FEDERAL COURT OF AUSTRALIA

Sacco trading as Globeline Automotive Service v F.V. Bilotto Nominess Pty Ltd [2011] FCA 1287

OTHER MATTERS:

1.    The court notes that the applicant filed and served a Notice of Discontinuance dated 29 October 2011.

THE COURT ORDERS THAT:

1.    Subject to order 2 hereof, the applicant pay the respondent’s taxed costs of the proceeding.

2.    The respondent pay the applicant’s costs of the directions hearing on 4 November 2011.

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

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

Ex tempore

1    By an originating application dated 5 September 2011, the applicant, Deanne Sacco (trading as Globeline Automotive Services), alleges that the respondent, F.V. Bilotto Nominees Pty Ltd, breached sections 18, 21(1) and 22 of the Competition and Consumer Act 2010 (Cth) (“C&C Act”) by engaging in misleading and deceptive conduct and unconscionable conduct in the supply of services and in business transactions, and caused financial loss and damage totalling $35,407.10.

2    By an affidavit sworn on 5 September 2011, Ms Sacco deposed that she filed an application in the Victorian Civil and Administrative Tribunal (“VCAT”) in July 2011 and that in August 2011 the respondent also filed an application in VCAT under retail tenancies legislation seeking, inter alia, arrears of rent. It appears from the affidavit that the proceedings in VCAT were still in progress at the date of swearing.

3    It is not possible clearly to discern any details of the applicant’s allegations of breach of the C&C Act from the affidavit, although the voluminous exhibits thereto seem to indicate that the applicant has complained that she leased premises from the respondent intending to run an automotive business, which the respondent represented to be a lawful use. There was, however, no relevant permit and the applicant complained that she expended funds improving the property.

4    In the present proceeding, no statement of claim was filed, as required by r 8.05 of the Federal Court Rules (“the Rules”), as damages are sought. Further, no genuine steps statement was filed in accordance with r 8.02 of the Rules and s 6 of the Civil Dispute Resolution Act 2011 (Cth), specifying the steps taken to resolve the issues in dispute or the reasons why no such steps were taken.

5    A return date of 4 November 2011 was fixed for the matter. The respondent entered an appearance on 9 September 2011. On Saturday, 29 October 2011, the applicant filed a notice of discontinuance on the basis that the applicant paid the respondent’s taxed costs. It was not disputed that a copy of the notice of discontinuance was emailed to the respondent on the same date.

6    Rule 26.12 of the Rules deals with discontinuance. It relevantly provides, by subrule (2)(a)(i), that a party may file a notice of discontinuance without the leave of the court or the other party’s consent at any time before the return date fixed in the originating application. Subrule (7) provides that unless the terms of a consent or an order of the court provide otherwise, a party who files a notice of discontinuance under subrule (2) is liable to pay the costs of each other party to the proceeding in relation to the claim or part of the claim that is discontinued. Thus, by r 26.12(2)(a)(i), the applicant was entitled to discontinue without leave or consent of the other party at any time before the return date, and in fact did so. By r 26.12(7), however, absent consent or court order, the applicant is liable to pay the costs of the other party. The applicant’s notice of discontinuance accordingly provided for payment of the respondent’s taxed costs.

7    The respondent, late on 3 November 2011, filed with the court minutes of proposed orders seeking that the originating application be struck out, that the applicant pay its costs on an indemnity basis by 18 November 2011, and in the event of failure so to pay, that the applicant’s solicitor, Ron Silverstein, pay such costs by 25 November 2011.

8    Before me, counsel for the respondent submitted that the proceeding was an abuse of process as it wholly replicated the VCAT proceeding, thereby warranting strike out, indemnity costs and a costs order against the legal practitioner. There was, however, no strike-out application or application for a costs order against a non-party before the court, nor any material filed in support enabling me to conclude that the matter was an abuse of process. Further, as the applicant, pursuant to the Rules, was entitled to discontinue, subject to paying the respondent’s costs unless otherwise ordered, any application to strike the proceeding out would be a futility. Any application for payment of costs by the legal practitioner would have had to be made formally, supported by proper material, and it would have been necessary to afford the practitioner an adequate opportunity to respond. The jurisdiction to grant such applications is exercised carefully and sparingly, and only in clear cases of serious dereliction of duty or misconduct sufficiently serious to warrant such a step (see, eg, Da Sousa & Anor v Minister of State for Immigration, Local Government and Ethnic Affairs (1993) 41 FCR 544).

9    Similarly, while the relevant rule indicates that a discontinuing party must ordinarily pay the other party’s costs, costs in the usual case are awarded on a party-party basis. While an award of costs and the level thereof are discretionary matters, as is well-established, indemnity costs are typically reserved for circumstances such as baseless allegations of fraud, fraudulent conduct, abuse of process, misconduct in litigation, delay or persisting in a hopeless case (see, eg, Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 and Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189). While the current application had obvious formal deficiencies, and, subject to the question of today’s costs, there is no reason why the applicant should not pay the respondent’s costs of the discontinued proceeding, I am not satisfied that there are circumstances warranting a departure from the usual basis of costs.

10    The applicant submitted that, in the circumstances, as the respondent had occasioned an unnecessary appearance, the respondent should pay the applicant’s costs of the return date. The applicant was entitled, as stated above, to discontinue the proceeding subject, in the ordinary course, to the payment of costs, and notified the court and the respondent several days ago of discontinuance on the basis of payment of the respondent’s taxed costs. The respondent, however, unsuccessfully sought costs on a different level together with other relief, but filed no proper application or material in support, although it entered an appearance on 9 September 2011 and was notified of the proposed terms of the discontinuance some days ago.

11    Therefore, in my opinion, it is appropriate that the respondent pay the applicant’s costs of the directions hearing of 4 November 2011.

Associate:

Dated:    4 November 2011