Carberry v Drice[2011] QSC 19

SUPREME COURT OF QUEENSLAND

[1] MARGARET WILSON J: On 11 January 2011 I gave written reasons for concluding that the plaintiff’s statement of claim against the first, second, third and fifth respondents should be struck out and that he should have leave to replead some of his claims. Counsel have since made written submissions on the form of the orders and on costs.

Orders

[2] I have determined that the following orders should be made:

(a) that the statement of claim against the first, second, third and fifth respondents be struck out;

(b) that the applicant Christopher Michael Carberry have leave to file and serve an amended statement of claim, limited to his claims for declaratory and injunctive relief against the first, second and third respondents and for declaratory relief against the fifth respondent;

(c) that the applicant file and serve any amended statement of claim as aforesaid on or before 11 March 2011;

(d) that the applicant file and serve any application to regularise the capacity in which the first respondent has been joined on or before 21 February 2011;

(e) that the application filed by the applicant on 5 August 2010 be adjourned to a date to be fixed.

Costs

[3] The first, second, third and fifth respondents have asked for an order that the applicant and his solicitors pay their costs of the application to strike out the pleading on the indemnity basis. They have asked the Court to fix those costs in the sum of $16,500. Further, they have asked for an order making the payment of those costs a condition of leave to replead.

[4] The applicant has submitted that there should be an order making the first, second, third and fifth respondents’ costs their costs in any event.

Order that the applicant pay the first, second, third and fifth respondents’ costs

[5] The respondents have had incomplete, but substantial, success on their application. In the circumstances I consider that the applicant should be ordered to pay their costs, and I decline to make the payment of those costs a condition of the leave to replead.

Standard or indemnity costs?

[6] It is only where a case exhibits some special or unusual feature that the Court will order costs to be assessed on the indemnity basis rather than the standard basis.[1] In Colgate-Palmolive Company v Cussons Pty Limited[2] Sheppard J listed a number of instances where indemnity costs might be warranted: the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud; misconduct causing the Court and other parties to waste time; the commencement or continuance of proceedings for some ulterior motive or in wilful disregard of known facts or clearly established law; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; the imprudent refusal of an offer of compromise; and costs against a contemnor.

[7] In my view indemnity costs are not warranted in the present case. While there was no basis for the applicant’s claims for damages, he has been given leave to replead his claims for declaratory and injunctive relief. The respondents’ spirited argument that all of his claims were vested in his trustee in bankruptcy was unsuccessful in relation to the claims for declaratory and injunctive relief. I did not find their submission that because the applicant is a former solicitor he ought to have known his claims had no prospect of success helpful. The very fact of his being a struck-off solicitor casts doubt on his capacity to assess the relative merits of his claims; at any rate, I am not satisfied that some of his claims cannot succeed.

Fixing costs

[8] Nor do I consider that this is an appropriate case in which to fix the quantum of the costs. The estimate provided by the respondents’ solicitor appears to have been prepared on the assumption that the Court would order costs on the indemnity basis. So far as the solicitors’ fees are concerned, the estimate contains no more than a bald claim for fees of $5,000 plus GST for undertaking 13 steps in the preparation and presentation of the application: it does not contain any indication of whether that amount has been calculated by reference to hourly charge-out rates of one or more practitioners or in some other way. Ten thousand dollars plus GST has been claimed for counsel’s fees, being two days at $5,000 per day for undertaking seven steps in the preparation and presentation of the application and written submissions: whether those fees are reasonable is a matter which ought to be considered by a costs assessor.

[9] As a general rule, it is not necessary to replicate a costs statement in accordance with r 705 of Uniform Civil Procedure Rules 1999 (Qld) before the Court will exercise its discretionary power to fix costs. However, the Court needs to be satisfied that the amount in which it is asked to fix costs is a realistic estimate of the likely outcome of a formal assessment. In the present case, the level of detail provided is insufficient for me to be so satisfied.

Costs against the applicant’s solicitors

[10] The Court has power to order costs against a non-party, but it is a power which is exercised sparingly and only in exceptional circumstances.[3] Where the claim is made against a party’s solicitor, it is usually necessary to show some dereliction of duty to the Court[4] – for example, the presentation of an argument with no prospects of success and without the urging of the client.[5]

[11] On 19 July 2010, the solicitors for the first, second, third and fifth respondents wrote to the applicant’s solicitors in these terms –

"We have received your client’s statement of claim.  The various causes of action pleaded therein vest in your client’s trustee in bankruptcy. Your client has no standing to bring these proceedings.

The statement of claim is also embarrassing as including causes of action not known to law namely 'damages for inconvenience, vexation, distress, loss of reputation and disappointment'.  There is no cause of action pleaded giving rise to a claim for damages nor have such damages been particularized in accordance with UCPR.

If you [sic] client withdraws the proceedings by close of business on 20 July 2010 our clients will bear their own costs.  I [sic] you don’t withdraw the proceedings we will make an immediate application to have the proceedings struck out seeking costs on an indemnity basis against your firm for commencing and prosecuting proceedings on behalf of a party who has no standing."

[12] The respondents did not have the measure of success their solicitors asserted they would have. Nor has it been shown that the applicant’s solicitors pursued the application without the urging of their client. I am not satisfied that they were in dereliction of their duty to the Court, and I decline to make an order for costs against them.

Costs order

[13] There should be an order that the applicant Christopher Michael Carberry pay the first, second, third and fifth respondents’ costs of and incidental to the application filed by them on 27 July 2010 to be assessed on the standard basis.