FEDERAL COURT OF AUSTRALIA

Keynes v Rural Directions Pty Ltd (No 5) [2011] FCA 484

THE COURT ORDERS THAT:

1.    The plaintiffs pay the third defendant’s costs of and incidental to the plaintiffs’ Amended Notice of Motion filed on 22 December 2010 (dismissed by the Court on 1 April 2011), and its predecessor Notice of Motion filed on 7 December 2010 on an indemnity basis, to be taxed and paid forthwith.

2.    The third defendant’s application for an order that the plaintiffs’ proceeding against it be dismissed be adjourned to a date to be fixed.

3.    The plaintiffs pay the fourth defendant’s costs of and incidental to the plaintiffs’ Amended Notice of Motion filed on 22 December 2010 (dismissed by the Court on 1 April 2011), and its predecessor Notice of Motion filed on 7 December 2010 on an indemnity basis.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1    These reasons deal with applications made by the third and fourth defendants respectively for various orders following an order I made on 1 April 2011. On that day I made an order that an Amended Notice of Motion filed by the plaintiffs on 22 December 2010 (‘Amended Notice of Motion’) be dismissed. My reasons for making that order are set out in Keynes v Rural Directions Pty Ltd (No 4) [2011] FCA 304 (‘Keynes (No 4)’).

2    The principal orders sought by the plaintiffs in the Amended Notice of Motion were that certain judgments I had given in favour of the third defendant and the fourth defendant respectively, pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth), be set aside. My reasons for giving the judgments are set out in Keynes v Rural Directions Pty Ltd (No 2) [2009] FCA 56 (‘Keynes (No 2)’); 72 ACSR 264. The plaintiffs sought leave to appeal from my decision in Keynes (No 2) and the Full Court of this Court granted leave but dismissed the appeal: Keynes v Rural Directions Pty Ltd [2010] FCAFC 100; (2010) 186 FCR 281.

3    The judgment or judgments I had previously entered in favour of the third defendant did not dispose of the plaintiff’s proceeding against the third defendant because there was a contract (ABB Grain basis contract, see Keynes (No 4)) in respect of which the third defendant did not seek judgment. However, the plaintiffs’ pleading in relation to that contract was successfully challenged by the third defendant and the Amended Statement of Claim in so far as it pleaded causes of action in relation to that contract was struck out.

4    The position in the case of the fourth defendant was different from that of the third defendant. The plaintiffs’ case against the fourth defendant related to only one contract and following my decision I made an order that there be judgment in the fourth defendant’s favour in the proceeding.

5    The third defendant now seeks the following orders:

1.    The plaintiffs pay the third defendant’s costs of and incidental to the plaintiffs’ Amended Notice of Motion filed on 22 December 2010 (dismissed by the Court on 1 April 2011), and its predecessor Notice of Motion filed on 7 December 2010 on an indemnity basis, to be taxed and paid forthwith.

2.    The plaintiffs’ proceeding against the third defendant be dismissed.

6    The second order is sought by the third defendant on the ground that although it does not have judgment with respect to the ABB Grain basis contract there is no existing statement of claim in relation to that contract and the plaintiffs have had (so the third defendant contends) a more than adequate opportunity to remedy defects in its pleading. Some of those defects were identified in Keynes (No 2) (at [103] and following).

7    The fourth defendant also seeks an order that the plaintiffs pay its costs of the Amended Notice of Motion (and its predecessor Notice of Motion filed on 7 December 2010) to be taxed and paid on an indemnity basis. It does not need the other orders sought by the third defendant because it has judgment in its favour in the proceeding against it.

The orders sought by the third defendant

8    I start with the second order sought by the third defendant.

9    Counsel for the third defendant presented a cogent argument in support of the third defendant’s claim that the plaintiffs’ proceeding against it should be dismissed. As I have said, he contended that they had had ample opportunity to put forward a statement of claim in relation to the ABB Grain basis contract which complied with the Federal Court Rules as to pleadings. They had not taken that opportunity and in fact had proffered a pleading which, among other things, had made no attempt to address defects previously identified by me.

10    The plaintiff’s counsel asked me to adjourn the application for an order dismissing their proceeding against the third defendant. He told me that certain developments had taken place in relation to the plaintiffs’ affairs which he did not wish to mention in open Court but which were known to the third and fourth defendants. He told me that those developments meant that there was –

… a very realistic prospect that the dispute between the third and fourth defendant, and the plaintiffs will be resolved, on one basis or another.

11    I accept the implicit assurance of counsel for the plaintiffs that he has good grounds at this stage not to mention the developments in open Court. On the face of it, an order for dismissal will have a significant effect on the plaintiffs’ interests. On the other hand, there will not be any substantial prejudice to the third defendant if there is a further short delay. Without forming any view about the merits of the third defendant’s application I will stand it over to a convenient date in about three weeks’ time.

12    I turn now to the first order sought by the third defendant.

13    The third defendant puts forward its application for costs to be taxed and paid on an indemnity basis on the ground that the plaintiffs’ application had no chance of success and properly advised the plaintiffs should have known that fact (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397; Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; Dal Pont, G E, Law of Costs (2nd ed, Butterworths, 2009) pp 539-540).

14    It will be seen from Keynes (No 4) that important factors in terms of my decision not to set aside the judgments were the importance of the principle of finality of litigation, the weaknesses of the New Arrangement Claim and the absence of a clear and satisfactory explanation as to why the material was not brought forward before or on the application for summary judgment (see [37], [38] and [56]). The absence of an explanation was also a reason I refused leave to introduce the Basis Contract PDS Claim (see [59]).

15    On the application for indemnity costs the plaintiffs sought to debate again the question of whether they had put forward a clear and satisfactory explanation as to why the material was not brought forward before or on the application for summary judgment. In large measure their submissions repeated what they had put on their application for orders setting aside the judgment. Nothing the plaintiffs said causes me to alter the conclusions I reached in Keynes (No 4).

16    The plaintiffs faced a difficult task in persuading a Court to set aside judgments entered after argument and confirmed on appeal. I think the plaintiffs’ failure to advance a clear and satisfactory explanation as to why the material was not brought forward before or on the application for summary judgment means their application had no prospect of success and that this ought to have been known to them. In the circumstances the third defendant’s costs should be taxed and paid on an indemnity basis.

17    Furthermore, I think that the third defendant’s costs should be taxed and paid forthwith. The power to make such an order is contained in Order 62 Rule 3(2) of the Federal Court Rules. I considered the relevant principles in Rafferty v Time 2000 West Pty Limited (No 3) [2009] FCA 727 at [19]-[24]. This is an appropriate case for costs to be taxed and paid forthwith because of the nature of the interlocutory application and the likely delay between now and resolution by Court proceedings (should that be necessary) of the claim with respect to the ABB Grain basis contract. The judgments given in favour of the third defendant resolved those claims against it. I made an order on that application that the third defendant’s costs be taxed and paid forthwith. The position now is even stronger because the application in question was an unsuccessful one to set aside the judgments.

The order sought by the Fourth Defendant

18    For the same reasons I think the fourth defendant is entitled to an order that its costs be taxed and paid on an indemnity basis. In the circumstances, it is not necessary for me to consider an alternative basis for such an order put forward by the fourth defendant. That was that the fourth defendant had made an offer to settle its claim against the plaintiffs in a letter dated 30 November 2010. There is an obvious difficulty with that argument in that the claim which is the subject of the letter is not a claim that the fourth defendant makes against the plaintiffs in this proceeding.

Conclusion

19    I will make the following orders:

1.    The plaintiffs pay the third defendant’s costs of and incidental to the plaintiffs’ Amended Notice of Motion filed on 22 December 2010 (dismissed by the Court on 1 April 2011), and its predecessor Notice of Motion filed on 7 December 2010 on an indemnity basis, to be taxed and paid forthwith.

2.    The third defendant’s application for an order that the plaintiffs’ proceeding against it be dismissed be adjourned to a date to be fixed.

3.    The plaintiffs pay the fourth defendant’s costs of and incidental to the plaintiffs’ Amended Notice of Motion filed on 22 December 2010 (dismissed by the Court on 1 April 2011), and its predecessor Notice of Motion filed on 7 December 2010 on an indemnity basis.

Associate:

Dated:    12 May 2011