FEDERAL COURT OF AUSTRALIA Gibson Motorsport Merchandise Pty Ltd v Forbes [2003] FCA 583 GIBSON MOTORSPORT MERCHANDISE PTY LTD (ACN 095 810 110), ROBERT NOEL WATSON, FREDERICK CHARLES GIBSON, NOEL WATSON (AUST) PTY LIMITED (ACN 005 254 848), FC GIBSON PTY LIMITED (ACN 082 475 705), THE WATSON GROUP AUSTRAIA PTY LTD (ACN 091 455 426) and SYNARBY PTY LTD (ACN 057 500 973) v ROBERT JAMES FORBES and RACECAR PREPARATION AND MANAGEMENT PTY LTD (ACN 095 359 041) V372 of 2002 WEINBERG J 11 JUNE 2003 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V372 OF 2002 BETWEEN: GIBSON MOTORSPORT MERCHANDISE PTY LTD (ACN 095 810 110) FIRST APPLICANT ROBERT NOEL WATSON SECOND APPLICANT FREDERICK CHARLES GIBSON THIRD APPLICANT NOEL WATSON (AUST) PTY LIMITED (ACN 005 254 848) FOURTH APPLICANT FC GIBSON PTY LIMITED (ACN 082 475 705) FIFTH APPLICANT THE WATSON GROUP AUSTRAIA PTY LTD (ACN 091 455 426) SIXTH APPLICANT SYNARBY PTY LTD (ACN 057 500 973) SEVENTH APPLICANT AND: ROBERT JAMES FORBES FIRST RESPONDENT RACECAR PREPARATION AND MANAGEMENT PTY LTD (ACN 095 359 041) SECOND RESPONDENT JUDGE: WEINBERG J DATE OF ORDER: 11 JUNE 2003 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The applicants pay the respondents' costs of and incidental to the preparation, filing and service of the Defence to the Further Amended Statement of Claim dated 30 December 2002. 2. The applicants pay the respondents' costs of and incidental to the preparation of their letter to the applicants dated 19 February 2003. 3. The applicants pay the respondents' costs of and incidental to the consideration given to the proposed Second Further Amended Statement of Claim, and correspondence relating to that Second Further Amended Statement of Claim, from 3 April 2003 to 7 April 2003. 4. The applicants pay the respondents' costs of and incidental to the directions hearing on 7 April 2003. 5. The costs of and incidental to the respondents' notice of motion filed on 17 April 2003, including the costs of the hearing on 19 May 2003, be reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V372 OF 2002 BETWEEN: GIBSON MOTORSPORT MERCHANDISE PTY LTD (ACN 095 810 110) FIRST APPLICANT ROBERT NOEL WATSON SECOND APPLICANT FREDERICK CHARLES GIBSON THIRD APPLICANT NOEL WATSON (AUST) PTY LIMITED (ACN 005 254 848) FOURTH APPLICANT FC GIBSON PTY LIMITED (ACN 082 475 705) FIFTH APPLICANT THE WATSON GROUP AUSTRAIA PTY LTD (ACN 091 455 426) SIXTH APPLICANT SYNARBY PTY LTD (ACN 057 500 973) SEVENTH APPLICANT AND: ROBERT JAMES FORBES FIRST RESPONDENT RACECAR PREPARATION AND MANAGEMENT PTY LTD (ACN 095 359 041) SECOND RESPONDENT JUDGE: WEINBERG J DATE: 11 JUNE 2003 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 On 19 May 2003, the respondents to this proceeding moved to have the applicants' statement of claim stuck out. The notice of motion was filed on 17 April 2003, after many months of disagreement between the parties regarding the adequacy of that pleading. During the course of the hearing of the motion, the parties agreed that it would be more productive for the applicants to redraft those aspects of the statement of claim which dealt with the cause of action pleaded under the Trade Practices Act 1974 (Cth), than to engage in a protracted debate regarding the pleading. The question that needs to be determined is what order should be made in relation to costs? 2 The respondents seek orders that the applicants pay their costs of and incidental to: · preparing, filing and serving the Defence to the Further Amended Statement of Claim dated 30 December 2002; · the preparation of their letter to the applicants dated 19 February 2003 in relation to the Further Amended Statement of Claim; · considering the proposed Second Further Amended Statement of Claim, and correspondence relating to it, from 3 April 2003 to 7 April 2003; · the directions hearing on 7 April 2003; · preparing, filing and serving the respondents' notice of motion on 17 April 2003 and an accompanying affidavit; · considering the proposed Second Further Amended Statement of Claim, and preparing, filing and serving an outline of submissions from 8 April 2003 to 30 April 2003; · considering a proposed amended Second Further Amended Statement of Claim emailed to the respondents' solicitors on 14 May 2003, and preparing submissions for the hearing on 19 May 2003; and · the hearing on 19 May 2003. 3 The respondents submitted that the Defence which they prepared in response to the Further Amended Statement of Claim was wasted work because the applicants subsequently served two further versions of their pleading. They submitted that they had at all times since September 2002 reserved their right to strike out the Further Amended Statement of Claim, and that the subsequent amendments were so substantial that the next pleading bore little resemblance to that originally filed. 4 In addition, the respondents submitted that the applicants sought an indulgence in seeking to rely on the Second Further Amended Statement of Claim, and to abandon their earlier pleading, and a further indulgence by disclaiming reliance upon the Second Further Amended Statement of Claim in favour of a third version. 5 The respondents claim that they are entitled to their costs of the directions hearing on 7 April 2003 because that hearing concerned the Second Further Amended Statement of Claim, and a related issue regarding the respondents' application to be relieved of their consent to an "exchange of affidavits". They say that the latter issue arose only because of the uncertainty of the pleadings, and that the directions hearing was wasted in circumstances where the pleading was subsequently amended again, and is now to be further amended. 6 Finally, the respondents submit that they are entitled to their costs of filing the notice of motion dated 17 April 2003, the accompanying affidavit, and the extensive written submissions filed in support of that motion on the basis that the applicants have ultimately, though tacitly, conceded that the Second Further Amended Statement of Claim should be significantly amended. 7 The respondents also sought an order, under O 62 r 3, that costs be taxed in default of agreement and paid forthwith. That contention was supported by reference to the principles set out in McKellar v Container Management Services Ltd [1999] FCA 1639. 8 The applicants accepted that, as a general rule, where amendments to a pleading are made by a party after the other side issues a strike out motion, but before the motion is determined, the moving party should have its costs. They submitted, however, that this was not an ordinary case. They identified three factors which were said to militate against the general rule. They were: · there was correspondence from the applicants' solicitors inviting the respondents to request particulars, or clarification, of the Second Further Amended Statement of Claim. That correspondence was sent within seven days of the notice of motion being issued. The invitation was ignored until the hearing of the motion had actually commenced. · by par [2] of the notice of motion, the respondents themselves sought an indulgence from the Court, in that they wished to resile from an agreement made in December 2002 regarding the exchange of affidavits. · the fate of the strike out motion was likely to be linked to the outcome of the motion resiling from that agreement. Counsel from the respondents conceded in open court that if the respondents received a pleading "which they fully understood" they would not press the motion seeking to resile from the agreement. The applicants submitted that the Second Further Amended Statement of Claim complied with the rules of pleading, and contended that the strike out motion would have failed. However, their willingness to act in a reasonable and accommodating manner should not be used as the basis for an order for costs against them. 9 The applicants submitted that the costs of the motion should be reserved, and await the outcome of the motion, if pressed, or await the outcome of the trial, if not pressed. The applicants further submitted that there was no basis for an order that costs be taxed, and paid forthwith. 10 In my view, the respondents are entitled to their costs of preparing, filing and serving the Defence to the Further Amended Statement of Claim dated 30 September 2002, and all other steps taken by them, up to and including, the directions hearing on 7 April 2003. That includes the costs of that directions hearing. However, there is no basis whatever for an order to be made pursuant to O 62 r 3 in relation to those costs. 11 The question whether the respondents are entitled to any costs thereafter, including the preparation, filing and serving of their notice of motion on 7 April 2003, and the various matters associated with the preparation for, and hearing of, that notice of motion on 19 May 2003 is more vexed. It seems to me that the best course, in the event that the motion is pressed, is to reserve those costs until I see the Third Further Amended Statement of Claim, and am in a position to consider the extent to which it represents a significant modification of the earlier pleading. 12 Accordingly, I shall order that the applicants pay the respondents' costs, of and incidental to, the first four matters set out in par [2] of these reasons for judgment, culminating in, and including, the directions hearing on 7 April 2003. I shall order that costs of the motion be reserved to await the outcome of that motion, if pressed. However, if that motion is not pressed, I shall reserve the question of those costs with the understanding that any order regarding those costs will await the outcome of the trial. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg. Associate: Dated: 11 June 2003 Counsel for the Applicants: Mr M.J. Colbran QC and Mr R.S. Wotherspoon Solicitors for the Applicants: White SW Computer Law Counsel for the Respondents: Mr P.J. Jopling QC and Mr P.R.D. Gray Solicitors for the Respondents: Allens Arthur Robinson Date of Hearing: 19 May 2003 Date of Judgment: 11 June 2003