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Federal Court of Australia |
Last Updated: 25 January 2008
FEDERAL COURT OF AUSTRALIA
Shrimp v Landmark Operations Limited (No 2) [2008] FCA 25
PROCEDURE – COSTS – where
applicant’s application for separate trials refused – where ground
on which application refused not raised
until six months after hearing of
application – where application would otherwise have succeeded –
whether applicant
ought to have its costs of application for separate trials
– whether costs thrown away
Held: applicant to have its
costs of application for separate trials – costs thrown
away
PROCEDURE – COSTS – where cross-respondents
sought leave to defend main action – where third cross-respondent
successful in application
for leave to defend – where one hearing
conducted on basis of unarguable defence later abandoned – where other
cross-respondent
unsuccessful in application for leave to defend – where
other cross-respondent withdrew application for leave to defend –
appropriate order as to costs
Held: no order as to costs of
hearing conducted on basis of unarguable defence later abandoned – costs
otherwise reserved
Federal Court of
Australia Act 1976 (Cth) s 43
Federal Court Rules O 5, r 12
Land and Environment Court Act 1979 (NSW) s 69(2)
Colgate-Palmolive Co v Cussons Pty Ltd
(1993) 46 FCR 225 referred to
Foots v Southern Cross Mine Management Pty
Ltd [2007] HCA 56 referred to
NMFM Property Pty Ltd v Citibank Ltd (No
11) [2001] FCA 480; (2001) 109 FCR 77 referred to
Oshlack v Richmond River Council [1998] HCA 11;
(1998) 193 CLR 72 referred to
Shrimp v Landmark Operations Limited
[2007] FCA 1468 referred to
ROBIN JAMES SHRIMP AND JUDITH
ANN SHRIMP v LANDMARK OPERATIONS LIMITED ACN 008 743 217, MICHAEL ERNEST GARGAN,
SIMON & KATE GARGAN,
SELECTED SEEDS PTY LTD, AUSTRALIAN PREMIUM SEEDS PTY
LTD, SEED TESTING LABORATORY OF AUSTRALIA PTY LTD, STATE OF QUEENSLAND AND TOP
END RURAL SUPPLIES PTY LTD
SAD 55 OF 2006
BESANKO
J
24 JANUARY 2008
ADELAIDE
THE COURT ORDERS THAT:
1. On
the applicants’ notice of motion dated 24 November 2006:
1. Landmark Operations Limited, Mr Michael Gargan, Selected Seeds Pty Ltd and Top End Rural Supplies Pty Ltd be jointly and severally liable to pay the applicants’ costs of and incidental to the notice of motion to be taxed in default of agreement.2. Each of the parties liable under the above order be at liberty to apply for orders as to the appropriate contribution to the said costs as between them.
2. On Selected Seeds Pty Ltd’s notice of motion dated 29 March 2007 the costs of the notice of motion be reserved save and except that there be no order as to the costs of the hearing on 13 July 2007.
3. On Top End Rural Supplies Pty Ltd’s notice of motion dated 3 April 2007 the costs of the notice of motion be reserved save and except that there be no order as to the costs of the hearing on 13 July 2007.
4. On Mr Michael Ernest Gargan’s notice of motion dated 23 May 2007 the costs of the notice of motion be reserved save and except that there be no order as to the costs of the hearing on 13 July 2007.
Note: Settlement and entry of
orders is dealt with in Order 36 of the Federal Court Rules.
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BETWEEN:
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ROBIN JAMES SHRIMP AND JUDITH ANN SHRIMP
Applicants |
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AND:
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LANDMARK OPERATIONS LIMITED ACN 008 743 217
Respondent/First Cross-Claimant MICHAEL ERNEST GARGAN First Cross-Respondent/Second Cross-Claimant SIMON & KATE GARGAN Second Cross-Respondents SELECTED SEEDS PTY LTD Third Cross-Respondent/Third Cross-Claimant AUSTRALIAN PREMIUM SEEDS PTY LTD Fourth Cross-Respondent SEED TESTING LABORATORY OF AUSTRALIA PTY LTD Fifth Cross-Respondent STATE OF QUEENSLAND Sixth Cross-Respondent TOP END RURAL SUPPLIES PTY LTD Seventh Cross-Respondent |
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JUDGE:
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BESANKO J
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DATE:
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24 JANUARY 2008
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PLACE:
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ADELAIDE
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REASONS FOR JUDGMENT
1 These reasons deal with the question of the costs of various notices of motion issued in this proceeding.
2 On 10 August 2007 I made the following orders on a notice of motion issued by the applicants on 24 November 2006:
1. The applicants’ notice of motion dated 24 November 2006 be dismissed.
2. The question of costs on that notice of motion be reserved.
3. The matter be listed for directions at 9.00 am on Friday 31 August 2007.
3 On the same day, I made the following orders on
notices of motion issued by Selected Seeds Pty Ltd ("Selected Seeds"), Top End
Rural Supplies Pty Ltd ("Top End Rural Supplies") and Mr Michael Gargan,
respectively:
1. Selected Seeds Pty Ltd’s notice of motion dated 29
March 2007:
1. The third cross-claimant/third cross-respondent, Selected Seeds, be given leave to defend the claim brought by the applicants on the originating process in terms of the draft defence stated 24 July 2007 but subject to all rights the applicants may have under the Federal Court Rules in relation to the sufficiency of the defence;
2. The question of costs on the notice of motion be reserved;
3. The defence of Selected Seeds be filed and served within 7 days of the date hereof.
2. Top End Rural Supplies Pty Ltd’s notice of motion dated 3 April 2007:
1. The seventh cross-respondent be given leave to appear at the trial of the claim on the originating process.
2. The question of costs on the notice of motion be reserved.
3. Mr Michael Gargan’s notice of motion dated 23 May 2007:
1. The first cross-respondent/second cross-claimant have leave to appear at the trial of the claim on the originating process.2. The question of costs on the notice of motion be reserved.
4 I published reasons for making those orders: Shrimp v Landmark Operations Limited [2007] FCA 1468 and those reasons should be read with these reasons.
5 The relevant parties have now made submissions on the questions of costs
reserved in the above orders. Having considered the submissions,
I will make the
following orders as to costs:
1. On the applicants’ notice of motion
dated 24 November 2007:
1. Landmark Operations Limited, Mr Michael Gargan, Selected Seeds Pty Ltd and Top End Rural Supplies Pty Ltd be jointly and severally liable to pay the applicants’ costs of and incidental to the notice of motion to be taxed in default of agreement.2. Each of the parties liable under the above order be at liberty to apply for orders as to the appropriate contribution to the said costs as between them.
2. On Selected Seeds Pty Ltd’s notice of motion dated 29 March 2007 the costs of the notice of motion be reserved save and except that there be no order as to the costs of the hearing on 13 July 2007.
Similar orders to those to be made on Selected Seeds’ notice of motion dated 29 March 2007 will be made on the notices of motion of Top End Rural Supplies and Mr Michael Gargan, respectively.
6 My reasons for making these orders follow.
The application for separate trials
7 The applicants seek their costs of the application for separate trials against Landmark, Mr Michael Gargan, Selected Seeds and Top End Rural Supplies. Landmark opposes such an order and submits that there should be no orders as to the costs of the application. Mr Michael Gargan, Selected Seeds and Top End Rural Supplies also oppose such an order but, unlike Landmark, each submit that, in fact, the applicant should pay his or its costs of the application.
8 In the course of submissions, the applicants suggested that they should be awarded costs on a solicitor and client basis, but there are no circumstances in this case which warrant such an order (Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; NMFM Property Pty Ltd v Citibank Ltd (No 11) [2001] FCA 480; (2001) 109 FCR 77.
9 The application was unsuccessful. The usual order as to costs in those circumstances is that the costs of the successful party to an application are paid by the unsuccessful party: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 ("Oshlack") at 96-97 [66]-[68] per McHugh J. There are exceptions to the usual order or circumstances in which it is not made. The difference between the majority and minority in Oshlack was as to the width of the exceptions to the usual order or circumstances in which it is not made. McHugh J (with whom Brennan CJ was in general agreement) was in the minority and he said (at 97-98 [69]-[70]) (footnotes omitted):
The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd, Devlin J formulated the relevant principle as follows:
"No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct."
‘Misconduct’ in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute.
Apart from anomalous examples in the equity jurisdiction, there are very few, if any, exceptions to the usual order as to costs outside the area of disentitling conduct.
10 The majority (Gaudron, Gummow and Kirby JJ) took a broader view of the exceptions to the usual order or circumstances in which it is not made. Gaudron and Gummow JJ said (at 88 [40]):
There is no absolute rule with respect to the exercise of the power conferred by a provision such as s 69 of the Court Act that, in the absence of disentitling conduct, a successful party is to be compensated by the unsuccessful party. Nor is there any rule that there is no jurisdiction to order a successful party to bear the costs of the unsuccessful party.
(See also at 120-123 [134] per Kirby J and Foots v Southern Cross Mine Management Pty Ltd [2007] HCA 56 at [26] per Gleeson CJ, Gummow, Hayne and Crennan JJ.)
11 The observations of the High Court were made in the context of s 69(2) of the Land and Environment Court Act 1979 (NSW), but I think it is clear enough that those observations apply equally to the empowering provision in this case, namely, s 43 of the Federal Court of Australia Act 1976 (Cth).
12 The cross-respondents – Mr Michael Gargan, Selected Seeds and Top End Rural Supplies – submit that the usual order should be made in this case. In the course of their submissions they also submitted that the application for separate trials was premature.
13 The applicants submit that costs should be awarded in their favour because the application would have succeeded had Selected Seeds (in its application for leave to defend) not put forward an arguable plea of proportionate liability on 25 July 2007. There is an analogy here with costs thrown away. The applicants submit that their costs associated with the application are in effect wasted costs because had Selected Seeds raised the arguable plea of proportionate liability earlier, they would not have been incurred (see the discussion of costs thrown away in G E Dal Pont, Law of Costs (2003) [p 23] [14.36]).
14 The relevant events in chronological order are as follows.
15 The applicants commenced this proceeding on 3 April 2006, and issued their application for an order for separate trials on 24 November 2006. As at the latter date, Landmark had filed a defence and issued a cross-claim against Mr Michael Gargan. On 15 September 2006, Mr Michael Gargan issued cross-claims against Simon and Kate Gargan, Selected Seeds, Australian Premium Seeds Pty Ltd, Seed Testing Laboratory of Australia Pty Ltd, and the State of Queensland. On 16 November 2006, Selected Seeds issued cross-claims against Simon and Kate Gargan and Seed Testing Laboratory of Australia Pty Ltd and a new party to the proceeding, Top End Rural Supplies Pty Ltd.
16 It is reasonable to infer that the applicants issued their application after the cross-claims were issued, and after it had become apparent that the whole proceeding would not be ready for trial for some time and, in the applicants’ view, would involve a number of issues which were not issues in their claim against Landmark.
17 It is significant that the application issued by the applicants did not then come on for hearing until almost two months later. The oral submissions on the application were heard over two days on 18 and 19 January 2007. Between 24 November 2006 and 18 January 2007, defences to various cross-claims were filed and further cross-claims were issued in February and March 2007.
18 Landmark, Mr Michael Gargan, Selected Seeds and Top End Rural Supplies each opposed the application for separate trials. Landmark did so on grounds often pressed in opposition to an application for separate trials. I refer to [68] of my previous reasons. Selected Seeds, although submitting that the application was premature, submitted that there was sufficient before the Court for it to decide that the application should be dismissed. It raised an additional submission to the submissions put by Landmark. That additional submission involved the proportionate liability provisions set out in my previous reasons (at [52]-[57], [63]-[65]). In those reasons, I refer to the contentions advanced by Selected Seeds (at [53], [58], [59] and [62]). For convenience, I will use the shorthand reference to those contentions adopted in argument, namely, the "causation model" and the "liability model". Selected Seeds submitted that the causation model was at least arguable and that for that reason (together with other matters which were similar to those matters advanced by Landmark) an order for a separate trial should not be made. The submission that the causation model was arguable was a prominent submission on the hearing of the applicants’ application in terms of the time it occupied. For reasons set out in my previous reasons, the causation model is not an arguable construction of the proportionate liability provisions (at [50]-[67]). As I said in my previous reasons, the liability model was advanced very much as a subsidiary argument and at that time there was, to say the least, little to indicate that any of the cross-respondents were directly liable to the applicants (at [50], [68]).
19 Mr Michael Gargan and Top End Rural Supplies put submissions similar to those put by Selected Seeds. They submitted that, in fact, they had no choice but to make submissions in opposition to the application for separate trials after the applicants applied for an additional order during the submissions on 18 and 19 January 2007. The additional order sought by the applicants was as follows:
The cross-claimants and respondents to those cross-claims be bound as between themselves by the judgment, and findings of law and material fact in the applicants’ claim.
20 Before I delivered a ruling on the application, Selected Seeds, Mr Michael Gargan and Top End Rural Supplies each sought leave to defend the applicants’ claim against Landmark and each filed a draft defence in respect of which they sought leave. It should be noted that at no time did the applicants oppose any of the cross-respondents being given leave to appear at the hearing of the applicants’ claim against Landmark.
21 Each application came on for argument on 13 July 2007.
22 The course of events on the respective applications for leave to defend was described in my previous reasons in the following terms (at [73]-[76]):
73. The proposed defence put forward by Selected Seeds at the time of the argument on 13 July 2007 raised a number of factual issues apparently not raised by Landmark and those issues are identified in [75] below. In addition to the proposed defence it raised two allegations under the proportionate liability provisions of the TPA and the PLA. First, it pleaded that Australian Premium Seeds and Seed Testing Laboratory were each liable to the applicants and were concurrent wrongdoers within the relevant provisions. However, no particulars were provided such that it could be concluded that either of them was even arguably liable to the applicants. Secondly, it pleaded that Mr Michael Gargan, Simon and Kate Gargan, Australian Premium Seeds, Seed Testing Laboratory, State of Queensland, and Top End Rural Supplies were concurrent wrongdoers within the construction of the relevant provisions previously advanced by Selected Seeds and which I have rejected as not being arguable.
74. After submissions on 13 July 2007, Selected Seeds put forward a different proposed defence. This proposed defence raised proportionate liability as part of a plea only that the cross-respondents were directly liable to the applicants and it contained particulars in support of that allegation. I granted leave to defend in terms of that document. Mr Michael Gargan maintained his application as originally made which I refused as far as leave to defend was concerned. I made that decision for two reasons. First, for the reasons I have given, the broader construction of the proportionate liability provisions is not arguable and, secondly, Mr Michael Gargan’s proposed defence raises nothing more than what is contained in Selected Seeds’ proposed defence and I do not consider it appropriate to grant leave to defend to more than one cross-respondent. Selected Seeds’ application should be granted in preference to that of Mr Michael Gargan because its application was the first in time and, more importantly, its proposed defence does not contain a plea as to the proportionate liability provisions which I have concluded is not arguable. On hearing that Selected Seeds had been given leave to defend, Top End Rural Supplies withdrew its application for leave to defend and was content with an order that it have leave to appear at the hearing of the applicants’ claim against Landmark.
75. The proposed defence of Selected Seeds raises the following matters:
1. The seed delivered to the applicants by Landmark was in fact jarra grass seed.2. It is of no consequence that the seed was not "pure seed or certified as such".
3. The applicants adopted inappropriate farming practices and this caused the failure to achieve a commercially viable crop of jarra seed and hay in the first and subsequent germinations.
4. Contributory negligence by the applicants.
5. A failure to mitigate by the applicants and issues as to the loss and damage claimed by the applicants.6. The effect of the proportionate liability provisions on Landmark’s liability to the applicants on the basis Michael Gargan, State of Queensland, Simon Gargan and Kate Gargan, Selected Seeds, Seed Testing Laboratory and Top End Rural Supplies and each of them is liable to the applicants.
76. Some of these matters are not raised in Landmark’s defence and in other cases it is unclear whether they are raised in a way which will enable Landmark to bring forward a positive case at trial.
23 It was only on 25 July 2007 that Selected Seeds abandoned the proposed plea of proportionate liability based on the causation model, and put forward a properly particularised plea of proportionate liability based on the liability model. It was the latter plea which led to the dismissal of the application for separate trials (see my previous reasons at [69]). As soon as the arguable plea of proportionate liability was put forward, the applicants effectively acknowledged that their application could not succeed. On 10 August 2007, counsel for the applicants said that the applicants recognised "that that has devastating consequences for our application".
24 The application was not premature. A number of cross-claims had been issued and there was sufficient for the applicants to mount an argument that there should be an order for separate trials. While Selected Seeds and the other relevant cross-respondents submitted at the time that the application was premature, they submitted that the application could be dealt with on the material before the Court. They advanced an unarguable construction of the proportionate liability provisions, that is, the causation model.
25 The application would have succeeded but for the arguable plea of the proportionate liability provisions (that is, the liability model) which was not advanced until Selected Seeds put forward its proposed defence on 25 July 2007. I suggested in my previous reasons that the applicants’ case for the principal order was a strong one (at [22], [68]). It seems to me that for the reasons set out in those paragraphs, this was an appropriate case for a separate trial. It would probably have been necessary for me to make other orders as well including, perhaps, the additional order sought by the applicants.
26 The Federal Court Rules do not require that an application for leave to defend be made by a particular time. Such an application can be made on any directions hearing or on the trial or hearing of the cross-claim (O 5, r 12). However, that is not decisive here where the issue is which party is liable for the costs of a particular application in all the circumstances of the case. I am not satisfied that the step which defeated the application, that is, a properly particularised and arguable plea of proportionate liability put forward on 25 July 2007 could not have been put forward earlier in a way which would have avoided the costs, or the bulk of the costs of the application. As I said earlier, another way of viewing the matter is that the applicants' costs of the application are costs thrown away on the application for leave to defend in terms of the proposed defence put forward by Selected Seeds on 25 July 2007.
27 In the circumstances set out above, it seems to me that the proper order is that Landmark, Mr Michael Gargan, Selected Seeds and Top End Rural Supplies should pay the applicants’ costs of the application for an order for separate trials. The liability is joint and several, but it is not necessarily the case that as between the parties who are liable each should make an equal contribution to that liability. I will give the parties who are liable liberty to apply for orders as to the contribution to be made as between them.
The applications for leave to defend
28 It seems to me that a broad approach to the question of costs on the respective applications for leave to defend is appropriate. I think the costs of the hearing on 13 July should be dealt with in a way different from the other costs associated with the respective applications. Selected Seeds was successful in obtaining leave to defend in relation to a draft defence dated 24 July 2007. That was not the defence which was the subject of submissions on 13 July 2007. The draft defence which was the subject of submissions contained an unarguable plea of proportionate liability based on the causation model, and a plainly inadequately particularised plea of proportionate liability based on the liability model. The fact that a draft defence of that nature was put forward is a reason not to award costs to Selected Seeds. On the other hand, I think it is correct to say that although the applicants’ approach on 13 July 2007 to the applications for leave to defend was measured and not one of outright opposition, they did not concede the application and Selected Seeds has been successful in its application to defend the applicants’ claim on a number of grounds including those I identified in [75] of my earlier reasons (see [22] above). Having regard to these circumstances, the appropriate order in relation to the hearing on 13 July 2007 is that there be no order as to costs.
29 The other costs of Selected Seeds’ application for leave to defend should be reserved. That seems to me to be the appropriate course because the fate at trial of the defences raised by Selected Seeds in its defence may be relevant to the question of the appropriate order as to costs of the application for leave to defend.
30 Having regard to the way in which the applications proceeded and were
argued, I think the same orders should be made on the notices
of motion issued
by Mr Michael Gargan and Top End Rural Supplies, respectively.
Associate:
Dated: 24
January 2008
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Mr S Doyle with Mr M Jackson (18, 19 January, 13 July)
Mr S Doyle (10 August) |
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Solicitor for the Applicant:
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Lipman Karas (18, 19 January, 13 July, 10 August)
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Counsel for the Respondent/ 1st Cross-Claimant:
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Mr M Burnett (18, 19 January, 10 August)
Ms H Stavridis (13 July) |
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Solicitor for the Respondent/ 1st Cross-Claimant:
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DLA Phillips Fox (18, 19 January, 13 July)
Yeldham Lloyd Associates (10 August) |
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Counsel for the 1st Cross-Respondent/ 2nd
Cross-Claimant:
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Mr A Lazarevich (18 January, 13 July, 10 August)
The 1st Cross-Respondent did not appear 19 January |
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Solicitor for the 1st Cross- Respondent/ 2nd
Cross-Claimant:
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Moray & Agnew (18 January, 13 July, 10 August)
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Counsel for 3rd Cross-Respondent:
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Mr J Wells QC with Mr P Looney (18, 19 January)
Mr J Wells QC (13 July) Mr P Looney (10 August) |
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Solicitor for the 3rd Cross- Respondent:
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Carne Reidy Herd (18, 19 January, 13 July, 10 August)
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Counsel for the 7th Cross- Respondent:
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Mr M Birchall (18, 19 January, 13 July, 10 August)
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Solicitor for the 7th Cross- Respondent:
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Mr D Petch (18, 19 January, 13 July, 10 August)
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Dates of Hearing:
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18, 19 January, 13 July, 10 August 2007
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Date of Judgment:
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24 January 2008
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