was significant argument. It was not a total victory for the defendants, however. I accept also that time was taken up with evidence relevant to the Hungerfords claim and some time taken up in the consideration and debate of it.

Finally the defendants raised two miscellaneous items. Firstly, it alleged that on 22 March 1999 Mr Tyrell travelled from Perth and gave evidence on behalf of the plaintiff with respect to the plaintiff's tax returns but that that evidence was irrelevant. I am satisfied that the evidence was relevant and the need to bring him to Melbourne arose from the defendants' insistence on proper proof. The other matter raised was the time spent over the question of calling Mr Eddy to give evidence relating to the plaintiff's tax returns. I am satisfied that there was a certain degree of "toing and froing" wasted in court. No doubt further time and costs would have been incurred out of court by the plaintiff in pursuing these issues. Nonetheless, I consider that this is a matter which should be seen as part of the ordinary work associated with presenting a case and the plaintiff should be entitled to recover the costs which it incurred in pursuing the availability of Mr Eddy. It would be very rare for a party in a case of the complexity of this case not to find itself in the position that it reasonably incurred costs in pursuing evidence although it was unsuccessful in obtaining that evidence.

Miscellaneous costs issues raised by the plaintiff

The plaintiff has sought the costs of the two mediations held in 1998 and on 19 March 1999, the costs that were reserved from time to time, the costs of transcript, video conferencing and junior counsel's fee at the rate of 2/3rd of senior counsel's fees.

In response the defendants challenged two of these items. Firstly, they submitted that no order should be made in respect of the cost of the mediation held on 19 March 1999 because it was held, not as a result of any court order, but because the parties entered into it voluntary. I accept the submission of counsel for the plaintiff, however, that costs should be awarded where they are reasonably incurred. If both parties thought it appropriate to go to mediation, then the party that wins should recover the costs of that attempt to mediate, an attempt by both parties to save costs.

The other matter challenged is the claim that junior counsel fees be fixed at 2/3 of senior counsels' fees. The defendants submitted that the 2/3 rule having been specifically abolished there was no basis for making the order and junior counsels' fees should be taxed in the usual way. For the plaintiff it was submitted that the case was a classic case for allowing junior counsels' fees at that rate referring to Magna Alloys v Coffee (No.2) [1982] VicRp 10; (1982) VR 97 at 108. Not knowing what the effect of such an allowance would be, I think it appropriate to leave this matter to the Taxing Master, should the parties be unable to agree.

The defendants have raised a number of matters which would not have persuaded me to deprive the plaintiff of any party/party costs of the proceedings including reserved costs. They were the sorts of issues and items in respect of which the losing parties should carry the costs burden. The plaintiff, however, seeks more than the usual order for costs.

For the above reasons I am satisfied that the plaintiff has made out a case for special consideration because of the approach taken by the defendants on the issues of liability and contribution. I am also satisfied that the approach taken by the defendants to the question of the prospects of success of the Western Australian action were at times unreasonable. In my view this added significantly to the time and the cost of the proceedings.

The case is not one, however, where the plaintiff is entitled to solicitor/client costs for the whole of the hearing or the whole of the proceeding. Further, the matters complained of do not appear to me to come within the terms of rule 63.34 in that it does not appear to me that the nature and importance or the difficulty and urgency of the case would support a surcharge on the costs. Rather it is that the conduct of the defence during the hearing warrants solicitor/client costs to a limited extent. As I have indicated, that relates to the issues of liability and of contribution between the defendants and the impact, more difficult to define, of the conduct by the defendants of the investigation of the prospects of success of the original proceeding. If these matters are to be considered, however, it appears to me fair in the exercise of the cost discretion to take account of particular costs burdens unnecessarily imposed upon the defendants and costs unnecessarily incurred by the plaintiff because of the failings on its part to which I have referred above.

The problem arises as to how best to deal with these issues. It seems to me that justice will best be done in all the circumstances if I allow the plaintiff solicitor/client costs for the days identified above when evidence was given and submissions made relevant to liability and contribution but for no other parts of the hearing. I refer to the 29th, 30th, 31st March and the 1st, 7th, 8th, 9th, 15th, 16th, 19th, 20th and 21st April.. This is imprecise. It will include times spent on other matters including submissions, for example, by Mr Fitzgerald on some of the damages aspects. It will not include other times when contribution and liability were discussed. At the same time I propose that no direct orders be made in respect of the time and costs spent as a result of the unreasonable conduct of the defence. This combined approach appears to me to best address, albeit in an imprecise but a practical, reasonable and fair way, the need to make due allowance for time and costs incurred and added to the proceedings by the plaintiff in those areas where it might be said to have been at fault. Accordingly the orders I propose are that:

1. the defendants pay the plaintiff's costs of the proceedings including reserved costs, costs of transcript, video conferencing and mediations and reserved costs other than the plaintiff's costs of the application for disqualification heard by Warren, J. which should be paid by the second defendant.

2. that such costs be taxed, in default of agreement, on a party/party basis save and except for the cost of the plaintiff incurred on 29, 30, 31 March and 1, 7, 8, 9, 15, 16, 19, 20 and 21 April which costs should be taxed, in default of agreement, on a solicitor/client basis.

At a glance

Court

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Before

Source

Judgment (78 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (4)