| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : ALL THINGS ENTERPRISES PTY LTD -v- WELL CONNECTED BUSINESS SYSTEMS PTY LTD [2013] WADC 165 (S) CORAM : KEEN DCJ HEARD : 18 OCTOBER 2013 DELIVERED : 19 NOVEMBER 2013 SUPPLEMENTARY
DECISION : 6 DECEMBER 2013 FILE NO/S : CIVO 125 of 2013 BETWEEN : ALL THINGS ENTERPRISES PTY LTD First applicant
WESTMAN NOMINEES PTY LTD
Second applicant
PEARD & ASSOCIATES PTY LTD
Third applicant
PEARD LAWRENCE & ASSOCIATES PTY LTD
Fourth applicant
AND
WELL CONNECTED BUSINESS SYSTEMS PTY LTD
Respondent
(Page 2)
Catchwords: Costs - Indemnity costs - Exercise of discretion Legislation: Nil Result: Application for indemnity costs refused
Representation: Counsel:
First applicant : Mr J Hammond
Second applicant : Mr J Hammond
Third applicant : Mr J Hammond
Fourth applicant : Mr J Hammond
Respondent : Mr S J Davis
Solicitors:
First applicant : Hammond Legal
Second applicant : Hammond Legal
Third applicant : Hammond Legal
Fourth applicant : Hammond Legal
Respondent : Feinauer Commercial Lawyers
Case(s) referred to in judgment(s):
Brookvista Pty Ltd v Meloni [2009] WASCA 180
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Fazio v Fazio [2008] WASC 161
Flotilla Nominees v Western Australian Land Authority (2003) 28 WAR 95
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397
Oschlack v Richmond River Council (1998) 193 CLR 72
Unioil International Pty Ltd v Deloitte Touche Tohmatsu (A Firm) [No 2] (1997) 18 WAR 190
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1 KEEN DCJ: On 19 November 2013 I delivered judgment dismissing the applicant's application for pre-action discovery pursuant to O 26A r 4 Rules of the Supreme Court 1971.
2 Following that decision there was no issue between the parties that the applicants should pay the costs of the respondent. However the basis of that order for costs was in issue. The respondent seeks to have its costs paid on an indemnity basis. The applicants argue that the costs should be paid on the usual, party and party, basis. 3 I have received written submissions in respect of costs from both parties and it has been agreed that the issue of costs should be dealt with on the papers. 4 For the purposes of deciding the basis upon which the respondent should have its costs taxed it is not necessary for me to refer in full to my reasons for dismissing the application for pre-action discovery. However I will make passing reference to some of the findings as they may prove to be relevant. 5 It is illustrative to note that the application was refused on the basis that the applicants had not demonstrated, objectively, to the required level of proof that the applicants had or may have a relevant cause of action that was something more than mere assertion, conjecture or suspicion. 6 Alternatively, I found that if I was wrong in making that finding the application should still fail on the basis that I was not satisfied that the applicants required the information sought by the pre-action discovery in order to make a decision to commence proceedings. 7 In coming to those decisions I had regard to affidavits that were sworn on behalf of the applicants by Mr Ngo. The first of those affidavits was sworn on 11 July 2013 and the second was on 10 October 2013. 8 The July affidavit set out and annexed documents which tended to establish a potential claim against the respondent for misleading or deceptive conduct arising out of a Proposal prepared by the respondent. It made detailed assertions in relation to the facts underlying that claim and the damages that were said to have been incurred. 9 The October affidavit however undermined - to a considerable extent - the matters set out in the July affidavit. As I noted, at [54] the October affidavit demonstrated that the applicants did not and never had the relevant meter readings relative to the photocopiers for the period covered (Page 4)
by the Proposal which was, in part, the detailed information contained in the July affidavit. 10 It is said on behalf of the respondent that the findings made by me support a claim for indemnity costs. 11 There does not appear to be much dispute between the parties as to the relevant legal principles relating to the award of indemnity costs. 12 The applicants rely upon the judgment of Pullin J in Flotilla Nominees v Western Australian Land Authority (2003) 28 WAR 95. At [8] his Honour said: An order for indemnity costs will only be made if there is some special or unusual feature in the case to justify a departure from the ordinary practice. 13 His Honour went on to note: When the justice of the case does require such an order, then the court will have a discretion as to whether the order should be made. 14 His Honour went on to deal with a number of authorities, some of which I will come to, which touch upon the issue of the granting of indemnity costs. 15 A relevant starting point is, as noted by the respondent: Oschlack v Richmond River Council (1998) 193 CLR 72. Whilst that case involved issues of costs relevant to proceedings brought in the public interest, Gaudron and Gummow JJ noted at [44]: It may be true in the general sense that cost orders are not made to punish an unsuccessful party. However, in the particular circumstances of a case involving some relevant delinquency on the part of the unsuccessful party, an order is made not for party and party costs but for costs on a 'solicitor and client' basis or on an indemnity basis. The result is more fully or adequately to compensate the successful party to the disadvantage of what otherwise would have been the position of the unsuccessful party in the absence of such delinquency on its part. 16 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 is often referred to for the principles and guidelines that can be distilled from various authorities in relation to these matters. At [232] Shepherd J cited with approval Davies J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 where his Honour had said: (Page 5)
The above circumstances all fall within the category of litigation instituted or prolonged to an extent which ought to have been unnecessary. But that is not the only type of case in which indemnity costs may be awarded. 17 His Honour, Davies J, also noted: It is clear that the categories for the award of indemnity costs are not rigid. Each case must be considered on its own particular facts, having regard to the general principle that the usual award of party/party costs to the successful party should be made unless there are special circumstances to justify the making of a different order. 18 In Colgate-Palmolive Shepherd J then went on to deal with the settled practice in relation to the award of costs and noted at [233] that in consequence of the settled practice the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances must be such as to warrant the court departing from the usual course. 19 His Honour then went on to note various circumstances where the court had considered circumstances to warrant the exercise of the discretion in favour of an award of indemnity costs. By reference to authority his Honour referred, amongst other things, to misconduct that causes loss of time to the court and to other parties, proceedings commenced or continued in wilful disregard of known facts and undue prolongation of a case by groundless contentions. 20 The Court of Appeal in Brookvista Pty Ltd v Meloni [2009] WASCA 180 [32], noted that conduct of a defaulting party may deserve sanction by the court and properly reflected in an order for indemnity costs citing Oschlack. However the court noted that an order for costs is compensatory in nature and the amount of costs must relate to the costs reasonably incurred by the party to whom they are awarded. 21 In Fazio v Fazio [2008] WASC 161 [16], his Honour the chief justice noted in relation to indemnity costs: There is a discretion with respect to making orders of that kind, although the authorities establish that, in general, that discretion will not be exercised unless there is something in the conduct of the party against whom the order is sought that makes it appropriate for the court to take the unusual step of ordering indemnity costs. An example of such conduct would be where the conduct of that party has been unreasonable and that unreasonable conduct has magnified the costs of the proceedings or where there is something in the conduct of the party that merits censure or (Page 6)
reproof or the defence or the claim has been pursued for some collateral or improper purpose. (citations omitted) 22 In the present case the respondent submits that an order for indemnity costs should be made because the conduct of the applicants in firstly asserting in the July affidavit that it had identified errors in the Proposal based on information in its possession it subsequently, in its October affidavit, asserted otherwise viz that the information in the July affidavit was asserted without access to any documents and the claim was, as acknowledged by counsel on behalf of the applicants, 'pure speculation'. 23 The respondent says that the conduct of the applicants, in making positive assertions in the July affidavit and then undermining those positive assertions in the October affidavit, was improper and/or unreasonable conduct deserving of sanction by the court. Specifically in written submissions the respondent argued: 15. It was neither proper nor reasonable: a. for the Plaintiffs to write to the Defendant in February 2013 asserting that they had 'supporting evidence and calculations' to substantiate a damages claim; b. for the Plaintiffs' solicitors to write to the Defendant in March 2013 asserting a damages claim based on the calculations in the Proposal being wrong by reference to the meter readings of the photocopying machines; c. for Mr Ngo to reply on those letters in his July affidavit in support of an application for discovery of the meter readings under O 26A r 4; d. and then for the Plaintiffs to expose that position as untenable by Mr Ngo deposing, four months later, and apparently in response to the Defendant's initial submissions, that they never had the meter readings. 24 The respondent then goes on to argue that the allegations in the correspondence that was annexed to the July affidavit should never have been made and should not have been relied upon as the basis for the application for pre-action discovery as they were groundless contentions. 25 It is said that these contentions have unduly prolonged the matter and should never have been made. (Page 7)
26 The applicants' position is that, whilst I dismissed the claim on the basis that the applicants had not reached the required level of proof so as to form the basis of an order under O 24A, I had nevertheless gone on to consider a position should that finding be erroneous. It is said that the reasons for my decision do not demonstrate that the conduct of the applicants was unreasonable nor that any groundless contentions or improper conduct or unreasonable conduct was involved. 27 It is argued that it was reasonable for the applicants to write to the respondent in the terms of annexure KVN5 asserting that they have supporting evidence and calculations to substantiate a damages claim. It is also said that that must be seen in the context of par 32 of the July affidavit in which Mr Ngo is said to have made it clear that the applicants did not have the meter readings upon which the respondent had based its Proposal. 28 It is said that there is no inconsistency between the affidavits which discloses unreasonable or improper conduct. 29 In my view this is a case where the conduct of the applicants has caused loss of time to the court and to the respondent. Further, the application was brought before the October affidavit was sworn and must clearly have been on the basis of a disregard of known facts. I do not propose to go into all of my reasons for judgment, but it is quite clear that the facts that were asserted in July were undermined by the October affidavit. In my view the applicants are not saved by the argument that in the July affidavit Mr Ngo made it clear that the applicants did not have the meter readings upon which the respondent had based its Proposal. In that affidavit at annexure KVN5 Mr Ngo made a clear claim for damages identifying the quantum of such damage and how it was assessed. It was also said in that letter, 'We have supporting evidence and calculations to substantiate our damages claim of $132,303.00 plus GST'. The letter even went on to apportion that amount between certain entities. 30 Further, in KVN6 the solicitors for the applicants also set out a positive claim for damages for misleading or deceptive conduct and identified the quantum of that claim by reference to the Scarborough office and again in considerable detail. It was also asserted in that letter, 'My client has established that the figures provided by the company in its Proposal are wrong by reference to the meter readings of the photocopying machines'. A document was annexed, said to demonstrate the point. (Page 8)
31 I am of the opinion that it was irrelevant for Mr Ngo to assert in par 32 of the affidavit that the applicants had been unable to decide whether to commence proceedings against the respondent without having access to the meter readings or other documents upon which the respondent may have based its Proposal. Whether it had the meter readings or not it was asserting a positive case in considerable detail. It was that that was undermined by the October affidavit and shown to be false in material respects. 32 Accordingly, adopting the analysis of Shepherd J in Colgate-Palmolive v Cussons, the facts as found by me do demonstrate that the allegations ought not to have been made as the original application was, as demonstrated by the papers, based on groundless contentions. That being the case I can infer that there has been a loss of time to the court and to the respondent which has been occasioned by disregard of known, or what should have been known, facts. 33 In the circumstances I am satisfied that those facts are capable of grounding the making of an order for payment of costs on the indemnity basis. Nevertheless, it is still a matter for me to exercise a discretion as to whether or not I should make such an order. 34 These proceedings were commenced by originating summons. The relevant determination on costs provides for the appropriate remuneration on a party/party basis which is not ungenerous in its limits. I have no information as to how much work has been involved in this matter and whether or not, if indemnity costs were awarded, how that would relate to the amount allowable under the relevant determination. In Unioil International Pty Ltd v Deloitte Touche Tohmatsu (A Firm) [No 2] (1997) 18 WAR 190 Ipp J noted, in relation to issues which were not in dispute or could not be disputed and which had not been admitted, that an indemnity costs order was not warranted where counsel was unable to identify any costs so incurred which would not be covered by an order for party and party costs. 35 That is the situation in the present case. Whilst I am satisfied that the conduct of the applicants would bring them within the parameters of an indemnity costs order, I am not satisfied, in exercising my discretion, that such an order should be made as I am not satisfied that it would be warranted in the circumstances and having regard to the allowable amounts in the determination on a party/party basis. (Page 9)
36 Accordingly, the appropriate order should be that the applicants should pay the respondent's costs of the originating summons and any reserved costs to be taxed.
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