FEDERAL COURT OF AUSTRALIA

Cirillo v Consolidated Press Property Ltd (formerly known as Citicorp Australia Limited) (No 2) [2007] FCA 179

COSTS – action summarily dismissed – unreasonable to have subjected the respondents to the expenditure of costs

Federal Court of Australia Act 1976 (Cth) s 43

Cirillo v Consolidated Press Property Pty Ltd (formerly known as Citicorp Australia Limited) [2007] FCA 60 referred to

Re Wilcox;  Ex parte Venture Industries Pty Ltd (1996) 141 ALR 727 cited

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 cited

Yates Property Corporation Pty Ltd v Boland (No 2) (1997) 147 ALR 685 cited

Hamod v New South Wales (2002) 188 ALR 659 followed

VINCENZO CIRILLO v CONSOLIDATED PRESS PROPERTY PTY LTD (FORMERLY KNOWN AS CITICORP AUSTRALIA LIMITED), JOHN HAROLD HEARD, STEPHEN YOUNG, CW CONSTRUCTION PTY LTD (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION) AND FINLAYSONS A FIRM

No SAD 254 of 2006

FINN J

22 FEBRUARY 2007

ADELAIDE

THE COURT ORDERS THAT:

1.                  The applicant pay the respondents’ costs of the application on a solicitor and client basis. 

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

REASONS FOR JUDGMENT

1                     In Cirillo v Consolidated Press Property Pty Ltd (formerly known as Citicorp Australia Limited) [2007] FCA 60 I have ordered that the application be summarily dismissed against all respondents.  Put shortly, I found that the Statement of Claim was, first, offensive, embarrassing and disclosed no reasonable cause of action and, second, the causes of action relied upon were in any event doomed to failure because they sought to impeach a consent order of a superior court of record without first having that order set aside.

2                     The respondents have sought to be heard on the question of costs.  They now seek an order that costs be awarded in their favour on a solicitor and client basis. 

3                     The jurisdiction of the Court to order costs is conferred by s 43 of the Federal Court of Australia Act 1976 (Cth).  The section provides a broad and ample power which ought not be read down otherwise than in accordance with accepted principle.  The discretion so conferred is informed by the ordinary practice of this Court that an unsuccessful party usually will be required to pay the costs of the successful party on a party and party basis.  That practice, as was indicated in Re Wilcox;  Ex parte Venture Industries Pty Ltd (1996) 141 ALR 727 at 729 and 732-733, is not departed from unless the justice of the particular case so requires or some special or unusual feature arises. 

4                     The courts in quite some number of cases have indicated types or categories of case in which the award of costs on a basis other than party and party may appropriately be ordered:  see e.g. Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 232-234.  However, they have emphasised that the categories are not closed and that, even though circumstances may exist which are capable of warranting a more generous costs order than on a party and party basis, this does not compel that such an order be made:  Yates Property Corporation Pty Ltd v Boland (No 2) (1997) 147 ALR 685 at 687-688.  For present purposes it is unnecessary to consider the case law in any detail.  I am content in this matter to adopt the observations of Gray J (with whom the other members of the court agreed) in Hamod v New South Wales (2002) 188 ALR 659 at [20]:

“Indemnity costs are not designed to punish a party for persisting with a case that turns out to fail.  They are not awarded as a means of deterring litigants from putting forward arguments that might be attended by uncertainty.  Rather, they serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs.”

5                     I will not set out at length the background of this matter.  I incorporate by reference my reasons for judgment delivered on 7 February 2007.  First, what those reasons disclosed is that the claims made by the applicant had no prospects of success at all and that the applicant properly advised should have known that this was the case.  Put shortly, he sought to pursue proceedings in tort against the respondents in respect of conduct said to have been engaged in by them in legal proceedings which resulted in costs being unnecessarily incurred by him.  However, he needed in the circumstances to have set aside an order for costs made in the Supreme Court of South Australia in those proceedings.  For as long as it remained on foot, the principle of res judicata applied to any attempt to bring the tort actions in question.  This was pointed out at length and on a number of occasions to the applicant and his advisers.  It was disregarded.  Second, the actual causes of action pleaded against the respondents were, as counsel for the applicant ultimately accepted, offensive and embarrassing.  Further, the Statement of Claim itself did not reveal the very cause of action which counsel for the applicant indicated he actually wished to plead.  The nature of the pleading was such as to put the parties to considerable effort and expense both to penetrate what was being said for the purposes of divining what may have been alleged against them and adequately to respond to the statement.  Third, in relation to all parties, the pleading made allegations of impropriety of purpose in the conduct of legal proceedings without anything which might indicate there was any reasonable prospect of success in relation to the making out of those allegations.  In particular claims were made impugning the professional integrity of the fifth respondent which, in the circumstances, were wholly offensive. 

6                     I am satisfied that this is a matter in which it was unreasonable for the applicant to have subjected the respondents to the expenditure of costs in responding to the application.  The application was a hopeless one and ought never have been brought in the form it was.  The applicant may well have been badly advised.  This though provides no excuse for so imposing upon the respondents.

7                     I have ordered that the applicant pay the respondents’ costs of the application on a solicitor and client basis. 

Associate:

Dated:         21 February 2007