FEDERAL COURT OF AUSTRALIA

Nunagin Holdings Pty Ltd v Evertop Investments Pty Ltd [2007] FCA 1165

COSTS – interlocutory proceeding – whether costs should be payable forthwith

Federal Court Rules O 62 r 3

Airservices Australia v Jeppersen Sanderson Inc [2006] FCA 906 followed

Shahid v The Australasian College of Dermatologists [2006] FCA 414 applied

NUNAGIN HOLDINGS PTY LTD v EVERTOP INVESTMENTS PTY LTD (ACN 091 802 201) AND JAMES ALEXANDER KIDD

WAD 308 OF 2006

WILDWEST SPORTS PTY LTD (ACN 063 758 467) v EVERTOP INVESTMENTS PTY LTD (ACN 091 802 201), JAMES ALEXANDER KIDD AND THYE TAN

WAD 309 OF 2006

RODNEY KIM CROFT and JANICE ANNE CROFT v EVERTOP INVESTMENTS PTY LTD (ACN 091 802 201), JAMES ALEXANDER KIDD AND THYE TAN

WAD 310 OF 2006

NICHOLSON J

6 AUGUST 2007

PERTH

THE COURT ORDERS THAT:

1.                  The respondents’ notice of motion dated 8 January 2007 be dismissed.

2.                  The proposed amended statement of claim filed in these proceedings stand as the amended statement of claim and service be dispensed with. 

3.                  Within 14 days of the date of this order the respondents file and serve on the applicant any request for further and better particulars of the amended statement of claim.

4.                  Within 21 days of receipt of the application for further and better particulars of the amended statement of claim, the applicant file and serve answers or objections thereto. 

5.                  Within 28 days of receipt of the applicant’s answer to the respondents’ application for further and better particulars of the amended statement of claim the respondents file and serve a defence to the amended statement of claim and any counterclaim. 

6.                  Within 14 days of service of a defence and any counterclaim, the applicant do file and serve any reply and any defence to counterclaim.

7.                  Within 60 days of service of any reply the applicant and the respondents provide discovery on oath.

8.                  Within 14 days of discovery, the parties complete inspection.

9.                  The applicant do pay the respondents’ costs of the respondents’ notice of motion dated 8 January 2007 including any costs thrown away in relation to the amendment of the statement of claim in any event, to be taxed if not agreed.

10.              There be liberty to apply.

11.              The costs of these directions be costs in the cause.

12.              The matter be set down for a directions hearing in February 2008.

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

THE COURT ORDERS THAT:

1.                  The respondents’ notice of motion dated 8 January 2007 be dismissed.

2.                  The proposed amended statement of claim filed in these proceedings stand as the amended statement of claim and service be dispensed with. 

3.                  Within 14 days of the date of this order the respondents file and serve on the applicant any request for further and better particulars of the amended statement of claim.

4.                  Within 21 days of receipt of the application for further and better particulars of the amended statement of claim, the applicant file and serve answers or objections thereto. 

5.                  Within 28 days of receipt of the applicant’s answer to the respondents’ application for further and better particulars of the amended statement of claim the first and second respondents file and serve a defence to the amended statement of claim and any counterclaim. 

6.                  Within 14 days of service of a defence and any counterclaim, the applicant do file and serve any reply and any defence to counterclaim.

7.                  Within 28 days of receipt of the applicant’s answer to the respondents’ application for further and better particulars of the amended statement of claim the third respondent file and serve any amended defence to the amended statement of claim and any counterclaim.

8.                  Within 14 days of serve of any amended defence and any counterclaim, the applicant do file and serve any reply and any defence to counterclaim.

9.                  Within 60 days of service of any reply the applicant and the respondents provide discovery on oath.

10.              Within 14 days of discovery, the parties complete inspection.

11.              The applicant do pay the fist and second respondents’ costs of the first and second respondents’ notice of motion dated 8 January 2007 including any costs thrown away in relation to the amendment of the statement of claim in any event, to be taxed if not agreed.

12.              The applicant pay the third respondents’ costs thrown away by reason of the amendments in any event.

13.              There be liberty to apply.

14.              The costs of these directions be costs in the cause.

15.              The matter be set down for a directions hearing in February 2008.

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

THE COURT ORDERS THAT:

1.                  The respondents’ notice of motion dated 8 January 2007 be dismissed.

2.                  The proposed amended statement of claim filed in these proceedings stand as the amended statement of claim and service be dispensed with. 

3.                  Within 14 days of the date of this order the respondents file and serve on the applicants any request for further and better particulars of the amended statement of claim.

4.                  Within 21 days of receipt of the application for further and better particulars of the amended statement of claim, the applicants file and serve answers or objections thereto. 

5.                  Within 28 days of receipt of the applicants’ answer to the respondents’ application for further and better particulars of the amended statement of claim the first and second respondents file and serve a defence to the amended statement of claim and any counterclaim. 

6.                  Within 14 days of service of a defence and any counterclaim, the applicants do file and serve any reply and any defence to counterclaim.

7.                  Within 28 days of receipt of the applicants’ answer to the respondents’ application for further and better particulars of the amended statement of claim the third respondent file and serve any amended defence to the amended statement of claim and any counterclaim.

8.                  Within 14 days of serve of any amended defence and any counterclaim, the applicants do file and serve any reply and any defence to counterclaim.

9.                  Within 60 days of service of any reply the applicants and the respondents provide discovery on oath.

10.              Within 14 days of discovery, the parties complete inspection.

11.              The applicants do pay the fist and second respondents’ costs of the first and second respondents’ notice of motion dated 8 January 2007 including any costs thrown away in relation to the amendment of the statement of claim in any event, to be taxed if not agreed.

12.              The applicants pay the third respondents’ costs thrown away by reason of the amendments in any event.

13.              There be liberty to apply.

14.              The costs of these directions be costs in the cause.

15.              The matter be set down for a directions hearing in February 2008.

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

REASONS FOR JUDGMENT

1                     The parties have tendered a minute of directions in each proceeding, consensual in all respects save one.  The one outstanding point is that which relates to the basis on which the applicants should pay the respondents’ costs on the notices of motions dated 8 January 2007 including any costs thrown away in relation to the amendment of the statements of claims.  The respondents submit that the applicants should pay the costs forthwith.  The applicants oppose that aspect.

2                     The starting point is O 62 r 3 of the Federal Court Rules which provides:

‘3(1)    The Court may in any proceeding exercise its powers and discretions as to costs at any stage of the proceeding or after the conclusion of the proceeding.

3(2)     Where the Court makes an order in any proceeding for the payment of costs the Court may require that the costs be paid forthwith notwithstanding that the proceeding is not concluded. 

3(3)     An order for costs of an interlocutory proceeding shall not, unless the Court otherwise orders, entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded or further order.’

3                     The circumstances on which the respondents rely to support the making of an order by the Court that the costs be paid forthwith on each proceeding, are as follows.  Firstly, they submit that each of the statement of claims as filed on 31 October 2006 have effectively been almost abandoned.  Only five paragraphs remain unaltered in each.  Eight have been struck out and many pages of new allegations added.  These statements of claims had resulted from an order made by French J on 29 August 2006 requiring the applicants to commence the actions by 1 November 2006.  There had, therefore, been opportunity for the statement of claim in each matter to have been properly drafted.  The reality is, say the respondents, that it has taken from 1 November 2006 until present for the pleadings to be finalised. 

4                     The history of the proceedings from the record is as follows.  In the pre-action discovery matter (WAD 21/2005) his Honour made orders on 29 August 2006 that relevantly state:

‘1.        In the event that the applicants have not by 1 November 2006 commenced proceedings against the respondents they shall pay the respondents’ reasonable costs of and incidental to the provision of the discovery affidavit and inspection of documents in compliance with orders made in these proceedings.

2.         In the event that such proceedings are commenced by 1 November 2006 the costs shall, subject to the following order, be costs in the cause…’

5                     The pre-action discovery proceeding has been adjourned at the request of the parties at a directions hearing initially on 2 November 2006 and then by consent on 2 February 2007, 23 March 2007, 30 April 2007 and 28 June 2007.  Proceedings by the third applicant were discontinued by consent on 5 July 2007.  The proceeding was then adjourned on 12 July 2007 and then again on 20 July 2007 by consent.

6                     In the main actions (WAD 308-310/2006) the applicants filed their applications on 31 October 2006.  On 11 December 2006 the following relevant orders were made on each file:

‘1.        The first and second respondents file and serve any application pursuant to Order 11 Rule 16 and Order 20 Rule 2 by 8 January 2007, together with an outline of submissions in support.

2.         By 29 January 2007, the applicant file and serve any written outline of submissions in response.

3.         The application to strike-out be set down for oral argument on 5 February 2007 not before 3:15 pm, and for further directions...’

7                     The first and second respondents filed a notice of motion on 8 January 2007 together with a supporting affidavit and submissions.  On 2 February 2007 the Court ordered by consent that the applicants file and serve their submissions in response by 6 March 2007 and that the notice of motion be heard on 12 March 2007 at a time to be fixed, no submissions were received from the applicants.  The matter was then adjourned by consent on 12 March 2007, 26 March 2007, 26 April 2007 and 12 June 2007.

8                     On 12 July 2007 the applicant was ordered to file a proposed amended statement of claim on WAD 308/2006.  The respondents were ordered to file and serve any specific objections to the proposed amended statement of claim with any amended notice for dismissal or strike out within 7 days, none was received.  On 1 August 2007 the parties attended the directions hearing at which time the issue of costs being payable forthwith was raised for the first time. 

9                     The applicants oppose the order for payment of costs forthwith.  They state that the success of the respondents’ notice of motions have been satisfactorily met by the applicants’ agreement to pay the costs.  However, the applicants say there was an absence of conferral by the respondents before each motion was brought.  In those circumstances, by comparison with the Rules of the Supreme Court of Western Australia, there would be disentitlement to an award of costs, certainly costs payable forthwith, if there was no conferral.  In the applicants’ submissions, the history of these matters do not justify departure from the Rule reflected in O 62 r 3(3).

10                  In reply the respondents refer to the affidavit of Lucy Westwood sworn on 8 January 2007 to support their contention that there was a willingness to confer on their part. 

11                  In Shahid v The Australasian College of Dermatologists [2006] FCA 414 at [5]-[6] I said:

‘The respondent relies on the reasoning in McKellar v Container Terminal Management Services Ltd [1999] FCA 1639 and Sereika v Cardinal Financial Securities Ltd (formerly Inteq Custodians Ltd) [2001] FCA 687. 

In McKellar, Weinberg J followed the approach taken by Branson J in Life Airbag Co of Australia Pty Ltd v Life Airbag Co (New Zealand) Ltd [1998] FCA 545 and Kiefel J in Harris v Cigna Insurance Australia Ltd (1995) ATPR 41-445.  In Harris, Kiefel J accepted that an order that certain costs be taxed and paid forthwith was justified in circumstances where there had been a long delay in the course of the proceeding by the pursuit of an ill-considered and unnecessary claim.  It is common ground that the making of the order sought by the notice of motion is a matter in the discretion of the Court.’

In Airservices Australia v Jeppersen Sanderson Inc [2006] FCA 906 at [31]-[32] Graham J said:

‘In lengthy and complex cases where substantial costs have been thrown away as a result of ill-considered pleadings being drawn, the power to order that costs thrown away be paid forthwith should be used less sparingly than it has in the past.  Such costs should be capable of being recovered without the innocent party having to wait, possibly years, for that to occur (per Weinberg J in McKellar v Container Terminal Management Services Limited[1999] FCA 1639 at [41]).

The making of an order under Order 62 rule 3 is justified where, through no fault of a party, such as the first and second respondents in the present case, there has been substantial delay in the proceedings because an applicant has attempted a number of versions of the Application and of the Statement of Claim, additional directions hearings have taken place which should not have been necessary, interlocutory steps have been taken and applications have been brought unnecessarily given the changes to the pleadings that have occurred (see All Services Australia Pty Ltd v Telstra Corporation Ltd(2000) 171 ALR 330 at 333 [11].’

12                  In my view it cannot be found in the present circumstances that the substantial delay is not without involvement of the respondents.  This is because the respondents have consented to the adjournment of hearings which may have enabled the proceedings to be advanced.  In these circumstances I do not consider the evidence is such as to support the exercise of the Court’s discretion in favour of making the costs payable ‘forthwith'. 

Associate:

Dated:         6 August 2007