Brian Neville Mayfield & Marlene Theresa Mayfield (ATF B & M Mayfield Superannuation Fund) v P & B Corporation Pty Ltd (ATF North Cape Development Trust) [No 2]
[2015] WASC 356 (S)
•15 JUNE 2016
BRIAN NEVILLE MAYFIELD & MARLENE THERESA MAYFIELD (ATF B & M Mayfield Superannuation Fund) -v- P & B CORPORATION PTY LTD (ATF North Cape Development Trust) [No 2] [2015] WASC 356 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASC 356 (S) | |
| Case No: | CIV:2796/2013 | 14 DECEMBER 2015 | |
| Coram: | ALLANSON J | 15/06/16 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Application for special costs orders granted Costs orders made | ||
| B | |||
| PDF Version |
| Parties: | BRIAN NEVILLE MAYFIELD & MARLENE THERESA MAYFIELD (ATF B & M Mayfield Superannuation Fund) RICHARD COBLEY & ROBYN COBLEY (ATF R & R Cobley Family Super Fund) KENNETH MAXWELL DOWNES & LYNETTE LORRAINE GRIEVES PETER DAVID HORWOOD AND JILL HORWOOD DISCOVERY III PTY LTD FORMERLY LATITUDE FISHERIES PTY LTD (ATF Boschetti Superannuation Fund) MURRAY RONALD HORAK & ASTRID JEANETTE MARQUERITE HORAK MARTIN RYAN HORAK & URIEL GERALDINE DEKALBERMATTEN P & B CORPORATION PTY LTD (ATF North Cape Development Trust) BARRY COLIN HUMFREY PETER FRANCIS BELL REGIONAL WA PTY LTD FORMERLY P & B SERVICES PTY LTD KENESTA PTY LTD THOMSON SMSF WARRANT PTY LTD JOHN SCOTT THOMSON BIRDANCO NOMINEES PTY LTD (T/As RSM Bird Cameron) |
Catchwords: | Practice and procedure Costs Costs of interlocutory applications Where party successful in part Turns on own facts Practice and procedure Costs Costs of interlocutory applications Special costs orders Unusual difficulty, complexity or importance Turns on own facts |
Legislation: | Legal Practitioners (Supreme Court) (Contentious Business) Determination 2014 (WA) Legal Profession Act 2008 (WA), s 280(2) Rules of the Supreme Court 1971 (WA), O 20 r 19(5) |
Case References: | Wainwright v Barrick Gold of Australia Ltd [2014] WASCA 15 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiffs
RICHARD COBLEY & ROBYN COBLEY (ATF R & R Cobley Family Super Fund)
Second Plaintiffs
KENNETH MAXWELL DOWNES & LYNETTE LORRAINE GRIEVES
Third Plaintiffs
PETER DAVID HORWOOD AND JILL HORWOOD
Fourth Plaintiffs
DISCOVERY III PTY LTD FORMERLY LATITUDE FISHERIES PTY LTD (ATF Boschetti Superannuation Fund)
Fifth Plaintiff
MURRAY RONALD HORAK & ASTRID JEANETTE MARQUERITE HORAK
Sixth Plaintiffs
MARTIN RYAN HORAK & URIEL GERALDINE DEKALBERMATTEN
Seventh Plaintiffs
AND
P & B CORPORATION PTY LTD (ATF North Cape Development Trust)
First Defendant
BARRY COLIN HUMFREY
Second Defendant
PETER FRANCIS BELL
Third Defendant
REGIONAL WA PTY LTD FORMERLY P & B SERVICES PTY LTD
Fourth Defendant
KENESTA PTY LTD
Fifth Defendant
THOMSON SMSF WARRANT PTY LTD
Sixth Defendant
JOHN SCOTT THOMSON
Seventh Defendant
BIRDANCO NOMINEES PTY LTD (T/As RSM Bird Cameron)
Eighth Defendant
Catchwords:
Practice and procedure - Costs - Costs of interlocutory applications - Where party successful in part - Turns on own facts
Practice and procedure - Costs - Costs of interlocutory applications - Special costs orders - Unusual difficulty, complexity or importance - Turns on own facts
Legislation:
Legal Practitioners (Supreme Court) (Contentious Business) Determination 2014 (WA)
Legal Profession Act 2008 (WA), s 280(2)
Rules of the Supreme Court 1971 (WA), O 20 r 19(5)
Result:
Application for special costs orders granted
Costs orders made
Category: B
Representation:
Counsel:
First Plaintiffs : Mr M L Bennett
Second Plaintiffs : Mr M L Bennett
Third Plaintiffs : Mr M L Bennett
Fourth Plaintiffs : Mr M L Bennett
Fifth Plaintiff : Mr M L Bennett
Sixth Plaintiffs : Mr M L Bennett
Seventh Plaintiffs : Mr M L Bennett
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : Mr M C Goldblatt
Eighth Defendant : Mr M C Goldblatt
Solicitors:
First Plaintiffs : Bennett + Co
Second Plaintiffs : Bennett + Co
Third Plaintiffs : Bennett + Co
Fourth Plaintiffs : Bennett + Co
Fifth Plaintiff : Bennett + Co
Sixth Plaintiffs : Bennett + Co
Seventh Plaintiffs : Bennett + Co
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : Hammond King Touyz
Eighth Defendant : Hammond King Touyz
Case(s) referred to in judgment(s):
Wainwright v Barrick Gold of Australia Ltd [2014] WASCA 15 (S)
1 ALLANSON J: On 12 June 2015, I delivered reasons on applications by all defendants to strike out allegations pleaded against them in the third amended statement of claim. The parties conferred about the wording of orders to give effect to the reasons, and on 19 June, I made orders striking out the plaintiffs' claim against the seventh and eighth defendants. The court ordered that the plaintiffs file and serve any application for leave to re-plead the claims and a minute of proposed amended statement of claim by 30 June 2015. That date was extended by consent.
2 The plaintiffs complied with those orders.
3 The seventh and eighth defendants, but not the other defendants, challenged the amended plea. On 30 September 2015, I gave reasons on the application by the seventh and eighth defendants, on this occasion striking out the statement of claim in part.
4 The seventh and eighth defendants apply for the costs of the two applications, and also for special costs orders.
The first application
5 The application by the seventh and eighth defendants was successful in striking out the pleas against them in the statement of claim. The plaintiffs were give leave to re-plead. Pursuant to O 20 r 19(5), the plaintiffs were ordered to file and serve an application amend and a minute of proposed amended statement of claim.
6 The plaintiffs do not contest that the seventh and eighth defendants are entitled to the costs of the strike out application. The plaintiffs seek the costs of the summary judgment application.
7 The costs of such a summary judgment application are in the discretion of the court, but it is common to order that the costs of an unsuccessful application should be in the cause if it was not brought unreasonably. Although the court permitted the plaintiffs to re-plead their claim, the existing plea was deficient.
8 I am not satisfied, however, that the proper order in this instance is that the costs of the summary judgment application be in the cause. It is almost impossible to extricate that part of the costs attributable to one or the other aspect of the application. In substance, the seventh and eighth defendants succeeded in striking out the claim against them. In the subsequent re-pleaded claim, the case against them substantially changed. The defendants should not have the costs of affidavits sworn in support of the application for summary judgment. Otherwise, they should have the costs of the first application.
The second application
9 On 30 June 2015, the plaintiffs filed a minute of proposed orders in which they sought leave to amend the writ and also to amend the statement of claim. Following conferral, the plaintiffs further amended the minutes of the proposed amended writ and statement of claim.
10 On 31 July and 14 August, orders were made programming affidavits and submissions to be filed by the plaintiffs in support of an application to amend the statement of claim and the writ, and the application by the seventh and eighth defendants that those amendments not be permitted and for summary judgment. The other defendants did not oppose the plaintiffs' application.
11 The proposed amendments went far beyond the matters that had been found to have been inadequately pleaded in the third amended statement of claim. Some claims were deleted. Importantly:
1. The plea in negligence now specifically included the seventh defendant, and expanded the factual basis of the claim in negligence.
2. The plaintiffs added causes of action for misleading or deceptive conduct under the Australian Consumer Law, alternatively the Australian Securities and Investment Commission Act 2001 (Cth).
12 The amendments also dealt with a factual development since the commencement of the action and earlier versions of the statement of claim. The dispute relates to a development project. Previously, the plaintiffs had pleaded claims arising from the resumption, or purported resumption, of their units in the unit trust that was carrying out the development. On 28 August 2014, the bank which provided finance to the development gave notice that it had retaken possession of the property which was the major asset in the project. The plaintiffs now pleaded their entitlement to damages on a different basis, including on the basis of 'lost opportunity'.
13 In opposing the amendment, the seventh and eighth defendants submitted:
1. the plaintiffs have failed to disclose a reasonable cause of action on either of the causes of action in negligence or under statute, or would prejudice, embarrass or delay the fair trial of the action;
2. the amended statement of claim was the sixth attempt to plead a cause of action and it remains flawed;
3. the plaintiffs have substantially changed their case between various versions of this statement of claim;
4. the plaintiffs have provided no explanation for the indulgence sought in belatedly making allegations of reliance on 'lost opportunity';
5. the allegations of lost opportunity are inconsistent with material allegations of fact pleaded against other defendants; and
6. in any event the allegations are 'impenetrable and would prejudice, embarrass or delay the fair trial of the action'.
14 The defendants submitted that the court should refuse leave to amend and enter judgment for them. Alternatively, they submitted that the action should be disposed of summarily on the basis that there is no serious question to be tried on any cause of action sought to be raised by the plaintiffs.
15 The challenge to the pleading was successful in part.
16 First, the plaintiffs pleaded that the defendants had breached their duty of care to the plaintiffs by negligent advice in a letter dated 1 May 2013 as to the valuation of the trust, and the fair market value of each of the units in it. I held that even if the defendants had a duty of care, the letter of 1 May 2013 could not reasonably be construed in the manner alleged. That, in effect, disposed of that part of the claim.
17 Second, the plea of misleading or deceptive conduct had two limbs. I held that with regard to the first of those allegations, the plaintiffs had failed to sufficiently plead both the conduct and the relevant circumstances that made that conduct misleading. In circumstances where the plaintiffs pleaded a failure 'from 2009', I held that the plea was also embarrassing in the sense that it may prejudice, embarrass or delay the fair trial of the action.
18 Other arguments on behalf of the defendants were not upheld.
19 The scope of the seventh and eighth defendants' engagement to provide advice is central to the first limb of the plaintiffs' case in negligence. The defendants submitted that the plaintiffs had not sufficiently pleaded the terms of the arrangement under which the defendants provided services. I did not strike out the plea, but noted that the plaintiffs had pleaded that full particulars of the matters on which the plaintiffs relied would be provided after discovery and inspection. Should there be need to revisit the adequacy of the pleading at a later time, following usual interlocutory processes, it can be done.
20 The issue was a substantial one at the hearing. The defendants filed an affidavit of the seventh defendant, dated 13 August 2015, and made lengthy submissions. In particular, the defendants submitted that the court should infer the allegations were pleaded for an ulterior purpose.
21 The defendants' general objections to the plaintiffs being permitted to amend were not upheld, including the allegations of ulterior purpose. The application for summary judgment was refused.
22 One limb of the plea in misleading or deceptive conduct was also not struck out.
23 I did not uphold the seventh and eighth defendants' submission that the claim of damages for 'lost opportunity' was inconsistent with claims pleaded against other defendants, and that the inconsistency inherent in the plea cannot be overcome by pleading the claim is in the alternative.
24 As a result, the plea that eighth defendant breached its duty of care by its letter of 1 May 2013, and a related paragraph, were not permitted to stand. The plea of misleading or deceptive conduct relating to the conduct of the seventh and eighth defendants from October 2009 was also not permitted. The plaintiffs were given leave to re-plead. There are aspects of the plea that await discovery and inspection before it can be determined whether the plaintiffs can plead a sufficient case.
25 Both the plaintiffs and the defendants applied for costs of the second applications.
26 The defendants were again successful in part. They did, however, introduce several issues which contributed substantially to the length and complexity of the hearing and on which they failed. The application for summary judgment did not succeed. There can be no precise assessment of the costs attributable to issues. As a matter of estimation, I believe that the plaintiffs should pay 65% of the defendant's costs of the application. That allows for the 'preliminary' issues, including issues of good faith and ulterior purpose, that were determined against the defendants, and the extent to which those issues were reflected in both written and oral submissions. It also takes into account the failure of the summary judgment application, but recognises that two significant components of the plaintiffs' case were not permitted to stand.
Special costs orders
27 Under s 280(2) of the Legal Profession Act the court may order that any particular allowance in the scale set out in a Legal Costs Determination be raised or a limit removed. The principles guiding the exercise of that discretion have been established in several decisions: see, for example, Wainwright v Barrick Gold of Australia Ltd [2014] WASCA 15 (S) [7] - [9].
28 Before making an order the court must form an opinion which has two components: that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate; and that the inadequacy arises because of the unusual difficulty, complexity or importance of the matter.
29 The 'matter' which must be unusually difficult, complex or important in order to enliven the power conferred by s 280(2) is the whole of the 'matter' in respect of which legal services were provided and which comes within the scope of the legal costs determination. The word 'unusual' qualifies only the 'difficulty' of the matter and not its complexity or importance. The word 'unusual' essentially requires a value judgment by the court, having regard to the court's experience of the particular case when compared with the usual run of cases. The reference to 'importance' in s 280(2) requires the court to consider whether the work done was appropriate to the significance of the issues in the litigation. In the present matter, there is no question of public or community interest generally, and importance must stem from the significance of the issues to the parties.
30 The amount of costs is to be determined by taxation. The court does not usurp the function of the taxing officer. The function of the court in making a special costs order is limited to setting the parameters within which the taxing officer will tax the relevant bill, and providing any specific directions which will assist the taxing officer to assess the amount to be allowed on taxation.
31 The court exercises the power under s 280(2) as a matter of impression, taking into account the greater expertise of taxing officers in fixing the amount of costs that should be properly and reasonably allowed. The court may act on affidavit evidence, and may form a view based on its familiarity with the action, and how the matter was conducted.
32 In the present case, the defendants filed an affidavit of Colin Touyz, principal of the firm representing the defendants. Mr Touyz deposed that the matter is important because of the nature and extent of the allegations of wrongdoing made against the defendants in their professional capacity. The defendants also submitted that a special costs order is warranted because of the unusual difficulty, and the complexity of the matter.
33 It is sufficient for present purposes to say that I am satisfied the importance of the matter might justify work beyond the hours limited in the determination for a matter of this kind. It was not unusually difficult. The statement of claim was complicated, but the defendants have not shown that the claim against them is itself complex. But only one of the three factors in s 280 needs be met, and I am satisfied the defendants have established importance.
34 The actual costs incurred, as set out in an attachment to the affidavit of Mr Touyz, are extraordinary. In particular, they appear to involve substantial duplication between counsel and solicitor and work not strictly related to the strike out applications. The resulting draft bill exceeds $65,000; that is about three times the amount in item 10 of the schedule to the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2014 for two proceedings in chambers.
35 To what extent the hours can be justified, and whether all of the work claimed is properly claimed on an application to strike out, is a matter for a taxing officer. Neither hearing went for half a day - the second took just over an hour. But it is at least arguable that the preparation for the applications required work beyond the time limited in the determination because of the importance of the matter. The defendants should have an order under s 280 removing the limit on hours for preparation.
36 I am not satisfied, however, that any basis has been put forward for also lifting the limits on fees for solicitor and counsel. Mr Touyz simply deposed that he and counsel had a particular 'charge out rate'. Both rates are well above scale. There is nothing to suggest that either of them brought any special experience or expertise to the matter, or that the rate charged by either of them was by reference to the difficulty, importance or complexity of the matter.
37 It is common for costs orders in interlocutory matters to be ordered to be taxed and paid forthwith. That may be so even where the costs cannot be fixed but require taxation at an interlocutory stage. I see no reason to depart from that practice.
38 Accordingly, the orders of the court will be:
1. The plaintiffs pay the seventh and eighth defendants' costs of the application dated 24 June 2014 except for the costs of preparation of affidavits on the application for summary judgment.
2. The plaintiffs pay 65% of the seventh and eighth defendants' costs of the application dated 29 July 2015 for leave to amend the writ and statement of claim.
3. The costs in orders 1 and 2 be taxed without regard to the hourly limits imposed under the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2012 (for costs incurred up to 4 July 2014) and the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2014 (for costs incurred after 4 July 2014).
4. The costs are to be paid forthwith.
39 The plaintiffs should pay the costs of the application for costs. There is no basis on which those costs should be the subject of an order under s 280. They should be taxed as part of the one taxation.
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