Gunns Ltd v Marr (No 3) [2006] VSC 386 (20 October 2006)

Last Updated: 20 October 2006

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 9575 of 2004

GUNNS LIMITED & ORS (ACCORDING TO SCHEDULE ATTACHED)	Plaintiff
V
ALEXANDER MARR & ORS (ACCORDING TO SCHEDULE ATTACHED)	Defendant

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JUDGE:	BONGIORNO J
WHERE HELD:	Melbourne
DATE OF HEARING:	9 October 2006
DATE OF JUDGMENT:	20 October 2006
CASE MAY BE CITED AS:	Gunns v Marr (No. 3)
MEDIUM NEUTRAL CITATION:	[2006] VSC 386

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Costs – indemnity costs – strike out of third version of statement of claim – no misconduct demonstrated – no unreasonable behaviour of plaintiffs warranting order other than on general basis – RSC 63.29, 63.31.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr P. Santamaria SC with Mr I. Waller	Clayton Utz
For the First, Third, Fourth and Fifth Defendants	Mr P Bornstein	Phillips Fox
For the Second and Sixth Defendants	Mr D. Beach SC, with Mr S. O’Meara	Maurice Blackburn Cashman
For the Seventh, Eighth, Ninth, Fourteenth, Fifteenth, Sixteenth and Seventeenth Defendants	Mr M. Gronow and Mr C. Thomson	Herbert Geer and Rundle
For the Tenth and Eleventh Defendants	Mr L. Maher	Fitzgerald & Browne, Hobart
For the Twelfth Defendant	Mr T. Mitchell	Fitzgerald & Browne, Hobart
For the Thirteenth and Eighteenth Defendants	Mr K. Farouque	Maurice Blackburn Cashman
For the Nineteenth Defendant	Ms J. Benson	Norton White
For the Twentieth Defendant	Mr N. Russell	Coadys

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HIS HONOUR:

1 On 18 July 2005, the Court determined a pleading application adversely to the plaintiffs. It ordered that the defendants’ costs of that application be paid by the plaintiffs; such costs to be taxed on a party and party basis.^[1] Pursuant to leave reserved to the plaintiffs in the judgment of 18 July 2005 they filed a further version of their statement of claim, designated V3, which version itself was struck out by the Court on 28 August 2006.^[2] The defendants have now sought their costs on an indemnity basis or, at least on a solicitor and client basis. The plaintiffs have not resisted the defendants’ application for costs but maintain that those costs should be taxed only on a party and party basis.

2 The discretion to order costs is now conferred by s 24 of the Supreme Court Act 1986. It is in the widest terms both as to the party or parties against whom a costs order may be made and as to the extent of that costs order. RSC r 63.28 provides three nominated bases for the taxation of costs and permits the Court itself to specify any other basis for taxation in the exercise of its discretion.

3 The reasons for which V3 was struck out may be summarised as being because of its prolixity, its complexity, the conclusionary nature of many of its allegations leading to ambiguity and uncertainty and the fact that it was embarrassing in the legal sense of that word. It was an improvement on V2. It was not per se an abuse of the court’s process and, as Mr Santamaria SC who appeared for the plaintiffs on the costs application pointed out, those defendants who sought to have the proceeding summarily terminated were unsuccessful.

4 Many cases were referred to by counsel for various defendants in their argument as being illustrative of the way various judges have exercised the discretion to award costs on other than the general basis which, by RSC r 63.31 is party and party. A party entitled to party and party costs is entitled to all costs necessarily proper for the attainment of justice or for enforcing or defending the rights in contention in the relevant litigation.^[3]

5 A recent judgment of the Court of Appeal dealing with the question of indemnity costs is P C R Z Investments Pty Ltd v National Golf Holdings Limited^[4]. In that case Chernov JA referred to the need for the party seeking an order for costs other than on the general basis to establish something special or unusual to justify such an order. He considered that the general rule should only be departed from where the losing party had misconducted itself in relation to the proceeding or where the institution of the proceeding was plainly unreasonable or where the proceeding was issued for an ulterior or collateral purpose.

6 In the context of this case, applying Chernov JA’s criteria, it would be necessary for the defendants to demonstrate that there had been some misconduct in relation to the filing and serving of V3 or in seeking to maintain it as an appropriate statement of claim. Although references were made in the argument on the strike out application to the plaintiffs having instituted this proceeding, not for the purpose of vindicating rights, but rather for the purpose of silencing the defendants, no evidence to that effect was ever produced. Any question of ulterior motive or collateral purpose can, thus, be put to one side. Was there misconduct or unreasonable behaviour on the part of the plaintiffs which would justify a higher award of costs than party and party?

7 In essence the defendants’ criticism of V3 which, they collectively submitted, should lead to an award of indemnity costs was that V3 did not heed the warnings given by the Court when it struck out V2 that radical alteration to the statement of claim had to be undertaken if the proceeding was to survive. Mr Beach SC, who appeared for the second and sixth defendants, recited a number of matters from the Court’s first judgment which, he submitted, were not taken up by the plaintiffs in formulating V3. Other counsel for other defendants made similar points. In the final analysis it is, of course, a matter of degree but, applying Chernov JA’s criteria, it would only be if the court was affirmatively satisfied that the plaintiffs’ failure to heed the warnings given in V2 amounted to misconduct in the conduct of the litigation or that by proffering V3 they were acting plainly unreasonably that a departure from the ordinary basis of taxation of costs would be justified. Even if the concept of misconduct was to be applied technically rather than as connoting any moral turpitude it is difficult to see how it could be applied to the plaintiffs in this case.

8 Taking into account the changes which the plaintiffs did make to the formulation of their claim in V3 and notwithstanding the warning which the Court gave as to the danger of an order for indemnity costs should the plaintiffs not appropriately mend their hand I am not satisfied that the circumstances exist here for an award of costs on other than the general basis. Accordingly, the order for costs will be that the plaintiffs pay each of the defendants costs of and incidental to the application to strike out V3, such costs to include the costs of this application for costs.

---SCHEDULE OF PARTIES

	No. 9575 of 2004
BETWEEN:
GUNNS LIMITED	Firstnamed Plaintiff
ROBIN SIMONS	Secondnamed Plaintiff
HEATHER SIMONS	Thirdnamed Plaintiff
- and -
ALEXANDER MARR	Firstnamed Defendant
GEOFFREY LAW	Secondnamed Defendant
RUSSELL HANSON	Thirdnamed Defendant
LEANNE MINSHULL	Fourthnamed Defendant
HEIDI DOUGLAS	Fifthnamed Defendant
THE WILDERNESS SOCIETY INC.	Sixthnamed Defendant
ADAM BURLING	Seventhnamed Defendant
LOUISE MORRIS	Eighthnamed Defendant
SIMON BROWN	Ninthnamed Defendant
ROBERT BROWN	Tenthnamed Defendant
MARGARET PUTT	Eleventhnamed Defendant
HELEN GEE	Twelfthnamed Defendant
BEN MORROW	Thirteenthnamed Defendant
LOU GERAGHTY	Fourteenthnamed Defendant
NEIL FUNNELL	Fifteenthnamed Defendant
BRIAN DIMMICK	Sixteenthnamed Defendant
HUON VALLEY ENVIRONMENT CENTRE INC.	Seventeenthnamed Defendant
PETER PULLINGER	Eighteenthnamed Defendant
FRANK NICKLASON	Nineteenthnamed Defendant
DOCTORS FOR NATIVE FORESTS INC.	Twentiethnamed Defendant

^[1] [2005] VSC 251.

^[2] [2006] VSC 329.

^[3] RSC r 63.29.

^[4] [2002] VSCA 24.