Windsor v Sydney Medical Service Co-operative Ltd

Windsor v Sydney Medical Service Co-operative Ltd - [2010] FCA 364 - FCA 2010 case summary — Zoe

[7]

Background 2 The background is not in dispute. 3 On 28 February 2007, Dr Windsor filed an application and statement of claim in this Court for damages for breach of contract and for contravention of s 52 of the Trade Practices Act 1974 (Cth) ('the TPA'). 4 On 13 June 2007, SMS filed notice of the 2007 motion seeking orders pursuant to O 11 r 16 of the Rules that the statement of claim be struck out, such further or other order as the Court saw fit, and costs. SMS contended that there were two fundamental deficiencies in the case pleaded by Dr Windsor: (1) that Dr Windsor did not have a cause of action against SMS in contract; and (2) that the claim advanced under the TPA was time barred. 5 On 17 March 2008, I delivered judgment on the 2007 motion (Windsor v Sydney Medical Service Cooperative Ltd [2008] FCA 348 ('the 2008 Judgment') and ordered that the statement of claim be struck out and Dr Windsor pay SMS's costs of the 2007 motion ('the Costs Order'). The Costs Order has not been entered. 6 On 11 April 2008, Dr Windsor's solicitors, Auslegal, wrote to SMS's solicitors, TressCox, stating that Dr Windsor had instructed Auslegal to amend the application and statement of claim and enclosed a copy of an amended application and statement of claim. The letter further stated that the pleadings had not closed as at 17 March 2008 and that Dr Windsor proposed to file an amended application and statement of claim under O 13 r 3(1) of the Rules. For reasons which remain unexplained, an amended statement of claim was not filed until 1 December 2008, over eight months later. 7 On 15 May 2008, SMS attempted to file a notice of motion to have a bill of costs in relation to the 2008 Judgment taxed forthwith. The notice was rejected by the Registry. 8 On 23 May 2008 SMS filed a bill of costs in relation to the 2008 Judgment. 9 On 27 May 2008, TressCox served the bill of costs referred to in [8] above, a certificate under O 62 r 40(2) of the Rules and a Notice to Practitioners issued under O 62 of the Rules. 10 On 18 July 2008, the Court issued a Certificate of Taxation for $22,800.00. 11 On 13 and 14 August 2008, respectively Dr Windsor's solicitor, Mr Relf of Auslegal, paid $20,000.00 of the Certificate of Taxation and then $2,800.00 into TressCox's trust account. 12 On 1 December 2008, Dr Windsor filed an amended statement of claim pursuant to O 13 r 3(1) of the Rules. 13 On 5 May 2009, SMS filed a notice of motion seeking, inter alia, summary judgment pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) ('the FCA Act')in relation to the amended statement of claim ('the 2009 motion'). 14 On 1 July 2009, I delivered judgment on the 2009 motion (Windsor v Sydney Medical Services Co-operative Ltd (No 2) [2009] FCA 704) ('the 2009 Judgment') and ordered that the 2009 motion be dismissed with costs. 15 On 25 August 2009, Auslegal wrote to Unsworth Legal, SMS's current solicitors, outlining the basis for the orders now sought in Dr Windsor's motion. Short minutes of order were enclosed with the letter to the effect of the orders now sought. Auslegal further stated that the letter would be relied on by Dr Windsor on an application for indemnity costs if the short minutes of order were not signed and a notice of motion seeking the orders was filed. 16 On 1 September 2009, Unsworth Legal replied to Auslegal's letter dated 25 August 2009 and stated that SMS did not agree to the proposed short minutes of order because: (1) SMS's costs of the 2007 motion were taxed on the basis that the matter had ended; and (2) in any event, Dr Windsor had not sought to appeal the orders made on the 2007 motion or object to SMS's application for assessment of costs. 17 Both of the matters set out in Unsworth Legal's letter of 1 September 2009 are reiterated in the evidence served by SMS in opposition to Dr Windsor's motion. A third matter raised is that the Court and SMS's solicitor, Mr Unsworth, were of the view that the matter had ended.

[10]

SMS's Submissions 22 At the forefront of SMS's submissions, in the face of what was clearly an application to strike out pleadings under O 11 r 16 of the Rules, but where evidence in addition to the statement of claim was placed before the Court during the course of the application, is that it would have been more appropriate if I had regarded the 2007 motion as having been made under O 20 r 5 of the Rules or s 31A(2) of the FCA Act; and that I would have taken that course had the point now relied upon been taken during the course of the application. I was referred to what was said by Northrop and Neaves JJ, with whom Beaumont J agreed, in Patton v Minister for Defence (1987) 13 FCR 339 at 341: 'The learned primary judge assumed that the application was made under O 11, r 16. However, his Honour did receive, and placed reliance upon, some material extraneous to the amended statement of claim and it may have been more appropriate to have regarded the motion as having been made under O 20, r 2 which, as appears, permits the court to receive evidence. Nothing, however, turns on this so far as the present appeal is concerned.' 23 According to SMS, if I had done this, it is clear from the 2009 Judgment at [21] that, on the evidence put before the Court in 2007, such an application would have succeeded. 24 SMS further submitted: (1) Dr Windsor failed to act promptly to appeal against the 2008 Judgment or to have it set aside and failed to take any objection when SMS incurred significant costs in reliance upon the 2008 Judgment and Costs Order. (2) Dr Windsor has provided no explanation for her failure to appeal against the 2008 Judgment or to make prompt application to set it aside. (3) Dr Windsor does not in fact genuinely seek to set aside the orders of 17 March 2008. The substantive orders made on that occasion were to strike out the statement of claim. Dr Windsor does not seek to reinstate the original statement of claim. Dr Windsor does not even seek to support the original statement of claim. (4) Dr Windsor does not seek to maintain the case relying upon alleged breach of the TPA pleaded in the original statement of claim. To that extent the 2008 Judgment was clearly correct. That alone would have warranted a costs order in favour of SMS. (5) Dr Windsor in fact merely seeks to set aside the Costs Order made on 17 March 2008 without any reconsideration of the substantive orders. As such, Dr Windsor's motion is an abuse of process. 25 SMS submitted that unexplained delay in prosecuting an application such as the present is in itself sufficient ground to refuse the relief sought (referring to Gledhill Enterprises v BP Australia (unreported, Federal Court of Australia, Whitlam J, 1 June 1993). 26 This proposition is reinforced in circumstances such as the present case where the other party (SMS) has been prejudiced by that delay. 27 In SMS's submission, the fact that Dr Windsor was aware that SMS was proceeding with the taxation of the costs and (at least through her solicitors) must have realised SMS was incurring costs in doing so, gives rise to an estoppel precluding Dr Windsor from disputing SMS's entitlement to do so on the principles laid down in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387. 28 Adapting the words of Brennan J in Waltons Stores at 428 - 429: SMS assumed there was a valid costs order and that it was entitled to proceed to taxation; Dr Windsor, knowing that SMS is incurring detriment in reliance on the assumption, did nothing to deny the correctness of the assumption; SMS incurred costs in reliance upon the assumption; and SMS will suffer detriment in that those costs will be wasted if the assumption is not fulfilled. 29 Alternatively, if Dr Windsor is not strictly estopped from seeking to have the Costs Order set aside, the Court should nevertheless apply an analogous principle in declining to set the order aside.

[17]

The time for the taxation of costs of interlocutory proceedings 43 In Rafferty v Time 2000 West Pty Ltd (No 3) (2009) 257 ALR 503 at [20], Besanko J summarised the purposes of the general rule embodied in O 62 r 3(3) of the Rules in the following terms: 'The general rule, which is embodied in O 62 r 3(3), is that the costs of an interlocutory proceeding are not to be taxed until the principal proceeding is concluded or until further order. The general rule serves a number of purposes. First, it avoids multiple taxations in a proceeding. Second, it avoids the apparent unfairness which may arise where, at an early stage of a proceeding, a party who is ultimately successful is required to pay costs to a party who is ultimately unsuccessful. Finally, it prevents interlocutory proceedings being used as a weapon to exhaust the financial resources of one of the parties.' 44 The principle of waiver or estoppel cannot be relied upon by SMS. The entitlement of SMS to tax a bill of costs in respect of the Costs Order was dependent upon the Court otherwise ordering within O 62 r 3(3) of the Rules. SMS's failure to do so cannot be excused by any conduct of Dr Windsor. Dr Windsor could not waive this requirement. The necessity for the Court to otherwise order before SMS's entitlement to tax a bill of costs could arise, indicates that this is a matter in which the public has an interest. The avoidance of multiple taxations and the prevention of interlocutory proceedings being used as a weapon to exhaust the financial resources of one of the parties are important aspects of the administration of justice. 45 If, contrary to Dr Windsor's submissions, she was able to waive the requirement in O 62 r 3(3) of the Rules otherwise ordering, then the Court should find that she did not waive this requirement. A deliberate choice by Dr Windsor to waive this requirement cannot be inferred from her conduct. All that happened was that Dr Windsor's solicitor, Mr Relf, in his email sent to SMS's solicitor, Ms Sorbara of TressCox, at 2.44 pm on 23 April 2008 advised that he was awaiting instructions. Otherwise, there was no response to the correspondence from SMS's lawyers or solicitors on 21, 22 and 27 May 2009. Further, there is no evidence that Dr Windsor knew of the terms of O 62 r 3 (3). 46 There is no analogous principle to estoppel or waiver whereby Dr Windsor is prevented from seeking to have the Costs Order set aside. No authority is cited for the analogous principle. Even if the Court were to find that there was an analogous principle, just as with estoppel and waiver, it would not run against statute.

[25]

Dr Windsor's Submissions 66 A party who has satisfied a judgment for the payment of money is entitled, on the reversal of the judgment, to repayment of the money paid (Commonwealth v McCormack (1984) 155 CLR 273 at 276) with interest (Heydon v NRMA Ltd (No 2) (2001) 53 NSWLR 600 at 603 and 608). 67 This general principle applies irrespective of how the order is reversed: whether on appeal (Commonwealth v McCormack at 276); following judicial review (Production Spray Painting & Panel Beating Pty limited v Newnham (No 2) (1991) 27 NSWLR 659 at 661 - 662), or any other way in which an erroneous judgment is overturned (National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 593, 597), varied (Lee v Mallam (1910) 10 SR (NSW) 876), or set aside (Mason & Carter's Restitution Law in Australia, K Mason et al, 2008 at [707]). 68 The Certificate of Taxation is not an order of the Court until it is drawn up and entered in accordance with O 62 r 45(3) of the Rules. The Certificate of Taxation was not drawn up and entered. Thus, the setting aside of the Certificate of Taxation under O 62 r 11 of the Rules or the Court's implied power is analogous to the quashing of orders following judicial review (Production Spray Painting and Panel Beating Pty Ltd v Newnham (No 2) per Handley JA at 661 - 662). The setting aside of the Certificate of Taxation will reverse the legal basis for the payment of costs of the 2007 motion. 69 SMS's argument that both it and the Court believed that the matter had ended does not justify SMS proceeding to tax the costs of the 2007 motion. It confirms, rather, that both SMS and the Court acted contrary to O 62 r 3(3). Further, SMS's position that the proceedings had ended had no reasonable basis in view of: (a) the principle of law (accepted in the 2009 Judgment) that the Court's power to strike out is concerned only with the adequacy of pleadings; and (b) the fact that TressCox was informed by Auslegal on 14 April 2008 (that is, one calendar month before SMS filed the notice of motion to have a bill of costs taxed) that Dr Windsor was of the view that the pleadings were not closed as at 17 March 2008 and that Dr Windsor proposed to file an amended application and statement of claim under O 13 r 3(1). Despite being on notice of Dr Windsor's position that the proceeding had not concluded, SMS proceeded to have its bill of costs taxed. 70 Dr Windsor's failure to appeal or object to the taxation of the costs either under O 62 r 46(3)(c) or otherwise, does not alter the fact that the bill of costs was taxed contrary to O 62 r 3(3). This failure does not negate or compromise her entitlement to have the costs repaid upon the setting aside of the Certificate of Taxation. Further there was no necessity for Dr Windsor to appeal against the 2008 Judgment because there was an alternative procedure available under O 35 r 7(1) of the Rules to correct the error therein.

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