Doppstadt Australia Pty Ltd & Anor v Lovick & Son Developments Pty Ltd & Anor [2021] HCATrans 1 (29 January 2021)

Last Updated: 2 February 2021

[2021] HCATrans 001

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S205 of 2014

B e t w e e n -

DOPPSTADT AUSTRALIA PTY LTD (ACN 091 501 236)

First Applicant

RAYMOND JOHN DAVIS

Second Applicant

and

LOVICK & SON DEVELOPMENTS PTY LTD

First Respondent

LOVICK ENGINEERING PTY LTD (ABN 67 054 835 068)

Second Respondent

BELL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 29 JANUARY 2021, AT 9.30 AM

Copyright in the High Court of Australia
HER HONOUR: On 18 November 2020, the respondents filed a summons seeking leave to file and serve a bill of costs to be taxed. For the reasons that I now publish leave is granted to the respondents to file and serve that bill of costs.

The order of the Court is:

Pursuant to rule 4.03.2 of the High Court Rules 2004 (Cth), the first and second respondents have leave to file and serve a bill of costs to be taxed as against the estate of the late Mr Raymond John Davis pursuant to the costs order made by Justices Bell and Gageler on 5 March 2015 in proceedings S205 of 2014.

I publish that order and the reasons. I direct that the reasons be incorporated into the transcript.

In 2006, Lovick & Son Developments Pty Ltd (“Developments”) and Lovick Engineering Pty Ltd (“Engineering”) (collectively, “the Lovick parties”) commenced proceedings in the Supreme Court of New South Wales (Slattery J) seeking, inter alia, damages against Doppstadt Australia Pty Ltd (“Doppstadt”) and Raymond John Davis (collectively, “the Doppstadt parties”) for allegedly engaging in misleading and deceptive conduct in the course of negotiations for the purchase of a high‑speed timber shredder.

The Lovick parties obtained judgment and a partial costs order in their favour^[1]. The Doppstadt parties appealed to the Court of Appeal of the Supreme Court of New South Wales (Ward, Emmett and Gleeson JJA) with limited success, which was largely offset by the Lovick parties’ cross‑appeal^[2]. No order was made for the costs of the appeal^[3]. The Doppstadt parties unsuccessfully applied for special leave to appeal. On 5 March 2015, the application was dismissed with costs^[4]. Those costs have not been taxed.

By summons filed on 18 November 2020, the Lovick parties apply for leave to file and serve a bill of costs to be taxed. The summons was served on Doppstadt (In liq)^[5], the estate of the late Mr Davis and Susanne Margaret Davis in her capacity as the legal representative of the estate of the late Mr Davis. The Lovick parties also seek an order that Mrs Davis be appointed to represent the estate of the late Mr Davis for the purposes of these proceedings^[6]. I directed that the application be determined without listing it for hearing and fixed a timetable for the provision of written submissions^[7].

The summons was filed some five years and eight months after the order was made. Rule 4.03.2 of the High Court Rules 2004 (Cth) (“the Rules”) provides:

“Where 3 years or more has elapsed since any party has taken any step in a proceeding, no step shall be taken in the proceeding without the leave of the Court or a Justice.”

The principles governing an application for leave brought under the predecessor of the present rule^[8] were considered in William Crosby & Co Pty Ltd v The Commonwealth^[9]. In their joint reasons, McTiernan, Kitto, Taylor and Owen JJ explained the purpose of the rule as follows^[10]:

“Its purpose is not to enable the Court to insist that an action shall proceed and to fix times within which further steps shall be taken. What it does is to forbid the further prosecution of proceedings in which no step has been taken ... unless leave is given to continue them, and it follows that it is for an applicant for leave to show that there is good reason for excepting the particular proceedings from the general prohibition which the rule imposes.”

The Lovick parties do not contest that filing a bill of costs to be taxed^[11] is a step in the proceeding for which leave is required^[12]. They accept that it is incumbent upon them to demonstrate the existence of “good reason” for the grant of the leave that is sought. Mrs Davis opposes the grant of leave and invites this Court to take account of the emotional toll on her should the Lovick parties be permitted to proceed to have their costs taxed after such lengthy delay.

The Lovick parties rely on the affidavits of Paul John Lovick, a director of Developments and Engineering, and their solicitor, Andrew Thomas Kelly. The Doppstadt parties and Mrs Davis rely on the affidavit of their solicitor, Michael Flaherty.

Mr Lovick states that in or about May 2015 he instructed his then solicitors, Campbell Paton & Taylor (“CPT”), to commence the costs assessment process and to seek taxation of the costs incurred by the Lovick parties in this Court. He asserts that between May 2015 and 1 March 2017 he was under the impression that CPT were acting on these instructions. The evident lack of progress led Mr Lovick on 1 March 2017 to instruct a new firm of solicitors, Baldock Stacy & Niven (“BSN”), to take carriage of the “costs assessment matter”. It appears that the instructions to BSN covered: (i) assessment of the costs the subject of the primary judge’s order made on 27 February 2013 (“the Supreme Court costs”); and (ii) the costs the subject of this Court’s order made on 5 March 2015 (“the High Court costs”).

Mr Lovick states his understanding that between March and June 2017 BSN was engaged in obtaining files from a number of previous solicitors who had acted for the Lovick parties in relation to the litigation from its inception. On 26 June 2017, Mr Lovick instructed BSN to engage a firm of costs consultants to prepare bills in assessable form in relation to the Supreme Court costs and the High Court costs. Itemised bills in each case were received by BSN on 6 December 2017. The bill of costs for the High Court costs was in an amount of $26,900.94. Mr Lovick states that following receipt of the itemised bills, he instructed BSN to negotiate with the Doppstadt parties with respect to payment of costs. What, if any, steps were taken with respect to negotiating payment of the High Court costs prior to 21 May 2018 is not established.

On 7 June 2018, BSN wrote to Mr Flaherty expressing the Lovick parties’ desire to resolve “this matter” without recourse to the courts. BSN stated its client’s intention was to “get the costs assessment process underway” by serving the “Bill in Assessable Form” if a satisfactory resolution was not reached by 22 June 2018. It is unclear if the reference to “this matter” was to one or both of the Supreme Court costs and the High Court costs. On 19 June 2018, Mr Flaherty responded, advising BSN that he was unable to obtain instructions from Mr Davis, who was terminally ill.

On 23 June 2018, Mr Davis died. On 16 July 2018, BSN wrote to Mr Flaherty asking whether Mr Davis had left a will and, if he had, for the names of the executors. On 19 July 2018, Mr Flaherty responded to BSN’s request without giving any information as to the existence of any will. Mr Flaherty did not accept that an application for an assessment of costs could properly be served on the estate. Nonetheless, Mr Flaherty requested that he be given copies of all invoices for the fees and disbursements claimed in the bills for the Supreme Court costs and the High Court costs.

On 22 November 2018, BSN attempted to file the bill of costs for taxation in this Court’s Sydney Registry. On 28 November 2018, the Deputy Registrar advised BSN of the need to obtain leave to do so. In the event, such an application was not made until 18 November 2020.

There is an issue about what took place over the two years after the Lovick parties were advised of the need to obtain leave. Mr Lovick states that between July 2018 and May 2020, he was told that BSN made numerous attempts by telephone and in writing addressed to Mr Flaherty and Mrs Davis to ascertain whether the late Mr Davis left a will. Mr Flaherty denies that he was the recipient of such inquiries in this period. There is a gap in this regard in the correspondence exhibited to Mr Lovick’s affidavit between July 2018 and 18 March 2020.

Mr Flaherty acknowledges that frequent communication with BSN occurred between 3 August 2018 and 25 May 2020 in connection with the Supreme Court costs. Throughout this period, he states that BSN did not raise the question of an application for leave to file the itemised bill relating to the High Court costs. There is no evidence of whether there was any reference to the High Court costs in Mr Flaherty’s communications with BSN over this period. It is apparent that as at 19 July 2018 Mr Flaherty was in receipt of the itemised bills for the High Court costs as well as the Supreme Court costs.

On 18 March 2020, BSN wrote to Mr Flaherty asserting that the Lovick parties were creditors of the estate of the late Mr Davis and asking to inspect a copy of his will pursuant to s 54(2) of the Succession Act 2006 (NSW). BSN renewed its request for a copy of the will on 7 April 2020. On 9 April 2020, Mr Flaherty responded to BSN’s requests neither acknowledging nor denying that he was in possession of the late Mr Davis’ will. Mr Flaherty questioned whether s 54 of the Succession Act applied in circumstances in which there had not been a grant of probate. On 14 April 2020, BSN wrote to Mr Flaherty asking that he confirm or deny whether he was in possession of any will and, in the event that he was, renewing the request for a copy of it. On 21 April 2020, Mr Flaherty responded to BSN disputing that the Lovick parties were creditors of the estate. In this communication, Mr Flaherty advised that Mrs Davis was named as executrix of the will of her late husband and stated that he was without authority to make any disclosures concerning the deceased’s affairs. The following day, BSN filed a notice to apply for probate in the Supreme Court addressed to Mrs Davis. On 24 April 2020, BSN wrote to Mr Flaherty enclosing a copy of the notice and renewing its request for a copy of the late Mr Davis’ will. On 5 May 2020, Mr Flaherty replied advising that his client, Mrs Davis, would apply for probate of her late husband’s will “in due course”. Mr Flaherty did not provide a copy of the will and reiterated his doubt that the Lovick parties were entitled to a copy of it.

On 13 May 2020, BSN wrote to Mr Flaherty again requesting that Mrs Davis apply for a grant of probate of her late husband’s will. On 19 May 2020, Mrs Davis filed a notice of intention to apply for probate and on 29 June 2020 she received a grant.

On 25 May 2020, BSN wrote to Mr Flaherty advising of its instructions to apply to this Court for: (i) leave to apply for taxation of the itemised bill for the High Court costs; (ii) that Mrs Davis be appointed to represent the estate of her late husband; and (iii) that the application be dealt with in the absence of a hearing.

Mr Flaherty’s account of the relevant history focuses on events in 2015. He states that between March and August 2015 he corresponded with CPT with respect to the Supreme Court costs and the High Court costs without agreement being reached. On 26 August 2015, Mr Flaherty asserts that he wrote to CPT “stating that [the Doppstadt parties] would make a payment of $125,000 to the [Lovick parties] with respect to all costs”. A copy of the letter is exhibited to his affidavit. Notably, the letter makes no reference to the High Court costs. The letter concluded as follows:

“In the hope of finalising this matter and, at the least, deal with any further claim your clients assert to interest, I am instructed my clients will make payment to your Trust Account this week in the sum of $125,000.

If your clients elect to pursue an assessment of costs notwithstanding, it is a matter for them. However, in those circumstances, my clients will rely on this letter in opposing any submission made by your clients that mine should meet such wasteful and extravagant costs of preparing an assessable bill as estimated by you ($50,000).”

On 4 September 2015, the Doppstadt parties paid $125,000 to the CPT trust account. Mr Flaherty describes the payment as having been made “with respect to all costs due to [the Lovick parties]”. Mr Flaherty states that following the payment he assumed that the matter was closed.

There was no basis for Mr Flaherty to make that assumption. The payment was not expressed to include the High Court costs. Indeed, the payment was not expressed to be made, nor accepted, in full satisfaction of the Doppstadt parties’ liability for the Supreme Court costs. As Mr Flaherty acknowledges, between 3 August 2018 and 25 May 2020 he was in frequent correspondence with BSN with respect to the costs assessment of the Supreme Court costs. The payment of $125,000 was taken into account in the costs assessor’s determination of the interest component of the Supreme Court costs.

The question of whether good reason has been shown for the grant of leave requires consideration of all the circumstances of the case. Even the fact of an inexcusable delay does not necessarily preclude an applicant from establishing that there is good reason^[13]. Here there are periods of unexplained delay. The Lovick parties accept that the 18‑month interval between September 2015 and March 2017 had the potential of creating a misunderstanding on Mr Davis’ part that they had abandoned their claim. Nonetheless, on or about 21 May 2018, Mr Lovick states that BSN provided a copy of the itemised bill to Mr Flaherty on “an informal basis in a genuine attempt to resolve the matter without need for further action and/or litigation”. This assertion is not disputed by Mr Flaherty. From that date, there can be no question that Mr Davis, and subsequently his estate, were aware of the Lovick parties’ intention to pursue recovery of the High Court costs. So much was confirmed in BSN’s letter to Mr Flaherty of 21 June 2018 in which it was asserted that a significant amount of money in respect of the Supreme Court costs and the “failed High Court leave application” was due.

It appears clear that the focus of BSN’s work on the Lovick parties’ behalf following the letter of 21 June 2018 was with respect to the assessment of the Supreme Court costs. On 9 October 2018, an application was made to the Supreme Court for an assessment of the same. The assessment proved to be lengthy. One factor that appears to have contributed to its length was a suggested ambiguity in the primary judge’s order with respect to interest on costs, which led to the necessity to obtain further submissions from the parties. Another factor was the difficulty the costs assessor encountered in seeking to ascertain the identity of the person representing the estate of the late Mr Davis. In the event, the assessor’s certificate specifying the amount of $448,276.05, as payable by the Doppstadt parties, was issued on 2 October 2019.

On Mrs Davis’ behalf, it is submitted that it was her understanding that the payment of $125,000 had brought the costs of the litigation to an end in 2015. As explained, there was no warrant for such an understanding. And, as also explained, there can be no question that by mid‑2018 Mrs Davis was aware of the Lovick parties’ intention to pursue their right to recover the High Court costs. Indeed, the Lovick parties are criticised for “hounding” Mrs Davis within three weeks of her late husband’s death in connection with their costs claims.

Courts have come to recognise in the exercise of procedural discretions that it may be appropriate to take into account the strain that litigation imposes on litigants^[14]. The litigation in this case was at an end and the strain that the grant of leave is suggested to impose is the prospect of the belated enforcement of the Lovick parties’ right to recover the High Court costs against the estate of the late Mr Davis. While Mrs Davis may have hoped that the Lovick parties would not pursue the matter, she cannot have had a reasonable expectation that they had abandoned their right to do so. Moreover, whatever criticism may be directed to BSN for the failure to progress the matter more efficiently, Mr Flaherty’s response on behalf of Mrs Davis to the requests made by BSN for information concerning the estate did not assist in the timely resolution of the outstanding High Court costs. The fact that pursuit of the High Court costs was neglected in favour of pursuit of the Supreme Court costs does not warrant the refusal of leave. Again, Mrs Davis’ choice not to disclose to BSN or to the costs assessor that she was named as executrix of her late husband’s estate did not assist in the timely resolution of the outstanding Supreme Court costs. Refusal of leave would deny the Lovick parties the benefit of this Court’s order. The interests of justice do not favour that Draconian outcome.

I propose to grant leave pursuant to r 4.03.2 of the Rules to permit the Lovick parties to file the bill of costs to be taxed. In circumstances in which a grant of probate has been made to Mrs Davis, I accept her submission that there is no occasion for making the order that is sought pursuant to r 21.06.2(b) of the Rules. In circumstances in which the Lovick parties seek an indulgence under the Rules, there will be no order as to the costs of the present application.

Order

For these reasons there will be the following order:

Pursuant to r 4.03.2 of the High Court Rules 2004 (Cth) the first and second respondents have leave to file and serve a bill of costs to be taxed as against the estate of the late Mr Raymond John Davis pursuant to the costs order made by Bell and Gageler JJ on 5 March 2015 in proceedings S205 of 2014.

Adjourn the Court until 10.00 am on Monday, 1 February in Canberra.

AT 9.31 AM THE MATTER WAS CONCLUDED

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^[1] Lovick & Son Developments Pty Ltd v Doppstadt Australia Pty Ltd [2012] NSWSC 529; Lovick & Son Developments Pty Ltd v Doppstadt Australia Pty Ltd (No 2) [2012] NSWSC 1579; Lovick & Son Developments Pty Ltd v Doppstadt Australia Pty Ltd (No 3) [2013] NSWSC 135.

^[2] Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158 at [406]- [411] per Gleeson JA (Ward and Emmett JJA agreeing at [1] and [13]-[17] respectively).

^[3] Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [22]- [23] per Ward, Emmett and Gleeson JJA.

^[4] Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd [2015] HCASL 15 per Bell and Gageler JJ.

^[5] On 22 June 2020, Doppstadt resolved to be wound up voluntarily.

^[6] High Court Rules 2004 (Cth), r 21.06.2(b).

^[7] High Court Rules, r 13.03.1.

^[8] High Court Rules 1952 (Cth), O 60 r 12(2).

^[9] [1963] HCA 6; (1963) 109 CLR 490.

^[10] William Crosby & Co Pty Ltd v The Commonwealth [1963] HCA 6; (1963) 109 CLR 490 at 496.

^[11] High Court Rules, r 54.01(a).

^[12] See Australian Broadcasting Commission v Industrial Court (SA) [1985] HCA 71; (1985) 159 CLR 536 at 540 per Wilson J.

^[13] Australian Broadcasting Commission v Industrial Court (SA) [1985] HCA 71; (1985) 159 CLR 536 at 541 per Wilson J.

^[14] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 214 [100] per Gummow, Hayne, Crennan, Kiefel and Bell JJ citing Ketteman v Hansel Properties Ltd [1987] 1 AC 189 at 220 per Lord Griffiths.