Anderson v McPHERSON [No 2]
[2012] WASC 19 (S2)
•25 JANUARY 2012
ANDERSON -v- McPHERSON [No 2] [2012] WASC 19 (S2)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 19 (S2) | |
| Case No: | CIV:2210/2007 | 3-6 OCTOBER & 24 NOVEMBER 2011 & 2 MARCH 2012 | |
| Coram: | EDELMAN J | 25/01/12 | |
| 8/03/12 | |||
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Costs orders made | ||
| B | |||
| PDF Version |
| Parties: | BRUCE WILLIAM ANDERSON CAROLYN ANDERSON STEPHANNIE MARRIEE McPHERSON TROY KENNON ANDERSON |
Catchwords: | Costs Order 24A offer of compromise Whether offer by plaintiffs more favourable to first defendant than orders made Method of valuing offer Similar offer of compromise made by first defendant Turns on own facts |
Legislation: | Federal Court Rules 1979, O 23 r 11(6) Federal Court Rules 2011, r 25.14 Property Law Act 1969 (WA), s 126 Rules of the Supreme Court 1971 (WA), O 24A Uniform Civil Procedure Rules 2005 (NSW), r 42.15A |
Case References: | Anderson v McPherson [No 2] [2012] WASC 19 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 8 MARCH 2012 FILE NO/S : CIV 2210 of 2007 BETWEEN : BRUCE WILLIAM ANDERSON
- First Plaintiff
CAROLYN ANDERSON
Second Plaintiff
AND
STEPHANNIE MARRIEE McPHERSON
First Defendant
TROY KENNON ANDERSON
Second Defendant
Catchwords:
Costs - Order 24A offer of compromise - Whether offer by plaintiffs more favourable to first defendant than orders made - Method of valuing offer - Similar offer of compromise made by first defendant - Turns on own facts
(Page 2)
Legislation:
Federal Court Rules 1979, O 23 r 11(6)
Federal Court Rules 2011, r 25.14
Property Law Act 1969 (WA), s 126
Rules of the Supreme Court 1971 (WA), O 24A
Uniform Civil Procedure Rules 2005 (NSW), r 42.15A
Result:
Costs orders made
Category: B
Representation:
Counsel:
First Plaintiff : Mr A P Rumsley
Second Plaintiff : Mr A P Rumsley
First Defendant : Mr D J Morris
Second Defendant : No appearance
Solicitors:
First Plaintiff : Alan Rumsley
Second Plaintiff : Alan Rumsley
First Defendant : Bruce Havilah & Associates
Second Defendant : No appearance
Case(s) referred to in judgment(s):
Anderson v McPherson [No 2] [2012] WASC 19 (S)
(Page 3)
1 EDELMAN J: This issue concerning the appropriate orders as to costs was deferred pending my decision on the other orders. Submissions as to costs orders were made at the conclusion of my oral reasons for decision on the other orders. The submissions ran past the end of the day and counsel were content that these reasons and my proposed costs orders would be provided by email, with liberty to apply in relation to the costs orders if any further matters arose from these reasons.
2 The plaintiffs sought various orders in their prayer for relief. These included an order for sale of the Anstey Road Property, a declaration concerning rights relating to the ANZ Anstey Road account, equitable compensation, and a declaration of resulting trust.
3 The issue concerning an order for sale of the Anstey Road Property under s 126 of the Property Law Act 1969 (WA) was deferred until after the giving of my reasons. There were also agreed facts that rates and charges were owing to the Armadale Council and the Water Corporation by the first defendant. Counsel for the plaintiffs said, at the end of trial that 'we hope not to trouble your Honour with [those issues]' (ts 264). The issue concerning the rights relating to the ANZ Anstey Road account was generally the subject of agreed facts at trial.
4 Apart from the first defendant's counterclaims, contribution and indemnity notice (as to which she accepts that she must pay the plaintiffs' costs) almost all of the evidence at trial, and almost all of the pleadings and the submissions of both counsel in opening and closing, were directed to whether the plaintiff was entitled to a declaration of resulting trust. That declaration was not made. The declaration of resulting trust was the essence of the plaintiffs' case because a resulting trust, and any beneficial interest of the parties under that trust, would dictate the parties' respective shares in the Anstey Road Property under an order for sale. The ordinary course in a case such as this would therefore be that the plaintiffs would pay the costs of the first defendant of the claim, to be taxed if not agreed.
5 Counsel for the plaintiffs pointed to my reasons that apart from the issue of the operation of presumptions the ultimate resolution of the resulting trust issue turned upon uncomplicated factual matters, some of which were not in dispute [5]. He submitted that the trial had been complicated and extended by issues raised by the first defendant in the counterclaim and contribution and indemnity notice. That may be so, but those additional costs will be borne by the first defendant, since the costs of the counterclaim and contribution and indemnity notice are to be paid by the first defendant.
(Page 4)
6 Counsel for the plaintiffs then referred me to an offer of settlement made by the plaintiffs to the first defendant under O 24A of the Rules of the Supreme Court 1971 (WA). The offer was made on 20 June 2008. It is an unfortunate mark of this litigation that an extremely similar offer was made by the first defendant to the plaintiffs on 29 March 2011, differing only in the requirement that the first defendant be released from payment of rates and taxes she owes in relation to the Anstey Road Property. Both offers were rejected.
7 Counsel for the plaintiffs sought party and party costs of the claim based upon the 20 June 2008 offer. His submission was that the orders made were less favourable to the first defendant than this offer and the plaintiffs were therefore entitled to their party and party costs of the claim for the period before and after the offer: see O 24A r 10 Rules of the Supreme Court.
8 Order 24A r 10 of the Rules of the Supreme Court is incomplete in one significant respect. It only contemplates costs orders in circumstances of an offer by a plaintiff or defendant where 'the plaintiff obtains judgment on the claim': see O 24A r 10(4),(5). It provides no direct guidance for how to resolve a situation where the defendant obtains judgment on the claim but the offer made by the plaintiff might have been more favourable to the defendant than the judgment obtained by the defendant. This gap has been noticed by judges in other jurisdictions, whose comments led to reform of the rules in New South Wales and in the Federal Court: see the discussion in G Dal Pont The Law of Costs (2nd ed, 2009), 374 - 375, [13.16]; Federal Court Rules 1979 O 23 r 11(6) (with effect from 1 August 2008) see now Federal Court Rules 2011 r 25.14; and Uniform Civil Procedure Rules 2005 (NSW) r 42.15A.
9 Counsel for the plaintiff submitted that the approach in O 24A r 10(4) ought to be applied by analogy in the general exercise of my costs discretion. Counsel for the first defendant did not suggest that this approach was incorrect. I proceed on this basis, although there may be doubt whether an analogical approach is always appropriate in a case of a statutory omission. In other words, it is unclear whether, in the absence of provision in the rules, the common law should generally allow costs for the period both before and after an offer to a plaintiff where a defendant obtains judgment which is less favourable than the offer. However, in circumstances in which the plaintiff did obtain some orders sought (albeit not orders which were the subject of any substantial contest) I proceed on the basis that the question is whether the plaintiffs' offer was more favourable than the judgment obtained by the first defendant.
(Page 5)
10 The plaintiffs' offer on 20 June 2008 was as follows:
(1) payment of $170,000 to the first defendant;
(2) a release of the first defendant from liability under the ANZ Anstey Road loan (with an outstanding balance of $141,297.10 as at 12 May 2008); and
(3) the interests of the defendants in the Anstey Road Property be transferred to the plaintiffs.
11 It is extremely difficult to assess whether this offer, at this date, was more favourable to the first defendant than the orders which I have made. This is because the effect of my orders is that the first defendant will recover 25% of the value of the property (less selling costs). But there is no evidence before me concerning the value of the Anstey Road Property (in (3) above) as at 12 May 2008.
12 Both counsel submitted that I should consider, as a rough and ready approximation, a comparison between the $1 million value of the Anstey Road Property, as at 23 September 2011, based on the valuers' report from Mr Lambert, and the balance of the ANZ Anstey Road loan at about that date. This approach is very rough because it values the 20 June 2008 offer at a date several years later, ie 23 September 2011. At that date, the offer in force was an offer from the first defendant.
13 However, even proceeding on this basis as submitted by counsel for the plaintiffs, the plaintiffs' offer is less favourable to the first defendant than the judgment which the first defendant obtained.
14 At 28 September 2011, the balance of the ANZ Anstey Road loan was $132,243.35. The first defendant's liability under the ANZ Anstey Road loan was joint and several with the plaintiffs and the second defendant. But the first and second defendants had undertaken to the plaintiffs that they would make the repayments for that loan: see my reasons at [69(g)].
15 Although part of the increase in the loan was due to a draw down by the first defendant, the extent to which that draw down should be apportioned between the first and second defendant is a matter for the Family Court proceedings. There is insufficient evidence for me to make any apportionment.
(Page 6)
16 The result is that the plaintiffs had a right to proceed to recoup any of their $132,243.35 joint liability against the first or second defendant under the Anstey Road Agreement. The proposed release of the first defendant from that liability in the plaintiffs' O 24A offer was not a release of the second defendant. At best, from the plaintiffs' perspective, the release of the first defendant at 28 September 2011 should be valued at $66,121.68. The plaintiffs' claim against the second defendant was not released. The same value of the debt applies to the first defendant. Even if the Anstey Road Agreement could be construed as creating a joint liability of the first and second defendant to the plaintiffs, the first defendant could have sought equitable contribution from the second defendant if the whole of the debt were enforced against her, or joined the second defendant (who was not released) to any enforcement action.
17 Therefore, even if it be assumed that the plaintiffs' offer of 20 June 2008 had been in force as at 28 September 2011, and even assuming that I were to ignore the fact that the offer in force at that date was from the first defendant and not from the plaintiffs, a rough valuation of the plaintiffs' offer would be $236,121.68 (comprised of $170,000 cash offer plus $66,121.68). This is less than the amount which both counsel assumed to be the value of the judgment to the first defendant (ie $250,000, being a quarter of Mr Lambert's valuation) even with some reduction for selling costs (the extent of such a reduction was, again, not the subject of any evidence before me).
18 The appropriate costs disposition of the claim is that the plaintiffs should pay the first defendant's costs.
19 There remains for consideration the issue of the costs of the hearing on 2 March 2012 which concerned all the appropriate orders consequent upon my judgment. The primary focus of the submissions, written and oral, concerned those orders focussed upon an award of equitable compensation, in the amount of $180,000. There was little dispute concerning the other orders. The plaintiffs were unsuccessful in these orders sought for equitable compensation: see Anderson v McPherson [No 2] [2012] WASC 19 (S). After the delivery of my supplementary reasons, further submissions were made by both counsel in relation to the costs of the plaintiffs' action, including the costs of the 2 March 2012 hearing (ts 330 - 331). As to these orders, for the reasons I have given in this judgment the first defendant has also been successful in her submissions that the plaintiffs should pay the first defendant's costs of the action. There was no dispute that the first defendant should pay the
(Page 7)
- plaintiffs' costs of the counterclaims and contribution and indemnity notice.
20 It is, therefore, appropriate that the plaintiffs should pay the costs of the first defendant in relation to the 2 March 2012 hearing.
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