FEDERAL COURT OF AUSTRALIA

McKellar v Container Terminal Management Services Ltd (No 3)

[2001] FCA 11

COSTS – application by respondents for costs to be paid forthwith and on an indemnity basis – respondents successful on strike out application – applicants granted leave to replead claims – whether claim hopeless – whether appropriate that costs paid forthwith and/or on an indemnity basis.

Federal Court Rules O 62 r 3(3)

McKellar v Container Terminal Management Services Limited [1999] FCA 1639

Sammy Russo Supplies Pty Ltd v Australian Safeway Stores Pty Ltd [1998] ATPR 41-641

ANDREW McKELLAR and ANOR v CONTAINER TERMINAL MANAGEMENT SERVICES LIMITED and ORS

VG 555 of 1998

WEINBERG J

17 JANUARY 2001

MELBOURNE

THE COURT ORDERS THAT:

1.                  The applicants pay the tenth and eleventh respondents’ costs of the proceeding including any reserved costs.

2.                  Order 1 does not apply to the costs of and incidental to the motions dated 22 February 1999 and 5 November 1999 brought by the tenth and eleventh respondents.

3.                  The applicants pay the costs of and incidental to the notice of motion filed on 4 February 2000 by the fifth, sixth, twenty-eighth and thirtieth to thirty-third respondents, such costs to be taxed and paid forthwith.

4.                  The applicants pay the costs of and incidental to the notice of motion filed on 10 February 2000 by the seventh to ninth and twelfth to twenty-seventh respondents, such costs to be taxed and paid forthwith.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     On 10 November 2000 I ordered that the application against the tenth and eleventh respondents be dismissed.  I also ordered that the applicants’ claims, set out in their further amended statement of claim, against the fifth, sixth, twenty-eighth and thirtieth to thirty-third respondents (“the PCS respondents”), and the seventh to ninth and twelfth to twenty-seventh respondents (“the Lang respondents”), be struck out.  I gave leave to the applicants to file and serve a second further amended statement of claim, limited to claims brought under the Trade Practices Act 1974 (Cth).  I ordered that the parties file and serve submissions in relation to any orders for costs that should be made arising out of those orders.

2                     As the claims against the tenth and eleventh respondents have been dismissed entirely, I consider that the ordinary costs order is appropriate.  Those respondents did not seek a costs order on any other basis.  Accordingly, I will order that the applicants pay the tenth and eleventh respondents’ costs of the proceeding.  I will also order that those costs do not include the costs of and incidental to the motions dated 22 February 1999 and 5 November 1999 brought by the tenth and eleventh respondents, as those costs have already been the subject of prior orders.

3                     The PCS and the Lang respondents seek orders for costs on an indemnity basis with such costs to be paid forthwith.  Much the same considerations apply in respect of these submissions as were set out in my judgment McKellar v Container Terminal Management Services Limited [1999] FCA 1639 (“the previous costs judgment”).  That judgment related to the costs orders I made following the successful strike out application of the applicants’ amended statement of claim.  I ordered that the applicants pay the costs of the respondents’ motions forthwith, on a party-party basis.

4                     In the previous costs judgment I set out in detail the principles relevant to the making of orders that costs be paid forthwith.  I do not propose to revisit those principles in this judgment.  I am of the opinion that precisely the same considerations apply in the present circumstances, and I will again order that, pursuant to O 62 r 3(3) of the Federal Court Rules, the applicants pay forthwith the PCS and Lang respondents’ costs of and incidental to their notices of motion dated 4 February 1999 and 10 February 1999 respectively, such costs to be taxed in default of agreement.

5                     With respect to the application for costs to be paid on an indemnity basis, the PCS respondents made the following submissions:

·        the further amended statement of claim was the applicants’ third unsuccessful attempt to plead their case;

·        the further amended statement of claim failed to remedy many elementary criticisms of the previous pleading;

·        the further amended statement of claim was drafted in a “generally loose and ill-conceived manner”; and

·        the applicants had, from the outset, been put on notice of the deficiencies of their statement of claim and each succeeding statement of claim has not cured those deficiencies.

6                     The PCS respondents rely upon the judgment of Goldberg J in Sammy Russo Supplies Pty Ltd v Australian Safeway Stores Pty Ltd [1998] ATPR 41-641 in support of their application for an order for costs on an indemnity basis.  The Lang respondents made similar submissions, also relying on the principles set out in Sammy Russo Supplies.  In that case, his Honour said at 41,097-41,098:

“In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 Woodward J said at 401:

“I believe that it is appropriate to consider awarding ‘solicitor and client’ or ‘indemnity’ costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, 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 law.”

In J‑Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers - Western Australia Branch (No 2) (1993) 46 IR 301 French J, after referring to Fountain Selected Meats said at 303:

“Although there is said to be a presumption in such cases that the action was commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law, it is not a necessary condition of the power to award such costs that a collateral purpose or some species of fraud be established.  It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case”.

In Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Sheppard J set out at 232 ‑ 234 a number of relevant principles in relation to the exercise of the Court’s discretion to award indemnity costs.  These principles have been adopted in a number of later cases:  Re Wilcox; Ex parte Venture Industries Pty Ltd (No 2) (1996) 141 ALR 727.  Sheppard J referred to a number of examples or circumstances in which an indemnity costs order had been made. 

In Davids Holdings Pty Ltd v Coles Myer Limited (1995) ATPR ¶41‑383 Drummond J said at 40,303:

“If a Respondent at any appropriate stage, which may be at the very outset or at some later stage, e.g after it has received a pleading or after discovery, puts an Applicant on notice that it regards the action as misconceived and goes further and sets out its detailed reasons for so thinking, then if the Applicant nevertheless proceeds without indicating any justification for doing so and fails, there may be good reason to consider whether indemnity costs should be ordered.””

7                     I am not persuaded that the present case falls into the category of cases to which Goldberg J referred.  I have granted leave to the applicants, albeit on a limited basis, to replead their claims against the PCS and the Lang respondents.  This in itself suggests that the claim may not be “a hopeless case”.  The respondents made the submission that they alerted the applicants to the deficiencies in the pleading, but that the applicants chose to contest the deficiencies.  The deficiencies identified by me in the previous judgment were largely pleading points, and not necessarily points which would indicate that the action is misconceived. 

8                     In the circumstances, I am of the view that the appropriate course is to order that the applicants pay the costs of the PCS and the Lang respondents of and incidental to their notices of motion dated 4 February 1999 and 10 February 1999 respectively, on a party-party basis, such costs to be taxed and paid forthwith.

Associate:

Dated:              17 January 2001