Broadway Pty Ltd Trading as trustee for the Criddle Family Trust v Lewis
[2012] WASC 373 (S)
•13 DECEMBER 2012
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA IN CHAMBERS |
| CITATION | : | BROADWAY PTY LTD TRADING AS TRUSTEE FOR THE CRIDDLE FAMILY TRUST -v- LEWIS [2012] WASC 373 (S) |
| CORAM | : PRITCHARD J | ||
| HEARD |
| ||
| DELIVERED |
| ||
| FILE NO/S |
| ||
| BETWEEN |
|
AND
STEVEN BURNETTE LEWIS
Defendant
Catchwords:
Practice and procedure - Costs - Whether the plaintiff is entitled to recover all of its costs where it did not succeed on all of its causes of action - Turns on own facts
Practice and procedure - Costs - Whether the defendant's offer of compromise marked 'without prejudice' is admissible in the costs hearing - Meaning of 'without prejudice' - Bases of the 'without prejudice' rule - Offer of compromise not admissible in the absence of the consent of both parties
[2012] WASC 373 (S)
Legislation:
Rules of the Supreme Court 1971 (WA), O 66 r 1, r 2
Supreme Court Act 1935 (WA), s 37
Result:
Costs application allowed in part
Category: B
Representation:
Counsel:
| Plaintiff | : | Ms K R Lendich |
| Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Jackson McDonald |
| Defendant | : | In person |
[2012] WASC 373 (S)
Case(s) referred to in judgment(s):
Amaca Pty Ltd v Hannell [2007] WASCA 158 (S)
Broadway Pty Ltd v Lewis [2012] WASC 373
Ford Motor Co of Australia Ltd v Lo Presti (2009) 41 WAR 1
J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers
(Western Australian Branch) (No 2) (1993) 46 IR 301
Keet v Ward [2011] WASCA 139
Kimpura Pty Ltd v JWH Group Pty Ltd [2004] WASCA 134
Letang v Cooper [1965] 1 QB 232
Oceanbulk Shipping and Trading v TMT Asia [2011] 1 AC 662
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569
Pihiga Pty Ltd v Roche [2011] FCA 240; (2011) 278 ALR 209
R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009]
WASC 206 (S)
Re Newman Air Charter Pty Ltd (1991) 5 WAR 365
Unilever plc v Procter and Gamble Co [2000] 1 WLR 2436
Walker v Wilsher (1889) 23 QBD 335
Witcombe v Talbot & Olivier [No 2] [2009] WASC 173 (S)
| PRITCHARD J | [2012] WASC 373 (S) |
PRITCHARD J: I delivered my reasons for decision in this action on 9 October 2012[1] and on that date I made orders to give effect to those reasons for decision. Broadway also sought orders to the effect that Mr Lewis pay its costs of the action. As Mr Lewis had not attended nor been represented at the trial, and did not attend on 9 October 2012 when my reasons for decision were delivered, I reserved the question of costs of the action and made orders requiring that Broadway file and serve on Mr Lewis a minute of proposed orders, setting out the orders it sought in relation to the costs of the action and in relation to the costs reserved prior to trial, together with a written outline of submissions in support of those proposed orders.
[1] Broadway Pty Ltd v Lewis [2012] WASC 373. These reasons should be read in conjunction with those reasons
2 Subsequently, Broadway's application for costs was listed for hearing
at a special appointment on 28 November 2012 (the costs hearing), and Broadway was ordered to serve Mr Lewis with a copy of the orders of the Court containing the listing of the costs hearing. Mr Lewis did not attend, nor was he represented at, the costs hearing.
The costs order sought by Broadway
3 Initially Broadway sought an order that Mr Lewis pay its costs of the
action and the counterclaim (including any costs reserved) to be taxed and paid on an indemnity basis and, in the alternative, an order that Mr Lewis pay Broadway's costs of the action and the counterclaim (including any costs reserved) to be taxed. At the hearing on 28 November 2012, however, counsel for Broadway advised the Court that Broadway no longer sought an order for costs in the former terms (that is, on an indemnity basis). The order now sought by Broadway is:
1.
The defendant pay the plaintiff's costs of the action and the counterclaim (including any costs reserved) to be taxed.
The Court's power to make orders in relation to costs
4 By virtue of s 37 of the Supreme Court Act 1935 (WA), the Court has a broad discretion to make orders in relation to the costs of, and incidental to, a proceeding. As McHugh J observed in Oshlack v Richmond River Council,[2] the statutory discretion, while broadly stated,
[2] [1998] HCA 11; (1998) 193 CLR 72, 96 [65].
is not unqualified and the discretion must be exercised judicially in accordance with established principle and factors directly connected with the litigation.
| PRITCHARD J | [2012] WASC 373 (S) |
5 The most important factor which guides the exercise of the costs
discretion is the result of the litigation.[3] Generally speaking, the Court will make an order that the successful party to an action recover his costs from the unsuccessful party, and this is known as the 'usual order as to Supreme Court 1971 (WA) (RSC). As McHugh J explained:[4] costs'. This principle is reflected in O 66 r 1(1) of the Rules of the
[3] Oshlack (96 - 97) [66].
[4] Oshlack (97) [67].
The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.
6 As Broadway was successful in the action, the starting point for
considering the proper exercise of discretion with respect to costs is that Broadway as the successful party should be able to recover its costs from Mr Lewis.
7 However, there are exceptions to this general approach to costs.
Generally speaking, these exceptions derive from the conduct of the successful party in relation to the litigation, or leading up to the litigation, which conduct is seen to disentitle that party to the benefit of the exercise of the discretion in its favour.[5] For example, 'the court may properly
[5] Oshlack (97) [69].
depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute'.[6]
[6] Oshlack (97 - 98) [69] (citations omitted).
8 There are two considerations arising from the facts of this case that
appear to be relevant to the exercise of the discretion to award costs. The first is that Broadway was not wholly successful, in the sense that it was not successful in respect of all of the causes of action it pleaded. Secondly, there was some limited information before the Court which suggested that Mr Lewis made an offer to settle the litigation prior to trial.
| PRITCHARD J | [2012] WASC 373 (S) |
Broadway was not successful in respect of each of its causes of action
In this action, Broadway sought:
(a) an order for possession of the Land; and (b) damages for use and occupation of the Land by Mr Lewis on the basis that Mr Lewis was either a tenant at will or a tenant at sufferance; and (c) in the alternative, mesne profits for trespass by Mr Lewis on the Land. 10 In his Amended Defence and Counterclaim Mr Lewis raised a
number of issues including alleged misrepresentations in relation to the boundary of the Land, common mistake in relation to the terms of the Contract for which rectification was sought, unconscionable conduct and estoppel. All of the claims in Mr Lewis' counterclaim were dismissed.
11 Accordingly, Broadway was successful in respect of its claim for
possession and in respect of the whole counterclaim, but not in respect of its claims for damages for use and occupation of the Land or for mesne profits for trespass.
12 The RSC contemplate that sometimes a departure from the usual
order as to costs will be required if a successful party has not been successful on all of the issues raised in the proceedings. By way of example, O 66 r 1(3) provides:
Where a party though generally successful in an action has, by the introduction of some issue or issues on which he has failed, increased the costs the Court may order such party to pay the costs of such issue or issues.
Similarly, O 66 r 2 relevantly provides:
In the absence of any special order -
(a)
where the statement of claim contains more than one cause of action and the plaintiff succeeds on one or more causes of action and the defendant succeeds on another or others, costs shall be allowed to the plaintiff on the cause or causes of action on which he succeeds and to the defendant on that or those on which he succeeds, in the same manner as if separate actions had been brought.
| PRITCHARD J | [2012] WASC 373 (S) |
14 This may not be a case for the direct application of either rule.
Mr Lewis was not present at the costs hearing and did not seek an order for costs in his favour. Further, given that Mr Lewis did not appear at the trial, his active participation in the litigation was sporadic,[7] and he was not
[7] Broadway Pty Ltd v Lewis [2012] WASC 373 [47].
legally represented for some of the time, whether and the extent to which he may have incurred costs in relation to those parts of Broadway's claim in respect of which it was not successful is unclear.
15 In this case, it is nevertheless appropriate, in my view, to take into
account Broadway's partial success in relation to the question whether, in the exercise of its general discretion under s 37 of the Supreme Court Act 1935 (WA) and O 66 r 1(1) RSC, the Court should make an order that Mr Lewis pay Broadway's costs of the action as a whole, or only for part thereof. The principles which have been developed in relation to the application of O 66 r 1(3) and O 66 r 2(a) RSC provide some guidance to the appropriate exercise of the Court's discretion as to the award of costs in the present circumstances.
Insofar as O 66 r 1(3) is concerned, the Court of Appeal in Amaca Pty Ltd v Hannell[8] made the following observations:[9]
[8] [2007] WASCA 158 (S).
[9] [2007] WASCA 158 (S) [6] - [7].
The power to depart from the general rule to the effect that costs follow the event and to instead adjust the costs order to be made by reference to the failure of the generally successful party on specific and particular issues within the litigation, is recognised by practice, authority and the express provisions of O 66 r 1(3). However, its application depends upon the identification of discrete and severable issues, the litigation of which has increased the costs of conducting the proceedings. Established practice in this State, and the authorities, suggest that the exercise of this power should be approached broadly, and as a matter of impression, and without an attempt at 'mathematical precision' which is likely to prove illusory –
see, for example J-Corp Pty Ltd v Australian Builders Labourers
Federated Union of Workers (Western Australian Branch) (No 2).[10][10] (1993) 46 IR 301.
Accordingly, the power to adjust an order for costs by reference to particular issues upon which the generally successful party has failed, is properly exercised only where there are discrete and severable issues upon which the generally successful party has failed, and which have added to the cost of the proceedings in a significant and readily discernible way. In a case in which the generally successful party has failed on only a minor issue, which did not add materially to the cost of the conduct of the proceedings, it would not ordinarily be appropriate to depart from the
| PRITCHARD J | [2012] WASC 373 (S) |
general rule, unless the conduct of the generally successful party in
relation to that issue had been unreasonable.
In Keet v Ward[11] the Court of Appeal set out the following four
[11] [2011] WASCA 139 [24].
propositions in relation to the application of O 66 r 2(a):
(a) the expression 'cause of action' in O 66 r 2(a) is a reference to a factual situation, the existence of which entitles the plaintiff to v Wheeler (No 2);[13] obtain a remedy: Letang v Cooper;[12] Permanent Building Society (b) the rule does not provide an inflexible rule which prescribes a mandatory approach to the awarding of costs in cases where there are multiple causes of action. The opening words 'in the absence of any special order' indicate that the court retains the discretion to [13] (1993) 10 WAR 569, 572 (Anderson J);
[12] [1965] 1 QB 232, 242 (Diplock LJ);
make a special order departing from the rule in O 66 r 2(a):
Kimpura Pty Ltd v JWH Group Pty Ltd;[14]
[14] [2004] WASCA 134 [12] - [15].
(c) however, where there are multiple causes of action and a party has succeeded on only one or some, the other party is prima facie entitled to costs on the others but the court will always attempt to Society v Wheeler (No 2);[15] do substantial justice in the circumstances: Permanent Building (d) it may not be appropriate to make a costs order in accordance with O 66 r 2(a) where there is in substance one contest, that is, where the causes of action arise from the one course of dealings, the one transaction or the same facts: Permanent Building Society v Wheeler (No 2);[16] R J Baker Nominees Pty Ltd v Parsons
[No 2].[18] Management Group Pty Ltd;[17] Witcombe v Talbot & Olivier [18] [2009] WASC 173 (S) (Beech J).
[17] [2009] WASC 206 (S).
[15] (1993) 10 WAR 569, 574 - 575 (Anderson J).
[16] (1993) 10 WAR 569, 574 - 575 (Anderson J).
18 In essence, the submission by counsel for Broadway was that
Broadway's claims for damages for use and occupation of the Land, and for mesne profits for trespass, were different legal characterisations of the same set of facts, and that those facts were part of the same set of facts on which the claim for possession was based. Counsel also submitted that the claims for damages for use and occupation and for mesne profits for trespass did not add to the costs of the proceedings in a material way.
| PRITCHARD J | [2012] WASC 373 (S) |
19 There was clearly a close relationship between Broadway's action for
possession founded as it was on Mr Lewis' occupation of the Land without an entitlement to do so, and its claims for damages arising from that occupation of the land. Looked at from that broad perspective, Broadway has a strong case for an award of all of its costs.
20 However, three considerations have led me to the view that
Broadway should not be able to recover its costs in relation to its claims for damages for use and occupation of the Land and for mesne profits.
21 First, the claims for damages and mesne profits were clearly quite
discrete from the claim for possession (and from the claims the subject of
Mr Lewis' counterclaim).22 Secondly, although there was some overlap in the factual foundations
for those claims, and for the claim for possession (namely the fact of Mr Lewis' continued occupation of the Land, to the exclusion of Broadway, after any entitlement Mr Lewis had to occupy the Land pursuant to the Lease had come to an end) this overlap was limited. The factual foundation for the claims for damages and mesne profits lay largely in what the parties did and said after the Lease came to an end (which was relevant to establishing the basis on which Mr Lewis remained in occupation) and evidence directed to establishing the quantum of damages in respect of that occupation. Because Mr Lewis admitted much of Broadway's claim for possession, much of the evidence led by Broadway at the trial was directed to Broadway's claims for damages and mesne profits.
23 Thirdly, the inclusion of the claims for damages and mesne profits
materially added to the cost of the proceedings. A significant portion of
the hearing time at the trial was devoted to these issues.24 Having regard to these considerations, in my view a just exercise of
the discretion to award costs warrants requiring Broadway to bear its own costs in relation to its claims for damages for use and occupation, and for mesne profits for trespass.
The costs reserved
25 Insofar as costs were reserved during the course of the litigation,
those costs pertained to two issues. On 2 July 2012 Broadway made an application to strike out the defence and for liberty to move for judgment arising from Mr Lewis' failure to comply with any of the trial directions which had been made leading up to the first listed trial date (of 7 August
| PRITCHARD J | [2012] WASC 373 (S) |
2012). At a directions hearing on 3 July 2012 (which Mr Lewis did not attend in person or by counsel) orders were made programming Broadway's application for hearing and the application was listed for hearing on 30 July 2012. On 30 July 2012, counsel for Mr Lewis appeared at the hearing and indicated that he was instructed to apply for an adjournment of the trial. Broadway's application was effectively put to one side while the Court dealt with Mr Lewis' application to adjourn the trial.
26 Mr Lewis' application to adjourn the trial was listed for hearing on
31 July 2012. I granted that application. Broadway sought costs arising from the adjournment of the trial and its application for judgment. Costs were reserved on that occasion.
27 Mr Lewis should pay Broadway's costs incurred in relation to
Mr Lewis' application for the adjournment of the trial and Broadway's costs thrown away by the adjournment of the trial. Mr Lewis' adjournment application (and the orders I made in light of that application) meant that it was ultimately unnecessary to deal with Broadway's earlier application to strike out the defence for non-compliance with the trial directions, and to move for judgment. In the circumstances, Mr Lewis should pay Broadway's costs of that application also. However, consistent with the view I have taken about the costs of the action more generally, Broadway's recovery of costs in respect of these applications should not extend to such of its costs which are attributable to its claims for damages for use and occupation of the Land or for mesne profits for trespass.
The impact of the offer to settle which was made by Mr Lewis
28 In support of its application for costs as originally framed (and in
relation to its claim for indemnity costs) Broadway filed an affidavit sworn by Tennille Maree Provost on 17 October 2012 to which Ms Provost annexed copies of three letters from Broadway's solicitors to Mr Lewis' solicitors. One of those letters (dated 23 March 2012) contains a reference to an email dated 21 March 2012 from Mr Lewis' then solicitors and to Mr Lewis' 'settlement proposal detailed therein' (the March email). A copy of the March email was not attached to Ms Provost's affidavit.
| PRITCHARD J | [2012] WASC 373 (S) |
29 Subsequent correspondence annexed to Ms Provost's affidavit makes
clear that the offer of settlement which was apparently contained in the March email was rejected by Broadway. Had an offer of settlement made by Mr Lewis been unreasonably rejected,[19] a question may have arisen as
[19] Cf Ford Motor Co of Australia Ltd v Lo Presti (2009) 41 WAR 1, 8 [16] - [19] (Buss JA, Wheeler JA
to whether Broadway was entitled to its costs after that point in time. Counsel for Broadway advised the Court that the March email had not been provided to the Court because it was marked 'without prejudice'.
30 A document marked 'without prejudice' is ordinarily not admissible
without the consent of both parties to the litigation.[20] The legal principles in relation to the rule that a document marked 'without prejudice' is Ltd v Roche.[21] The rule protects not only admissions in the form of an inadmissible were considered in some detail by Lander J in Pihiga Pty
[20] Walker v Wilsher (1889) 23 QBD 335, 337 (Lord Esher MR), 338 (Lindley LJ); see also Re Newman Air
[21] [2011] FCA 240; (2011) 278 ALR 209.
offer to settle, but also communications between parties generally in
respect to issues in the dispute including assertions made of the strength
and weakness of a party's case or an opponent's case.[22]
[22] Pihiga [81].
31 As Lander J noted, there are two bases for the rule. The first lies in
public policy, in that the existence of the rule encourages parties to engage in full and frank discussions aimed at settling their disputes without recourse to the courts. Secondly, the rule is founded on the express or implied agreement of the parties that the communications between them
should not be admissible in evidence if those communications do not lead
to a settlement.[23]
[23] Pihiga [83] - [86] citing Unilever plc v Procter and Gamble Co [2000] 1 WLR 2436, 2448 - 2449 (Robert
32 There are, however, exceptions to the rule. They were set out by
Robert Walker LJ in Unilever plc v Procter and Gamble Co.[24] One of those exceptions is for an offer expressly made 'without prejudice except as to costs', by which the parties expressly or impliedly agree that their communication will not be admissible save in the context of determining costs.[25] This exception is consistent with that basis for the rule which lies
[24] [2000] 1 WLR 2436, 2444 - 2445.
[25] Unilever [2445] and the authorities cited therein.
in the agreement of the parties. Counsel for Broadway confirmed that the March email was marked 'without prejudice' and not 'without prejudice save as to costs'.
| PRITCHARD J | [2012] WASC 373 (S) |
33 Following the costs hearing, the Court contacted the solicitors for
Broadway, and Mr Lewis, to enquire whether the parties would consent to the provision to the Court of the March email so that that email could be considered in relation to the question of costs. Neither Mr Lewis nor Broadway gave consent to the provision to the Court of the March email. Consequently the contents of that email were not able to be considered by the Court on the question of costs.
34 Whether the March email, and Broadway's refusal of the settlement
offer contained therein, would have had any implication for Broadway's application for costs is an entirely different question about which it is not appropriate to speculate. The Court is only able to determine Broadway's application for costs on the basis of the material before it and nothing in that material suggests that Broadway should not have its costs (limited as I have already indicated).
Conclusion
35 For these reasons, in my view the just exercise of the Court's
discretion in relation to costs in the circumstances of this case warrants
the making of an order in the following terms:
1. The defendant do pay the plaintiff's costs of the action and the counterclaim (including any reserved costs), other than the plaintiff's costs in relation to its claims for damages for use and occupation of the Land, and its claim for mesne profits for trespass, to be taxed.
(including the abbreviations contained in them).
agreeing).
Charter Pty Ltd (1991) 5 WAR 365, 368 - 369 (White AJ).
Walker LJ) and Oceanbulk Shipping and Trading v TMT Asia [2011] 1 AC 662 [27] (Lord Clarke).
0
4
2