Carroll v Investments (WA) Pty Ltd
[2012] WASC 93 (S)
•22 MARCH 2012
CARROLL -v- INVESTMENTS (WA) PTY LTD [2012] WASC 93 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 93 (S) | |
| Case No: | CIV:2406/2008 | 20-22 OCTOBER 2010, 22 MARCH 2012 & ON THE PAPERS | |
| Coram: | SIMMONDS J | 22/03/12 | |
| 21/05/12 | |||
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Defendant to be awarded its costs, including reserved costs, but not on indemnity costs basis Orders in related proceedings to be made | ||
| B | |||
| PDF Version |
| Parties: | JOHN CARROLL INVESTMENTS (WA) PTY LTD |
Catchwords: | Further orders in action application for costs of action on indemnity basis whether conduct of successful defendant in not complying with condition of settlement agreement terminated for that non-compliance by the plaintiff warranted denying the defendant its costs or substantially reducing them whether conduct of plaintiff warranted making indemnity costs order |
Legislation: | Rules of the Supreme Court 1971 (WA), O 66 r 1 |
Case References: | Carroll v Investments (WA) Pty Ltd [2012] WASC 93 Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 Gray v Sirtex Medical Ltd formerly known as Paragon Medical Ltd [2009] WASC 126 Jenkins v Hope [1896] 1 Ch 278 Mannix v Loumbos Pty Ltd [2000] NSWCA 32 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Quancorp Pty Ltd v Macdonald [1999] WASCA 101 Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 21 MAY 2012 FILE NO/S : CIV 2406 of 2008 BETWEEN : JOHN CARROLL
- Plaintiff
AND
INVESTMENTS (WA) PTY LTD
Defendant
Catchwords:
Further orders in action - application for costs of action on indemnity basis - whether conduct of successful defendant in not complying with condition of settlement agreement terminated for that non-compliance by the plaintiff warranted denying the defendant its costs or substantially reducing them - whether conduct of plaintiff warranted making indemnity costs order
Legislation:
Rules of the Supreme Court 1971 (WA), O 66 r 1
(Page 2)
Result:
Defendant to be awarded its costs, including reserved costs, but not on indemnity costs basis
Orders in related proceedings to be made
Category: B
Representation:
Counsel:
Plaintiff : Mr P J Mugliston & Mr A M Brook
Defendant : Mr S K Shepherd
Solicitors:
Plaintiff : Brook & Co
Defendant : Tottle Partners
Case(s) referred to in judgment(s):
Carroll v Investments (WA) Pty Ltd [2012] WASC 93
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95
Gray v Sirtex Medical Ltd formerly known as Paragon Medical Ltd [2009] WASC 126
Jenkins v Hope [1896] 1 Ch 278
Mannix v Loumbos Pty Ltd [2000] NSWCA 32
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Quancorp Pty Ltd v Macdonald [1999] WASCA 101
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S)
(Page 3)
- SIMMONDS J:
Introduction
1 This is my decision as to the matter of further orders to be made following the delivery of my decision Carroll v Investments (WA) Pty Ltd [2012] WASC 93 (the further orders) and following the making on that occasion of orders for the dismissal of the plaintiff's claims in the present proceedings. The further orders are principally as to the costs of these and related proceedings.
2 I begin by setting out matters of factual background to permit an understanding of further orders the parties respectively seek, and their cases for the making of such orders. I then deal with the issues arising out of those respective cases. The final section is my conclusions and call for terms for the further orders.
Background
3 This is taken from Carroll and the papers filed with the court in the proceedings in CIV 2406 of 2008, as well as in related proceedings with the same parties, CIV 1975 of 2007. This background is also taken from the affidavit of Alan Michael Brook (the Brook affidavit), solicitor for the plaintiff, sworn 5 April 2012 further to the document Plaintiff's Outline of Submissions as to Costs Orders dated 29 March 2012 (the plaintiff's submissions); and this background is further taken from certain annexures to the document Defendant's Submissions on Costs dated 5 April 2012 (the defendant's submissions). In the orders I made on the delivery of Carroll providing for the determination of the further orders I would make I did not provide for affidavit or other material than written submissions by the parties. However, neither party objected to the other's documents I have described. On that basis, I consider I may draw upon them. I will indicate when I am doing so.
4 In April 2005 the plaintiff entered into a contract (the plaintiff's contract) to buy from the defendant a unit (the plaintiff's unit) in a development (the development) the subject of a preliminary built strata plan which was annexed to the plaintiff's contract. The defendant by that time had two applications in respect of the development pending before the Western Australian Planning Commission (WAPC). One application showed a preliminary built strata plan very similar to but not identical with the preliminary built strata plan annexed to the plaintiff's contract (the first application). The other application showed a proposed strata plan which contained further differences from the preliminary strata plan
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- annexed to the plaintiff's contract (the second application). The differences included in particular the treatment as a separate lot of certain land, part of the land the subject of the development, over which there were easements in favour of the state's electrical power distribution utility (the land subject to the easements).
5 In May 2006 the WAPC notified the defendant of the WAPC's refusal of the second application.
6 In July 2006 the WAPC notified the defendant of its approval of the first application on certain conditions. Those conditions included that the land subject to the easements be shown on the strata plan for the development as common property.
7 In a letter dated 25 November 2006 to the plaintiff, the defendant referred to these two decisions of the WAPC and certain clauses in the plaintiff's contract to do with termination of the contract on a decision on an 'application' for approval in relation to the development. The two decisions of the WAPC were referred to in terms of their failure to permit the recognition of the excisions of the land subject to the easements from the development. The 25 November 2006 letter stated that the plaintiff's contract was terminated. It was common ground that the plaintiff at no time accepted the plaintiff's contract was at an end.
8 On 10 May 2007 a certificate of title issued for land including what had been occupied by the plaintiff's unit.
9 On 16 May 2007 the plaintiff lodged caveat K192548 (the caveat) on land comprised by that certificate of title. The defendant's submissions annex a copy of the caveat and the statutory declaration of the plaintiff in support of the caveat. I accept that these indicate that the basis of the caveat was the plaintiff's claim that he had an enforceable interest under the plaintiff's contract, which subsisted.
10 By originating summons filed 21 September 2007 the plaintiff commenced action in CIV 1975 of 2007. By orders later made in that action the caveat was extended until further order. Also by orders made in CIV 1975 of 2007 the action was stayed pending the determination of the proceedings in CIV 2406 of 2008.
11 By writ with statement of claim filed on 24 October 2008 the present proceedings in CIV 2406 of 2008 were commenced to enforce the plaintiff's contract. The plaintiff claimed specific performance, 'and or damages', as well as 'costs and interests'.
(Page 5)
12 On 5 November 2008 as stated in the Brook affidavit it was agreed at a mediation conference between the parties to CIV 2406 of 2008 that the proceedings in that action and in CIV 1975 of 2007 be settled as indicated in a handwritten document signed by the plaintiff and for the defendant (the settlement agreement). The settlement agreement provided in material part that both actions
will be settled on the basis that the defendant will pay to the plaintiff $40000 within 30 days from 5 November 2008.
At settlement of this matter the Plaintiff will give to the Defendant an executed and registrable withdrawal of caveat in respect of caveat no. K192548.
The parties agree that at settlement they will each sign a Minute of Consent Orders terminating both actions with no orders as to costs.
- See Annexure AMB-1 to the Brook affidavit.
13 It appears, if not entirely clearly, from the Brook affidavit that at no time thereafter and notwithstanding letters dated 5 December 2008, 10 December 2008 and 12 December 2008 from the solicitors for the plaintiff to the solicitors for the defendant requesting that settlement take place, did the defendant pay the $40,000 referred to. See Annexures AMB-2, AMB-4 and AMB-5, respectively, for those letters. In the letter of 12 December 2008, the solicitors for the plaintiff indicated they had instructions that, unless by 3.00 pm that day payment was received, the settlement would be at an end and they would apply to the court to reinstate the action.
14 By a minute of proposed orders dated 19 January 2009 from the solicitors for the defendant provision was made for payment of $40,000 by 20 February 2009, failing which the defendant irrevocably consented to judgment in that amount; and upon payment of that amount the plaintiff would deliver up to the defendant a withdrawal of the caveat and each party would sign a minute of consent orders terminating the proceedings in CIV 2406 of 2008 and CIV 1975 of 2007. See Annexure AMB-6 to the Brook affidavit.
15 In the event, however, on 19 January 2009 at a Case Management Conference in CIV 2406 of 2008, and on the plaintiff's application to reinstate those proceedings, orders were made for the defendant to file and serve a defence and counterclaim by 20 February 2009. See the Brook affidavit [13] - [14].
(Page 6)
16 I note in respect of the settlement agreement that in the defence filed 22 May 2009 [16], repeated unchanged in the amended defence for which I gave leave at the trial, there was the following plea:
If the Contract has not been terminated by the defendant (which is not admitted) then the defendant further pleads that by an agreement dated 5 November 2008 between Peter Tilli on behalf of the defendant and the plaintiff acting as plaintiff, the plaintiff agreed with the defendant that these proceedings between the plaintiff and the defendant would be settled on the terms and conditions set out in the agreement.
17 In the plaintiff's reply to defence filed 20 July 2009 the plaintiff pleaded as follows in [9]:
There was no settlement of this case as pleaded in paragraph 16 or at all as there was no payment by the Defendant to the Plaintiff of $40,000.00 within 30 days from 5 November 2008. In fact at no stage since that date has the Defendant said it was ready able and willing to make payment of the $40,000.00.
18 At trial, as noted in Carroll [45] the defendant abandoned its claim resting on the pleading of the settlement agreement.
19 Between 20 and 22 October 2010 there was a trial in CIV 2406 of 2008.
20 On 22 March 2012 I delivered Carroll where I stated my conclusion that the defendant had the right to terminate the plaintiff's contract which it had effectually exercised and thus the plaintiff's claims to enforce the plaintiff's contract, and his action in CIV 2406 of 2008, should be dismissed. I made orders then for the dismissal of the plaintiff's claims in CIV 2406 of 2008. I also made orders that the matters of further orders, including orders as to the costs of CIV 2406 of 2008, as to the caveat and as to related matters the subject of the proceedings in CIV 1975 of 2007, be the subject of written submissions by the parties and a minute or minutes of proposed further orders, to be filed by 5 April 2012. The matter of the making of further orders might thereafter be decided upon the papers.
21 In the event the plaintiff's submissions and the defendant's submissions were filed on 5 April 2012, with the Brook affidavit in the case of the plaintiff, and the annexures to the defendant's submissions in the case of the defendant. However, no minutes of proposed further orders were filed by either party. At the same time, I consider the orders
(Page 7)
- sought by each party sufficiently appear from their respective written submissions.
22 I turn now to the orders the parties respectively seek, and an outline or short statement of the effect of their cases for those orders.
Orders sought and outline of the cases for them: the defendant
23 The defendant seeks the following orders:
(1) The plaintiff pay the defendant its costs in CIV 2406 of 2008, including all reserved costs, on an indemnity basis;
(2) The proceedings in CIV 1975 of 2007 be dismissed;
(3) The caveat be immediately discharged and removed from the register; and
(4) The plaintiff pay the defendant its costs in CIV 1975 of 2007 to be taxed if not agreed.
24 The defendant's case for order (1) in outline is that the costs should follow the event, and that, as the plaintiff's conduct in bringing and pursuing the action in CIV 2406 of 2008 was unreasonable, an indemnity costs order was appropriate.
25 The defendant's case for orders (2), (3) and (4) in effect is that as the claims in CIV 1975 of 2007 rested on the same foundation as the claims in CIV 2406 of 2008 the making of those orders followed.
26 I note that, although in the closing submissions for the defence for the trial in CIV 2406 of 2008 there was a claim for loss arising from or relating to the caveat to which Carroll referred at [140], that claim is not pursued.
Orders sought and outline of the cases for them: the plaintiff
27 The plaintiff seeks the following orders:
(1) There be no order as to the costs of CIV 2406 of 2008;
(2) If there is to be an order for the defendant's costs, it not be on an indemnity basis and indeed be for 'substantially reduced' costs; and
(Page 8)
- (3) There be no order compensating the defendant for any loss arising from or relating to the caveat.
The matter of order (3) does not need to be further pursued, in view of the defendant's position previously described.
28 There are no proposed orders or separate submissions for the plaintiff as to dismissal of the proceedings in CIV 1975 of 2007, the discharge of the caveat or the costs of those proceedings.
29 The plaintiff's case for order (1) rests on the defendant's conduct under the settlement agreement.
30 The plaintiff's case for order (2) on a substantially reduced basis rests on the same foundation. The plaintiff's case for the order that in any event the defendant receive its costs but not an indemnity basis is in effect that the defendant had not shown the unreasonableness it contended for; that case is also in terms of the conduct of the defendant under the settlement agreement.
31 From these competing positions, the following issues present themselves:
(1) Should the costs of CIV 2406 of 2008 follow the event, and be on a substantially reduced basis?
(2) If those costs should follow that event without reduction, should they be on an indemnity basis?
(3) What orders should be made in CIV 1975 of 2007?
I turn to those issues.
Should the costs of CIV 2406 of 2008 follow the event but on a reduced basis?
32 If the costs of CIV 2406 of 2008 were to follow the event, and leaving aside the matter of reduced costs and indemnity costs, it is not in contest that the defendant would have them on the usual party and party basis, to be taxed if not agreed.
33 The costs of proceedings are of course in the discretion of the court. However, without limiting that discretion, the court will 'generally' order that the successful party will recover their costs: Rules of the Supreme Court 1971 (WA) O 66 r 1. See on this principle Gray v Sirtex Medical
(Page 9)
- Ltd formerly known as Paragon Medical Ltd [2009] WASC 126 [62] (Le Miere J).
34 As to the exercise of the discretion so as to make no order as to the successful party's costs, I note the following, citing Mannix v Loumbos Pty Ltd [2000] NSWCA 32 [13] (Foster AJA; Priestley & Foster JJA agreeing), from Kendall C and Curthoys J, Civil Procedure in Western Australia [66.1.4A], Service 136:
A successful party may properly be deprived of an award of costs if guilty of misconduct relating to the litigation or the circumstances leading up to the litigation as where by lax conduct the successful party 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.
35 For the plaintiff, reliance was placed on the settlement agreement and the defendant's failure to comply with the condition for payment of $40,000. I understood this to be a claim that the discretion should be exercised to make no order as to costs, or a substantially reduced order as to costs, on either of two bases. One was that the defendant was guilty of misconduct relating to the proceedings in CIV 2406 of 2008 in breaching the settlement agreement resulting in the proceedings being reinstated with the defendant obtaining relief which the plaintiff had offered in settlement of the dispute. The other basis was that the defendant's misconduct was in entering into an agreement following mediation with which it failed to comply.
36 As to the first basis, the defendant appeared to be referring me to the authority referred to in Mannix [13] of Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, 98 (McHugh J). That authority itself referred to Jenkins v Hope [1896] 1 Ch 278 to show that the court may 'properly depart from the usual order as to costs when the successful party … obtains relief which the unsuccessful party had already offered in settlement of the dispute': Oshlack (97 - 98).
37 However, Jenkins was a case which, so far as appears from the report, involved an unqualified offer by the defendants to settle the proceedings there by granting the plaintiff the relief it sought as well as costs. That offer stood at the time that the plaintiff delivered its statement of claim. Here the relief under the settlement agreement was qualified and the offer or acceptance of it had in effect been withdrawn by the plaintiff's termination of the settlement agreement no later than the time of
(Page 10)
- proceeding before the Case Management Registrar on 19 January 2009 to seek the reinstatement of the proceedings in CIV 2406 of 2008.
38 Of course, the apparent reason for withdrawal of the offer or acceptance by such termination was the defendant's failure to comply with the condition in the settlement agreement, which I understood as the second basis for the plaintiff's claim that I should make no order or a substantially reduced order as to the defendant's costs in CIV 2406 of 2008.
39 This form of conduct is not addressed in Oshlack or Mannix, the parties cited no authority with respect to it to deny a successful party its costs or to reduce them and I could find no such authority. In my view, conduct of that kind without more would not merit characterisation as the plaintiff contends for here as 'misconduct relating to the litigation'. Such conduct would appear to be a matter which is rather to be dealt with as under the agreement, for which there might be a remedy for its breach. The present are not proceedings for a remedy for such conduct. This is not to say a breach of a settlement agreement might not be such as to give rise to an exercise of the costs discretion such as the plaintiff seeks. An example might be where a settlement agreement was entered into with no intention of complying with its conditions. However, here, on the material before me, there is no more than a failure to comply with a condition in a settlement agreement, a failure which gave rise to a termination of the agreement.
40 I note that the plaintiff has not referred to any considerations particular to a claim for substantially reduced costs and none presents itself to me.
41 I also note that the plaintiff has made no submissions that any of the reserved costs in CIV 2406 of 2008 should be separately dealt with, and no reason for such dealing presents itself to me.
42 Accordingly, I would make an order that the defendant have its costs of CIV 2406 of 2008, including reserved costs, to be taxed if not agreed, subject to the matter of indemnity costs, reached next.
Should the defendant have its costs in CIV 2406 of 2008 on an indemnity basis?
43 The defendant's case for its costs in CIV 2406 of 2008 on an indemnity basis rested on two bases. One basis was the conduct of the plaintiff in bringing and pursuing those proceedings allegedly in 'wilful
(Page 11)
- disregard' of 'known facts and the established law'. The other basis was the plaintiff engaging in conduct allegedly prolonging the case on 'groundless contentions'.
44 I consider it cannot be contested that, notwithstanding that the usual order for costs is on party and party basis, an indemnity costs order may be made in a case where a party has commenced proceedings 'in wilful disregard of known facts or the established law' or unduly prolonged the proceedings on 'groundless contentions'. These are examples of an 'element of improper, or at least unreasonable, conduct on the part of the parties or their legal advisors in relation to the case': Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [9] (Pullin J). See also Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) [10] (Pullin JA & Kenneth Martin J), referring to Quancorp Pty Ltd v Macdonald [1999] WASCA 101 [7] (Wheeler J), where her Honour referred to persisting in a 'hopeless' case.
45 There are other bases on which the conduct of a party might be sufficient to merit an indemnity costs order being made against them. See Flotilla Nominees [8] - [9]. However, no other basis is advanced by the defendant, and none presents itself to me.
46 I treat 'wilful disregard of known facts and the established law' and undue prolongation of the case on 'groundless contentions' separately.
47 As to the first, the defendant appears to rest its claim for indemnity costs on that basis, or at least that the plaintiff ran a 'hopeless' case, on either of two matters. One matter was the foundation of fact which the plaintiff accepted and on which the defendant says the plaintiff's pleaded basis for the relief it sought rested. The other matter was the nature of the relief the plaintiff sought on that basis. I deal with each matter separately.
48 The defendant's submissions describe, correctly in my view, matters of factual background not in dispute. The defendant's submissions state that the pleaded basis, resting on that factual background, for the plaintiff's contention that the defendant was not entitled to terminate the plaintiff's contract was that the defendant was 'bound' under the plaintiff's contract to retain the land subject to the easements as common property in the development. The defendant's contention was that on the plaintiff's own evidence at trial the plaintiff understood that the defendant was not so bound, and so the plaintiff's pleaded basis fell away, and on established law the plaintiff could not terminate the plaintiff's contract.
(Page 12)
49 I accept that, on the plaintiff's pleadings (see reply to defence dated 16 July 2009 [4] - [6]), his case was that the defendant was not entitled to terminate the plaintiff's contract in the events that had happened, and the basis for that case was that the defendant had not made a 'proper application' to the WAPC under the provisions as to termination in the plaintiff's contract in not including the land subject to the easements as common property in the development. I further accept that the plaintiff's evidence at trial was to the effect that the defendant was entitled to vary the development to excise the land subject to the easements from the development: see Carroll [27] and trial 21 October 2010 (ts 148, 153, 155).
50 However, in my understanding of the plaintiff's case as pleaded and conducted at trial, that case was that any such variation could not, as a matter of construction of the plaintiff's contract, as a result of the decisions of the WAPC on either the first application or the second application, give rise to a right to terminate the plaintiff's contract. That raised a question of construction and application of the plaintiff's contract that was of some difficulty: see Carroll [59] read with [60] - [111]. In view of that quality of that question, I am unable to conclude that the plaintiff's conduct in pursuing his case was in wilful disregard of known facts and established law.
51 As to the second matter on which the defendant's submissions appear to rest their claim for indemnity costs as a matter of 'wilful disregard of known facts and the established law', or at least the pursuit of a 'hopeless' case, the nature of the relief the plaintiff sought, the defendant's submissions referred to both of the plaintiff's principal claims, for specific performance and damages.
52 As to the claim for specific performance, the defendant's case was there were three reasons why the court would not as a matter of discretion have granted that relief. I do not need to review those reasons. That is because they were ones which were put to me at trial. I described them in Carroll and concluded that I would not have declined the remedy of specific performance, at least without giving the plaintiff an opportunity to re-open his case to lead further evidence. See [130] - [135].
53 As to the claim for damages, the defendant's case was that the plaintiff had neither pleaded particulars of loss nor provided evidence of loss at the trial. In Carroll I dealt with these matters, which the defendant had put to me at trial: see [136] - [137]. My conclusion set out there was that the plaintiff had failed to prove any loss. However, in view of my
(Page 13)
- conclusion on the claim for specific performance, it does not seem to me such failure is sufficient to represent a form of 'improper or unreasonable conduct': Flotilla Nominees [9]. I am of that view as the claim for damages was at least in part an alternative to the claim for specific performance, as a claim for 'and or damages' (emphasis added).
54 As to the allegation that the plaintiff unduly prolonged the case on groundless contentions, it was not evident to me what other matter the defendant was relying upon than that subsumed by the allegation of the plaintiff's wilful disregard of known facts and established law previously dealt with.
55 Accordingly, I would not make the indemnity costs order the defendant seeks.
56 This conclusion makes it unnecessary for me to consider whether or not the breach of the settlement agreement by the defendant on which the plaintiff relies for not making an indemnity costs order is sufficient for that purpose.
What orders should be made in CIV 1975 of 2007?
57 I note the character of the proceedings in CIV 1975 of 2007, and the nature of the caveatable interest claimed for the caveat. I note also the absence of any submissions by the plaintiff that there are other relevant considerations than those urged against the orders sought by the defendant in CIV 2406 of 2008.
58 In view of those matters, and as no such considerations present themselves to me, I conclude that orders to the effect of those the defendant seeks in CIV 1975 of 2007 should be made.
Conclusions and call for orders
59 I have concluded that orders should be made in CIV 2406 of 2008 to the following effect: the defendant should have its costs of that action, including reserved costs, to be taxed if not agreed.
60 I have also concluded that orders should be made in CIV 1975 of 2007 to the following effects: that proceedings in that matter be dismissed; that the caveat be immediately discharged and removed from the register; and that the plaintiff pay the defendant's costs in that action, including any reserved costs, to be taxed if not agreed. I note in relation to an order to remove the caveat that the registrar is not a party to the
(Page 14)
- action, and so the order could not be in such terms but rather should be crafted with a view to achieving that effect.
61 I will hear from the parties as to the detailed terms of such orders, and any other orders to be made as a consequence of these reasons.
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