Caratti Holdings Co Pty Ltd v Coventry Group Ltd
[2014] WASC 403 (S)
•7 JANUARY 2015
CARATTI HOLDINGS CO PTY LTD -v- COVENTRY GROUP LTD [2014] WASC 403 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 403 (S) | |
| Case No: | CIV:2482/2013 | ON THE PAPERS BY SUBMISSIONS OF 21 NOVEMBER, 5 & 8 DECEMBER 2014 | |
| Coram: | KENNETH MARTIN J | 7/01/15 | |
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Some scale allowance limits removed | ||
| B | |||
| PDF Version |
| Parties: | CARATTI HOLDINGS CO PTY LTD COVENTRY GROUP LTD |
Catchwords: | Costs Orders post trial Indemnity costs sought Allowances under scale sought to be raised in alternative Turns on own facts |
Legislation: | Legal Profession Act 2008 (WA), s 280(2) |
Case References: | Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1973) 129 CLR 99 Electricity Generation Corporation trading as Verve Energy v Woodside Energy Ltd [2011] WASC 268 (S2) Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) Leighton Contractors Pty Ltd v Public Transport Authority of Western Australia [No 7] [2009] WASC 218 Marsh v Baxter [2014] WASC 187 (S) Quancorp Pty Ltd v Macdonald [1999] WASCA 101 Sims v Jooste [No 2] [2014] WASC 373 (S) Soia v Bennett [No 2] [2013] WASCA 85 (S) Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
COVENTRY GROUP LTD
Defendant
Catchwords:
Costs - Orders post trial - Indemnity costs sought - Allowances under scale sought to be raised in alternative - Turns on own facts
Legislation:
Legal Profession Act 2008 (WA), s 280(2)
Result:
Some scale allowance limits removed
Category: B
Representation:
Counsel:
Plaintiff : No appearance
Defendant : No appearance
Solicitors:
Plaintiff : Lavan Legal
Defendant : Clayton Utz
Case(s) referred to in judgment(s):
Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1973) 129 CLR 99
Electricity Generation Corporation trading as Verve Energy v Woodside Energy Ltd [2011] WASC 268 (S2)
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95
Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
Leighton Contractors Pty Ltd v Public Transport Authority of Western Australia [No 7] [2009] WASC 218
Marsh v Baxter [2014] WASC 187 (S)
Quancorp Pty Ltd v Macdonald [1999] WASCA 101
Sims v Jooste [No 2] [2014] WASC 373 (S)
Soia v Bennett [No 2] [2013] WASCA 85 (S)
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S)
Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509
1 KENNETH MARTIN J: In the aftermath of the defendant's success in defeating all the plaintiff's claims at trial as recited in my reasons in Caratti Holdings Co Pty Ltd v Coventry Group Ltd [2014] WASC 403, delivered 31 October 2014, it moves for dispositive orders dismissing the action and for declaratory relief under its counterclaim. The defendant also moves for costs orders in its favour, against the plaintiff, pitched at the level of indemnity costs, or as a less preferred alternative, for taxed party and party costs with a removal of almost all scale limits - in respect of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2012 (WA) and the Legal Profession (Supreme Court) (Contentious Business) Determination 2014 (WA), as they would otherwise apply.
2 These residual post trial issues are being determined on the papers, with the benefit of the parties' written submissions and, in the case of the defendant, a 160 page affidavit sworn by a member of the defendant's team of solicitors (Ms Lauree Coci) on 21 November 2014: see [195] of my reasons above.
3 Essentially, the defendant now moves for orders in terms of its Revised Minute of Proposed Orders of 8 December 2014.
4 Dispositive orders sought by the defendant, as regards the dismissal of the plaintiff's action and the issue of declarations confirming the validity of the defendant's Future Development Notice ('FDN') given under cl 23 of its lease from the plaintiff, and its entitlement to sublease any part of what is erected as part of the FDN works, are not controversial at this time, given my reasons.
5 What remain as controversial are the appropriate orders as to the successful defendant's costs of the trial. The plaintiff's written submissions and minute of orders as to costs accept, in the light of the trial's outcome, a liability to meet the taxed (party and party) costs of the defendant. Nevertheless, it resists as wholly inappropriate the making of any order against it for indemnity costs.
6 The plaintiff correlatively submits that it is inappropriate for there to be any costs orders (responding to the defendant's alternative submission) removing or adjusting Scale limits - other than for two Scale allowance items, namely, item 17 (Preparation of Case) under the 2012 and 2014 Scales, and item 20(b) (Fee on Brief for Senior Counsel) under the 2014 Scale. The defendant's revised minute of 8 December 2014, by contrast, seeks to remove most scale limits and also lift the hourly rates of participating legal practitioners - in respect of Scale Allowance items 3, 6(a), 7(b), 8, 15(b) and (c), 17, 20(b), (d), (e) and (g), 24 and 25.
7 In the end result, I am of the view:
(i) the defendant's application for indemnity costs of the trial is inappropriate and must be rejected; and
(ii) the defendant should receive its taxed party and party costs associated with defeating the plaintiff's action and correlatively succeeding upon its own counterclaim at the trial, with scale allowance limits removed in respect of only items 3(b) and (c), 7(b), 17, 20(b), (d) and (e) and 24, but without any adjustments to hourly rates for legal practitioners, save for senior counsel. My reasons for those conclusions follow.
Indemnity costs: the parties' submissions
8 The essence of the defendant's argument for indemnity costs can be summarised as follows:
(1) The plaintiff's contractual construction arguments concerning cl 23 of the lease were unsuccessful, as was its more recently introduced construction argument - asserting the inability of the defendant to sublease any new areas created under the work done in implementation of the defendant's FDN. Pre-trial correspondence exchanged between the parties' solicitors had warned the plaintiff that these arguments were untenable, with the defendant ultimately being vindicated by the trial's outcomes on all issues.
(2) The plaintiff had abandoned, but only in the months shortly before trial, a pleaded key aspect of its former case, asserting misleading and deceptive conduct on the part of the defendant. But that late amendment replaced the redundant plea with a new implied term argument, now contending for the defendant's breach of an implied term carrying the obligation of good faith and reasonableness, as regards the defendant's invocation of power as lessee to issue the FDN, as and when it did, under cl 23 of the lease. This late argument was also rejected at trial.
(3) Pre-trial correspondence between solicitors (see 'LDC1', page 12) had seen the defendant's solicitors on 21 May 2014 also warn the plaintiff's solicitors that its new pleas were so lacking in merit that, if not withdrawn, indemnity costs orders would be sought, in effect, after they were defeated at trial - as they now have been.
(4) The defendant goes even further, to submit that the plaintiff has, in effect, knowingly run a meritless case against it, for the ulterior motive of retaliating against the defendant - by reason of the bad 'history' of other disputes as between them, surrounding this now turbulent ongoing long-term relationship under their lease.
As expressed by the reply submissions of the defendant (of 8 December 2014) it is contended at paragraph 8 'they demonstrate that [the plaintiff's] decision to initiate and pursue a hopeless case represents the latest instalment in a continuing pattern of behaviour by which [the plaintiff] utilises litigation for a collateral purpose'.
(5) The defendant also sought to raise other conduct by the plaintiff in the present litigation as warranting the Court's sanction by indemnity costs orders. This included the (brief) pursuit of further and better discovery from the defendant, after securing, in effect, expedited trial dates from the Court, on the basis of an assurance that no further interlocutory applications would be pursued and that the action was ready for trial in all respects. In the end, that foreshadowed further discovery application by the plaintiff was not pursued, after the Court indicated the early trial dates would be jeopardised by such an application, if pressed.
9 For its part the plaintiff resists an indemnity costs order, contending, in effect, that it pursued arguable causes of action and that its litigious conduct was not unreasonable and does not warrant a costs sanction.
10 The plaintiff also says it was not given proper notice of the defendant's intention to seek indemnity costs. That submission, however, must be immediately rejected as irrelevant. If there is ultimately shown to be some misconduct requiring the sanction of the Court, then that is all that should be shown. In some circumstances, of course, the giving of notice could be one consideration in that evaluation. But notice is not an invariably required prerequisite to the sanction of the Court.
11 The plaintiff also objects to the defendant seeking to adduce wider evidence of a pejorative character against it, as is identified under the defendant's point 4 above, on a costs application in the aftermath of a trial. That objection by the plaintiff must be upheld. It would be unprecedented to allow to be opened up on a costs application following trial what would amount to a wide ranging investigation about an unsuccessful plaintiff's 'true' motives, and also its alleged misconduct in other litigation environments, on the basis of hearsay evidence tendered by way of a solicitor's affidavit and without cross-examination. Objection to the submission of the defendant and to any receipt of such materials must be upheld. Consequently, the plaintiff's fourth argument is rejected. It should be remembered that a party's pursuit of litigation for a proven collateral purpose can constitute in its own right an independent cause of action, for the tort of abuse of process: see Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509. That is another reason why the defendant's wide submission of misconduct, in the present context of post-trial wash-up costs orders, is out of place.
Indemnity costs: determination
12 As regards the other submissions of the defendant, I am not, in the end, persuaded that the plaintiff's failed construction and implied term arguments were so ill founded as to warrant the Court's sanction, by an indemnity costs order.
13 There was no disagreement as between the parties in their written submissions as to the underlying legal principles governing the making of such orders. They are exceptional orders - as is explained in Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) and see also Soia v Bennett[No 2] [2013] WASCA 85 (S) [8.]
14 Evaluating the strength of arguments about contractual construction is always easier using hindsight, once a trial result is known. Whilst this plaintiff's construction and implied term arguments did not find favour with me in the end, they were not, as advanced, so untenable that they could just be dismissed out of hand as a nonsense. There is a difference between a weak or marginal argument and a truly hopeless one - as Wheeler J observed in Quancorp Pty Ltd v Macdonald [1999] WASCA 101 [7].
15 Contractual construction arguments can be notoriously tricky to resolve. Not infrequently there is disagreement, even at the highest curial levels and even as between the greatest of judges, over the correct interpretation of a contractual term. A lot can depend on the starting position as the exercise is embarked upon. Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1973) 129 CLR 99 is a notable contractual construction dispute in point. The dissent of Gibbs J (as he then was) is nowadays constantly referred to for a classically illuminating discussion of the approach towards interpreting a commercial instrument. Yet, in that case, Barwick CJ and Stephen J took a wholly different view towards the true meaning of the contentious clause, as Dharmananda and Firios explain in their useful article exploring in depth that decision: see Kanaga Dharmananda SC and Leon Firios, 'Now We Know Our ABC: Reflections On The Interpretation of Contracts' (2014) 38 Australian Bar Review 283.
16 The construction conclusions I ultimately reached in the present case, in the end, presented to me as clear. But by then I had received the benefit of very considerable written and verbal assistance from senior counsel, across the course of what turned out to be only a one and a half day trial, which was run very efficiently on both sides. I would not assess it as beyond the realms of possibility that other judicial minds might at the end reach different construction conclusions (no doubt on suitably refined legal arguments).
17 In short, the threshold for an imposition of a costs sanction beyond party and party taxed costs against this unsuccessful plaintiff is not surmounted by the defendant.
Special costs orders
18 The alternative arguments for taxed costs with a removal of most scale limits raises legal principles that again were not at all controversial as between the parties from their written submissions. The two limbs of the so-called Heartlink test, for the purposes of engaging s 280(2) of the Legal Profession Act 2008 (WA), must be met by the defendant: Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S).
19 There is presently no dispute emanating from the plaintiff that the second limb of the Heartlink test is met. As to that concession, I would accept that the (disjunctive) s 280(2) tripartite factor of 'importance' to both parties, under their long term lease relationship, is well met. But otherwise, I would have needed some more persuasion as regards the satisfaction of either of the otherwise disjunctive factors of 'unusual difficulty', or of 'complexity', in what turned out to be a less than two-day contractual construction trial, with minimal viva voce evidence and mostly agreed facts.
20 The residual controversy distils then to an issue over meeting the first limb of the Heartlink test by the defendant, with the plaintiff's opposing contention being that only the scale allowance limits in respect of items 17 (preparation of case) and 20(b) (senior counsel) should be removed in a taxation of the successful defendant's costs. The plaintiff also resists any tinkering with the hourly rates for legal practitioners, as set under the 2012 or 2014 Scale.
21 Relevant to this aspect of the application, there is found within Ms Coci's affidavit as 'LDC9', a draft bill of costs proposed on behalf of the defendant for the purposes of a taxation, with very lengthy appended billing records. From that, I am satisfied that beyond the two scale item allowances which the plaintiff concedes, allowance limits should also be removed in respect of items 3(b) and (c) (defence), 7 (giving discovery of documents), 20(d) and (e) (counsel fees), and 24 (mediation, conferrals or other conferences). In respect of those items, I am satisfied that it has been shown that the levels of allowances under the applicable costs determinations may prove to be 'inadequate' and that this outcome is due to the importance of this matter to the parties - in circumstances where they were both (properly, in my view) represented at the trial by senior counsel. Beyond that, however, I am not persuaded as regards any other scale limits. It should by now go without saying, but say it I will, that any orders I issue to this end do nothing more than open up a potential for a taxing officer to allow an amount greater than the nominated scale limit otherwise applicable. My orders do not otherwise bear upon the ultimate exercise of the taxing officer's discretion in the taxation.
22 In relation to the issue of the level of the hourly rates for legal practitioners, the position must obviously vary from case to case and trial to trial. A bespoken assessment is undertaken on each occasion. For instance, in Marsh v Baxter [2014] WASC 187 (S) I did not, in the end, after that trial remove the limits on legal practitioners' hourly rates for particular presenting circumstances of that trial. However, in Sims v Jooste [No 2][2014]WASC 373 (S) I did remove the hourly rate allowance. The starting position as regards legal practitioners' hourly rates was articulated by Pullin J (as he then was) in Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [22]. His Honour said:
Secondly, a special costs order might be made in relation to the hourly rates provided for an item in the scale. An hourly rate might be thought to be too low for some reason. A special costs order will not be necessary if the amount to be claimed is no more than the maximum dollar amount specified for that item. So, for example, item 8(b), which relates to the giving of particulars of a pleading, provides for a maximum dollar amount based on the assumption that a junior practitioner will carry out the work and take up to five hours to complete such work. It is quite proper on taxation under that item to show that a senior practitioner did the work, but in that case the senior practitioner in the ordinary case would have to complete the work in less than five hours to stay within the dollar limit specified in the scale for that item. If a successful party considers that much more than five hours had to be spent on the task and believes that it can be demonstrated that this was reasonably necessary on a taxation, and also wishes to demonstrate that all of the work was performed by a senior practitioner and that the remuneration should be at the senior practitioner's rate, then a special costs order should be sought. The order that might be sought might be that the 'costs in relation to item 8(b) be taxed without regard to the limit in the scale and that the costs be taxed at the senior practitioner's rate' (or 'at the rate of $x per hour'). The need for an order of this sort would be necessary if a costs agreement under s 59 of the Legal Practitioners Act has been entered into by the successful party, the hourly rates in the agreement are higher than in the scale, and the party wishes costs to be taxed at that rate. However, the details of the agreement, and in particular the hourly rate which the party applying for a special costs order wants to apply, should be disclosed when the application is made. In my opinion, it is not correct for a party to seek an order lifting limits in the scale without disclosing to the judge the details of the agreement or the hourly rate which the applicant wants to use on taxation (and only later inform the taxing officer of the rate). I should also add that there should be no expectation that, as a matter of course, rates in the costs agreement which are above scale will be ordered to be the rates to apply in taxation as between party and party. There would have to be evidence justifying the higher rate. The whole point of the existing scale is that the rates are struck by reference to what is being charged within the profession. It is true that the hourly rates can only be an average or mean of the upper rates determined in the survey, and there will be some cases where the unusual complexity or importance of the case warrants the special expertise of the practitioner involved and warrants an increase in the hourly rate. In some cases not involving unusual complexity or importance, the higher rates paid will not be recoverable. A party is always entitled to the luxury of retaining the highest paid practitioners in the conduct of their case, but they cannot always expect to recover these costs from the other party. If the hourly rates in the scale are thought by parties or practitioners to be too low for work which is not of unusual complexity or importance, then submissions should be made to the Legal Costs Committee to increase the rates in the scale.
23 See also the reasons of Le Miere J in Leighton Contractors Pty Ltd v Public Transport Authority of Western Australia [No 7] [2009] WASC 218 [40] - [46], and in Electricity Generation Corporation trading as Verve Energy v Woodside Energy Ltd [2011] WASC 268 (S2) [7].
24 For the present case which, in the end, came to be resolved after a one and a half day trial, I am not satisfied by the materials presented by the defendant that the scale levels for legal practitioners' hourly rates should be removed, other than for senior counsel: see items 20(b) and (d) in the Determination Scales for 2012 and 2014.
Orders
25 In the end then, dispositive orders, including as to costs, should issue in the terms below, effective from the time of the publication of these further reasons:
1. The action be and is hereby dismissed.
2. The Court Declares to be valid the Future Development Notice dated 7 August 2013 issued by the defendant to the plaintiff under cl 23 of the lease agreement between the plaintiff and the defendant dated 7 November 2007 (the Lease).
3. The Court further declares that cl 13.3 of the Lease has the effect that the defendant is entitled to sublet any part of any building erected as part of the Future Development Works under cl 23 of the Lease.
4. The plaintiff do pay the defendant's costs of the Action and Counterclaim to be taxed (if not agreed), and any taxation of the defendant's costs shall be undertaken:
(a) without reference to the limits provided for in items 3(b) and (c), 7(b), 17, 20(b), (d) and (e) and 24 in Table B of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2012 (WA) and the Legal Profession (Supreme Court) (Contentious Business) Determination 2014 (WA) (Scales); and
(b) in the case of Senior Counsel, without reference to the hourly rates and the daily rates provided under items 20(b) and (d) in the Scales.
0
12
1