Cardaci v Cardaci [No 2]
[2022] WASC 277
•25 AUGUST 2022
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: CARDACI -v- CARDACI [No 2] [2022] WASC 277
CORAM: ALLANSON J
HEARD: 24 AUGUST 2022
DELIVERED : 24 AUGUST 2022
PUBLISHED : 25 AUGUST 2022
FILE NO/S: CIV 1249 of 2022
BETWEEN: MAE CARDACI
Plaintiff
AND
FILIPPO PRIMO CARDACI
Defendant
Catchwords:
Practice and procedure - Costs - Where party seeks further consideration of costs order made following hearing of application under s 92 of Trustees Act 1962 (WA) - Whether court can now alter or clarify perfected order - Whether alteration or clarification necessary - Whether court should make orders in this application requiring trustee to tax her own costs
Practice and procedure - Costs - Meaning of order for costs on solicitor and client basis
Practice and procedure - Costs - Whether order should be made for indemnity costs
Legislation:
Trustees Act 1962 (WA)
Rules of the Supreme Court 1971 (WA)
Result:
Application dismissed
Defendant to pay plaintiff's costs of application on indemnity basis
Representation:
Counsel:
| Plaintiff | : | Mr G D Cobby SC |
| Defendant | : | Mr S K Dharmananda SC & Ms C McKay |
Solicitors:
| Plaintiff | : | Herbert Smith Freehills |
| Defendant | : | Bennett + Co |
Case(s) referred to in decision(s):
Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] HCA 26, (2001) 179 ALR 406
Ben-Pelech v Royle [2020] WASCA 168 (S)
Blatchford v Laine [2018] WASC 207
Commissioner of the Australian Federal Police v Razzi (No 2) (1991) 30 FCR 64
Huntingdale Village Pty Ltd v Korda [2015] WASCA 101 (S)
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASC 129 (S)
Yara Australia Pty Ltd v Oswal [2012] WASCA 264
ALLANSON J:
Introduction
On 17 May 2022, on the plaintiff's originating summons, I gave directions under s 92 of the Trustees Act 1962 (WA) with respect to whether the plaintiff was justified in maintaining certain proceedings as trustee of the Washburn Trust and as trustee of Marc's Testamentary Trust. Further orders were made that related to the use by the plaintiff, as trustee, of money from the assets of the trusts to investigate claims against former trustees.
Mr Filippo Primo Cardaci appeared as a defendant in that application. I was satisfied that the defendant's participation was properly characterised as for the protection of the trust assets and provided for the defendant's costs to be paid from the two trusts.
The orders for costs were:
…
8.The Plaintiff's costs of the application be paid on a solicitor and client basis in equal shares from the assets of the Washburn Trust and Marc's Testamentary Trust.
9.The Defendant's costs of the application be paid on a solicitor and client basis in equal shares from the assets of the Washburn Trust and Marc's Testamentary Trust.
By letter dated 29 June 2022, the defendant applied for further orders. The application was supported by affidavits of Shemali Samaraweera, sworn 29 June 2022, and of Chloe Alyssa Tolley, affirmed 19 August 2022.
Initially, the defendant complained that, despite requests, the plaintiff (as trustee of the two trusts) had failed to comply with the order to pay his costs. The complaint evolved into a more complex organism, with the defendant claiming a lack of parity in the treatment of the two costs orders. He said that the plaintiff declined to reveal what steps she took, as trustee, to satisfy herself as to the costs properly payable from the trusts pursuant to order 8. This expanded complaint was reflected in proposed orders where the defendant sought, in the alternative:
(1)both the plaintiff's and the defendant's costs be paid forthwith on a solicitor and client basis and without recourse to taxation;
(2)orders by which the plaintiff pays the defendant the same amount as her paid costs, as payment or part payment, with the balance to be paid after taxation;
(3)the plaintiff's and the defendant's costs be taxed on a solicitor and client basis; and the plaintiff's costs be adjusted to the extent they differ from costs previously paid.
The defendant also sought orders as to the costs of this application.
After a short hearing on 24 August 2022, I dismissed the application with reasons to be published. The plaintiff sought an order for indemnity costs. The defendant did not oppose an order for costs, but submitted that the criteria for an award of indemnity costs had not been satisfied.
The correspondence leading to the application
I will outline the correspondence between the parties, and the way in which this matter developed, because it is relevant to the plaintiff's application for indemnity costs.
The defendant first demanded payment by letter dated 1 June 2022, claiming the costs of $244,976.98 were payable forthwith, and demanding the sum be paid within five days. The amount of costs payable had not then been determined.[1] The plaintiff replied, requesting a full breakdown of the costs claimed to enable the plaintiff, as trustee, to consider the reasonableness of the costs claimed.
[1] Second Affidavit of Shemali Samaraweera, sworn 29 June 2022, SMS 30.
In the ensuing exchange of emails, each party made its position clear.
The defendant asserted that solicitor and client costs 'mean such costs as chargeable between a solicitor and client and for which the client is liable to pay'.[2] The defendant demanded that he should be paid the amount of the invoices forthwith in equal shares from the assets of the two trusts, and asserted that the plaintiff has no discretion to form her own view as to the reasonableness of the costs demanded.
[2] Second Affidavit of Shemali Samaraweera, sworn 29 June 2022, SMS 31.
The plaintiff responded to the defendant's demands, stating that costs on a solicitor client basis provide for indemnity for all costs 'provided that they were in a reasonable amount and reasonably incurred'.[3] The plaintiff questioned whether the amount claimed was excessive and requested a full breakdown of costs, as otherwise it was not possible to make any assessment of the reasonableness of the claim.
[3] Citing Blatchford v Laine [2018] WASC 207 [151] ‑ [154].
The plaintiff has an obligation to protect the assets of the trust. Her apparent scepticism about the amount demanded is understandable when the defendant refused to provide information, and the amount was claimed for an application which took less than a day to hear, and which was not particularly complex.
The defendant had also chosen to engage counsel from the Sydney bar, who appeared in person rather than by video. On 27 June 2022, the defendant offered to reduce the claim to $229,347.50, removing the costs of travel and accommodation for counsel.[4] He made no other concession.
[4] Second Affidavit of Shemali Samaraweera, sworn 29 June 2022, 72 ‑ 73.
On 28 June 2022, the plaintiff wrote that she was entitled to apply for a costs assessment.[5] In a further email on the same day, the plaintiff repeated that, arguably, she would breach her obligations as a trustee if she was to accede to the plaintiff's request without any attempt to verify the amount claimed.[6]
[5] Second Affidavit of Shemali Samaraweera, sworn 29 June 2022, 72.
[6] Second Affidavit of Shemali Samaraweera, sworn 29 June 2022, 69.
The defendant then provided:
(1)the costs agreement between the defendant and his solicitors; and
(2)the costs agreement between the solicitors and senior and junior counsel who appeared on the return of the originating summons.
The agreements show that senior counsel was engaged at an hourly rate of $2,500, more than four times the rate for senior counsel in the costs determination for contentious business in this court, and slightly less than his junior's daily rate.
The defendant had provided invoices, but each simply recorded 'to our professional fees as per the attached schedule' and, in some cases, the amount of disbursements. The schedules were not attached. The defendant refused to provide further information.
On 29 June 2022, the plaintiff's solicitors wrote that the proper course for the defendant was to apply to have the costs assessed.[7]
[7] Second Affidavit of Shemali Samaraweera, sworn 29 June 2022, SMS 33.
The defendant brought an application that day requesting a hearing 'to consider the plaintiff's treatment of order 9 of the Orders'.
The resolution of the application
Both parties filed submissions. The submissions filed on behalf of the plaintiff are, in my opinion, plainly correct.
First, both parties now appear to accept that solicitor and client costs are costs that are reasonably incurred and in a reasonable amount.[8] The defendant still appears to hedge his position by submitting that there is little difference, at least practically, between indemnity costs and solicitor and client costs. But the basis on which costs will be assessed is clear. There is no question of the defendant simply being paid the amount invoiced unless it is for costs reasonably incurred and in a reasonable amount.
[8] Written submissions of defendant filed 19 August 2022 [17]; citing Commissioner of the Australian Federal Police v Razzi (No 2) (1991) 30 FCR 64, 67; Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] HCA 26, (2001) 179 ALR 406, 415 [40].
Second, the orders of 17 May 2022 have been made and extracted and, save for limited exceptions such as the slip rule, the court has exhausted its jurisdiction to make further orders.
It is not necessary to invoke the slip rule to make an order for taxation. Order 66 r 32(2) of the Rules of the Supreme Court 1971 (WA) provides, relevantly, that 'where an order of the Court directs the payment of any costs … those costs may be taxed without any order in that behalf being made'. Were it necessary, the order required would not go beyond adding the words 'to be taxed'. It is not necessary.
Third, it is not necessary to amend or add to the order to resolve any ambiguity or doubt as to what was intended by order 9 of 17 May 2022. What was intended is that the defendant's costs of the application be paid on a solicitor and client basis in equal shares from the assets of the Washburn Trust and Marc's Testamentary Trust. That is what the order says.
Finally, the issue of 'parity' of treatment does not arise. What steps the plaintiff took in order to comply with her duties as trustee in reimbursing her own legal costs is a separate question and is not in issue in this application.
Should there be an award of indemnity costs
The principles relevant to the grant of costs on an indemnity basis are well established.[9]
[9] See Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASC 129 (S) [10]; Yara Australia Pty Ltd v Oswal [2012] WASCA 264 [33]; Huntingdale Village Pty Ltd v Korda [2015] WASCA 101 (S) [11] ‑ [17]; See also Ben-Pelech v Royle [2020] WASCA 168 (S) [7].
In the present matter, the defendant began with the indefensible position that he was entitled to be paid on demand for all costs he had incurred, without regard to whether they were reasonably incurred.
When the application was brought, the defendant was maintaining his position that he was entitled to the amount of the invoices, except for the concession regarding travel and accommodation. He requested the matter be relisted for the court 'to consider the plaintiff's treatment of order 9 of the Orders'.
The defendant then appeared to modify his position, so that by the time submissions were filed, he accepted that an order for costs on a solicitor and client basis is an order for costs that are reasonably incurred and in a reasonable amount. Yet he still submitted that, properly construed, order 9 obliged the plaintiff to pay 'the full extent of the defendant's liability to pay costs arising from the plaintiff's application'.[10]
[10] Written submissions of defendant filed 19 August 2022 [19].
In his written submissions and in his proposed orders, the defendant introduced the additional issue of equal treatment with the plaintiff.
Properly advised, the defendant should have known that this application was not necessary, and could not succeed. He did not require an order that his costs be taxed, or a further order to set out the basis on which they should be taxed.
The attempt to introduce parity of treatment in this application had no foundation in principle. Whether the defendant has reasonable grounds to question how the plaintiff dealt with exoneration for her own costs, and I am not suggesting that he has, this application was not the vehicle to raise that question.
The trustee should not have been put to the expense of responding to the application.
The orders of the court are:
(1)The application is dismissed.
(2)The defendant forthwith pay the plaintiff's costs of the application, such costs to include all costs except in so far as they are of an unreasonable amount or have been unreasonably incurred so that, subject to the above exceptions, the plaintiff will be completely indemnified by the defendant for her costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
TB
Associate to the Honourable Justice Allanson
25 AUGUST 2022
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