Benseman v Noosa Cat Australia Pty Ltd [2001] QDC 77

DISTRICT COURT OF QUEENSLAND CITATION: Benseman v. Noosa Cat Australia Pty Ltd [2001] QDC 077 PARTIES: JOHN BENSEMAN (Plaintiff) and NOOSA CAT AUSTRALIA PTY LTD (Defendant) FILE NO/S: Plaint No. 258 of 1998 DIVISION: Civil PROCEEDING: Trial ORIGINATING COURT: Maroochydore District Court DELIVERED ON: 17 May 2001 DELIVERED AT: Maroochydore HEARING DATE: 2 May 2001 JUDGE: K S Dodds DCJ ORDER: (1) I order that the defendant and Wayne Leslie Hennig pay the plaintiff’s costs of and incidental to the proceeding, to be assessed on the indemnity basis. (2) I order the sum of $25,000 together with accretions, if any, paid into court by the plaintiff as security for costs be paid out to the plaintiff and the security be discharged. CATCHWORDS: COSTS – indemnity costs – scale – conduct of parties - whether to be ordered on an indemnity basis – whether costs should be ordered against the director of the defendant company – whether the director was the “mind” of the defendant company – whether costs should be awarded for two counsel. Cases cited Re Talk Finance & Insurance Services Pty Ltd [1994] 1 Qd R 558 Naomi Marble and Granite Pty Ltd v FAI General Insurance Company Ltd [1999] 1 Qd R 518 Paterson-Wells v FAI General Insurance Company Ltd [1995] 1 Qd R 282 Knight v F P Special Assets Ltd (1992) 174 CLR 178 -- 1 of 5 -- 2 COUNSEL: S S W Couper QC and P Cronberg for the plaintiff G D Garrick for the defendant SOLICITORS: Tavoularis & Company for the plaintiff Rigby Lawyers for the defendant [1] On 2 May 2001, I ordered that the judgment of the District Court Maroochydore given on 6 March 1997 and perfected on 11 April 1997 in plaint number 186 of 1995 Maroochydore Registry between John Benseman plaintiff and Noosa Cat Australia Pty Ltd defendant, be set aside. The judgment had been obtained by fraud. I also assessed damages and interest. [2] Senior counsel for the plaintiff has sought an order for costs on the indemnity basis, both against the defendant and against Wayne Lesley Hennig (Hennig). Hennig was a Director, and the directing mind of the defendant. He has also asked that I certify the case as one in which it was reasonable and necessary for two counsel to be engaged and that I order the sum of $25,000 paid into court by the plaintiff as security for costs be paid with accretions, if any, to the solicitors for the plaintiff. COSTS ON THE INDEMNITY BASIS [3] The costs of a proceeding are in the discretion of a court, but follow the event unless the court considers another order is more appropriate: r 689 UCPR. Unless under the rules or an order of a court otherwise provides, the Registrar must assess costs on the standard basis: r 703 UCPR. The court may order costs to be assessed on the indemnity basis: r 704 UCPR. [4] Apart from cases especially provided for in the rules, costs will only be ordered to be assessed on the indemnity basis in special circumstances which justify it. Re Talk Finance & Insurance Services Pty Ltd [1994] 1 Qd R 558 in an example of special circumstances where persons against whom the orders were sought had knowingly given false evidence: see also Naomi Marble and Granite Pty Ltd v FAI General Insurance Company Ltd [1999] 1 Qd R 518. [5] In Naomi Marble Shepherdson J included in circumstances justifying costs on the indemnity basis; • when the courts’processes had been used for ulterior purposes (at 521); • where some unusual or special feature in the case justifies the court so awarding costs (at 521). • where the justice of the case requires it (at 522); His Honour had found that the plaintiff had made fraudulent claims and attempted to deceive the court. He ordered costs on the indemnity basis against the plaintiff. -- 2 of 5 -- 3 [6] In this case the defendant company, through its directing mind Hennig, maintained a claim for monies said to be owing for work performed and materials supplied for the plaintiff’s boat. The claim was clearly false. I rejected Hennig’s claim that he believed the claim to be true. The claim was fraudulent. [7] The plaintiff has as a consequence of the defendant’s claims borne the expense of two sets of proceedings in this court. He was kept out of possession of his boat between about mid 1991 and July 1997. By December 1993 Hennig had formulated the defendant’s claim against the plaintiff. Despite an inspection of the boat in January 1999 when the work done, or not done, on the boat was exposed for all to see, the defendant persisted in denying it had not carried out the work Hennig had claimed it had carried out but which it had not. It was only at the start of the trial before me that it was admitted that the bulk of that work had not been done. [8] The circumstances I have briefly touched upon lead me to conclude that costs of the proceeding before me should be assessed on the indemnity basis. COSTS AGAINST HENNIG PERSONALLY [9] In Knight v F P Special Assets Ltd (1992) 174 CLR 178 the High Court held, by majority, that the jurisdiction conferred by O 91, r 1 of the rules of the Supreme Court Queensland (now replaced by the UCPR) was not confined to the parties to the proceedings. In that case costs orders had been made against the receivers of companies, which were unsuccessful parties to proceedings. The court recognised a general category of cases in which an order for costs may be made against a non party consisting of circumstances where the party to the litigation is an insolvent person, or man of straw, where the party has played an active part in the conduct of the litigation and where the non-party or some person on whose behalf he or she is acting or by whom he or she has been appointed has an interest in the subject matter of the litigation. [10] In Naomi Marble Shepherdson J discussed at some length, the jurisdiction to order costs against a non-party and to be assessed on the indemnity basis (see at 542 – 545). He considered the jurisdiction may be exercised in a case where the interests of justice require it, bearing in mind always that the case must be an exceptional one to justify departure from the prima facie general principle that costs orders are only made against a party to the litigation. At page 545, His Honour listed categories of case which may justify an order of this type. They are not necessarily confined only to cases where the unsuccessful party is insolvent. They include: • where the unsuccessful party is a company and the director or the directors control it; • where the non-party is the effective litigant standing behind the actual party; • where the non-party is funding or otherwise financially assisting the unsuccessful party to the litigation and stands to benefit if that party has been successful; • where a non-party has supported the unsuccessful party and has done so acting in bad faith towards the other parties and towards the court, such as by giving -- 3 of 5 -- 4 false testimony or forging documents or preventing relevant document being discovered. [11] The present case falls generally within the categories which I have listed above. Hennig was at all times the directing mind of the defendant, a private company. It was his company. He was the one who was responsible for all its activity relevant to its resisting the plaintiff’s claim to recover his boat, its counter-claim, and its defence to the plaintiffs claim tried before me. [12] I propose to order both the defendant and Hennig pay the plaintiff’s costs. PAYMENT OF MONEY OUT OF COURT [13] By consent order made on the 21 June 2000 the plaintiff paid $25,000 into court as security for the defendant’s costs of the action. [14] The order was sought by the defendant because the plaintiff resided outside of the jurisdiction, according to the defendant, had misstated his address in the originating process, his claim was unmeritorious and he failed to disclose all encumbrances over property he owned in the jurisdiction. The consent order included an order the defendant contemporaneously sign and return to the respondent’s solicitors, by 4pm the next day, a signed request for trial date. [15] There was no reason advanced which would justify not discharging the security for costs and ordering payment out of the money in court to the plaintiff. Judgment has been given for the plaintiff in the action in which the security was ordered: see r 676 UCPR. REQUEST FOR CERTIFICATION FOR TWO COUNCIL [16] In the Uniform Civil Procedure Rules Schedule 2, scale of costs for the District Court from the 1st of May 2000, Part 2 thereof specifically includes fees to counsel in cases where in the case of the plaintiff’s costs assessed on the standard basis, the amount recovered is not more than $50,000: see items 73 to 87. After item 87 it is provided that “Fees to counsel in any other proceeding within the jurisdiction of the court are to be as the Registrar considers proper in all of the circumstances”. Other than that, there is no reference to counsels’ fees. Here the amount recovered exceeds $50,000. In that case counsel’s fee or counsels’ fees are not covered by the scale and are a matter for the Registrar. It appears to have been thought that in cases where the amount recovered (or claimed in the case of the defendant’s costs on the standard basis) was less than $50,000, counsels’ fees should be nominated with a discretion in the assessing Registrar to allow a higher or lower amount as considered reasonable, whereas in all other matters they were to be entirely in the assessing Registrar’s discretion. [17] Part 1 of the Schedule provides, in paragraph 4, that the court or a judge may direct that costs to be allowed for counsel are to be inter alia “more than the costs under Part 2 either generally or in relation to a particular item if the costs are not sufficient -- 4 of 5 -- 5 because of the work involved or the importance, difficulty or complexity of the proceeding.” [18] In Paterson-Wells v FAI General Insurance Company Ltd [1995] 1 Qd R 282, the Court of Appeal questioned whether, in view of the provisions of Schedule I have referred to, a trial judge had the power to certify for two counsel in a case where the amount claimed and recovered exceeded $50,000. [19] I do not consider it appropriate to give any such certification as requested. It is a matter for the Registrar on an assessment. The only comment it is appropriate to make at this stage is that the cause of action was an unusual one. Such a cause of action is not common, nor is it easily successfully prosecuted. Whether that justified two counsel as opposed to senior counsel alone, is a matter for assessment by the Registrar. The extent of the work required would be a relevant factor [20] I order that the defendant and Wayne Leslie Hennig pay the plaintiff’s costs of and incidental to the proceeding, to be assessed on the indemnity basis. I order the sum of $25,000 together with accretions, if any, paid into court by the plaintiff as security for costs be paid out to the plaintiff and the security be discharged. -- 5 of 5 --