FEDERAL COURT OF AUSTRALIA Pipinias v Newport Quays Stage 2A Pty Ltd [2009] FCA 1452 MANUAL PIPINIAS v NEWPORT QUAYS STAGE 2A PTY LTD ACN 117 374 222, MC MARINA SOUTH LTD ACN 121 362 301, MAXWELL BARBER, TRAVIS BARBER and LARISSA BARBER; URBAN CONSTRUCT PROJECT MARKETING PTY LTD ACN 095 779 669; URBAN CONSTRUCT PTY LTD SAD 150 of 2008 LANDER J 3 DECEMBER 2009 ADELAIDE IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION SAD 150 of 2008 BETWEEN: MANUAL PIPINIAS Applicant/Cross Respondent AND: NEWPORT QUAYS STAGE 2A PTY LTD ACN 117 374 222 First Respondent/Cross Claimant/Cross Respondent MC MARINA SOUTH LTD ACN 121 362 301 Second Respondent/Cross Claimant/Cross Respondent MAXWELL BARBER Third Respondent/Cross Claimant/Cross Respondent TRAVIS BARBER Fourth Respondent/Cross Claimant/Cross Respondent LARISSA BARBER Fifth Respondent/Cross Claimant/Cross Respondent URBAN CONSTRUCT PROJECT MARKETING PTY LTD ACN 095 779 669 Cross Claimant/Cross Respondent URBAN CONSTRUCT PTY LTD Cross Respondent JUDGE: LANDER J DATE OF ORDER: 3 DECEMBER 2009 WHERE MADE: ADELAIDE THE COURT ORDERS THAT: 1. The applicant's claim against the first to fourth respondents (inclusive) be dismissed. 2. The applicant have leave to discontinue the proceeding against the fifth respondent. 3. The applicant pay the first and second respondents' costs of and incidental to the applicant's proceeding against the first and second respondents, to be taxed in default of agreement. 4. There be no order as to costs on the applicant's claim against the third and fourth respondents. 5. The first and second respondents' cross-claim against the applicant be adjourned for mention only to Wednesday, 10 March 2010 at 9.00am. 6. The cross-claim by the first and second respondents against the third and fourth respondents be dismissed with no order as to costs. 7. The cross-claim by the first and second respondents against Urban Construct Project Marketing Pty Ltd be dismissed with no order as to costs. 8. The cross-claim by the third and fourth respondents against the first and second respondents and Urban Construct Project Marketing Pty Ltd be dismissed with no order as to costs. 9. The cross-claim by Urban Construct Project Marketing Pty Ltd against the first to fourth respondents (inclusive) be dismissed with no order as to costs. 10. The cross-claim by the fifth respondent against Urban Construct Pty Ltd be dismissed with no order as to costs. 11. Paragraphs 1.1 and 1.2 of the orders made on 16 October 2008 be discharged. 12. The applicant pay the fifth respondent's costs on a party and party basis up to 19 November 2009 and thereafter 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 eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY general division SAD 150 of 2008 BETWEEN: MANUAL PIPINIAS Applicant URBAN CONSTRUCT PROJECT MARKETING PTY LTD ACN 095 779 669 Cross-Claimant AND: NEWPORT QUAYS STAGE 2A PTY LTD ACN 117 374 222 First Respondent MC MARINA SOUTH LTD ACN 121 362 301 Second Respondent MAXWELL BARBER Third Respondent TRAVIS BARBER Fourth Respondent LARISSA BARBER Fifth Respondent URBAN CONSTRUCT PTY LTD Cross-Respondent JUDGE: LANDER J DATE: 3 DECEMBER 2009 PLACE: ADELAIDE REASONS FOR JUDGMENT 1 This is a claim by the fifth respondent to a proceeding brought by the applicant for the costs of the proceeding on an indemnity basis. It is necessary to recount the history of the matter to understand the nature of the application made. The applicant brought proceedings against four respondents in relation to two contracts he entered into on 4 September 2006. In those contracts he agreed to purchase from the first respondent a unit to be built at Newport Quays and agreed to lease a marina berth at Newport Quays from the second respondent. 2 He claimed that he was induced to enter into those agreements by misrepresentations made by the third and fourth respondents. He later alleged, when joining the fifth respondent, that she also made misrepresentations to him. The proceeding came to trial on 30 November 2009 when Mr Slattery QC opened on behalf of the applicant. After he had completed his opening the applicant commenced his evidence. The applicant's evidence was interrupted by the Court taking a view of the development, which included the unit and the marina berth. The applicant then continued his evidence-in-chief. 3 On 1 December 2009 the Court adjourned with the intention of resuming the trial on 3 December 2009. On 2 December 2009 my chambers were advised that the proceeding had settled and that the parties would be seeking various orders to reflect the settlement. I was advised that there would be an argument in relation to the fifth respondent's costs. When the proceeding was called on this morning, I was asked to make a number of orders by consent. The effect of those orders was that the applicant's claim as against the first to fourth respondents was dismissed, and the applicant was to pay the first and second respondent's costs of the proceeding. 4 The applicant sought leave to discontinue the proceeding against the fifth respondent. The fifth respondent did not oppose the applicant being granted leave to discontinue the proceeding, but claimed that the conduct of the applicant was such that a term of the discontinuance should be that the applicant pay the fifth respondent's costs on an indemnity basis. The applicant conceded that the fifth respondent was entitled to the costs of the proceeding, but the concession only went as to party and party costs. I am left to resolve whether the order ought to be party and party costs or solicitor and client costs. Apart from the proceeding between the applicant and the respondents, there were also a number of cross-claims, most of which I do not need to identify for the purpose of these reasons. There was, however, a cross-claim brought by the fifth respondent against Urban Construct Pty Ltd, which was her then employer. In the orders which I have made today, that cross-claim brought by the fifth respondent against Urban Construct Pty Ltd was dismissed with no order as to costs. 5 The fifth respondent claims that the proceeding should never have been brought. She says that there was no evidence upon which a court could have found that she engaged in misleading and deceptive conduct which would give rise to any relief against her. She claimed in the alternative that if the applicant could reasonably have brought the proceeding, the applicant should not have continued with the proceeding, especially after a letter was written to the applicant's solicitors by her solicitors on 10 November 2009. On that day the fifth respondent's solicitors wrote: As you are aware we act for Larissa Barber (Larissa) in the Proceedings. Your client asserts in his Second Further Amended Statement of Claim that Larissa has made various representations amounting to misleading and unconscionable conduct which give rise to your client's claims for statutory damages at common law, including costs and interest. We are instructed that our client vigorously denies having made any such representations. On 23 September 2008 your client swore an affidavit (the affidavit) in support of his application for an injunction. At paragraph 50 of the affidavit your client asserts that Travis Barber told him before he signed the Contract that because he was buying off the plan there was no stamp duty payable. Your client further asserts that he relied on this representation in his decision to purchase the Property. Your client makes no mention of a similar representation having been made by Larissa. Your client now alleges that is the case although failed to inform the Court of this apparently salient fact in his affidavit. At paragraph 55 of the Second Further Amended Statement of Claim your client asserts that Larissa made verbal statements including a statement that there 'was no stamp duty payable because the Applicant was purchasing from the plan'. Your client later asserts that he relied on this representation in his decision to purchase the Property. Our client vigorously denies making this representation or any of the other representations pleaded at paragraph 55. Further, any representation made by Larissa (which is denied) regarding your client's cooling off rights is a representation of law and does not give rise to your client's claims. In any event, the allegations made by your client in the Second Further Amended Statement of Claim are inconsistent with the earlier allegations made by your client in the affidavit. In the affidavit your client makes no mention of Larissa having made any representations regarding the fact that stamp duty was payable on the purchase of the property. Larissa will rely on this prior inconsistent statement in the trial of the Proceedings going to questions of credit and as to the truth of any such allegation. Even if your client is successful in the trial proper, it is unlikely that Larissa could meet any judgment debt and so any victory by your client would likely be pyrrhic. For these reasons, we are instructed to make the following offer: 1. That your client forthwith discontinue the within proceedings against our client on the basis that each party bears its own costs of the proceedings. This offer will remain open until such time as our client withdraws it in writing. We will rely on the contents of this letter as a formal Calderbank offer on the question of costs including in seeking costs on a solicitor client or indemnity basis. 6 She claimed to be entitled to costs on an indemnity basis, from the date upon which she first engaged solicitors or, in the alternative, if that claim were not successful, from 10 November 2009. 7 The applicant's case against the fifth respondent was contained in paragraph 55 of the statement of claim. He alleged that on 4 September 2006 the fifth respondent made three representations to him in relation to the development of which the unit was to be a part. He said that she said words to the effect: 1. Stage three is going ahead. 2. Settlements on the contracts will be in 2009. 3. There was no stamp duty payable, because the applicant was purchasing from the plan. 8 If the applicant was to succeed on a claim brought under s 52 of the Trade Practices Act 1974 (Cth) against the fifth respondent, the applicant needed to establish first, that the representations had been made; secondly, that they were false; and thirdly, that he had acted upon those representations and relied upon them in entering into the two contracts on 4 September 2006. Although the applicant's evidence-in-chief had not completed by the time the proceeding was dismissed, it is to be observed that the applicant had not given evidence of any representation made by the fifth respondent apart from the representation that there was no stamp duty payable because the applicant was purchasing from the plan. 9 That representation was not relied upon by the applicant in this proceeding for damages against the fifth respondent. He did not claim that the representation was false and that he had had to pay stamp duty, and that he had relied upon it in entering into the contracts. That was not what this proceeding was about. So whether the fifth respondent said that or not, and I note that in correspondence she denies she ever said anything of the kind, is not so much to the point. 10 This proceeding was about whether or not the fifth respondent made the first representation pleaded, that stage three was going ahead, and whether the applicant relied upon that representation. Mr Coppola, who appeared for the fifth respondent, has taken me through the applicant's evidence which shows that before the applicant ever spoke to the fifth respondent on 4 September 2006, the applicant had said that he had decided to purchase the unit and lease the marina berth. The applicant went to speak to Ms Barber for the purpose of entering into the contract. Mr Slattery QC said that I have not heard all of the applicant's evidence and it may be that the applicant's evidence would have later included evidence of that representation having been made. However, I think that is unlikely. The applicant was asked about the conversation with the fifth respondent and he gave evidence of the representation about stamp duty. His evidence had passed the events of 4 September 2006 and at the time that the Court adjourned on 1 December 2009 he was giving evidence of events subsequent to that day. 11 It is not clear to me why the fifth respondent was ever joined as a party to this proceeding. The gravamen of the applicant's case was against the fifth respondent's father and her brother in relation to representations they had made prior to the applicant ever speaking to the fifth respondent. However, the applicant elected to join the fifth respondent subsequent to the issue of the proceeding and he pursued his case against her until the case was discontinued by leave this morning. The orders which I have made this morning seem to me to represent an acknowledgment on the part of the applicant that the case against the fifth respondent could not be maintained. As I have said, the case against her was simply a case for damages. By discontinuing the proceedings against her and by agreeing that he ought to pay her costs, he has acknowledged, in my opinion, that he had no case against her. 12 The case against the first and second respondents, and the third and fourth respondents, was a little different. The applicant claimed that he was entitled to rescind the contracts, as a result of the conduct of the third and fourth respondents by reason of the representations that were made. The orders which I have made today again appear to acknowledge that the applicant had no case in that regard. Mr Slattery, however, said that I should not infer from the orders any acknowledgment on the applicant's part that he had no case against the first to fourth respondents. He said that a deed had been executed and that he would wish to bring that to my attention, so that it could be established that there was no simple acknowledgment made by the applicant that he had no case against the first to fourth respondents. He asked for an adjournment. 13 The fifth respondent has already been put to considerable cost in this proceeding by the applicant maintaining the proceeding against her. It seemed to me that if the applicant wished me to infer, contrary to the orders which I have made today that some commercial resolution had been reached, by which some of the respondents apart from the fifth respondent acknowledge that the applicant had some sort of case against them, that evidence ought to have been adduced prior to the commencement of this argument. The point of today's hearing was to bring this matter to a conclusion and for those reasons, I refused Mr Slattery's application to adjourn the proceeding to enable him to bring in further evidence. 14 I also refused the application for an adjournment for another reason. The deed to which Mr Slattery referred is apparently confidential and the applicant would require the consent of all of the other parties to the deed, who are not known to me, to agree to the publication of the deed to the Court. That would have incurred further costs. There would need to be further affidavits filed in relation to the deed and the events relating to the entry into the deed. That would have required further costs. There would have to be a further argument which would also have incurred further costs. For those reasons, in the exercise of my discretion, I refused the application for an adjournment. 15 As I have already said on 10 November 2009 the fifth respondent's solicitor wrote to the applicant's solicitor asserting that there was no case against the fifth respondent. It was brought to the applicant's solicitor's attention that, even if the applicant were successful in the trial, it is unlikely that the fifth respondent could meet any judgment debt and any victory by the applicant would be likely to be "pyrrhic". The fifth respondent's solicitor said that for those reasons the fifth respondent offered to settle the matter on the basis that the applicant forthwith discontinued the proceeding against the fifth respondent, and that each party bear its own costs of the proceeding. That offer was rejected by the applicant's solicitors on 19 November 2009. 16 It is apparent that the applicant's now position is worse than that which was offered by the fifth respondent in that letter of 10 November 2009. The applicant concedes that the applicant ought to be ordered to pay the fifth respondent's costs at least on a party and party basis. The applicant could have settled on 10 November 2009, or very shortly thereafter, on the basis that the fifth respondent pay her own costs. To that extent, the applicant is worse off. 17 The applicant however argued that I ought to make an order for party and party costs rather than solicitor and client costs because the fifth respondent had, by entering into the consent orders today, abandoned a right that she had against her employer. The fifth respondent's employer was Urban Construct Pty Ltd. She claimed in her cross-claim against that company indemnity for any damages she might be ordered to pay. Urban Construct Pty Ltd defended that cross-claim on the basis that she was not acting in the course of her employment and therefore not entitled to indemnity. She agreed today for her cross-claim to be dismissed with no order as to costs. The applicant contended that she thereby gave up a right. The fifth respondent could have, it was contended, proceeded against her employer and had her costs paid by way of indemnity. I think there are two problems with that argument. First, it is impractical and unreasonable. It is unreasonable to suggest that the fifth respondent should have continued the cross-claim in circumstances where every other claim and cross-claim has been abandoned by all parties to the proceeding, simply for the purpose of obtaining an indemnity in relation to her costs. Secondly, her claim for indemnity was indemnity in relation to damages. She had nothing to be indemnified against as soon as the applicant gave up his claim against the fifth respondent. Therefore she had no claim to pursue. True it is she gave up her claim for costs on the cross-claim, but they are not the same costs which she is seeking against the applicant. She has abandoned her claim for costs on the cross-claim, but she is now seeking her costs on the proceeding which has been brought against her by the applicant on a solicitor and client basis. Therefore I think the proposition is unreasonable, but not only unreasonable, it is untenable. 18 In my opinion, justice would be served in this case if the applicant were ordered to pay the fifth respondent's costs on a party and party basis up to 19 November 2009, which was the date upon which the applicant refused her offer and thereafter on an indemnity basis, and there will be an order accordingly. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. Associate: Dated: 17 December 2009 Counsel for the Applicant: Mr P Slattery QC with Mr R Ross-Smith Solicitor for the Applicant: DLA Phillips Fox Counsel for the First Respondent/Cross Claimant/Cross Respondent: Mr M Abbott QC with Mr M Burnett Solicitor for the First Respondent/Cross Claimant/Cross Respondent: Iles Selley Counsel for the Second Respondent/Cross Claimant/Cross Respondent: Mr M Abbott QC with Mr M Burnett Solicitor for the Second Respondent/Cross Claimant/Cross Respondent: Iles Selley Counsel for the Third Respondent/Cross Claimant/Cross Respondent: Mr D Trim QC with Mr R Harms Solicitor for the Third Respondent/Cross Claimant/Cross Respondent: Montgomery & Co Counsel for the Fourth Respondent/Cross Claimant/Cross Respondent: Mr D Trim QC with Mr R Harms Solicitor for the Fourth Respondent/Cross Claimant/Cross Respondent: Montgomery & Co Counsel for the Fifth Respondent/Cross Claimant: Mr G Coppola Solicitor for the Fifth Respondent/Cross Claimant: Fisher Jeffries Counsel for the Cross Claimant/Cross Respondent: Mr I Robertson SC with Ms A Barnett Solicitor for the Cross Claimant/Cross Respondent: Gilchrist Connell Date of Hearing: 30 November, 1, 2 and 3 December 2009 Date of Judgment: 3 December 2009