Caratti v Boban Pty Ltd (Administrators Appointed) [No 2]
[2015] WASC 139 (S)
•8 MAY 2015
CARATTI -v- BOBAN PTY LTD (ADMINISTRATORS APPOINTED) [No 2] [2015] WASC 139 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASC 139 (S) | |
| 08/05/2015 | |||
| Case No: | COR:60/2014 | 5 MAY 2015 | |
| Coram: | MITCHELL J | 5/05/15 | |
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiff in COR 60 of 2014 to pay the fifth defendant's costs of the trial of the contempt proceedings No order as to the costs of the primary proceedings | ||
| B | |||
| PDF Version |
| Parties: | ALLEN BRUCE CARATTI BOBAN PTY LTD (ADMINISTRATORS APPOINTED) PINEVIEW INVESTMENTS PTY LTD (ADMINISTRATORS APPOINTED) AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION JAMIE KEVIN POLLOCK JOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL ADMINISTRATORS OF BOBAN PTY LTD JOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL ADMINISTRATORS OF PINEVIEW INVESTMENTS PTY LTD SOIL AND CONTRACTING PTY LTD |
Catchwords: | Costs Unsuccessful application for orders holding accused in contempt of court Interaction of privilege against selfincrimination with obligation of parties to confer in civil proceedings Circumstances in which contempt proceedings can properly be instituted Costs Where action settled during the trial Turns on own facts |
Legislation: | Nil |
Case References: | Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201 Allbeury v Corruption and Crime Commission [2012] WASCA 84 (S) ASIC v Sigalla [No 4] [2011] NSWSC 62; (2011) 80 NSWLR 113 Brookvista Pty Ltd v Meloni [2009] WASCA 180 Caratti v Boban Pty Ltd (administrators appointed) [2015] WASC 118 Gray v Sirtex Medical Ltd formerly known as Paragon Medical Ltd [2009] WASC 126 Hinch v Attorney General (Vic) (1987) 164 CLR 15 Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 Witham v Hollaway (1995) 183 CLR 525 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
BOBAN PTY LTD (ADMINISTRATORS APPOINTED)
First Defendant
PINEVIEW INVESTMENTS PTY LTD (ADMINISTRATORS APPOINTED)
Second Defendant
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Third Defendant
JAMIE KEVIN POLLOCK
Fourth Defendant
JOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL ADMINISTRATORS OF BOBAN PTY LTD
Fifth Defendant
JOHN SHEAHAN AND IAN RUSSELL LOCK AS JOINT AND SEVERAL ADMINISTRATORS OF PINEVIEW INVESTMENTS PTY LTD
Sixth Defendant
- Plaintiff
AND
BOBAN PTY LTD (ADMINISTRATORS APPOINTED)
Defendant
Catchwords:
Costs - Unsuccessful application for orders holding accused in contempt of court - Interaction of privilege against selfincrimination with obligation of parties to confer in civil proceedings - Circumstances in which contempt proceedings can properly be instituted
Costs - Where action settled during the trial - Turns on own facts
Legislation:
Nil
Result:
Plaintiff in COR 60 of 2014 to pay the fifth defendant's costs of the trial of the contempt proceedings
No order as to the costs of the primary proceedings
Category: B
Representation:
COR 60 of 2014
Counsel:
Plaintiff : Mr N D C Dillon
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : Mr J E Scovell
Fifth Defendant : Mr T J Porter
Sixth Defendant : Mr T J Porter
Solicitors:
Plaintiff : Roe Legal Services
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : Mills Oakley Lawyers
Fifth Defendant : Sheahan Lock Partners
Sixth Defendant : Sheahan Lock Partners
COR 23 of 2014
Counsel:
Plaintiff : Mr J E Scovell
Defendant : No appearance
Solicitors:
Plaintiff : Mills Oakley Lawyers
Defendant : No appearance
Case(s) referred to in judgment(s):
Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201
Allbeury v Corruption and Crime Commission [2012] WASCA 84 (S)
ASIC v Sigalla [No 4] [2011] NSWSC 62; (2011) 80 NSWLR 113
Brookvista Pty Ltd v Meloni [2009] WASCA 180
Caratti v Boban Pty Ltd (administrators appointed) [2015] WASC 118
Gray v Sirtex Medical Ltd formerly known as Paragon Medical Ltd [2009] WASC 126
Hinch v Attorney General (Vic) (1987) 164 CLR 15
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
Witham v Hollaway (1995) 183 CLR 525
- MITCHELL J:
(This judgment was delivered extemporaneously on 5 May 2015 and has been edited from the court's record.)
Costs of the contempt application
1 On 16 April 2015, I upheld a no case submission on the application of Mr Caratti, the plaintiff in COR 60 of 2014, to commit Mr John Sheahan for contempt of court. On the following day I dismissed the same application made against Mr Ian Lock.
Costs should follow the event
2 Mr Caratti's submissions accept that the rule as to costs which ordinarily applies is that costs should follow the event.1
3 In the present case I see no reason to depart from that ordinary rule.
4 Mr Caratti relies on an alleged failure by the fifth defendant to confer in relation to the contempt application, which failure is said to be in breach of O 59 r 9 of the Rules of the Supreme Court 1971 (WA) (Rules). I reject that submission. The privileges against self-incrimination and exposure to penalties, to which I referred in Caratti v Boban Pty Ltd,2 are clearly not abrogated by O 59 r 9 of the Rules, or the obligation of parties to confer about interlocutory disputes.
5 The fact that the contempt application may be made in civil proceedings or may even be classified as a civil contempt does not alter the onus of proof, being beyond reasonable doubt,3 or abrogate the privileges to which I have referred. It is also clear that contempt proceedings do not take their character from the proceeding in which the application for contempt is made.4
6 Mr Caratti also points to the fact that the fifth defendant did not disclose various matters concerning their defence until after the close of the prosecution case. That is an attitude which may be expected in such a matter, and is merely the manifestation of the exercise of the privileges to which I have referred. It provides no basis for departing from the ordinary rule that costs follow the event.
7 In many respects, the submissions as to the costs of the contempt proceedings by those representing Mr Caratti display a fundamental lack of understanding of what is involved in alleging and establishing a contempt of court. The allegation of contempt is a serious allegation which may well see the alleged contemnor imprisoned or fined. An allegation of contempt is properly made only if the person making the allegation is in possession of, or is confident that he or she is in a position to obtain, admissible evidence capable of establishing the guilt of the accused beyond reasonable doubt. Commonly with other proceedings in which criminal sanctions may be applied, the person making the allegation should not expect the accused to assist in their own prosecution or disclose any defence prior to the close of the prosecution case.
8 I also agree with observations that were made by Gillard J in the Supreme Court of Victoria in Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd,5 which I believe bear quoting in full. There Gillard J said:
Any charge of contempt of court against a person or company is serious. Court orders are made and must be obeyed to the letter. To allege that a litigant has failed to comply with an order and to bring proceedings that he or it should be punished for breach are indeed serious matters.
Contempt proceedings should not be brought for an ulterior purpose. In civil proceedings where there is an alleged breach of an order, the main purpose for bringing a contempt proceeding is coercive or remedial. There may be another purpose. In the case of deliberate refusal to obey an order, contempt proceedings are appropriate to uphold the rule of law and to vindicate judicial authority, by the imposition of a penalty, ie punishment. The contempt jurisdiction fulfils a dual purpose, namely, enforcement of the order and punishment, in an appropriate case, for disobedience. Once this occurs, the question arises whether the circumstances warrant some form of punishment. Care must be exercised before bringing the proceeding and careful consideration must be given to the continuation of the proceeding after the coercive function has been satisfied.
The issue and continuation of the proceeding usually produces compliance so that the coercive function is satisfied. The enforcement of a court order by the remedy of contempt is indeed drastic, bearing in mind that the penalty includes imprisonment, and in my opinion contempt proceedings to enforce an order should be a remedy of last resort. As a general rule, the coercive function of the proceeding should only be employed when there are no other effective means of doing so. The cases support that proposition. See, by way of example, Danchevsky v Danchevsky. In Ansah v Ansah Ormrod LJ, at p 144 said:
'Breach of … an injunction is, perhaps unfortunately, called contempt of court, the conventional remedy for which is a summons for committal. But the real purpose of bringing the matter back to the court, in most cases, is not so much to punish the disobedience as to secure compliance with the injunction in the future. It will often be wiser to bring the matter before the court again for further direction before applying for a committal order. Committal orders are remedies of last resort; in family cases they should be the very last.' (emphasis added by Gillard J)
It must be steadily borne in mind that contempt proceedings are serious and must not be issued without serious and careful appraisal of the facts. The jurisdiction is not available for a litigant to punish the other litigant or seek to gain an advantage.
If the coercive function is satisfied, punishment for disobedience to a court order should, as a general rule, be confined to intentional breaches which are serious. This will depend upon the degree of culpability of the contemnor and whether there is any element of contumacy. (footnotes omitted)
9 In the present case the plaintiff accepts that the principal purpose for bringing the contempt proceedings was to avoid the fifth defendant being appointed as the liquidator of Boban Pty Ltd (Boban) and Pineview Investments Pty Ltd (Pineview) in the main proceedings. In my view, that was not a proper purpose for the bringing of a contempt application.
10 Had an indemnity costs order been sought, I would have been very sympathetic to it for that reason. However, Mr Porter made it clear in his submissions for the fifth defendant that indemnity costs are not being sought in these proceedings.
11 Nonetheless, in determining that the ordinary rule as to costs should apply, I take account of the improper purpose for which the contempt proceedings were instituted by the plaintiff. I also take account of the fact that there was no reasonable basis for instituting contempt proceedings against Mr Sheahan. Mr Caratti produced no admissible evidence capable of establishing contempt against Mr Sheahan, and on the state of evidence in possession of Mr Caratti against Mr Sheahan the contempt application against him should not have been brought on that ground alone. The point is highlighted by the submission advanced on behalf of Mr Caratti that 'it was reasonable to assume that Mr Sheahan will have participated in the conduct which was the subject of the Contempt Proceedings'. An allegation of contempt should be based on evidence, not assumption.
12 Further, and contrary to Mr Caratti's submissions, the joint appointment of Mr Sheahan and Mr Lock as administrators was not itself a basis for the conclusion that Mr Sheahan had committed contempt.
13 Mr Caratti also points to the circumstances in which the trials listed for 27 October 2014 came to be adjourned. However, in my view the adjournment resulted from the independent action of Commonwealth authorities, and was not a matter for which the fifth defendant was responsible.
14 In any event, the matters which are raised by Mr Caratti in relation to what occurred on 27 October 2014 might have been relevant to the question of the costs of the adjournment and the appointment of a provisional liquidator. It is unnecessary for me to decide that point in circumstances where those costs have been agreed as between the plaintiff and fifth defendant. However, even if those matters were established, it would not have any significant influence on my discretion to award costs of the proceedings for contempt.
15 I also do not think there is any significant weight to be attached to the criticisms made by Mr Caratti as to the consents to act as liquidators provided by the fifth defendant. In any event, it is not appropriate on a costs application that I determine the validity of those criticisms, which I understand to be disputed by the fifth defendant.
Fixing costs
16 The fifth defendant asks that I fix the costs of the contempt proceedings in an amount of $140,418.70, reflecting a schedule annexed to the affidavit of Mr Lock sworn on 29 April 2015.
17 When a costs order is made the court may fix the amount of the costs payable rather than order that they be taxed. The purpose of fixing costs is to avoid the expense and delay involved in taxation. Consistent with that objective, in fixing the sum the court will not subject the costs to the detailed scrutiny often applied in a taxation of costs. It is appropriate instead to apply a much broader brush than would be applied on a taxation of costs. But in fixing the amount of the costs, the approach of the court should be logical, fair and reasonable. The power to award a fixed sum should only be exercised when the court considers that it can determine the amount of the costs fairly. That means the court must have available to it sufficient material that it is confident it can arrive at an appropriate sum.6
18 Absent any application or order for indemnity costs, that assessment must be made on a party and party basis.
19 In my view, it is not appropriate for me to fix a sum based on the schedule to Mr Lock's affidavit, as I am not in a position to fairly determine the extent to which the many items claimed were reasonably incurred. I am not confident that I can determine the amount of costs that will compensate the fifth defendant on a party and party basis for the costs they have reasonably incurred in defending the proceedings.
20 In my view, the appropriate order is that costs be taxed rather than fixed in a lump sum.
Engaging senior counsel
21 Given the seriousness of the allegations made against Mr Lock and Mr Sheahan it was, in my view, appropriate for junior and senior counsel to be briefed in the matter. However, it is not necessary for me to make any order in respect of the engagement of senior counsel, as sought by the fifth defendant. The Rules have dispensed with the requirement for a certificate for second counsel.
Orders
22 I would therefore make an order that Mr Caratti pay the fifth defendant's costs of and incidental to the plaintiff's interlocutory application for contempt, including the costs of their application for costs orders, to be taxed if not agreed.
23 There was some debate before me as to the appropriate scale item7 to be applied to that exercise. It is accepted by Mr Caratti that I have a discretion to order that costs be taxed on the basis that the hearing on 16 - 17 April 2015 was a trial to which item 20 applies. I consider it appropriate to make that order, because the contempt application is properly regarded as a separate hearing, albeit one that takes place within existing proceedings, and also because the items in the scale dealing with interlocutory applications would not make adequate provision for the proper costs incurred by the fifth defendant in defending the proceedings.
Other costs
24 In relation to the other aspects of COR 60 of 2014 and the whole of COR 23 of 2014, it is my view that the appropriate order is that there be no order as to costs beyond those costs orders already made in the proceedings. The matters effectively settled prior to a contested hearing, on terms which did not entirely reflect the initial position advanced by any party.
25 Ordinarily the power to award costs is exercised after a hearing on the merits, and as a general rule the successful party is entitled to his or her costs. However, where there has been no hearing on the merits, the court is deprived of the factor that usually determines whether or how it will make a costs order.
26 In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin,8 McHugh J considered the relevant principles for determining costs orders where there has been no hearing on the merits of the case. His Honour found:
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases. (footnote omitted)
27 McHugh J identified that in appropriate cases a court will make an order for costs where there has been no hearing on the merits, and these cases include:
(a) Where one party has acted so unreasonably that the other party should obtain the costs of the action.9
(b) Where although the parties acted reasonably, by looking at the undisputed facts one party was almost certain to have succeeded in the matter.10 That party should have the benefit of having their costs paid.
28 However, the court must not attempt to resolve a hypothetical action between the parties.11 The undisputed facts disclosed in the pleadings, affidavits, discovered documents or interlocutory relief granted can be used in determining whether one party was almost certain to have succeeded.12
29 I am not satisfied that any party was almost certain to have succeeded in the matter. The submissions of Mr Pollock and Soil and Contracting Pty Ltd (Pollock parties) effectively invite me to conduct a trial of the matter and resolve disputed issues in order to make an award of costs. They say that the extensive evidence and written submissions filed in the matter empowers the court to determine a position as to the costs of the application to wind up Boban and Pineview on the just and equitable ground. I decline to accept that invitation. The evidence is extensive and disputed, as are the submissions. The Pollock parties are effectively asking me to try the application to wind up the companies on the just and equitable ground for the purpose of determining the costs of that application. That is not, in my view, an appropriate approach to adopt for a costs issue.
30 The Pollock parties suggest that the issue of costs might be adjourned until the liquidators deliver their report as to the solvency of Boban and Pineview. I do not accept that submission. Costs ordinarily follow the event after a determination by the court. A report of liquidators is not a determination by the court, and is not limited to considering the evidence which has been produced in court to date. I do not accept that a report of liquidators can serve as a substitute for a determination of this court for the purposes of awarding costs.
31 Mr Caratti attempted to attribute blame to the Pollock parties for the adjournment of the trial scheduled to commence on 27 October 2014, and sought an order that Mr Pollock pay costs of and associated with that adjournment. In my view, that adjournment was a consequence of the Australian Taxation Office (ATO) taking action independently of the parties to these proceedings. Although Mr Pollock provided information to the ATO at its request through the fifth defendant, he is not responsible for the response of the ATO to the provision of that information. In my view, the costs of the adjournment on 27 October 2014 are simply part of the costs of the proceedings for which no special order should be made.
32 Mr Caratti and the Pollock parties effectively sought to blame each other for costs incurred prior to the resolution of the matters on 23 April 2015. However, the proceedings effectively resolved by consent, except in relation to the issue of which of the alternative candidates for the office of liquidator put forward by Mr Caratti should be preferred, that being an issue which I determined on that day. Otherwise there was no determination of the merits of any party's contentions. The resolution of the proceedings in that manner, effectively by consent, involved both Mr Caratti and the Pollock parties altering their positions at the eleventh hour.
33 I am not satisfied that either Mr Caratti or the Pollock parties has, in relation to the other matters raised in the two proceedings, acted so unreasonably that the other parties should obtain the costs of the action or a substantial part of it, except to the extent as has already been ordered. I understand that a costs order has been made in relation to a first adjournment of a trial of the proceedings and all parties accept it is not appropriate for any order I make today to disturb that costs award.
34 Nor is there any other reason why one party should be required to pay the other's costs, except to the extent that costs have been ordered, in circumstances where there has been no determination of the merits of the proceedings.
35 Therefore the order in COR 60 of 2014 and COR 23 of 2014 should be that, except as otherwise ordered, there be no order as to costs.
1Hinch v Attorney General (Vic) (1987) 164 CLR 15, 89 - 90; Allbeury v Corruption and Crime Commission [2012] WASCA 84 (S) [7].
2Caratti v Boban Pty Ltd (administrators appointed) [2015] WASC 118.
3 See Witham v Hollaway (1995) 183 CLR 525.
4 See ASIC v Sigalla [No 4] [2011] NSWSC 62; (2011) 80 NSWLR 113 [23] - [31] and authorities there discussed.
5Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201 [91] - [95].
6Brookvista Pty Ltd v Meloni [2009] WASCA 180 [26] - [27].
7 The 'scale' is Table B to the Legal Profession (Supreme Court) (Contentious Business) Determination 2014.
8Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622.
9Lai Qin (624); Gray v Sirtex Medical Ltd formerly known as Paragon Medical Ltd [2009] WASC 126 [67].
10Lai Qin (625).
11Re Western Australian Planning Commission; Ex parte Solomon [2010] WASCA 236 [9].
12Jeruth Pty Ltd v Haybale Pty Ltd [2004] VSC 319 [6].
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