FEDERAL COURT OF AUSTRALIA Greyhound Pioneer Australia Ltd v Pioneer Motor Service Pty Ltd [1999] FCA 474 COSTS - application for costs from respondents on indemnity basis - where proceedings initially brought against incorrect respondent and respondent conceals identity of correct respondent - where evidence given to Court by respondent misleading - significance of respondents' earlier offer to pay costs on terms, but offer not accepted. COSTS - costs sought against a non-party - interests of justice - where respondents in effect seek indemnification from their former solicitor in relation to possible costs - where respondents assert they were given wrong advice by their former solicitor, thereby exposing them to additional unnecessary costs orders. PRACTICE AND PROCEDURE - strike out of proceedings - whether any question of issue estoppel - where proceedings initially brought against incorrect respondent and subsequently against correct respondents. Knight v FP Special Assets Ltd (1992) 174 CLR 178 cited General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 cited GREYHOUND PIONEER AUSTRALIA LTD (ACN 008 685 229) v PIONEER MOTOR SERVICE PTY LTD (ACN 002 858 451) QG 51 OF 1997 GREYHOUND PIONEER AUSTRALIA LTD (ACN 008 685 229) v NOWRA COACHES PTY LTD (ACN 000 824 909) & ORS QG 122 OF 1998 SPENDER J 14 APRIL 1999 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 51 of 1997 BETWEEN: GREYHOUND PIONEER AUSTRALIA LIMITED (ACN 008 685 229) Applicant AND: PIONEER MOTOR SERVICE PTY LTD (ACN 002 858 451) Respondent IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 122 OF 1998 BETWEEN: GREYHOUND PIONEER AUSTRALIA LIMITED (ACN 008 685 229) Applicant AND: NOWRA COACHES PTY LTD (ACN 000 824 909) First Respondent JOHN DOUGLAS KING Second Respondent SUSANNE LINDA KING Third Respondent JUDGE: SPENDER J DATE OF ORDER: 14 APRIL 1999 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The costs of Greyhound Pioneer Australia Limited of and incidental to proceedings QG51 of 1997 be paid by Nowra Coaches Pty Ltd, John Douglas King and Susanne Linda King, those costs to be taxed if not agreed. 2. The costs of Greyhound Pioneer Australia Limited of the notice of motion of 8 September 1998 in proceedings QG 51 of 1997 be paid by Nowra Coaches Pty Ltd, John Douglas King and Susanne Linda King on an indemnity basis. 3. The notice of motion of 8 December 1998 in proceedings QG 122 of 1998 is dismissed with costs, to be taxed if not agreed. 4. The matter constituted by the relief sought in paragraphs 2 and 3 of the notice of motion filed 2 March 1999 in proceedings QG122 of 1998 is transferred to the Supreme Court of New South Wales, to abide such further order of the Court as may be appropriate, and the question of the costs of that matter is reserved to the order of the Supreme Court of New South Wales. 5. Nowra Coaches Pty Ltd, John Douglas King and Susanne Linda King pay the costs of Greyhound Pioneer Australia Ltd of the notice of motion filed 2 March 1999 in proceedings QG 122 of 1998, to be taxed if not agreed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 51 of 1997 BETWEEN: GREYHOUND PIONEER AUSTRALIA LIMITED (ACN 008 685 229) Applicant AND: PIONEER MOTOR SERVICE PTY LTD (ACN 002 858 451) Respondent IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 122 OF 1998 BETWEEN: GREYHOUND PIONEER AUSTRALIA LIMITED (ACN 008 685 229) Applicant AND: NOWRA COACHES PTY LTD (ACN 000 824 909) First Respondent JOHN DOUGLAS KING Second Respondent SUSANNE LINDA KING Third Respondent JUDGE: SPENDER J DATE: 14 APRIL 1999 PLACE: BRISBANE REASONS FOR JUDGMENT 1 This judgment relates to two separate proceedings, namely QG 51 of 1997 and QG 122 of 1998, and three notices of motion, one of which is the subject of the hearing before the Court today. Initially, however, it is necessary to deal with two earlier notices of motion. 2 The first of these earlier motions, filed on 8 September 1998 on behalf of Greyhound Pioneer Australia Limited, seeks orders that: "…John Douglas King, Susanne Linda King and Nowra Coaches Pty Ltd pay the Applicant's costs of and incidental to the principal proceedings…" (QG 51 of 1997) and the costs of the notice of motion. It further seeks that the costs "…be assessed and paid on the basis of a complete indemnity, or on such other basis as [the Court] should order." The second notice of motion, filed 8 December 1998 on behalf of Nowra Coaches Pty Limited, John Douglas King and Susanne Linda King, who are the respondents in proceedings QG 122 of 1998, seeks orders that those proceedings be struck out or, alternatively, that they be stayed. 3 There is an inter-relationship between those motions. They were heard in December last year and judgment has been delayed in respect of them because of the foreshadowing of the notice of motion on behalf of the Kings that they would seek, if they were ordered to pay the costs of proceedings QG 51, that they be indemnified in respect of those costs by their former solicitor, Pamela Humphreys. This third notice of motion was filed on 2 March 1999. In fact, the motion does not seek indemnity, but rather seeks an order that "…the costs of proceedings QG 51 and also QG 122 including the hearing on 14 December, 1998 be paid by Pamela Humphreys…" together with the costs of the notice of motion filed 2 March 1999. 4 It is that aspect of the matter which underlines the difficulty that attaches to the notice of motion of 2 March 1999. So far as Greyhound Pioneer is concerned, there is no interest by it in any questions of misconduct or professional negligence on the part of the Kings' former solicitor. In truth, what the Kings are seeking is indemnification of any costs that they might be ordered to pay, it being asserted by them and denied by Ms Humphreys that they were the subject of wrong advice by Ms Humphreys which had the effect of exposing them to costs orders to which they would not otherwise be exposed. 5 So far as the motion seeking that the Kings pay the costs of proceedings QG 51, the position can be shortly stated. I gave judgment in those proceedings on 16 October 1997 and I ordered that the respondent, which was Pioneer Motor Service Pty Ltd: "...whether by itself or otherwise, on the route between Brisbane and Sydney, be restrained from: (a) using, permitting or authorising the use of the word "Pioneer" as part of the respondent's trading name or style; (b) using, permitting or authorising the use of the word "Pioneer" upon any motor coach used by the respondent in the provision of motor transport services; or (c) using, permitting or authorising the use of any other colourable imitation of the word "Pioneer." " 6 I ordered that that order be stayed for a period of 28 days from the date of the order, the reason being to give time to the respondent to put its house in order as to the correction of documentation and livery of offices and of the livery of the buses themselves. 7 A notice of appeal was filed on 6 November 1997 from my orders of October 1997 but the respondent, Pioneer Motor Service Pty Ltd, discontinued that appeal on 10 February 1998. 8 Proceedings QG 51 of 1997 essentially concerned the question of whether the use of the name Pioneer Motor Service on coaches conducting a bus service between Brisbane and Sydney in competition with coaches operated by Greyhound Pioneer constituted passing off or conduct in contravention of section 52 of the Trade Practices Act. On 30 May 1997, Drummond J heard an application for interlocutory relief, and declined to grant it, having regard to the Court's ability to give an early trial of the principal proceedings. 9 The trial of the matter took place in August 1997 and judgment was given, as I have indicated, on 16 October 1997. Shortly after the notice of discontinuance on 10 February 1998, Greyhound Pioneer commenced contempt proceedings. On 11 March 1998, it contended that Pioneer Motor Service Pty Ltd was continuing to use the name in breach of the Court's orders of 16 October 1997. That motion was returnable on 16 April 1998. A week before that motion was to be heard, namely on 8 April 1998, Pioneer Motor Service Pty Ltd appointed an administrator. It appears that the true position is that, for a long time, Pioneer Motor Service Pty Ltd had ceased to operate any bus line using the name "Pioneer". 10 The meeting of creditors of Pioneer Motor Service Pty Ltd held on 6 May revealed that, at the time of the proceedings before me, the name "Pioneer Motor Service" was being used by Nowra Coaches Pty Ltd. That company (Nowra Coaches Pty Ltd) had been granted a licence as and from 20 May 1996 from Mr and Mrs King as directors of Pioneer Motor Service Pty Ltd. It appears further from that meeting that the defence of the proceedings in QG 51 of 1997 had been paid for by Mr and Mrs King, thereby extinguishing a debt that they had owed to Pioneer Motor Service Pty Ltd. The position is that Pioneer Motor Service Pty Ltd is unable to pay the costs of proceedings QG51 of 1997. 11 I think it is correct to note that, while the question of deception in the use of the name "Pioneer Motor Service" was the central issue in proceedings QG51 of 1997, the corporate entity using that name was the subject of evidence and, at the very least, evidence given on behalf of Pioneer Motor Service Pty Ltd in proceedings QG51 of 1997 was misleading. Mr King said in his evidence-in-chief when asked about the relationship between Nowra Coaches Pty Ltd and Pioneer Motor Service: "Pioneer Motor Services is a proprietary limited company that we operate our long services from." 12 He agreed that the respondent now operated the business and, when asked where Nowra Coaches Pty Ltd operated its coaches, he said that it was a local bus service and that it operated its coaches around Nowra. The effect of the evidence and the conduct of those proceedings generally was that there was never any suggestion, as was the case, that Nowra Coaches Pty Ltd was in fact the true respondent and the person who operated the bus service between Sydney and Brisbane under the name Pioneer Motor Service. In those circumstances, it is submitted that Nowra Coaches Pty Ltd and Mr and Mrs King should pay the costs of Greyhound Pioneer of those proceedings. 13 That, it is submitted, is particularly so since Pioneer Motor Services has had an administrator appointed and the creditors have voted that the company be wound up. It does not have the capacity to pay anything more than a small proportion of the costs ordered to be paid by it. 14 There is no argument as to the law to be applied. Whether a third party should pay the costs of the action is referred to in Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 192 to 193. There, Mason CJ, Deane and Gaudron JJ indicated that an order will be made against a third party where the interests of justice require it: "...where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party…has an interest in the subject of the litigation. 15 Each of those elements is satisfied in the present circumstances. The truth of the matter is that the litigation was conducted in an attempt to protect the use of the name Pioneer Motor Service. That purpose was one in which Mr and Mrs King and Nowra Coaches Pty Ltd had a clear interest and it would be unjust for an insolvent company to be the only person subject to costs orders in respect of the unsuccessful attempt to "protect the name". 16 It seems to me plain that I ought to order that the costs of and incidental to proceedings QG 51 of 1997 be paid by Nowra Coaches Pty Ltd, John Douglas King and Susanne Linda King, those costs to be taxed if not agreed. 17 It was further submitted in the notice of motion filed 8 September 1998 that any costs order have a requirement that the respondents pay indemnity costs. It seems to me that, notwithstanding the matters to which I have referred, I ought not order payment of costs on that basis. 18 Notwithstanding what I regard as a deliberate deception of the Court in respect of the true identity of the operator of the business Pioneer Motor Service, that circumstance would not, in the ordinary course, have resulted in the ordering of indemnity costs. There are further reasons also which incline me against the making of indemnity costs. One of those is an important one. Mr and Mrs King offered to cause Nowra Coaches Pty Ltd to pay the costs but on condition that no further action be taken against that company. This offer was contained in a letter from the solicitors for Mr and Mrs King dated 11 May 1998. That condition, understandably, was unacceptable to Greyhound Pioneer but I infer that, absent that condition, the offer would have been accepted. 19 There is the further circumstance that in the course of the hearing of this and the other notice of motion, each of Nowra Coaches Pty Ltd, John Douglas King and Suzanne Linda King undertook to the Court that they, by themselves, their servants and agents and any relevant corporation would not, on the route between Brisbane and Sydney, engage in the conduct which was the subject of my orders of 16 October 1997. When that undertaking was offered, the question arose as to whether there was anything left of proceedings QG 122 of 1998 but I was told then and it has been maintained now that the other relief claimed in those proceedings, namely damages, is still being pursued. 20 It seems to me, therefore, that there is no proper basis on which I ought to order indemnity costs in proceedings QG 51 of 1998 but that I ought to recognise the Court's view of the conduct engaged in in those proceedings by ordering that the costs of the motion of 8 September 1998 be paid on an indemnity basis. It is only because of the conduct engaged in in proceedings QG 51 that that motion was necessary. 21 So far as the notice of motion seeking the striking out of proceedings QG 122 of 1998, that can be very shortly disposed of. 22 In an extraordinarily bold submission, it was contended that the application of the principles discussed by the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 would have the consequence that the new proceedings raised matters which could have been expected to have been raised in the earlier proceedings and that the assertions on behalf of the applicants in the new proceedings would give rise to a conflict in the judgment as well as increased costs. First of all, there will be no conflict in any orders that are made because the orders affect different legal entities: that is the short answer to the question of inconsistent judgments, which is the rationale of the principle in Anshun. But secondly, the difficulties which necessitated the commencement of the second proceedings, while they have been largely met by the late offering of the undertakings, are a direct consequence of the deception which, unfortunately, infected proceedings QG 51 of 1997. 23 On the ordinary principles as to strike out in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 and the other well-known principles, this is a clear case where the notice of motion seeking the strike out should be refused. That notice of motion is dismissed with costs to be taxed if not agreed. 24 Having had regard to the submissions contained in Mr Perkins' written outline on behalf of Ms Humphreys, and the submissions made orally by Mr Biggins as to how the notice of motion filed 2 March 1998 ought be disposed of, I will, pursuant to the cross-vesting legislation, transfer the matter constituted by the relief sought in paragraphs 2 and 3 of the notice of motion filed 2 March 1999 in proceedings QG122 of 1998 to the Supreme Court of New South Wales, to abide such further order of the Court as may be appropriate, and I reserve the question of costs of that matter to the order of the Supreme Court of New South Wales. 25 However, I also order that Greyhound Pioneer have its costs of the motion filed 2 March 1999, to be taxed if not agreed. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender. Associate: Dated: 14 April 1999 Counsel for the Applicant Mr W Sofronoff QC with Mr R M Derrington Solicitors for the Applicant: Russell and Company Counsel for the Respondents: Mr Philip Biggins Solicitors for the Respondents: Johnston Brien Counsel for former solicitor of respondents Mr I R Perkins Solicitors for former solicitor of respondents Mallesons Stephen Jaques Date of Hearing: 14 April 1999 Date of Judgment: 14 April 1999