SUPREME COURT OF QUEENSLAND

CITATION:	JM Kelly Buildings Pty Ltd v Murphy [2023] QSC 23 	
PARTIES:	JM KELLY BUILDERS PTY LTD (IN LIQUIDATION)
(first plaintiff)

AND

KAWANA JOINERY CO. PTY LTD (IN LIQUIDATION)

(second plaintiff)
AND

BURNS & TWIGG PTY LTD (IN LIQUIDATION)
(third plaintiff)

AND

BPM COWLRICK PTY LTD (IN LIQUDATION)
(fourth plaintiff)
v
JOHN GEOFFREY MURPHY
(first defendant)
AND
ELIZABETH GABRIEL MURPHY
(second defendant)	
FILE NO/S:	BS 8977 of 2019
	
DIVISION:	Trial	
PROCEEDING:	SRL Case Review	
ORIGINATING COURT:	Supreme Court	
DELIVERED ON:	17 February 2023	
DELIVERED AT:	Brisbane	
HEARING DATE:	On the papers	
JUDGE:	Freeburn J	
ORDER:	The plaintiffs pay the defendants costs thrown away by the amendments of the claim and statement of claim on 5 May 2020 and 7 October 2022. 	
CATCHWORDS:	COSTS – COSTS RESERVED – COSTS “THROWN AWAY” BY AMENDMENTS TO STATEMENT OF CLAIM  – INDEMNITY COSTS – STANDARD COSTS – where the second defendant seeks an order that the plaintiff pay costs during a period where the statement of claim was amended multiple times – where the second defendant seeks indemnity costs on the basis that the costs during that period were “thrown away” – whether the costs during the relevant period were wasted – whether costs can be awarded on an indemnity basis when the matter is still in an interlocutory stage 
	
COUNSEL:	CA Wilkins and AG Psaltis for the plaintiffs 
	
SOLICITORS:	Clayton Utz Lawyers for the plaintiffs

REASONS
[1]	Ms Murphy, the second defendant, seeks an order that the plaintiff pay all of her costs of the proceeding for the period between 23 August 2019 and 24 August 2020.  She seeks those costs on an indemnity basis.
[2]	It is necessary to set out some of the background.
Background
[3]	On 17 October 2018, Mr Vickers and Mr Owen were appointed as voluntary administrators of the first and second plaintiffs and liquidators of the third and fourth plaintiffs.  On 21 November 2018, Mr Vickers and Mr Owen were appointed liquidators of the first and second plaintiffs so that from that point onwards they were liquidators of all four plaintiff companies.
[4]	In August and October 2019, Ms Murphy was publicly examined over the course of six days before a Registrar of the Federal Court.
[5]	On 23 August 2019 – that is during the course of her public examination – the first and second plaintiffs brought these proceedings against Mr and Ms Murphy.  Essentially, Mr and Ms Murphy were sued for breaches of their corporate duties as officers of the plaintiff companies.
[6]	The statement of claim was a significant document.  It had been settled by counsel and, as against Ms Murphy, seeks compensation of $7.8m.  Filed at the same time was an affidavit of Mr Vickers which runs to many thousands of pages.  On the same day, Boddice J made orders freezing the assets of Mr and Ms Murphy.  Those freezing orders have continued.
[7]	On 12 February 2020, the first and second plaintiffs applied to have Ms Murphy dealt with for contempt of court for failure to comply with the freezing orders.  The allegation was that she had made payments out of bank accounts which were comprehended by the freezing orders.
[8]	Both parties place reliance on this part of the chronology.  Ms Murphy says she incurred significant legal costs (she was then represented by lawyers) and yet the plaintiffs withdrew the contempt allegations on the morning of the hearing.  The plaintiffs say they decided not to persist when Ms Murphy explained that she did not understand the requirements of the freezing orders.  I am unable to resolve that issue and the resolution is not essential for present purposes.
[9]	On 28 February 2020, Boddice J made orders by consent dismissing the contempt application with the plaintiffs’ costs of the application to be costs in the proceeding.
[10]	On 29 April 2020, Holmes CJ made orders joining the third and fourth plaintiffs, giving leave to amend the statement of claim, and continuing the freezing orders.
[11]	On 5 May 2020, the plaintiffs filed and served their amended claim and amended statement of claim.  Again, the statement of claim is a substantial document, this time settled by counsel.  The amendments are substantive.
[12]	In July 2020, particulars were sought by Ms Murphy’s solicitors, and they were provided by the plaintiffs’ solicitors at the end of that month.  On 24 August 2020, Ms Murphy filed and served her defence.  In October 2020, the plaintiffs filed and served a reply.
[13]	On 19 November 2020, the plaintiffs applied for this matter to be heard with another similar matter against Mr Milton (the Milton proceedings).  They also applied for both proceedings to be managed in the Supervised Case List.
[14]	In the Milton proceedings, the defendants applied to strike out the statement of claim on the ground that the quantification of damages was fundamentally flawed.  On 26 March 2021, Flanagan J dismissed that application.
[15]	In the meantime, at the end of 2020, Ms Murphy says that she ran out of funds with which to retain lawyers. She has thereafter represented herself.
[16]	In April 2021, Boddice J made consent orders for the two proceedings to be managed together on the Self-Represented List and that the evidence in each proceeding be evidence in the other.
[17]	On 23 November 2021, the parties in both proceedings participated in a mediation before Mr McKenna QC.  The mediation was unsuccessful.  It is worth noting that Ms Murphy says this about the mediation:
On November 23rd 2021, a mediation was unsuccessful.  At this mediation, once introductions were completed, the Plaintiffs asked that I remove myself from discussions while they pursue discussions with other Defendants.  After several hours, the Plaintiffs called an end to the mediation without any discussion with me personally or any attempt to mediate with me whatsoever.
[18]	The plaintiffs have not sought to contradict that version, although of course there may well be good reasons why a party who is unable to conclude a compromise with one defendant would decline to try to come to an arrangement with the other.
[19]	There was then a substantial delay.  The plaintiffs’ solicitor, Mr Sharry, deals with that delay at paragraphs 15 to 28 of his affidavit filed on 29 September 2022.  Essentially, some steps were taken in the Milton proceedings and the amendments to this proceeding stalled until the plaintiffs were able to “regularise” this proceeding.  In summary, the amendments sought to add to both proceedings an alternative method of calculating loss and damage.
[20]	The plaintiffs finally applied for leave to further amend its claim and statement of claim in this proceeding on 29 September 2022.  I granted that leave on 5 October 2022.
Recent History
[21]	The directions made on 5 October 2022 were that:
(a)	the plaintiffs have leave to further amend their claim and statement of claim;
(b)	by 9 December 2022 the defendants were to file and serve their amended defences – this order was later vacated on 15 December 2022 and the date extended to 25 January 2023;
(c)	by 6 February 2023 the plaintiffs file and serve their replies;
(d)	by 26 October 2022 Ms Murphy was to provide the court with her submissions as to the grounds on which she seeks an order that the plaintiffs pay her costs;
(e)	by 9 November 2022 the plaintiffs were to respond;
(f)	this proceeding and the Milton proceeding be reviewed together on 15 December 2022 – this order was vacated – the matter was reviewed on 13 December 2022;
(g)	the parties were to confer on expert evidence and the mode of trial including proof of quantum;
(h)	the parties’ costs of the review, and the application for leave to amend be their costs in the proceeding.
[22]	The parties complied with the orders about costs submissions.
[23]	Mr Murphy filed and served his amended defence on 6 February 2023.  Ms Murphy has yet to file and serve her amended defence.
[24]	The orders made on 13 February 2023 were that Ms Murphy have until 27 February 2023 to file and serve her amened defence.  An amended reply is due by 13 March 2023.  Orders were also made about evidence-in-chief from the plaintiffs.
What Costs?
[25]	The first issue to consider is just what costs does Ms Murphy seek.  There is a related question – just what costs have not already been dealt with.
[26]	Ms Murphy seeks an order that the plaintiffs’ “pay all my costs on an indemnity basis between (23 August 2019 and 24 August 2020)”.  That is what Ms Murphy says she seeks at paragraph 41 of her submissions.  Of course, Ms Murphy was represented during that 12-month period.  She is now self-represented.
[27]	Ms Murphy seeks those costs on an indemnity basis, or alternatively on a standard basis.
[28]	It is worth noting that during the period from August 2019 to August 2020 various orders have been made in the proceeding.  In each case costs have been reserved.  There is one exception.  The orders made by Boddice J by consent on 28 February 2020 ordered that the plaintiffs’ costs of that application be the plaintiffs’ costs in the proceeding.  That means that the court cannot interfere with those costs.
Costs Thrown Away
[29]	Ms Murphy seeks those costs on the basis that those costs – from the time she was served with the original claim and statement of claim until the filing and service of her defence to the amended statement of claim – were costs thrown away.  She contends that they are costs “thrown away” because the plaintiffs have now proceeded with version 3 of their claim.
[30]	There is certainly some force in Ms Murphy’s complaint about the three versions of the claim and statement of claim, and the time, effort and costs expended.  There is an understandable degree of frustration at a proceeding which is only now descending into evidence despite some three and a half years of litigation and nearly 80 filed court documents.  I am conscious too that the legal costs of relatively complex proceedings like this are well beyond the resources of ordinary citizens.  That consideration is often forgotten – not least by those who prepared pleadings and whose focus, not surprisingly, is on ensuring that their clients’ case is given the best possible prospect of success.
[31]	However, costs thrown away is an expression that means costs that have become wasted: The Fashion Wardrobe Pty Ltd v Pola [1984] 1 Qd R 251 at 254.  Here, there is no reason for thinking that all of the costs incurred by Ms Murphy in the 12-month period are entirely wasted.  There are certainly significant differences between the three versions of the statement of claim.  But I am unable to conclude that the costs are entirely wasted.
[32]	The plaintiffs point out that version 3 of their pleading merely “augments” version 2 because it merely adds an alternative basis for assessing compensation.  The plaintiffs say they have not abandoned their earlier approach to compensation.
[33]	Whilst that may be true, it is relevant to note that none of the changes to the plaintiffs’ pleadings are said to be because of the conduct of Mr and Ms Murphy.  It is accurate to say that these are refinements to the plaintiffs’ case that it has decided to prosecute.  No good reason is proffered as to why the refined case could not have been reflected in version 1.
[34]	The plaintiffs, correctly, point out that a party is normally entitled to be paid any costs thrown away under UCPR 386 or 692(2).  And, it is submitted, that party is entitled to those costs without the need for any specific order.  As the plaintiffs also conceded, relying on the reasons of Flanagan J in Callide Power Management Pty Ltd v Callide Coalfields (Sales) Pty Ltd (No 4) [2015] QSC 337, in some circumstances it may be appropriate for the court to make a specific order requiring a party to pay costs thrown away as a result of the amendment.
[35]	Here, for three reasons, it is appropriate to make a specific order dealing with the costs thrown away by the amendments.  The first is that, as in Callide, there is some complexity to this case.  There have been a series of applications, reviews and amendments to a case that itself has some complexity.  The second is that, as I have mentioned, there is an order of Boddice J which allocates the costs of the contempt application as the plaintiffs’ costs in the proceeding.  Both parties ought to have the benefit of explicit interim allocations of costs.  The third is that Ms Murphy is self-represented.  It may well be of some assistance to her, whether in dealing with lawyers or with costs assessors, or others, to be able to point to a specific order which allocates to her the costs thrown away by the amendments.
[36]	I propose to make such an order.
Indemnity Basis
[37]	However, it is appropriate to make that order on the standard basis.  A costs order on an indemnity basis requires either some unreasonableness or some irresponsibility on the part of the litigant who is to pay those costs: Thornton v Lessbrook Pty Ltd (No 2) [2010] QSC 363 at [6].
[38]	On this issue the plaintiffs referred me to Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 where a number of circumstances were listed which would justify an exercise of the discretion to award indemnity costs (e.g., proceedings commenced or continued in wilful disregard of known facts).
[39]	The difficulty is that it is not practical for the court to properly assess, at least at this stage, whether one or other party has acted unreasonably or irresponsibly.  That is why costs of interlocutory skirmishes are frequently reserved until after the trial.  At that point, once the litigation has concluded, a fuller light can be cast on the conduct of the parties. 
[40]	And so, whilst one can understand Ms Murphy’s frustration with the slow progress, there is no basis upon which the court can, at this stage, conclude that the plaintiffs have acted unreasonably or irresponsibly in amending.  After all, to take one example, it may turn out that the plaintiffs succeed on one or even both of its alternative compensation cases.
[41]	For those reasons, I decline to order costs on an indemnity basis.
[42]	Incidentally, as will be seen from the chronology set out above, at a certain point in the proceedings Ms Murphy commenced acting on her own behalf.  That may make the assessment of the costs thrown away a little difficult because of the principle that a litigant cannot recover costs other than outlays unless the litigant is represented by a lawyer admitted to practice in the relevant jurisdiction.
[43]	That is a matter best left to costs assessment.