C G Maloney Pty Ltd v Noon [2011] NSWSC 256

Supreme Court New South Wales

Medium Neutral Citation: C G Maloney Pty Ltd v Noon [2011] NSWSC 256 Hearing dates: 30 March 2011 Decision date: 30 March 2011 Before: Rein J Decision: Plaintiff to pay the defendants' costs on an indemnity basis Catchwords: PROCEDURE - costs - application for indemnity costs - defendants successful on Anshun defence - very strong case on Anshun and success on other issues as well Cases Cited: Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 Noon v Bondi Beach Astra Retirement Village Pty Ltd [2010] NSWCA 202 Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd (No 3) [2010] NSWSC 1479 Category: Consequential orders Parties: C G Maloney Pty Ltd ACN 000 449 374 (plaintiff) Gregory Brian Noon (first defendant) Matthew Jack Noon (second defendant) Representation: Counsel: B DeBuse (plaintiff) A S Bell SC (defendants) Solicitors: McCooe Raves & Poole (plaintiff) Gilbert + Tobin (defendants) File Number(s): SC 2010/423568

EX TEMPORE Judgment 1On 25 March 2011, I dismissed the plaintiff's proceedings and ordered it to pay the defendants' costs. I handed down my reasons on that occasion and those reasons should be read in conjunction with these. 2The defendants' counsel, Dr A S Bell SC, on 25 March 2011, indicated that his clients might seek an order for indemnity costs and I directed an exchange of submissions between counsel. I received detailed written submissions from both Dr Bell on behalf of the defendants and Mr B DeBuse who appears today on behalf of the plaintiff. 3The defendants' solicitors wrote to the plaintiff's solicitors on 21 December 2010 and this letter is Exhibit A on this application. Exhibit A was written after the defendants had issued a lapsing notice which would cause the caveat to lapse on 24 December 2010 in the absence of proceedings being brought by the plaintiff. The plaintiff commenced proceedings on 24 December 2010. 4In Exhibit A, the solicitors for the defendants made a number of points in relation to the caveat which had been lodged by the plaintiff. The first was actually a point based on an argument of the defendants that was rejected by me in these proceedings but the second point in the letter made reference to [53] of the Court of Appeal judgment in Noon v Bondi Beach Astra Retirement Village Pty Ltd [2010] NSWCA 202 which spoke of the "fine disregard of privy of contract", discernible in the Agreement for Sale of Land ( "the Agreement" ), and asserted correctly that the plaintiff would fail in its case as a matter of construction of clause 15 of the Agreement. 5Exhibit A made a further point, which was that any new proceedings would infringe the rules in relation to res judicata and Anshun estoppel. It also attacked the propriety of lodgement of the caveat. 6In Exhibit A, the solicitors for the defendants wrote: "Our clients have already incurred costs in corresponding with you and your clients' previous solicitors. Our clients are entitled to claim these from your client. However our clients are willing to release your clients from this obligation but only if your client ceases to press the Caveat immediately and your clients provide a written undertaking through you, as their solicitors, that they will take no further steps to press the Caveat or lodge any further caveat that relies in any way upon alleged rights under clause 15." Exhibit A went on to say that if the undertaking was not provided and attempts made to extend the caveat, the letter would be relied upon in an application for indemnity costs against the plaintiff. 7My attention has been brought to a useful summary of principles in the recent judgment of Slattery J in Ventouris Enterprises Pty Ltd v Dib Group Pty Ltd (No 3) [2010] NSWSC 1479 . Reference can also be made to the decision of Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 where his Honour said at 233-234: "it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo ); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata ) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata ); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestley JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis." 8It is important to note that Sheppard J was instancing categories. His Honour made it quite clear that the categories are not closed. 9Generally speaking, it has to be borne in mind that mere failure on the part of the plaintiff or the defendant in a case does not of itself warrant an order for indemnity costs. Some of the categories where indemnity costs are awarded involve significant misconduct, such as the making of allegations of fraud that were totally without foundation, but the categories are not limited. 10The nature of the Anshun defence (and it is applicable to res judicata as well) is that it is asserted by the defendant in such cases that the plaintiff, by bringing the fresh proceedings, is vexing the defendant for a second time and this is a category of abuse of process. I think that is a relevant and important consideration in determining whether an award of indemnity costs should be made against an unsuccessful plaintiff, but I should not be understood as saying that an order for indemnity costs should necessarily be made whenever the Anshun defence or res judicata defence is successful. 11As Dr Bell pointed out, in this case there is not simply the fact that the defendants succeeded on the Anshun defence, but it is a case in which, as part of that success on that point, there was evidenced material which made it clear that the plaintiff had in the earlier proceedings given consideration to the very claim which it now sought to advance in this case, and even at one point seemed to assert that claim then abandoned it or did not press it. There was here a particularly strong case for an Anshun estoppel. 12Secondly, as Dr Bell pointed out, the plaintiff failed on two other grounds which are dealt with in the judgment, being matters of construction of the Agreement and lack of mutuality in relation to the claim of the right to enforce the Agreement as against the defendants, and the first of those other grounds was dealt with in Exhibit A as well. 13Dr Bell made it clear that he does not seek to categorise Exhibit A as falling directly within the principles relevant to Calderbank letters, but he submits that the contents of Exhibit A can be and should be taken into account on the issue of indemnity costs. 14Mr DeBuse accepted that should I come to the conclusion that the plaintiff's claim was a hopeless one doomed to failure, that is a reason why the Court would be justified in making an order for indemnity costs, but he submitted that absent that conclusion or some other ground identified in Colgate-Palmolive, the order sought by the defendants should not be made. 15There was an issue about whether Exhibit A contained any real offer at all. Mr DeBuse argued that the plaintiff would not have been liable for the costs of the defendants obtaining advice. Dr Bell did not seek to assert that an offer was made sufficient to enable it to be characterised as a Calderbank letter, so it is not necessary to dwell upon this issue. I think it is of some relevance (albeit limited) that the defendants did write to the plaintiffs and put them squarely on notice that the claim, if advanced, would be barred and the reasons for that, and warning the plaintiff that the defendants would seek to rely on Exhibit A on the issue of indemnity costs. 16Whilst I am not persuaded that the plaintiff's claim was so hopeless that it could be described as doomed to failure, it was a very weak case and comes perilously close to that characterisation and I take that into account as well. 17For the reasons I have articulated, in my view, this is a case in which the plaintiff should pay the defendants' costs on an indemnity basis.