1110 Hay Pty Ltd as trustee for the Hay Street Trust v Metso Minerals (Australia) Ltd [No 5]
[2019] WASC 406
•6 NOVEMBER 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: 1110 HAY PTY LTD as trustee for THE HAY STREET TRUST -v- METSO MINERALS (AUSTRALIA) LTD [No 5] [2019] WASC 406
CORAM: DERRICK J
HEARD: 6 NOVEMBER 2019
DELIVERED : 6 NOVEMBER 2019
FILE NO/S: CIV 3327 of 2011
BETWEEN: 1110 HAY PTY LTD as trustee for THE HAY STREET TRUST
Plaintiff
AND
METSO MINERALS (AUSTRALIA) LTD
First Defendant
METSO MINERALS OY
Second Defendant
METSO MINERALS (AUSTRALIA) LTD
Plaintiff by counterclaim
AND
1110 HAY PTY LTD as trustee for THE HAY STREET TRUST
Defendant by counterclaim
Catchwords:
Lease - Compromise Agreement - Claims by parties for amounts payable under Lease and Compromise Agreement
Practice and procedure - Order referring question to registrar pursuant to s 50(1) of the Supreme Court Act 1935 (WA) - Construction and interpretation of order - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA)
Supreme Court Act 1935 (WA)
Result:
Question referred by registrar to the court for determination answered
Representation:
Original Action
Counsel:
| Plaintiff | : | Mr C S Williams |
| First Defendant | : | Mr B W Ashdown |
| Second Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Solomon Brothers |
| First Defendant | : | Squire Patton Boggs |
| Second Defendant | : | No appearance |
Counterclaim
Counsel:
| Plaintiff by counterclaim | : | Mr B W Ashdown |
| Defendant by counterclaim | : | Mr C S Williams |
Solicitors:
| Plaintiff by counterclaim | : | Squire Patton Boggs |
| Defendant by counterclaim | : | Solomon Brothers |
Case(s) referred to in decision(s):
1110 Hay Pty Ltd as trustee for the Hay Street Trust v Metso Minerals (Australia) Ltd [No 3] [2018] WASC 230
Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2018] WASCA 185
Mahlo v Westpac Banking Corporation Ltd [1999] NSWCA 358
Smith v Madden [1946] HCA 19; (1946) 73 CLR 129
Wright Prospecting Pty Limited v Hancock Prospecting Pty Limited [No 11] [2011] WASC 74
Wright Prospecting Pty Limited v Hancock Prospecting Pty Limited [No 13] [2017] WASC 286
DERRICK J:
(These reasons were delivered extemporaneously on 6 November 2019 and have been edited from the transcript)
Introduction
In May 2018 I heard the five day trial of the action between the plaintiff and the first defendant.[1] For the purposes of the trial the parties specified a number of questions for my determination. The parties specified the questions on the basis that my answers to the questions would determine the dispute between them.
[1] The second defendant is a company incorporated in Finland. The plaintiff has not sought to serve the writ of summons on the second defendant outside of the jurisdiction. Accordingly, the action does not concern the second defendant despite the fact that it is named as a defendant in the action.
On 3 August 2018 I published my written reasons for decision (the Primary Reasons).[2] In the Primary Reasons I answered each of the questions that had been posed for my determination by the parties.[3]
[2] 1110 Hay Pty Ltd as trustee for the Hay Street Trust v Metso Minerals (Australia) Ltd [No 3] [2018] WASC 230.
[3] These reasons will assume familiarity with the content of the Primary Reasons and should be read in conjunction with the Primary Reasons. Further, the terms used in these reasons that are defined in the Primary Reasons bear the same meaning as given to them in the Primary Reasons.
One of the questions posed for my determination by the parties (question 11) was whether the plaintiff was entitled to recover from the first defendant its legal costs as costs of remedying, or attempting to remedy, defaults by the first defendant pursuant to cl 4.1(c) of the Lease. Despite the wording of the question, counsel for the plaintiff made clear in his opening address at trial that the only legal costs that the plaintiff was seeking to recover pursuant to cl 4.1(c) of the Lease 'are the costs of pursuing these proceedings'.[4] For the reasons that I gave in the Primary Reasons, my answer to the question posed was that the plaintiff was entitled under cl 4.1(c) of the Lease to recover from the first defendant the legal costs for which it was liable and which it properly incurred up until 24 April 2012 in pursuing, by way of the Counterclaim filed on 3 February 2012, these proceedings for the purpose of remedying the first defendant's default in failing to pay to the plaintiff the outgoings that I had stated in my answer to question 5 were, subject to cl 7 to cl 10 of the Compromise Agreement, payable to the plaintiff.[5] In addition, I ordered pursuant to s 50 of the Supreme Court Act 1935 (WA) that the issue of the quantum of the costs payable under cl 4.1(c) in accordance with my answer to the question should be referred to a registrar of the court so as to enable the registrar to undertake an inquiry and make a report to the court as to the amount of costs payable.[6]
[4] ts 182, 15 May 2018.
[5] Primary Reasons [492]. At the relevant time the plaintiff was actually the defendant in the litigation between the parties which is the explanation for the plaintiff having made a counterclaim.
[6] Primary Reasons [493].
On 18 April 2019 I made orders in the following terms to give effect to my answer to question 11 and my decision to order a registrar to undertake the above referred to inquiry (the Orders):[7]
[7] The order was made, with the agreement of the plaintiff, in the terms of a minute of proposed orders prepared by the first defendant dated 18 April 2019.
1.Pursuant to section 50(1) of the Supreme Court Act 1935 (WA), the following question be referred to a Registrar of this Honourable Court:
The amount payable pursuant to clause 4.1(c) of the Lease being the reasonable cost to the plaintiff up until 24 April 2012 in pursuing, by way of the counterclaim filed on 3 February 2012, these proceedings for the purpose of remedying the first defendant's default in paying to the plaintiff the outgoings for the period 19 May 2010 to 1 March 2012.
2.The Registrar shall undertake an inquiry and make a report to the Court as to the amount of costs assessed pursuant to the question in order 1.
3.In conducting such inquiry the Registrar should report on whether any challenged item has or has not been incurred within the matters provided for in, and determine the proper costs for which the first defendant shall be liable pursuant to, the question in order 1.
4.The Registrar shall have liberty to refer to the Court for determination any issues which the Registrar considers in need of determination by the Court for the purpose of completing the inquiry and report.
On 10 September 2019 a registrar undertook the inquiry pursuant to the Orders.
On 24 September 2019 the registrar made an order in the following terms:
Pursuant to the liberty reserved in order 4 of the order of his Honour Derrick J made 18 April 2019, the following issue is referred to the Court for determination:
1.Is it necessary for the plaintiff to establish in each case that the costs claimed relate to the part of the counterclaim filed on 3 February 2012 which sought repayment specifically, and only, of outgoings?
The hearing relating to the question referred by the registrar to the court for determination took place before me on 6 November 2019.
The relevant pleadings - summary
As noted above, the litigation between the parties was actually commenced by the first defendant as plaintiff. It is not necessary to explain the events that ultimately led to the plaintiff becoming the plaintiff in the action and the first defendant becoming the first defendant in the action. It suffices for present purposes to say that this occurred as a result of orders made by consent pursuant to O 43 r 16 of the Rules of the Supreme Court 1971 (WA) on 13 July 2012.
The proceedings between the parties were commenced by the first defendant on 6 December 2011.
On 20 December 2011 the first defendant filed its Statement of Claim. In the Statement of Claim the first defendant claimed declaratory relief. The declarations sought by the first defendant included the following:
1.The plaintiff must refund to the first defendant any amount paid by the first defendant towards the Shortfall Amount that was in excess of two thirds of the Shortfall Amount;
2.The plaintiff did not complete the Stage 1 Works by 30 October 2010; and
3.The first defendant is not liable to pay one third of the Shortfall Amount.
On 3 February 2012 the plaintiff filed its Defence and Counterclaim. By the Counterclaim the plaintiff sought, among other things, payment of the Shortfall Amount and a declaration that the plaintiff had completed the Stage 1 Works by 30 October 2010.[8] By the Counterclaim the plaintiff also sought payment of other moneys, including outgoings, which the plaintiff claimed were owed to it by the first defendant.[9]
[8] Counterclaim, [31] ‑ [35].
[9] Counterclaim, [39] ‑ [43].
On 13 March 2012 the first defendant filed its Reply and Defence to the Counterclaim of the plaintiff. By the Reply and Defence the first defendant disputed that it had any outstanding obligation to pay outgoings and asserted that the amount the plaintiff claimed as outstanding outgoings had already been paid.[10] The first defendant also pleaded that if it was liable to pay the plaintiff any amount (which it denied) it was entitled to set off alleged overpayments of car parking fees, car parking levies, and the Shortfall Amount.[11]
[10] Reply and Defence to Counterclaim, [35] ‑ [38].
[11] Reply and Defence to Counterclaim, [25], [28], [56] and [86].
Inherent in the first defendant's defence to the claim in the Counterclaim for payment of outstanding outgoings was an issue about the plaintiff's allocation of payments made by the first defendant. The plaintiff claimed that the payments made by the first defendant towards outgoings were insufficient to pay the outgoings that had fallen due. The first defendant asserted that the outgoings had been paid and made a number of other assertions concerning payment (or overpayment) of other amounts claimed by the plaintiff, some of which were disputed by the first defendant in whole or in part.
The statement of costs
Prior to the inquiry hearing, and pursuant to programming orders made by the registrar, the plaintiff filed a statement of costs dated 17 July 2019 (the statement of costs). By the statement of costs the plaintiff claims a total of $23,115.90 plus disbursements of $912.32 as the amount that is payable by the first defendant to it pursuant to cl 4.1(c) of the Lease; that is, as the reasonable cost to the plaintiff up until 24 April 2012 in pursuing, by way of the Counterclaim, these proceedings for the purpose of remedying the first defendant's default in paying to the plaintiff the outgoings for the period 19 May 2010 to 1 March 2012. The items of costs claimed are as follows:
1.Preparing a letter of demand (29 September 2011 - 9 November 2011);
2.Preparing a statement of claim which was, after the first defendant commenced the litigation, converted into the Counterclaim (2 November 2011 - 23 November 2011);
3.Preparing the Defence and Counterclaim (7 December 2011 - 3 February 2012);
4.Attendance at status conference (13 February 2012);
5.Attendance at directions hearing (15 March 2012);
6.Attendance at strategic conference (5 April 2012);
7.Preparing answers and objections to request for further and better particulars of the Defence and Counterclaim (26 March 2012 - 5 April 2012);
8.General preparation and progression of case including perusal of the Reply and Defence to the Counterclaim and necessary correspondence and conferral with, among others, client and the court (13 January 2012 - 23 April 2012); and
9.Disbursements (6 October 2011 to 16 February 2012).
The submissions of the parties
The plaintiff submits that it ought to be entitled to recover all relevant costs incurred in the pursuit of the Counterclaim up until 24 April 2012 without the need to identify which items of costs (or portions thereof) were referable specifically, and only, to outgoings. The plaintiff submits that the exercise now required is not the isolation or quarantining of the costs that the plaintiff incurred in pursuing the Counterclaim insofar as it sought payment of outstanding outgoings from the costs of defending the first defendant's claim and the costs of the plaintiff claiming payment of other moneys. The plaintiff submits that the first defendant's response to the claim for outgoings factually linked discharge of the liability to pay outgoings with the assessment of other moneys that the plaintiff claimed were owing and the assessment of the first defendant's claim that other liabilities had previously been overpaid. The plaintiff asserts, in this context, that the clear delineation of the issues relating to its claim for outgoings that had occurred by the time of trial had not occurred at the time of the preparation and filing of the Counterclaim.
The first defendant submits that the Primary Reasons and par 1 of the Orders clearly do not contemplate awarding the plaintiff costs for the claims in the Counterclaim which were dismissed by the court. The first defendant submits that the plaintiff should not be able to recover all costs connected with the Defence and Counterclaim generally. The first defendant submits that for the plaintiff to recover costs for an item of work specified in the statement of costs it must establish that the costs claimed relate exclusively to pursuing by way of the Counterclaim the first defendant's default in relation to the payment of outgoings for the period 19 May 2010 to 1 March 2012. The first defendant submits that only those separate and additional cost elements that would never have arisen or would not have arisen to the same extent if the claim for outgoings had not been made are recoverable.[12] The first defendant submits that to the extent that work was performed in pursuing the Counterclaim that did not relate exclusively to pursuing the first defendant’s default in relation to the payment of outgoings, those costs will be picked up by the general costs of the action and do not form part of the costs that I ordered to be paid by way of contractual entitlement pursuant to cl 4.1(c) of the Lease.
[12] First defendant's submissions [30]. In support of its submission the first defendant cites a number of decisions concerned with the principles to be applied in the proper construction of the terms of general and specific costs orders: Smith v Madden [1946] HCA 19; (1946) 73 CLR 129, 133 ‑ 134, 136 ‑ 137; Mahlo v Westpac Banking Corporation Ltd [1999] NSWCA 358 [88]; Wright Prospecting Pty Limited v Hancock Prospecting Pty Limited [No 11] [2011] WASC 74 [113]; Wright Prospecting Pty Limited v Hancock Prospecting Pty Limited [No 13] [2017] WASC 286 [41] ‑ [42]; Hancock Prospecting Pty Ltd v Wright Prospecting Pty Ltd [2018] WASCA 185 [48] ‑ [52], [62] ‑ [68].
In its written submissions the first defendant submits that to be recoverable the plaintiff must show that 'the particular item of cost relates exclusively to work with respect to the first defendant's outstanding outgoing charges (for the period 19 May 2010 to 1 March 2012) as set out in the Counterclaim filed 3 February 2012, up until 24 April 2012, and which created separate and additional costs that would not otherwise have arisen'.[13] However, in response to a question by me the first defendant's counsel made clear that the first defendant is not seeking to contend that the item of costs specified in the statement of costs relates exclusively to work with respect to the first defendant's outstanding outgoings charges, but rather that some portion of the costs specified in the item relates exclusively to work with respect to the first defendant's outstanding outgoing charges.
[13] First defendant's submissions [32].
Analysis and decision
In the Primary Reasons the only default by the first defendant that I found, in answering the various questions posed for my determination, had been established by the plaintiff was the default by the first defendant in failing to pay to the plaintiff the outgoings that I had stated in my answer to question 5 were, subject to cl 7 to cl 10 of the Compromise Agreement, payable to the plaintiff.[14] It is for this reason that my relevant finding in the Primary Reasons was that the default under the Lease in respect of which the plaintiff was entitled to recover its legal costs pursuant to cl 4.1(c) of the Lease was the default by the first defendant in failing to pay to the plaintiff the outgoings that I stated in my answer to question 5 were, subject to cl 7 to cl 10 of the Lease, payable to the plaintiff. Neither my finding in the Primary Reasons nor par 1 of the Orders contemplates, or can be construed as providing, that the plaintiff is able to recover pursuant to cl 4.1(c) legal costs incurred in pursuing, by way of the Counterclaim, claims which I did not find to have been established. The fact that the first defendant defended the plaintiff’s claim for outgoings by asserting not only that it had already paid the claimed outgoings, but also that if it was liable for any outgoings it was entitled to set off the amount owed against other overpayments, does not bear on the issue; does not provide any basis for interpreting par 1 of the Orders as entitling the plaintiff to recover pursuant to cl 4.1(c) all legal costs incurred in pursuing claims pleaded in the Counterclaim regardless of whether or not I found the claims to have been established. It follows that I do not accept the plaintiff's submission that it ought to be entitled to recover all relevant costs incurred in the pursuit of the Counterclaim up until 24 April 2012 without the need to identify which items of costs (or portions thereof) were referable specifically, and only, to the claim for outgoings.
[14] Primary Reasons [481].
In order to prove an entitlement to any costs in accordance with the Primary Reasons and par 1 of the Orders in respect of an item of work specified in the statement of costs, the plaintiff must establish that some or all of the work specified in the item relates to the claim for the outstanding outgoings (in the sense that the work would not need to have been performed if the claim for the outstanding outgoings had not been made) and that consequently some or all of the costs claimed in the item relate to the claim for the outstanding outgoings (in the sense that the costs would not have arisen if the claim for the outstanding outgoings had not been made).[15] It will be for the registrar to determine if any portion of the work performed by the plaintiff specified in an item of the statement of costs does relate to the plaintiff's claim for the outstanding outgoings for the relevant period. It will also be for the registrar to determine the amount of costs payable by the first defendant to the plaintiff in respect of this work. I recognise that the performance of this task may not be free from difficulty and may require the registrar to exercise a degree of judgment. However, taxing officers (registrars) are routinely called upon to exercise judgment in the determination of disputes over costs between parties to civil litigation in an endeavour to ensure substantial justice between the parties. There is nothing particularly unusual about this.
[15] Wright Prospecting Pty Limited v Hancock Prospecting Pty Limited [No 13] [23]; Hancock Prospecting Pty Limited v Wright Prospecting Pty Limited [62] – [66].
As the first defendant acknowledges, any work specified in the item that does not relate to the claim for outgoings in the sense I have specified will, from a costs perspective, fall to be dealt with under the general costs of the action.
I come back then to the question posed by the registrar for the court's determination. For the reasons that I have given, my answer to the question is that it is necessary for the plaintiff to establish in each case that the costs claimed in an item specified in the statement of costs, or a portion thereof, relate to the part of the Counterclaim filed on 3 February 2012 which sought repayment specifically, and only, of outgoings.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CP
Associate to the Honourable Justice Derrick8 NOVEMBER 2019
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