Chattan Projects Pty Ltd v Turner
[2014] WASC 491
•18 DECEMBER 2014
CHATTAN PROJECTS PTY LTD -v- TURNER [2014] WASC 491
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 491 | |
| Case No: | CIV:2132/2014 | ON THE PAPERS | |
| Coram: | EDELMAN J | 18/12/14 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiff to pay defendant's costs of the application fixed at $2,000 | ||
| B | |||
| PDF Version |
| Parties: | CHATTAN PROJECTS PTY LTD LEIGH GEOFFREY TURNER |
Catchwords: | Practice and procedure Costs Discontinuance of application for freezing order Where application discontinued as a result of issues raised by the Court Whether no order as to costs should be made Costs of removal of affidavit from Court record |
Legislation: | Civil Judgments Enforcement Act 2004 (WA) Rules of the Supreme Court 1971 (WA) |
Case References: | Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 Frigo v Culhaci [1998] NSWCA 88 Harlap v Rosepoint Nominees Pty Ltd [2009] WASC 241 Jackson v Sterling Industries Ltd [1987] HCA 23; (1987) 162 CLR 612 PT Bayan Resources TBK v BCBC Singapore Pte Ltd [2014] WASCA 178 Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622 Tagget v Sexton [2009] NSWCA 91; (2009) 255 ALR 522 Walter v Buckeridge [No 4] [2011] WASC 313 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
LEIGH GEOFFREY TURNER
Defendant
Catchwords:
Practice and procedure - Costs - Discontinuance of application for freezing order - Where application discontinued as a result of issues raised by the Court - Whether no order as to costs should be made - Costs of removal of affidavit from Court record
Legislation:
Civil Judgments Enforcement Act 2004 (WA)
Rules of the Supreme Court 1971 (WA)
Result:
Plaintiff to pay defendant's costs of the application fixed at $2,000
Category: B
Representation:
Counsel:
Plaintiff : Mr D J Morris
Defendant : Mr J Eastoe
Solicitors:
Plaintiff : HHG Legal Group
Defendant : Jonathan Eastoe
Cases referred to in judgment:
Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380
Frigo v Culhaci [1998] NSWCA 88
Harlap v Rosepoint Nominees Pty Ltd [2009] WASC 241
Jackson v Sterling Industries Ltd [1987] HCA 23; (1987) 162 CLR 612
PT Bayan Resources TBK v BCBC Singapore Pte Ltd [2014] WASCA 178
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622
Tagget v Sexton [2009] NSWCA 91; (2009) 255 ALR 522
Walter v Buckeridge [No 4] [2011] WASC 313
- EDELMAN J:
Introduction
1 On 25 November 2014, a special appointment was listed to hear an application to extend a freezing order. This was the first substantial hearing of the application between the parties.
2 At the hearing of the special appointment, I raised an issue concerning my power to make or continue any freezing order. After an exchange with the solicitor for Chattan Projects, and after an adjournment that he requested, he sought leave to discontinue his application. I made orders discontinuing the application and providing for the parties to confer about costs, with any dispute about costs to be determined on the papers. Chattan Projects sought an order that there be no order as to costs. Mr Turner sought orders for his costs of the special appointment, and his costs concerning removal of an affidavit from the Court record.
3 For the reasons I explain below, it is appropriate that Chattan Projects pay the costs of Mr Turner concerning the special appointment only, fixed at $2,000. It is, unfortunately, necessary to set out the background and nature of the dispute in some detail in order to explain this conclusion.
The freezing order application
4 Chattan Projects is a company in the business of residential construction. Its sole director and secretary is Mr Smith.
5 On 22 August 2013, Chattan Projects arranged for a property in Woodbridge then owned by it to be listed for sale.
6 On 23 September 2013, Mr Turner made an offer to purchase the Woodbridge property for $960,000. Chattan Projects accepted this offer on 24 September 2013. The scheduled date for settlement of the sale of the property was 25 November 2013.
7 On 16 November 2013, Mr Smith's wife received a telephone call from Mr Turner. Mr Turner informed Mr Smith's wife that he was relying on 'getting funds out of some trusts' but was not able to produce the money required for settlement.1
8 The sale of the Woodbridge property to Mr Turner did not eventuate.
9 On 25 July 2014, Chattan Projects sold the Woodbridge property to another buyer for $900,000.
10 On 8 August 2014, Chattan Projects instructed its solicitors to investigate public records concerning Mr Turner's financial position for the purposes of assessing whether to commence legal proceedings against Mr Turner. Chattan Projects discovered that Mr Turner owned a property in Kalamunda, and that that property was due to be sold at auction on 10 August 2014.
11 On 10 August 2014, Mr Turner's Kalamunda property was sold for $850,000 at auction. The auction was a mortgagee sale by the Bank of Queensland.
12 On 12 August 2014, Chattan Projects applied to this court for a freezing order under O 52A of the Rules of the Supreme Court 1971 (WA). The basis of Chattan Projects' application was its belief that it will be successful in its proceedings against Mr Turner and that there was a danger that a judgment in these proceedings would not be satisfied because Mr Turner might dispose of, deal with or diminish in value his assets.2 The proposed orders and evidence were deficient, so I declined to make the freezing order and adjourned the application.
13 Chattan Projects came back before the Court on 15 August 2014. On that occasion, I gave oral, unpublished reasons for decision (which I directed the solicitor for Chattan Projects to provide to Mr Turner) explaining that I was satisfied there was a danger that a prospective judgment would not be satisfied because Mr Turner might dispose of, deal with or diminish in value his assets for the following reasons:
(1) the omission by Mr Turner to mention anything about the sale of the Kalamunda property to Chattan Projects' solicitors, despite opportunities to do so and circumstances in which it might be expected that this would be mentioned;
(2) evidence that suggested Mr Turner had been setting up and deregistering companies in quick succession for almost 30 years and his bankruptcy on two occasions; and
(3) the ephemeral nature of a 'syndicate' that was said by Mr Turner to be the basis for future payments from Mr Turner to Chattan Projects.
14 The return date for the freezing order was 1 September 2014. At that time, Mr Turner sought an extension of time to comply with an order requiring him to swear and serve on Chattan Projects an affidavit setting out information about the value, location and details of his assets. The extension was granted and the matter listed for directions on 26 September 2014. That directions hearing was vacated when the parties agreed orders programming the matter to a special appointment.
15 In the meantime, on 25 August 2014, Chattan Projects commenced an action against Mr Turner in the District Court seeking around $100,000 and various other unquantified amounts from Mr Turner. The claim was for an alleged breach of the contract for the sale of the Woodbridge property.
The preparation for the special appointment on 25 November 2014
16 On 1 September 2014, the return date of the freezing order, no application was made for the freezing order to continue until the hearing of the special appointment. But, on 25 November 2014, both parties proceeded on the basis that the application was for continuation of the freezing order, on the assumption that there was no difference in principle between the continuation of the order or the grant of a new order.
17 According to Mr Turner's solicitor,3 he was instructed by Mr Turner on 19 September 2014. The parties then provided affidavit evidence and submissions in relation to the special appointment on 25 November 2014.
18 For Mr Turner, his solicitor prepared short affidavits as follows: affidavits sworn by Mr Turner on 19 September 2014 and 1 October 2014, a supplementary affidavit from Mr Turner sworn 12 November 2014, and an affidavit which his solicitor swore on 30 October 2014.
19 Mr Turner deposed to matters including that he has rights to a $31,790 surplus from sale of the property in Kalamunda.4 Mr Turner said that he holds these funds on trust on the terms of the Baywest Trust. Mr Turner said that he also holds a motorcar worth about $80,000, and a trailer worth about $5,000 on the same trust. Other than these assets, Mr Turner said that the only assets he owns are 'clothing, a mobile phone and a watch and other personal items of no significant value'.5 Mr Turner produced a stamped deed appointing him as a trustee of the Baywest Trust, prepared by solicitors and stamped 20 March 1991. He also produced documents showing that he had borrowed the purchase price for the Kalamunda property in his capacity as trustee of the Baywest Trust.
20 Chattan Projects submitted that Mr Turner's allegations of trusteeship should be rejected. Chattan Projects did not seek leave to cross-examine Mr Turner on his affidavit. Nor did it introduce any evidence concerning why Mr Turner's evidence of trusteeship should be rejected. It asserted that the Kalamunda property had vested in Mr Turner as a beneficiary of the Baywest Trust because he had occupied the property for a period of time. Alternatively, Chattan Projects said that the Baywest Trust was a sham.
21 It suffices to say that there was no direct evidence to support either of the assertions of Chattan Projects concerning vesting of the trust or the trust being a sham. The basis upon which these inferences were sought was weak. Chattan Projects did not seek leave to cross examine Mr Turner on his affidavit.
22 The three bases upon which the freezing order had been sought had considerably weakened by the time of the special appointment. The first matter was qualified by the evidence concerning the Baywest Trust. And the second matter was qualified by the lack of any evidence that any of the companies deregistered by Mr Turner had ever been in receivership, liquidation, or administration.
23 In Cardile v LED Builders Pty Ltd,6 a majority of the High Court approved the following statement by the New South Wales Court of Appeal in Frigo v Culhaci:7
[A freezing order] is a drastic remedy which should not be granted lightly …
A [freezing order] is an interlocutory order which, if granted, imposes a severe restriction upon a defendant's right to deal with his or her assets. It is granted at the suit of a plaintiff whose status as a creditor is in dispute and who need not be a secured creditor. Its purpose is to preserve the status quo, not to change it in favour of the plaintiff. The function of the order is not to 'provide a plaintiff with security in advance for a judgment that he hopes to obtain and that he fears might not be satisfied; nor is it to improve the position of the plaintiff in the event of the defendant's insolvency' … Many authorities attest to the care with which courts are required to scrutinise applications for [freezing orders] (citations omitted).
24 For these reasons, Chattan Projects' case, although reasonably simple, was not strong. But it vigorously pursued the freezing order application to the special appointment on 25 November 2014. It relied on two affidavits and three sets of submissions, and it brought objections and made further submissions on those objections to various parts of Mr Turner's evidence.
The issue raised by the Court on 25 November 2014
25 At the commencement of the hearing on 25 November 2014, I raised with the parties the question whether I had power to make any freezing order in circumstances in which the action had been commenced in the District Court.
26 Order 52A r 5 of the Rules of the Supreme Court is concerned with freezing orders in two situations:
(i) when a judgment has already been obtained, or
(ii) when an applicant has a good arguable case on an accrued or prospective cause of action.
27 Order 52A r 2(1) of the Rules of the Supreme Court provides that a freezing order can be made 'for the purpose of preventing the frustration or inhibition of the Court’s process by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied'.
28 The 'Court' is not defined. It is a capitalised term which has been described as creating a 'courtcentric' provision.8 In this case, the 'Court' refers to the Supreme Court. Hence, as Buss JA observed in PT Bayan Resources TBK v BCBC Singapore Pte Ltd,9 O 52A r 5 distinguishes between actual or prospective judgments of the Supreme Court and actual or prospective judgments of other courts. The District Court of Western Australia is 'another court' for the purposes of the definition in O 52A r 1 (ie a court in Australia other than the Supreme Court of Western Australia).
29 In a case involving an accrued or prospective cause of action in the District Court, which was the basis for Chattan Projects' application, a pre-condition before a freezing order can be granted by the Supreme Court is that 'there is sufficient prospect that the judgment will be registered in or enforced by the [Supreme] Court' (O52A r 5(1)(b)(ii), O 52A r 5(3)(b)). This reflects the purpose of a freezing order which is to preserve the efficacy of the execution which would lie against an actual or prospective judgment debtor. It is not to provide security to a plaintiff.10
30 The Civil Judgments Enforcement Act 2004 (WA) applies to any civil judgment given by the Supreme Court, the District Court or the Magistrates Court (see s 5).
31 Section 9(1) of the Civil Judgments Enforcement Act provides that:
(1) An application or request that may be made under this Act to a court in relation to a judgment must be made -
(a) to the court that gave the judgment; and
(b) at the registry of that court where the documents relating to the action or matter in which the judgment was given are being held, unless the court gives permission for the application or request to be made at another registry.
33 I raised these issues with the solicitor for Chattan Projects and he sought an adjournment to consider the legal issues. Following the adjournment he sought leave to discontinue his application. The solicitor for Chattan Projects did not accept that the Supreme Court had no power to make the freezing order. But he submitted that he could make the application in the District Court and sought to discontinue the application on that basis.
34 I granted leave to discontinue subject to orders as to costs. The solicitor for Chattan Projects sought some time to confer with the solicitor for Mr Turner about costs and, if agreement could not be reached, for costs to be determined on the papers. No agreement was reached.
The costs applications now before the Court
Costs of removal of an affidavit from the Court record
35 Prior to the filing of costs submissions by the parties, an affidavit was filed by the solicitor for Chattan Projects. In it, the solicitor deposed to selected correspondence and conversations between himself and the solicitor for Mr Turner. It appeared from the affidavit that the relationship between the solicitors had, unfortunately, deteriorated. The purpose of the solicitor's affidavit was apparently in anticipation of an application for indemnity costs by Mr Turner.
36 The solicitor for Mr Turner responded to the affidavit by letters to the solicitor for Chattan Projects and to the Court. The solicitor for Mr Turner explained that he would seek orders concerning a potential application that he would make under O 37 r 7 of the Rules of the Supreme Court seeking an order removing the affidavit from the Court file.
37 On 11 December 2014, I brought the solicitors back before the Court for them to explain the proportionality of the growing number of potential applications including the removal of the affidavit from the Court file, as well as the potential application for taxation of costs, including on an indemnity basis.
38 The solicitor for Mr Turner sensibly conceded that a taxation of the costs of the freezing order application, whether or not on an indemnity basis, would not be sought. After this concession, the solicitor for Chattan Projects consented to the orders that Mr Turner had sought in correspondence with him for the removal of the affidavit that he had filed from the Court record. No formal application for such removal was ever made.
39 Counsel for Mr Turner sought his costs of the removal of the affidavit from the Court record. In all the circumstances, it is appropriate that there be no order as to costs concerning the removal of the affidavit from the Court record.
Costs of the 25 November 2014 special appointment
40 Chattan Projects submitted that there should be no order as to the costs of the special appointment. This was said to be because (i) the freezing order was not complex, (ii) Chattan Projects made proper and early concessions about the scope of the freezing order, and (iii) Chattan Projects discontinued the action as a result of the Court's observations about jurisdiction.
41 Mr Turner submitted that he should be entitled to his legal costs of the special appointment in circumstances in which, until the hearing of the special appointment, Chattan Projects had contended that the trust had vested or was a sham. Mr Turner did not seek to have his costs taxed, whether on an indemnity basis or otherwise. He reasonably sought only an order fixing the costs of the freezing order application. He sought an amount in accordance with the typical or median instance provided in Item 2.4 of the Schedule in 4.7.1.1 of the Consolidated Practice Directions of $1,892 (preparing and lodging submissions and authorities, preparation, attending on hearing, reporting) plus an extra hour of hearing time at $583.
42 It will sometimes be the case that upon discontinuance there is no order as to costs.13 But much may depend on all the circumstances of the particular case. Two particular circumstances emphasise why I would make an order for costs in this case.
43 First, the discontinuance occurred in circumstances in which Chattan Projects could not have succeeded in its application due to the lack of power for the court to make the orders sought. Chattan Projects has, in effect, been unsuccessful.14 I bear in mind that the fundamental flaw in Chattan Projects' application was a simple matter raised by the Court rather than the parties. However, I doubt whether the application would have been discontinued earlier even if this point had been raised by Mr Turner. The issue of lack of power to make the orders sought was never accepted by Chattan Projects and the solicitor for Chattan Projects sought to discontinue only on the basis that the District Court would be a more expedient forum for the application. Nevertheless, the solicitor for Chattan Projects accepted that he could have commenced the application for a freezing order in the District Court at the time he brought, or contemplated, the District Court action.
44 Secondly, even apart from the issue of power raised by the Court, Chattan Projects' application was weak for the reasons that I have explained. Although the application was reasonably simple, any legitimate goal of the application was not proportionate to the strength of the applicant's case, the sums of money involved, and the time and legal costs involved in the manner that the application was pursued.
45 In my broad brush assessment of the costs of the application in all of the circumstances of this case, and in light of a comparison with the usual run of special appointments by chamber summons, I consider that the appropriate amount by which the costs should be fixed is $2,000.
46 The order I make is that Chattan Projects pay the costs of Mr Turner concerning the 25 November 2014 special appointment, fixed at $2,000.
1 Affidavit of Mr Smith sworn 12 August 2014 [27].
2 See Rules of the Supreme Court 1971 (WA) O 52A r 5(4)(b)(ii).
3 Special appointment hearing, 25 November 2014.
4 Affidavit of Mr Turner sworn 1 October 2014, Attachment LGT 1.
5 Affidavit of Mr Turner sworn 19 September 2014 [8].
6Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380, 403 - 404 (Gaudron, McHugh, Gummow & Callinan JJ).
7Frigo v Culhaci [1998] NSWCA 88 (Mason P, Sheller JA, Sheppard AJA).
8Tagget v Sexton [2009] NSWCA 91; (2009) 255 ALR 522, 533 [58] (Beazley JA).
9PT Bayan Resources TBK v BCBC Singapore Pte Ltd [2014] WASCA 178 [78].
10Jackson v Sterling Industries Ltd [1987] HCA 23; (1987) 162 CLR 612, 619, 625 – 626 (Deane J); Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380, 401 [43] (Gaudron, McHugh, Gummow & Callinan JJ).
11Harlap v Rosepoint Nominees Pty Ltd [2009] WASC 241.
12Harlap v Rosepoint Nominees Pty Ltd [2009] WASC 241 [11].
13 See Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, 625 (McHugh J).
14Walter v Buckeridge [No 4] [2011] WASC 313 [13] - [15] (Le Miere J).
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