FEDERAL COURT OF AUSTRALIA

Khoury v Sidhu [2011] FCA 857

THE COURT ORDERS THAT:

1.    The respondents pay the applicants’ costs of and incidental to the notice of motion filed 1 June 2010.

2.    The applicants’ costs of and incidental to its notice of motion dated 12 July 2010 are the applicants’ costs in the cause.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

REASONS FOR JUDGMENT

Background

1    The present application concerns the question of costs arising out of two notices of motions heard on 19 July 2010. The determination of this question has been held over pending the decision of the Full Court arising out of an appeal (with leave) from the interlocutory decision on aspects of the motions in relation to which the costs have been incurred. The primary interlocutory decision is Khoury v Sidhu (No. 2) [2010] FCA 1320. The decision of the Full Court dismissing the appeal is Khoury v Sidhu [2011] FCAFC 71. The decision of the Full Court dismissing the appeal was published on 27 May 2011.

2    It is now appropriate to determine the outstanding question of costs.

3    By Order 10 of the orders made on 30 November 2010, the costs of and incidental to each of the notices of motion were reserved for further determination upon the receipt of submissions from the parties.

4    By Order 11, the parties were directed to lodge written submissions and indicate whether they wished to be heard orally. The parties have filed submissions and are content for the issue of costs to be determined on the papers.

The respondents’ notice of motion

5    By their notice of motion filed 1 June 2010 the respondents relevantly sought the following orders:

a.    That the Applicants provide further discovery immediately of all documents within their possession, custody or power relating;

i.    Dealings between them and Mr Monty Khoury relating to the deed of loan between them and Mr Monty Khoury dated 9 September 2008, caveat 77194004 dated 10.9.8 or the realisation of the land over which that caveat was lodged;

ii.    The value of their right of indemnity against Mr Monty Khoury with respect to monies paid by the applicants to the second and third respondents, and

iii.    The files of River Legal and Helen Boyd Solicitor that are relevant to the issues between the parties, including the dealings related to the matters in (i) and (ii) above.

b.    That the respondents have leave to amend their defence in accordance with the draft defence that is within exhibit LSK1 to the affidavit of Lucinda Susan Kasmer sworn 31 May 2010;

c.    That the respondents have leave to file the affidavits of Denis Stephenson sworn 28 May 2010 and the Baldev Sidhu sworn 31 May 2010 and rely upon them as evidence in chief;

d.    That the applicant provide further discovery immediately of documents relating to the new matters raised by their proposed amended defence; and

e.    Costs of and incidental to the application be reserved.

The applicants’ notice of motion

6    By their notice of motion dated 12 July 2010, the applicants sought the following orders:

 a.    Leave to issue a subpoena directed to Denis Stephenson;

b.    Directions for the filing and service by the applicants of further affidavit evidence in relation to the respondents’ amended defence should the Court grant leave and in reply to the affidavits of Mr Sidhu and Mr Stephenson should the court grant leave; and

c.    The respondent’s pay the applicant’s costs of this motion and the motion filed by the respondents on 1 June 2010 to be taxed on the indemnity basis.

The decision of 30 November 2010

Amended defence

7    By Order 1 the respondents’ were granted leave to amend their defence in the terms of their proposed amended defence with the exception of the proposed paras 73 to 81. In granting leave to amend, the Court had regard to the following factors: the importance of resolving all issues put in controversy; the proposed amendments were not futile; and, granting leave would not cause substantial prejudice or injustice to the respondents: [93] of the principal judgment.

8    Leave was granted in respect of proposed paras 10A to 29 variously on the basis that the paragraphs: merely expanded an existing contention; affirmatively pleaded facts within an existing controversy; sought to give an affirmative denial to an allegation of the applicants in circumstances where the respondents had previously pleaded that the allegation was simply a state of mind; and, the paragraphs contained admissions of matters pleaded by the applicants: [38] to [49] of the principal judgment.

9    Leave was granted to plead paras 32 to 42 which affirmatively plead matters going to the amount of loss said to have been suffered by the applicants as a result of their reliance upon the pleaded representations (denied by the respondents).

10    Paragraphs 44 to 47 were more controversial than the other proposed amendments. These paragraphs plead further facts in answer to the applicants’ allegations, if found to be true. By these paragraphs the respondents plead that the applicants would have suffered the claimed loss because they would have granted the mortgage in issue in any event regardless of whether they knew the contended truth of the matter and, further, the applicants suffered loss partly as a result of their failure to take reasonable care to protect their economic interests. The applicants contended that leave to amend ought to be refused as the pleaded facts do not give rise, as a matter of law, to an arguable ground upon which the amount of compensation awarded by the Court could be reduced. The applicants relied principally on the High Court decisions in Henville v Walker (2001) 206 CLR 459 and I & L Securities v HTW Valuers (2002) 210 CLR 109.

11    Leave was granted on the basis that the Court was satisfied that having regard to the wide discretion conferred by s 87 of the Trade Practices Act 1974 (Cth), the pleaded matters were at least arguably relevant to the exercise of the discretion as to whether the Court ought to reduce the level of compensation awarded under s 87: [71]-[72] of the principal judgment.

12    Paragraphs 48 to 72 plead facts directed to demonstrating that Monty Khoury is a concurrent wrongdoer in relation to the applicants’ claim and that, as such, any liability of the respondents ought to be limited to the proportionate amount the Court considers just under Part VIA of the Trade Practices Act. The applicants resisted the proposed amendment on the footing that, as a matter of law, Part VIA has no application to a claim brought solely under s 87 as s 87CB (1) provides that Part VIA “applies to a claim (an apportionable claim) if the claim is a claim for damages made under s 82 for (a) economic loss; or (b) damage to property; caused by conduct that was done in a contravention of section 52” [emphasis added].

13    The Court gave leave to amend in terms of those paragraphs on the footing that the pleaded matters were arguably relevant to the exercise of the discretion under s 87: [87]-[88] of the principal judgment. The Court also noted the central role of Monty Khoury in the controversy the subject of the proceeding and the desirability of resolving all the issues raised by the controversy in one proceeding:

14    Paragraphs 73 to 81 plead facts directed to demonstrating that the applicants' solicitor, Ms Boyd was a concurrent wrongdoer for the purposes of Part VIA of the Trade Practices Act because she had failed to properly advise the applicants of particular matters. Leave was refused as Part VIA is only enlivened when the acts or omissions of the alleged concurrent wrongdoer involve a contravention of s 52 of the Trade Practices Act. The pleading did not assert that Ms Boyd’s acts or omissions involved such a contravention: [91] and [92] of the principal judgment.

Additional matters

15    By Order 7, the applicants were ordered to provide further discovery of documents relevant to the matters raised by the defence, by reason of leave to amend.

16    By Orders 2 and 3, the respondents were given leave to file the affidavits of Mr Sidhu and Mr Stephenson and rely upon them as evidence-in-chief of those witnesses: [97]-[100] of the principal judgment. The Court was not satisfied that the applicants would suffer any prejudice as a result of the order as the applicants had ample time to deal with the matters raised by the affidavits as a result of the trial being adjourned by reason of Justice Logan’s decision to disqualify himself from the conduct of the trial. The Court was satisfied that any prejudice could be cured by further directions granting the applicants leave to file further affidavits addressing the contentions raised in the affidavits of Mr Sidhu and Mr Stephenson. As a result of leave given to file the affidavits of Mr Sidhu and Mr Stephenson, the parties were invited by Order 8 to submit proposed orders for the future conduct of the trial pursuant to which affidavits in response would be filed.

The decision on the applicants’ motion

17    The Court granted leave to the applicants to issue a subpoena to Mr Stephenson in the substantially the same form as that sought by the applicants: [125] of the principal judgment. The documents sought by the subpoena were necessary in order to allow the applicants to test the case pleaded against them and supported by the affidavit of Mr Stephenson filed 28 May 2010. The Court rejected the contentions of the respondents that the proposed subpoena was drawn too widely and that the application for leave was premature.

The costs of the respondent’s motion

18    The relevant background to the motion is this.

19    The matter was originally listed for hearing for three days on 1, 2 and 3 June 2010 by Logan J. Spender J made directions for the filing of affidavits as evidence-in-chief. By orders made 20 November 2009 the respondents were required to file and serve affidavits by 18 December 2009. On or around 5 May 2010, the respondents appointed new solicitors although neither the applicants nor the Court was so advised until 25 May 2010. The respondents also retained new counsel in late April 2010. The new legal representatives seemed to have formed the view that it would be necessary to:

1.    call evidence from Mr Denis Stephenson, the solicitor who had previously acted for the respondents in the matter;

2.    amend the defence; and

3.    seek further and better discovery.

20    However, the time for filling evidence-in-chief had long passed.

21    The respondents therefore made the application resulting in the orders made on 30 November 2010. The respondents seem to have first notified the applicants about the possibility of amending their defence by a letter sent 25 May 2010 enclosing a copy of the proposed amended defence. The respondents served the proposed affidavit of Mr Stephenson on Friday 28 May 2010 and the affidavit of Mr Sidhu late on 31 May 2010.

22    By reason of Logan J’s personal relationship with Mr and Mrs Stephenson, his Honour elected to disqualify himself from hearing the matter further. His Honour adjourned the trial to a date to be fixed and reserved the costs of the hearing conducted 1 June 2010. It was this decision that lead to the adjournment of the trial. The respondents’ motion along with the motion filed by the applicants was heard on 19 July 2010.

Cost orders sought

23    The applicants seek the following orders for costs:

a.    The respondents pay the applicants’ costs thrown away by reason of the adjournment of the hearing and the costs of the motion filed by the respondent to be taxed on the indemnity basis.

b.    The applicants have leave to tax the costs under order 1 which shall be payable forthwith.

24    The applicants’ principal submission in support of their proposed orders is that the respondents failed to manage the proceeding with due diligence and by seeking to amend their pleading and adduce new evidence on the eve of trial they caused significant costs to be incurred, Court time lost, and delay. They say that whilst the application of the respondents to amend was successful, the outcome should be treated as an indulgence of the Court given the late and unexplained (save for the change in legal representation) change in position by the respondent. They rely upon the decision of French J in Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court, 3 May 1991); Orrcon Operations Pty Ltd v Capital Steel and Pipe Pty Ltd & Ors (No 2) [2008] FCA 24 at [18] per Besanko J; and Rafferty v Time 2000 West Pty Ltd (No 3) (2009) 257 ALR 503 to support their contentions.

25    The applicants contend (and the respondents reject) that they are entitled to costs under s 87CE of the Trade Practices Act. The respondents contend that the decision of Logan J to reserve the question of the costs of adjournment of the trial should not be disturbed on the basis that if the applicants ultimately fail in the main proceeding it would be unjust to require the respondents to pay these costs.

26    The respondents further contend that nothing in the present circumstances warrants the Court departing from the ordinary course that costs follow the event. In support of this contention they make these submissions:

1.    The delay in these proceedings was not as protracted as those in Tetijo where the Court still did not consider it appropriate to order global indemnity costs;

2.    Whilst it would have been desirable for the respondents to have raised the pleading issue earlier, their failure to do so cannot be characterised as ‘misconduct’ in the sense used by French J in Tetijo;

3.    An order that costs be paid forthwith is contrary to the general rule contained in Order 62 rule 3(3);

4.    Courts will only depart from the general rule in very special circumstances and these are not present here:

4.1    As contrary to the obiter of Besanko J in Orrcon there have not been multiple attempts to plead a case resulting in delay; and

4.2    As contrary to the requirements set out in Rafferty the adjournment was not the result of a delaying tactic or reprehensible conduct on behalf of the respondent and has not in and of itself caused a substantial delay.

27    The respondents also contend that the delay caused by their decision to seek leave to file the affidavit of Mr Stephenson was minimal and that in fact it was the applicants’ decision to seek leave to appeal and then appeal from the interlocutory decision granting leave that has been the cause of the real delay since the trial was adjourned.

28    The Court has a broad discretion to award costs pursuant to s 43 of the Federal Court of Australia Act 1976 (Cth) (the “Federal Court Act”). The discretion must be exercised in accordance with the settled principle, taking account of all of the relevant facts. Order 62, rule 29 of the Federal Court Rules provides that:

Subject to this Order, the costs of any application or other step in any proceedings shall, unless the Court otherwise orders, be deemed to be part of the cost of the cause of the party in whose favour the application or other step is determined and shall be paid and otherwise dealt with in accordance with the provisions of this Order.

29    Ordinarily the discretion to order costs is exercised in favour of the successful party on the merits. A successful litigant thus has a reasonable expectation of obtaining an order for costs. The principle is generally concerned with doing justice by giving the party who succeeds in the action, on the whole, the benefit of a costs order. As interlocutory proceedings are not generally decisive of the proceeding as a whole, the notion that “costs follow the event” does not necessarily apply to many interlocutory applications.

30    In O’Keefe Nominees Pty Ltd v BP Australia Ltd (1995) 55 FCR 591, Spender J said this:

The primary concern that an order for costs reflect the justice of the situation is the reason that on many interlocutory questions the costs are reserved. In most cases, when an order for costs of the principal proceedings is made, no specific reference is made to costs which are reserved and they are, by the order for costs which is made, picked up in favour of the party that has been successful in the litigation. This circumstance reinforces the not uncommon position that in respect of the payment of costs of an interlocutory application, it is not necessarily just that the costs of an interlocutory application should follow the result of that interlocutory application but rather should be determined by the result of the principal litigation of which the interlocutory application forms but a part. For the same reason, costs orders on interlocutory applications are sometimes made whereby the costs of the application are the costs of the applicant in the principal proceedings or of a respondent in the principal proceedings, so that the benefit of that costs order is dependent on the outcome of the principal litigation.

31    However, where a party seeks a dispensation, indulgence or favour of the Court, such a party will often be ordered to pay the other side’s costs regardless of whether their application succeeds.

32    The application of this general rule in the context of a successful application to amend a statement of claim is demonstrated by the decision of the Western Australian Court of Appeal in Stanley & Ors v Layne Christensen Company & Ors [2006] WASCA 56. There, the applicants in the principal proceeding appealed from the decision of the Master ordering that the applicants in the principal proceeding pay the respondents’ costs of the application to amend the previously amended statement of claim. Wheeler JA, delivering the principal judgment on appeal, said this:

52    The general rule is, and should remain, that where a party is seeking the indulgence of the Court, that party will be required to pay the costs of the application, including costs thrown away, and will not normally receive the costs of the application. However, it is also a normal rule that the Court will have regard to the extent to which it might be said that costs were unnecessarily incurred by a party, and will have regard to the reasonableness of the party's conduct in determining how costs should be awarded. In particular, where a contested application, even for an indulgence, is unnecessary because a party acting reasonably would have consented to appropriate orders, the party who has caused the costs to be unnecessarily incurred will not obtain its costs of such a proceeding merely because the application is for some indulgence. That is implicitly recognised in Briggs [Briggs v Curtis Quick & Associates, unreported; Supreme Court of WA, 30 March 1998] at 14, where Owen and Parker JJ appear to accept that an unreasonable withholding of consent might form an appropriate basis for a ruling on costs which departed from the ‘normal rule’ relating to indulgences. However, in that case their Honours considered that it could not be said that the other party was unreasonable to require that the proposed amendment be justified to the satisfaction of a judicial officer.

…

55.    I should add that the respondents submit that, as a general principle, the ‘normal rule’ upon a successful application to amend pleadings should be that the Court orders costs in the cause, since whether or not the amendments prove to be necessary and appropriate will depend upon whether the amending party ultimately succeeds at trial. I would not go so far as to hold that that should be the usual or normal order. There are a number of factors to balance. One is that, since it would generally be possible for a party to avoid the need to seek any indulgence by accurately formulating its pleading or otherwise complying with the rules, the fact that the party is seeking an indulgence will be relevant. As I have already noted, the degree of conferral and the reasonableness of conduct of the party opposing such an indulgence will also be relevant. Where amendments are not substantial, or where they serve simply to further clarify an otherwise broadly satisfactory pleading, it may be appropriate simply to order costs in the cause. Such a course may also be appropriate where an amendment adds a substantial, different, but apparently arguable cause of action, on the basis that it is always possible for a trial Judge to make a special order in relation to the costs of such an issue, if it should ultimately be found that the party is unsuccessful in relation to that new cause. It is appropriate that the discretion in such cases should remain unfettered in the interests of efficient case management.

                                [emphasis added]

33    In Stanley the Court set aside the Masters orders as to costs and substituted an order that the costs of the application to amend be the costs of the cause. The Court accepted the submission that the circumstances warranted a departure from the ordinary course as the parties had engaged in detailed consultations prior to the application being brought and thus efficient case management required the parties to make informed decisions as to whether or not to argue an issue and face cost consequences should they decide to unnecessarily oppose an application: see [53] and [54].

34    The general rule regarding the costs of applications for indulgence is also applicable in relation to applications for extension of time as a result of the operation of Order 62, rule 23 of the Federal Court Rules which provide that:

Where a party applies for an extension of time he shall, unless the Court otherwise orders, pay the costs of and occasioned by the application or any order made on or in consequence of the application.

35    Consistent with the cases dealing with applications to extend the time in which to commence a proceeding Courts will ‘otherwise order’ in circumstances where the opposition to the application is unreasonable. As remarked by Gibson ACJ in Bladel v Russel Allport (unreported Full Court of the Supreme Court of Tasmania, 12 November 1964), the courts are “desirous of not encouraging litigants to oppose a meritorious claim for an extension of time on a supposed basis that they will get their costs in any event”.

36    As to an order that a party applying to extend time to comply with directions pay costs under Order 62, rule 23, see Saizeriya Co Ltd & Anor v Peregrine Management Group Ltd Pty & Ors [2005] FCA 1174.

Application in the circumstances

37    The costs of and incidental to the adjournment of the trial were reserved by the order of Logan J on 1 June 2010. By para 10 of the orders made on 30 November 2010 the question of costs of and incidental to the two notices of motion were reserved for further determination upon submissions from the parties. Only the costs of the two motions are presently in issue notwithstanding that the applicants seek to have the costs thrown away by reason of the adjournment dealt with now. Even if the costs of the adjournment were in issue now, the Court would not depart from the order of Logan J reserving the costs to the final determination of the proceeding consistent with O’Keefe. Therefore, the applicants’ submissions so far as they seek an order that the costs of the adjournment be determined now, are rejected.

38    That leaves for further consideration the costs of the respondents’ motion.

39    The proper exercise of the discretion requires the making of an order that the respondents pay the applicant’s costs of the motion. The considerations are these.

40    First, the application to amend the pleading and file the additional affidavits was made on the day that the trial was scheduled to begin, the applicants having only been notified of the prospect of both applications one week earlier.

41    Second, whilst paras 10A to 29 and 32 to 42 could properly be characterised as insubstantial amendments, the amendments sought and granted in relation to paras 44 to 47 and 48 to 72, were substantial amendments as they introduced new grounds upon which the respondents sought to avoid liability either in full or in part.

42    Third, whilst an argument might be made that a reasonable party would have consented to the proposed amendments concerning paras 10A to 29 and 32 to 42 it was not “unreasonable” for the applicants to oppose the amendments concerning paras 44 to 47 and 48 to 72 having regard to some degree of controversy as to whether the discretion conferred under s 87 of the Trade Practices Act is properly informed by the considerations reflected in the material facts pleaded by those paragraphs. Therefore, on the whole, it was reasonable in the circumstances for the applicants to oppose the amendments. In addition, the applicants were successful in relation to the proposed amendment to introduce paras 73 to 81.

43    Fourth, the respondents have not provided an explanation for the late amendments and the need for further evidence save for a change in position following the appointment of new legal advisers.

44    Fifth, whilst the Court found that the applicants would suffer no prejudice if the respondents were allowed to file the affidavits of Mr Stephenson and Mr Sidhu, there is no reason to depart from the principle contained in Order 62, rule 23, the applicants having not acted unreasonably in opposing the application.

45    Sixth, whilst the respondents succeeded in obtaining orders for disclosure, the applicants did not act unreasonably in resisting the application. The applicants had taken the position that if the proposed amendments were allowed, they would disclose documents made relevant by those amendments.

The basis for costs

46    The circumstances do not warrant an order for costs on an indemnity basis or an order that the costs be paid forthwith.

47    The discretion conferred by s 43 of the Federal Court Act will not be exercised so as to order costs on an indemnity basis unless there is some special or unusual feature justifying such an order: Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 per Sheppard J; Re Wilcox: Ex parte Venture Industries Pty Ltd (No. 2) (1996) 141 ALR 727 at 729 per Black CJ and 732-733 per Cooper and Merkel JJ (and the cases cited therein); Abbot v Random House Australia Pty Ltd [1999] FCA 1540 at [5] per Beaumont, Miles and Drummond JJ.

48    The applicants contend that a special or unusual feature of the proceeding is “the default of the respondents by very late amendments and new evidence that has caused significant costs and loss of time to the court and the applicants”: applicants’ submission [14]. The applicants rely upon Tetijo.

49    Tetijo concerned an application for indemnity costs by the respondent after the applicant discontinued the proceeding by leave one month prior to the commencement of a four day trial. The discontinuance was not pursuant to any compromise between the parties and came nearly three years following the commencement of the proceeding. French J (as he then was) made this observation:

Counsel for the respondent next attacked the applicant's conduct of the proceedings saying that interlocutory steps had been protracted by its failure to comply with requests for particulars and discovery and with orders of the Court. Further, it was said, there were untenable applications to amend pleadings and for leave to appeal. Discontinuance of the action was at the last minute and no explanation had been advanced for it. He submitted that it should be inferred that there had been a sudden acceptance by the applicant of the hopelessness of its case and that this was a matter which should have been apparent very shortly after the commencement of the proceedings.

I accept that the interlocutory processes were unduly protracted and that the applicant must bear much of the responsibility for this. However, costs orders were made in favour of the respondent where the applicant was responsible for wasted appearances. When, in an individual case, there is evidence of particular misconduct on the part of a party that causes loss of time to the Court and to other parties then an order for solicitor-client costs and/or costs to be paid forthwith may be made. In my opinion a global order of this kind is not warranted in this case.

50    The circumstances of this case are somewhat different to those in Tetijo (where, in any event, French J did not make an indemnity order). There have not been multiple attempts to re-plead the defence nor unmeritorious interlocutory applications such that by the conduct of the respondents, the interlocutory processes have been ‘unduly protracted’. Further, as the respondents submit, whilst it would have been desirable for the respondents to raise the issue of the amended pleading and further evidence earlier, their failure to do so could not be properly characterised as “misconduct on the part of a party” as the evidence discloses that the late application was properly attributable to a change in legal representation on behalf of the respondents.

51    Further, the respondents in this case were successful in their application.

52    An order for costs on an indemnity basis is not a proper exercise of the discretion in all the circumstances.

53    As to the payment of costs forthwith, the applicants submit that the respondents’ late re-pleading and new evidence has caused delay: applicants’ submissions at [15].

54    An order that costs of an interlocutory application be paid forthwith is contrary to the general rule in Order 62, rule 3(3). The applicant places reliance on Orrcon Operations Pty Ltd v Capital Steel and Pipe Pty Ltd & Ors (No. 2) [2008] FCA 24. In particular, the applicant places reliance upon the observations of Besanko J at [18] where his Honour says this:

18.    The authorities suggest that there are a number of reasons for the general rule embodied in O 62 r 3(3) and they include avoiding multiple taxations, avoiding interlocutory applications being used as a means to exhaust the funds of an opposing party and avoiding unfairness in a case where, for example, a party who is ultimately successful is unable to set off his or her judgment against an earlier liability to pay costs. The authorities suggest that a common example of a case in which a court will otherwise order is where there are multiple attempts to plead a case causing delay in the progress of the case to hearing and final orders.

55    Besanko J sets out with apparent approval the following passage in Fiduciary Limited v Morningstar Research Pty Ltd (2002) 55 NSWLR 1 where Barrett J identified three categories of case in which the Court might order that costs be paid forthwith under Pt 52A, r 9 of the Supreme Court Rules 1970 (NSW):

1.    where the decision on the application determines a separately identifiable matter or the completion of a discrete aspect;

2.    where there has been unreasonable conduct on the part of the unsuccessful party; or

3.    where there is likely to be a considerable lapse of time between the application and the final determination of the proceeding.

56    Nothing in the circumstances of this case warrants the departure from the ordinary rule. There have not been multiple attempts to re-plead the defence. The delay in commencing the trial has been the result of a combination of factors, namely, the election on the part of Logan J to disqualify himself; the respondents’ application; and the applicants’ decision to appeal from the Court’s interlocutory decision regarding the respondents’ application.

Does s 87CE of the Trade Practices Act change this conclusion?

57    The applicants submit that as the respondents failed to notify the applicants at an earlier stage that the respondents had reasonable grounds to believe that Monty Khoury and Ms Boyd might be concurrent wrongdoers, the respondents should be liable for the applicants’ costs in relation to the amendment of defence under s 87CE.

58    Section 87CE of the Trade Practices Act relevantly provides:

87CE Defendant to notify plaintiff of concurrent wrongdoer of whom defendant aware

(1)     If:

(a)    a defendant in proceedings involving an apportionable claim has reasonable grounds to believe that a particular person (the other person) may be a concurrent wrongdoer in relation to the claim; and

(b)     the defendant fails to give the plaintiff, as soon as practicable, written notice of the information that the defendant has about:

(i)    the identity of the other person; and

(ii)    the circumstances that may make the other person a concurrent wrongdoer in relation to the claim; and

(c)    the plaintiff unnecessarily incurs costs in the proceedings because the plaintiff was not aware that the other person may be a concurrent wrongdoer in relation to the claim;

the court hearing the proceedings may order that the defendant pay all or any of those costs of the plaintiff.

(2)    The court may order that the costs to be paid by the defendant be assessed on an indemnity basis or otherwise.

59    However, in circumstances where the applicants have failed to put forward any evidence that they have unnecessarily incurred costs because they were unaware that either Monty Khoury or Ms Boyd may be concurrent wrongdoers in relation to their claim against the respondents, s 87CE has no application. In fact (and particularly in relation to Monty Khoury), it is difficult to imagine how the applicants could not have been aware, having regard to the factual matrix, that Monty Khoury or Ms Boyd may have been concurrent wrongdoers.

The applicants’ motion

60    The applicants seek an order that the respondents pay the applicants’ costs of the motion filed by the applicants to be taxed on a party/party basis.

61    The respondents seek an order that the costs of the motion be reserved.

62    The applicants were successful in their application as the Court granted leave to issue a subpoena to Mr Stephenson in substantially the same form as sought.

63    The respondents resisted the application despite the fact that documents sought by the applicants were relevant to the matters in issue as a result of the respondents’ pleading as supported by the affidavit of Mr Stephenson filed 28 May 2010. As mentioned earlier, the Court rejected the respondents’ contentions that the subpoena was too wide and premature.

64    The respondents’ conduct in resisting the subpoena must be viewed in light of the fact that Mr Stephenson had already answered an earlier subpoena issued by the applicants and that Mr Stephenson had deposed, in his affidavit of 28 May 2010, that all the relevant items in his possession (except for one annexed to his affidavit) had already been disclosed by the applicants or the respondents or produced pursuant to the earlier subpoena: [109] of the principal judgment.

65    Therefore, the respondents’ conduct cannot be said to be have been unreasonable in resisting the application.

66    Accordingly, the appropriate order is that the applicants’ costs in relation to its motion should be the applicants’ costs in the cause. Such an order mitigates any potential unfairness to the respondents should they ultimately be successful in the principal proceeding.

Associate:

Dated:    2 August 2011