Alpine Holdings Pty Ltd v Warwick Entertainment Centre Pty Ltd
[2003] WASC 53 (S2)
•27 MAY 2004
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA IN CIVIL |
| CITATION | : | ALPINE HOLDINGS PTY LTD & ORS -v- WARWICK ENTERTAINMENT CENTRE PTY LTD & ORS [2003] WASC 53 (S2) |
| CORAM | : ROBERTS-SMITH J | ||
| HEARD |
| ||
| DELIVERED | : 24 MARCH 2003 | ||
| SUPPLEMENTARY | |||
| DECISION | : 27 MAY 2004 | ||
| FILE NO/S |
| ||
| BETWEEN |
|
EGON KONIG Second Plaintiff
SHELLEY KONIG
Third Plaintiff
AND
WARWICK ENTERTAINMENT CENTRE PTY LTD
(ACN 054 246 918)First Defendant
WESTGEM HOLDINGS PTY LTD
(ACN 050 218 954)Second Defendant
ROBERT STEELE
Third Defendant
Catchwords:
Costs - Extension of time to apply for removal of costs limit - Delay - Factors -
Whether prejudice to other parties
Costs - Removal of limit for getting up - Order 66 r 12(1) Rules of the Supreme Court - Unusual complexity - Other good or sufficient reason - Whether amount of work involved constitutes a good or sufficient reason
Legislation:
Legal Practice Act 2003 (WA), s 215
Rules of the Supreme Court, O 66 r 12(1)
Result:
Application to extend time granted
Cost limit removed
Category: B
Representation:
Counsel:
| First Plaintiff | : | Mr P Sheavyn & Mr O D Feinauer |
| Second Plaintiff | : | Mr P Sheavyn & Mr O D Feinauer |
| Third Plaintiff | : | Mr P Sheavyn & Mr O D Feinauer |
| First Defendant | : | Mr N D C Dillon |
| Second Defendant | : | Mr N D C Dillon |
| Third Defendant | : | No appearance |
| Fourth Defendant | : | No appearance |
[2003] WASC 53 (S2)
Solicitors:
| First Plaintiff | : | Feinauer & Associates |
| Second Plaintiff | : | Feinauer & Associates |
| Third Plaintiff | : | Feinauer & Associates |
| First Defendant | : | Williams & Hughes |
| Second Defendant | : | Williams & Hughes |
| Third Defendant | : | No appearance |
| Fourth Defendant | : | No appearance |
Case(s) referred to in judgment(s):
Alpine Holdings Pty Ltd & Ors v Warwick Entertainment Centre Pty Ltd & Ors
[2003] WASC 53
Alpine Holdings Pty Ltd & Ors v Warwick Entertainment Centre Pty Ltd & Ors
[2003] WASC 53(S)
Jewel Walk Pty Ltd & Anor v Kondinin Group Inc [2001] WASC 197
McLean v Kerville, unreported; SCt of WA; Library No 6455; 1 October 1986
Schmidt v Gilmour [1988] WAR 219
Snowtop Mushrooms v Powley, unreported; FCt SCt of WA; Library No 4501;
14 May 1982
Verdell Pty Ltd v F & G Nominees Pty Ltd & Anor [2002] WASC 58(S2)
Wayella Nominees Pty Ltd as Trustee for the D J Gordon Family Trust v
Cowden Ltd [2003] WASC 210(S)
Case(s) also cited:
Collins v Westralian Sands Ltd (1993) 9 WAR 56
Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400
Geneva Finance Ltd v Resource & Industry Ltd [2002] WASC 121(S)
Re City of Joondalup; Ex parte Mullaloo Progress Association Inc [2003]
WASCA 293(S)
[2003] WASC 53 (S2)
ROBERTS-SMITH J
ROBERTS-SMITH J: The trial of this action was heard before me over nine hearing days from the 4 to 8 and 11 to 14 November 2002. My primary reasons allowing the plaintiffs' claim and dismissing the first defendant's counterclaims were handed down on 24 March 2003: Alpine Holdings Pty Ltd & Ors v Warwick Entertainment Centre Pty Ltd & Ors [2003] WASC 53. A supplementary judgment was delivered on 14 July 2003: Alpine Holdings Pty Ltd & Ors v Warwick Entertainment Centre Pty Ltd & Ors [2003] WASC 53(S).
2 In the latter I gave judgment for the plaintiffs and assessed damages.
I dismissed counterclaims by the first and second defendants. I refused an application by the plaintiffs for indemnity costs, ordered the defendants to pay the plaintiffs' costs on a party-party basis and dismissed an application by the first and second defendants for a stay of execution pending appeal, but granted a partial stay in respect of the third and fourth defendants.
3 The supplementary judgment followed the hearing of further
submissions by the parties on 27 May and 23 June 2003, relating to those issues. By chamber summons filed on 24 March 2004, the plaintiffs seek leave to make this application out of time - that is, they seek an extension of time to apply and they seek, inter alia, an order pursuant to O 66 r 12(1) of the Rules of the Supreme Court ("RSC"), that the taxing officer be at liberty to tax the plaintiffs' bill of costs on the basis that the limit in item 13 of the Supreme Court scale of costs be removed.
4 The application is supported by the affidavit of Oliver Dirk Feinauer,
sworn 22 March 2004. The first and second defendants oppose the application and in support of that opposition there has been filed an affidavit of David Ross Kilpatrick, sworn on 25 May 2004. It is convenient to begin with a general outline of what has been put before me in the affidavits, before I deal with the submissions made by the parties. I note that neither the third nor the fourth defendant appears before me nor is represented today.
5 Turning to Mr Feinauer's affidavit, he begins by setting out the
background to the litigation and representation of the plaintiffs. I do not need to canvass that now. As far as the trial itself was concerned, Mr Feinauer deposes that a total of 190 documents were filed and attaches a list of those documents. As Mr Dillon points out in his submissions, a number of those documents are effectively pro forma documents but, of course, others are not.
[2003] WASC 53 (S2)
ROBERTS-SMITH J
6 Mr Feinauer deposes that a total of 13 witnesses were examined by
counsel during the trial. He refers to the occasions on which submissions were made to me and to the course of events leading to the judgments. I note, as Mr Feinauer points out, that an amended minute of proposed orders which was filed on 29 May last year, sought removal of the costs limit, but in the event nothing was said of that by anybody at any hearing and no submission was advanced in relation to it. As a consequence, of course, that did not feature in any way in any decision made by me.
7 Really, the gravamen of Mr Feinauer's affidavit begins at [19] where
he refers to the appearance before me on the delivery of my supplementary decision in July 2003. Mr Feinauer deposes as to that, that due to the pressure of practice a practitioner of less than one year's post admission experience was required to attend to take the judgment and that any failure to move for special orders as to costs on that occasion can be ascribed to inadvertence and inexperience on the behalf of counsel.
8 Then he turns to the situation as it evolved subsequent to the delivery
of that judgment, and he says as to that, that due to the size of the file and substantial documentation involved it was envisaged that the process of taxation would be costly and protracted, and he considered it to be in the best interests of his clients to brief practitioners who act predominantly in the area of costs.
9 To that end, on 13 August 2003, a representative of his office
telephoned Mr David Garnsworthy of Garnsworthy Cost Consultancy to retain him to act for the plaintiffs. In the course of that contact it was ascertained that Mr Garnsworthy had already received instructions from Messrs Williams & Hughes, who were the solicitors for the corporate defendants at trial, with respect to costs and other undisclosed matters relating to the file.
10 He also observes that Ms Maria-Luisa Coulson was a prior employee
of the firm in about 1997, who had worked on the file and as she was associated with Garnsworthy Chambers the issue of conflict was perceived and that was raised in a facsimile to Williams & Hughes on 13 August 2003, following the conversation to which I have referred. As a result, Mr Garnsworthy advised that the Cost Consultancy was unable to act for the plaintiffs' solicitors by reason of the conflict of interest.
11 Other inquiries were made to obtain specialist assistance in that area.
I do not need to detail precisely what they were. The situation is, however, that it was not until instructions were given to Mr Sheavyn of
[2003] WASC 53 (S2)
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Messrs Talbot & Olivier on 23 October 2003, that the solicitors were able to obtain a practitioner to assist them in drafting a bill of costs for taxation and making an application for special orders as to costs.
12 So far as the work done on the matter is concerned and specifically
that involved in the getting up, which is all the application before me now relates to, it is deposed by Mr Feinauer that the complexity of the claim and the rigorous pursuit of the defendants' position afforded little opportunity to limit the scope of the litigation. The opposing parties, it is said, were unable to agree in relation to elements of the claim, or as to aspects of damages in light of the blanket denial of the defendants that any misrepresentations were made, that the plaintiffs relied on any representations made to them, or that any of the losses claimed were causally linked to conduct on behalf of the defendants.
13 As a consequence, Mr Feinauer says, all aspects of the matter had to
be exhaustively prepared for trial and that led to an increase in the work necessarily done. It is also contended that the matter raised not only complex factual issues, but also complex matters of law including, but not limited to, the quantum of claims. As to the item "getting up", Mr Feinauer deposes that a preliminary review of the file by Mr Sheavyn has indicated, on a conservative approximation, that the work involved in getting the case up for trial took something in excess of 410 hours. A number of those are itemised in terms of the work done, such as attendances on clients and witnesses, attendance on counsel, research and the like. Again, I do not propose to specify those particular amounts - that is, the times - nor the items in respect of which they are attributed.
14 The affidavit of Mr Kilpatrick is quite short. He deposes that he has
had the conduct of the action almost since its commencement, the file having initially been transferred to Williams & Hughes from the then firm Parker & Parker. He deposes that since at least early 2000 - which was more than two years prior to trial - most of the correspondence and communications he had with Feinauers and generally with the plaintiffs' solicitors, were with certain identified practitioners about whom he has made inquiries with the Legal Practice Board and by reference to the Law Almanac of Western Australia and believes they are relatively junior practitioners. In his affidavit he gives the details of those inquiries.
15 The conclusion, however, which he advances in his affidavit is
essentially as to his belief that during the periods in which he dealt with those nominated practitioners, they were either in their articles, were restricted practitioners or were, at best, in their post restricted practice
[2003] WASC 53 (S2)
ROBERTS-SMITH J
year and that from the observations he made in relation to the conduct of the matter, it appeared to him that those junior practitioners were significantly involved in the preparation of the action for trial on behalf of the plaintiffs.
16 It is submitted in part, on behalf of the first and second defendants -
to whom I shall simply refer as "the defendants" - that much more was needed to be produced to me in support of this application than has been, and in particular, that there ought to have been at least a draft bill of costs.
17 I do not accept the submission that the plaintiffs should have brought
in a draft bill of costs and that, in the absence of such a draft bill, the application should fail. The nature and extent of the evidentiary material required to support an application to vary or remove a costs limit under O 66 r 12(1) will depend upon the circumstances of the particular case. One of the most important of those will be whether or not the Judge before whom the application is made was the trial Judge. In this case I was the trial Judge.
In McLean v Kerville, unreported; SCt of WA; Library No 6455; 1 October 1986, the then Chief Justice Sir Francis Burt said:
"… if the trial Judge is of the opinion that for reasons falling within O 66 r 12(1) the allowance in that scale should be increased then before making any order it would be a good rule of practice if he were to require the person seeking such an order to bring in a draft bill so enabling the trial Judge to tailor his order to the then known facts".
19 As to that, in Verdell Pty Ltd v F & G Nominees Pty Ltd & Anor [2002] WASC 58(S2), Wheeler J observed that it is to be noted that the Chief Justice apparently thought it was open to the trial Judge to form an opinion that the allowance should be increased before seeing any draft bill and that nothing in his Honour's observation required a bill of the detail which had in fact been set out in the affidavit before her Honour in that case. As her Honour pointed out, when one considers the material which the Full Court actually had before it in that case, the Court was able to review the exercise of the trial Judge's discretion without reference to any such bill.
20 I am indebted to her Honour for the very helpful discussion of the
authorities at [5] to [15] of her Honour's judgment in Verdell. I respectfully agree with her Honour's observations and conclusions as to the proper approach to be adopted on an application of this kind. I made
[2003] WASC 53 (S2)
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reference to them and to some of the other authorities in Wayella Nominees Pty Ltd as Trustee for the D J Gordon Family Trust v Cowden Ltd [2003] WASC 210(S).
I will not repeat all I said there. It will be sufficient if I quote what I said at [11] and [12]:
"11 The nature of the exercise to be conducted and the evidentiary material required for it were explained, particularly in Collins and in Verdell. Those and other authorities make it clear a Judge considering such an application is not engaging in a taxation. It is neither necessary nor appropriate for the Judge to examine items in a draft bill, line by line. What is necessary rather is for the trial Judge drawing, inter alia, on his or her knowledge of the trial to make a preliminary and provisional judgment whether on the face of it the amount of work done appears to have been reasonably done so as to constitute good and sufficient reason for making the order or, alternatively, as it is put in that way in this case, the case is of unusual complexity, such as to justify an order of that kind.
12 One point which does emerge from the authorities is that it is not sufficient for the applicant to show merely that work was done. The applicant must show why it was done or the necessity for it must otherwise be apparent to the trial Judge from his or her knowledge of the proceedings: that is to enable the Judge to make that preliminary and provisional determination, whether the work was reasonable and necessary. The point was, with respect, well made by Wheeler J in Verdell at [14] and [15], where her Honour said:
'14
Leaving aside the observations of Owen J in McDonnell at p 9 which may have been prompted by the circumstances of that case, and which I would respectfully suggest should not be seen as stating a general rule, it would appear that the following general propositions emerge in relation to the task of the Judge who determines whether or not a special costs order should be made. If the Judge has been the trial Judge, he or she will be
[2003] WASC 53 (S2)
ROBERTS-SMITH J
able to draw on experience of the trial, which will be of great assistance in understanding the issues involved, and in appreciating the extent to which, for example, detailed preparation for cross- examination appears to have been necessary, or work appears to have been necessary beyond normal court sitting times to respond to matters arising suddenly during the course of the trial. Whether or not the Judge has been the trial Judge, a perusal of the pleadings, the transcript, and the submissions, together with the materials which may relate to interlocutory applications, will be of great assistance in understanding whether it was necessary for additional work to be done.
15 Whether or not the Judge has been the trial Judge, there may be work done of which the Judge is not aware. For example, there may have been unusually voluminous discovery, which is not reflected in the actual number of documents tendered at trial, or there may have been consultation with potential expert witnesses or research of issues of law which were not in the end reflected in the trial. Such work may not have been unnecessary in the light of what was known at the time, but may have resulted in agreement between the parties or a decision by one or another party to abandon an issue which at first appeared to arise. In those cases, it will be necessary for affidavit material to be placed before the Judge explaining in general terms what work was done and why it was done, and giving some indication of the time occupied by such work. It will, of course, be necessary to establish that, prima facie, costs appear to have been incurred which exceed those allowable under the scale. Whether this material is produced in the form of a computer printout, or a draft bill, or a summary prepared by the practitioner having carriage of the file, does not appear to me to matter. If the step is taken of producing a detailed schedule or a computer printout or the like, the
[2003] WASC 53 (S2)
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Judge will not examine the material line by line, looking for possible duplication or overlap, or enquiring about the way in which every 10 minutes was spent.'"
22 As the plaintiffs' submissions make clear, the application is made
pursuant to O 66 r 12(1) RSC. That rule provides that where the Court is of the opinion that a special order as to costs should be made, by reason of unusual complexity or importance of the case or for any other good or sufficient reason, the Court may order that particular allowances in any relevant scale be raised or a limit removed and, in giving any such direction, the Court may fix a limit within which the taxing officer may allow such costs.
As I pointed out in Jewel Walk Pty Ltd & Anor v Kondinin Group Inc [2001] WASC 197, at [15]:
"There are therefore three separate bases upon which a special costs order may be made. They are by reason of: (a) the unusual complexity of the case; or (b) the importance of the case; or (c) any other good or sufficient reason".
24 I note in passing that the plaintiff also adverts to s 215 of the Legal Practice Act 2003 (WA), which relevantly provides in subsection (2) that if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the Court or officer may do all or any of the following:
(a) order the payment of costs above those fixed by the determination; (b) fix higher limits of costs than those fixed in the determination; (c) remove limits of costs fixed in the determination; (d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or taxed. 25 I shall return to that and to O 66 r 12 shortly. First it is necessary for
me to deal with the application for extension of time and the question of
delay.
It is clear that there has been not insignificant delay in the making of this application.
[2003] WASC 53 (S2)
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27 As Mr Dillon for the first and second defendants has pointed out, the
work the subject of this application - namely, getting up - is work which was or ought to have been completed by the commencement of the trial, which was on 4 November 2002. The trial was completed by 14 November 2002 and, as I have mentioned, my primary reasons were delivered in March 2003. That is some 12 months before the present application was filed.
28 I accept the correctness of Mr Dillon's submission that there were
occasions in the course of the hearing, both then and subsequently, in which the issue of costs was specifically raised; that is particularly so in relation to the submissions filed prior to the handing down of my supplementary reasons in July 2003, some eight months following the trial.
29 On that occasion matters relating to costs, including indemnity costs
and a certificate for two counsel, were expressly before the court. Mr Dillon's submission, as I apprehend it, is in part that the present application should have been raised and dealt with on that occasion and, indeed, it had been foreshadowed in the minute of proposed orders, as I have indicated.
30 His contention is that it ought to have been pursued on that occasion;
that there was sufficient information available as to the getting up to the plaintiffs to enable the submission, or the application to be made, and that it ought to have been done then. There is considerable force in that submission.
31 Even so, the plaintiffs had an opportunity for another 30 days
following the delivery of that decision to make application for removal or lifting of the costs limit. The rule allowing that 30 days does so, in my view, on the basis that it is not unusual for such a question to escape attention even in circumstances of the delivery of a final judgment, including one with respect to costs.
32 His further contention is that - and I express it briefly and without
attempting to give it the full scope with which he presented it in submissions - not only was the application not made within the time open to it to be made, but no explanation has been given in particular for the fact that the application was not made until now, following the expiration of 30 days from delivery of the supplementary reasons.
33 The explanation which I think is being advanced by the plaintiffs, or
on their behalf, is that it took their solicitors that long to determine
[2003] WASC 53 (S2)
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whether or not a special costs order could be substantiated and to make adequate preparation for it, by reliance upon practitioners with expertise in that area. I must say I do have some difficulty with that as a general proposition and the force of Mr Dillon's submission in relation to it cannot, I think, be denied. That, however, in my view is not the end of the matter. It is certainly a consideration which militates against the granting of the application for an extension of time. But it is appropriate, in my view, to consider those circumstances in the context of the matter as a whole, and that includes other considerations.
34 First of all, a guiding principle must be the public interest and that of
the parties in the finality of litigation, a matter to which I referred at [21] of my reasons for decision in Jewel Walk, referring to Esther Investments, where his Honour the Chief Justice refused an application made because although due to inadvertence, it was not made until nearly three and a half years after judgment, and the interests of finality of litigation militated against it. In the instant case the time elapsed is some nine months which is certainly well beyond the 30 days but not of the order of the delay in Esther Investments.
35 Secondly, the question of a special costs order had been raised,
although not pursued, in the minute of proposed orders filed by the plaintiffs on 29 May 2003. As I say, although not dealt with then, that was because it was not at that stage pursued before me and no party raised it. Nonetheless, I accept - as deposed to by Mr Feinauer - that the plaintiff certainly from the delivery of judgment was actively preparing to crystallise and press the application.
36 Thirdly, there is the question whether if the order had actively been
sought in May 2003, or within 30 days of that judgment, it would
probably then have been granted. I shall advert to this again later.37 Fourth, the litigation is not yet finalised because there is an appeal
pending which has not yet been heard. I note Mr Dillon's submission that one of the defendants, Mr Steele, has not filed an appeal and accordingly he would be, it is submitted, prejudiced were the application by the plaintiffs to be granted.
38 On this issue I think the practical answer to that contention is that the
plaintiffs' costs have not yet been agreed nor taxed and presumably, given
this application, they have not been quantified to the defendants at all.
[2003] WASC 53 (S2)
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39 Nor do I think that the case management principles now embodied in
the Rules of the Supreme Court militate against the grant of the plaintiffs'
application in the circumstances.
Finally, counsel for the defendants identified what he said was prejudice to them should the application be granted.
41 There were three as I apprehend it. The first is that final orders have
been made and the defendants are entitled to know where they stand and that includes his reference to the fact that Mr Steele has not filed an appeal; secondly, that the appeal has in fact already been instituted, but if this application were to be granted, that would involve further consideration of the defendants' position and, in particular, whether or not the grounds of appeal should be amended, or there should be a further appeal instituted against any order which might be made today; and thirdly, there is - he says - the prejudice of the defendants having to appear by counsel today.
42 The third, it seems to me, is not something which can go to the
question whether or not the extension of time should be granted, nor indeed whether or not the plaintiffs' application should itself be granted nor, in my view, does the second. So far as the first is concerned it is true that final orders have been made, but as I have observed, they are subject now to the pending appeal and the position of Mr Steele, I think, is dealt with in the way I have just indicated.
43 There is a general power to extend time notwithstanding the
application to extend is itself made outside the time limit - O 5 r 1 and 2 RSC: Snowtop Mushrooms v Powley, unreported; FCt SCt of WA; Library No 4501; 14 May 1982. In addition to those to which I have referred, one factor to which it is relevant to have regard on the question of extension of time, is whether the application for raising or removal of the limit should be granted.
44 And so, in that context, I return to my consideration of that question.
I mentioned the plaintiffs' reliance on s 215 of the Legal Practice Act 2003. In my view s 215 does not apply here. As Mr Dillon points out that Act did not come into operation until 1 January 2004. In any event, it would not affect any substantive change to the law in this area. I say that because it seems to me that if a case were of such unusual difficulty as to justify an increase in or removal of a cost limit, then it would inevitably also be a good or sufficient reason for doing so.
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45 Section 215 in its terms is more narrow in effect than O 66 r 12(1)
because the section allows an increase in costs only in three circumstances: namely, unusual difficulty, unusual complexity or unusual importance. The order, on the other hand, recognises unusually complex or unusually important matters, but the words "any other good or sufficient reason" are susceptible of encompassing not only unusual difficulty but any other relevant circumstance. That includes, in my view, the amount of work involved in preparation itself constituting a good and sufficient reason to increase the allowance provided under the scale: see Schmidt v Gilmour [1988] WAR 219.
46 It is neither necessary nor appropriate that I go through line by line
the material setting out the claim for time spent or costs incurred and analyse what has been claimed; although I think that is effectively what Mr Dillon sought to have me do. I accept I need to be satisfied not only that work was done to the extent claimed, but also that it was prima facie necessarily done, but that needs to be shown only in a general and global way and against the background of my knowledge of the trial itself. I am so satisfied.
47 On the face of it, the amount of time deposed by Mr Feinauer as
having been spent on getting up, suggests the case was of a degree of complexity and/or difficulty which extended well beyond that which would be regarded as ordinary. My own impressions of the conduct of the trial, the evidence, the pleadings and the submissions made by the parties, confirm that.
48 I accept it is at least probable that the case was one of unusual
complexity and difficulty in the sense I have mentioned. Considerations going to that conclusion include that the case was hard fought on every point, two of the defendants were unrepresented and conducted their own cases, and the issues of causation and assessment of damages were complex.
49 I am satisfied the plaintiffs have shown it is probable there was
greater work which was needed to be done in preparation than the scale amount contemplates as a maximum for the ordinary case. That is, in itself, a good and sufficient reason for removing the limit within the meaning of those words in O 66 r 12(1).
50 Thus, had the application for removal of the costs limit been made
within time, it would have been granted. That is a further reason for
extending time notwithstanding the long delay.
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51 A point urged upon me on behalf of the first and second defendants
that the work was or may have been done by junior practitioners and the scale limit would therefore not be inadequate, again has some force. However, I consider there is nonetheless prima facie justification for removing the limit.
52 Even if some substantial part of the claimed approximate total which
is in excess of 400 hours was done by junior practitioners, the money claimed would still significantly exceed the amount in the scale which has been calculated on the basis of 100 hours of a senior practitioner's time. Whether or not costs should actually be allowed for junior or senior practitioners and, if so, for what work, will be a matter for the taxing officer.
53 As to the contention that the plaintiffs failed on a number of points,
Mr Sheavyn submits that that should not bear on this application because there has been no apportionment of costs. The order already made is that the defendants must pay the plaintiffs' costs of the action. That submission must be accepted.
I would grant the application to extend time and allow the application for removal of the limit pursuant to O 66 r 12(1).