Cheng v Lam [No 9]
[2022] WASC 252
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: CHENG -v- LAM [No 9] [2022] WASC 252
CORAM: TOTTLE J
HEARD: 23 MAY 2022
DELIVERED : 9 AUGUST 2022
FILE NO/S: CIV 1706 of 2015
BETWEEN: MARY YUEN SHAN CHENG
Plaintiff
AND
FRANCIS HUNG LAM
First Defendant
ANDREA MAN YEE CHENG
Second Defendant
MARY YUEN SHAN CHENG
First Defendant by Counterclaim
CHAN THANH LAM
Second Defendant by Counterclaim
DAVID CUONG CHAN LAM
Third Defendant by Counterclaim
TINH AU
Fourth Defendant by Counterclaim
Catchwords:
Practice and procedure - Appeal of registrar's costs orders - Whether appeal is incompetent - Turns on own facts
Practice and procedure - Registrar's costs orders supplemental to registrar's report - Appeal treated as an application to adopt the registrar's costs orders - Whether the registrar erred in principle by making a costs order against the plaintiff - Whether the registrar erred in exercising discretion in awarding partial indemnity costs to the first and second defendants - Turns on own facts
Legislation:
Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2018
Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2020
Rules of the Supreme Court 1971 (WA), O 60A r 4(3)(a)
Supreme Court Act 1935 (WA), s 50
Result:
Registrar's costs orders adopted
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr P J Hannan |
| First Defendant | : | Mr P G McGowan |
| Second Defendant | : | Mr P G McGowan |
Solicitors:
| Plaintiff | : | G A Lacerenza & Associates |
| First Defendant | : | Johnston Crouse Lawyers |
| Second Defendant | : | Johnston Crouse Lawyers |
Cases referred to in decision:
Cheng v Lam [No 2] [2018] WASC 199
Cheng v Lam [No 2] [2021] WASCA 196
Cheng v Lam [No 3] [2020] WASC 45
Cheng v Lam [No 3] [2020] WASC 45 (S)
Cheng v Lam [No 4] [2020] WASC 175
Cheng v Lam [No 5] [2021] WASC 129
Cheng v Lam [No 6] [2021] WASC 265
Cheng v Lam [No 7] [2021] WASC 417
Cheng v Lam [No 8] [2022] WASC 122
CPB Contractors Pty Ltd v Celsus Pty Ltd (No 2) [2018] FCA 2112; (2018) 268 FCR 590
Harris v Caladine [1991] HCA 9; (1991) 172 CLR 84
House v The King [1936] HCA 40; (1936) 55 CLR 499
Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66
Priority Networking Pty Ltd v Peterson [2018] WASC 36
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S)
Wilden Pty Ltd v Green [No 6] [2018] WASCA 198
TOTTLE J:
Overview
On 28 June 2018, Chaney J ordered an account to be taken by a registrar in relation to eight property developments which had been the subject of partnership agreements between the plaintiff and the first and second defendants and others. His Honour specified how the account should be taken.[1] In ordering the taking of an account Chaney J was exercising the power conferred by s 50(1) of the Supreme Court Act 1935 (WA) (Supreme Court Act).
[1] Cheng v Lam[No 2] [2018] WASC 199.
Registrar Whitbread took the account and published a report on 19 February 2020.[2]
[2] Cheng v Lam [No 3] [2020] WASC 45.
The first and second defendants applied to the court for orders that the account be adopted save in respect of one item. I heard the application and made orders to the effect the registrar's report be adopted with the one exception identified by the first and second defendants. In addition, I made orders to facilitate the calculation of the ultimate outcome of the account.[3] The plaintiff appealed against the order that the registrar's report be adopted but the appeal was dismissed.[4] These reasons assume familiarity with the following: Chaney J's reasons for making the 28 June 2018 orders, the registrar's report of 19 February 2020, and with my reasons for adopting the report and my subsequent decisions on various aspects of the process of finalising the account.[5]
[3] Cheng v Lam[No 4] [2020] WASC 175.
[4] Cheng v Lam[No 2] [2021] WASCA 196.
[5] Cheng v Lam[No 4]; Cheng v Lam [No 5] [2021] WASC 129; Cheng v Lam [No 6] [2021] WASC 265; Cheng v Lam [No 7] [2021] WASC 417; Cheng v Lam [No 8] [2022] WASC 122.
Paragraph 9 of the orders made by Chaney J on 28 June 2018 was expressed as follows:
The question of costs of the account is reserved to the Registrar dealing with the account.
The plaintiff applied to the registrar for the following costs orders:[6]
1.The first and second defendants pay the plaintiff's costs of the taking of account to be taxed;
2.Alternatively, the costs of the taking of account be reserved pending the outcome of the plaintiff's appeal to the Full Court.
[6] Cheng v Lam [No 3] [6]. The application was made before the Court of Appeal which dismissed the plaintiff's appeal against the adoption of the registrar's report and thus the application for order 2 fell away on the dismissal of the appeal.
The first and second defendants applied to the registrar for the following costs orders:[7]
1.The plaintiff pay the first and second defendants' costs of the taking of account on an indemnity basis.
2.Alternatively the plaintiff pay 80% of the first and second defendants' costs of the taking of account on an indemnity basis.
[7] Cheng v Lam [No 3] [8].
On 18 January 2022 the registrar made the following orders:
1.The plaintiff pay 80% of the first and second defendants' costs up to 4 April 2019 on a party/party basis to be taxed if not agreed.
2.The plaintiff to pay 85% of the first and second defendants' costs from (and including) 4 April 2019 on an indemnity basis to be taxed if not agreed.
The registrar published reasons for making those orders.[8]
[8] Cheng v Lam [No 3] [2020] WASC 45 (S).
On 27 January 2022 the plaintiff filed a notice of appeal in respect of the registrar's orders.
The first and second defendants contended that the appeal is incompetent on the ground that O 60A r 4(3)(a) of the Rules of the Supreme Court 1971 (WA) (Rules of the Supreme Court) provides that a party who is dissatisfied with an order or decision of a registrar may not appeal from it, if the order or decision was made in relation to a matter referred to the registrar under s 50 of the Supreme Court Act. The first and second defendants went further and contended that the registrar's costs orders were not amenable to any review.
The plaintiff's counsel, Mr Hannan, advanced a number of arguments as to why the appeal was competent but proposed, as his ultimate 'fallback' position, that the registrar's orders and reasons be treated as a supplementary report that was required to be adopted by a judge as provided by s 50(2) of the Supreme Court Act before the orders could be enforced. Mr Hannan submitted, in effect, that the appeal hearing be treated as the 'adoption' hearing at which the plaintiff could develop her submissions to the effect that the registrar had made errors in the exercise of her discretion and that her orders should not be adopted. Counsel for the first and second defendants, Mr McGowan, accepted that, if I concluded the appeal was incompetent, but that the registrar's costs orders were properly to be regarded as part of the question referred to her, I should treat the appeal as an application to adopt the registrar's orders to avoid the parties being stuck in what he described as 'a procedural nightmare'.[9]
[9] ts 1214.
In my view the appeal is incompetent. The registrar's costs orders are, however, supplemental to her report of 19 February 2020 and must themselves be adopted under s 50(2) of the Supreme Court Act before they can be enforced. Given the difficult history of this litigation and, even though it is unorthodox, I will treat the appeal as an application to adopt the registrar's costs orders. The plaintiff's grounds of appeal and submissions will be taken as the grounds of opposition to the adoption by the court of those orders.
I consider the registrar's costs orders should be adopted. Before explaining why I have reached that conclusion, I will explain why the appeal is incompetent.
Appeal is incompetent
Appeals from decisions of registrars are governed by O 60A r 4 of the Rules of the Supreme Court which provides:
4.Appeals from decisions of registrars
(1)A party who is dissatisfied with an order or decision of a registrar may appeal from it.
(2)The appeal must be made to a judge, but a judge may order that it be heard by a master.
(3)This rule does not apply to an order or decision of a registrar -
(a)made or given in relation to a cause, matter, question or issue referred to or tried by the registrar under section 50 or 51 of the Act; or
(b)made or given in proceedings to which Order 61 applies; or
(c)when acting as a taxing officer; or
(d)made under Order 67A; or
(e) to which Order 67B rule 17 applies.
Section 50 of the Supreme Court Act provides:
50.Question in civil matter may be referred to referee etc.
(1)Subject to the rules of court, and to any right to have particular cases tried by jury, the Court or a judge may refer to a master or a registrar or to a referee for inquiry or report any question arising in any cause or matter, other than a criminal proceeding.
(2)The report of the master, registrar or referee may be adopted wholly or partially by the Court or a judge, and, if so adopted, may be enforced as a judgment or order to the same effect.
As explained by Mr Hannan in oral submissions the plaintiff's primary contention in support of the existence of a right of appeal from the registrar's costs orders was to the following effect - although the taking of the account was the subject of an order made under s 50(1) of the Supreme Court Act, par 9 of the orders made on 28 June 2018 should be considered as an 'intra-court' delegation made in the exercise of an implied or inherent power.[10] On that basis, so Mr Hannan argued, par 9 of the 28 June 2018 orders should be regarded as separate from the orders governing the taking of the account.[11] Mr Hannan accepted that the existence of such an implied or inherent power was not supported by any authority.
[10] ts 1193.
[11] ts 1193 - 1197.
I do not accept the distinction drawn by Mr Hannan between the referral of the taking of the account to a registrar and the reserving of the costs of the taking of the account to the registrar. In my view they are different aspects of the same matter referred to a registrar by Chaney J exercising the power under s 50(1) of the Supreme Court Act.
A number of other contentions were advanced in the plaintiff's written outline of submissions in support of the proposition that the appeal was a competent one. They were touched upon briefly in oral submissions. It would be fair to say, however, that as the argument unfolded Mr Hannan focussed on what I have described as his ultimate fallback position. With respect, this was a sensible approach. It is unnecessary for me to refer to the plaintiff's other contentions.
The reasoning that the reservation of the question of costs of the taking of the account to the registrar formed part of the referral made under s 50(1) of the Supreme Court Act necessarily means that the registrar's costs orders must be reviewed for the purpose of making a decision as to whether they should be adopted under s 50(2). The first and second defendants' contention that the registrar's costs orders were not subject to any review should not be accepted. A delegation of judicial power to a registrar without the possibility of an appeal or review would constitute an impermissible delegation of judicial power.[12]
[12] See generally: Harris v Caladine [1991] HCA 9; (1991) 172 CLR 84, 95 (Mason CJ & Deane J), 126 - 125 (Dawson J), 154 (Gaudron J), 164 (McHugh J); Priority Networking Pty Ltd v Peterson [2018] WASC 36 [17] - [26] (Le Miere J); CPB Contractors Pty Ltd v Celsus Pty Ltd (No 2) [2018] FCA 2112; (2018) 268 FCR 590 [55] (Lee J).
The Registrar's reasons
The registrar began her reasons with a reference to the challenges to the methodology adopted by the first and second defendants made by the plaintiff in the course of the taking of the accounts and noted that the challenges had been characterised both in the reasons given for the adoption of the registrar's report and in the Court of Appeal's decision as misconceived.[13]
[13] Cheng v Lam [No 3] (S) [2] - [4].
The registrar recorded the parties' competing positions as to costs. She noted that the relevant item in the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2020 was item 34 which provided for: 'An amount which is reasonable in the circumstances', and that the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2018 contained the same item. The registrar stated that, 'the costs on the taking of account [were] at [her] discretion'.[14]
[14] Cheng v Lam [No 3] (S) [14].
The registrar expressed the view that the decision as to costs could not be as simple as a determination of who succeeded and who failed. Her reasons for forming this view were as follows:
16In the course of taking the account I both directed the parties to his Honour Justice E M Heenan's decision In Re Ellis; Ellis v Ellis [2015] WASC 77 and gave an interlocutory decision (the Interlocutory Decision) on 18 July 2019 which meant that the plaintiff can have been in no doubt prior to the hearing of the taking of account as to the basis on which the court would take that account; namely a common account. The plaintiff contended for an account to be taken on a different basis, in broad summary, an account for profit on a basis compliant with tax rulings including determination of allegations of wilful default and/or fraud.
17As is clear from both Cheng v Lam [No 3] and Cheng v Lam [No 4] and the Court of Appeal's decision in Cheng v Lam, the plaintiff continued to approach the taking of account on a basis completely inconsistent with the orders for the taking of account made by his Honour Justice Chaney in Cheng v Lam [No 2] [2018] WASC 199 (the Orders) and the Interlocutory Decision.
18It was this persistent attitude (in circumstances where the Orders were not sought to be clarified or the Interlocutory Decision appealed) during the process of the taking of account, which led to a significant increase in both the amount of work involved and the hearing time taken, and thereby a significant increase in the legal costs incurred on the taking of account.
The registrar went on to say:
20The matter should properly be determined by quantifying legal costs incurred in addressing the matters in respect of which the plaintiff was successful (had the plaintiff approached the taking of account in accordance with the Orders) and by quantifying the legal cost consequences of the pointless pursuit of a basis for a taking of account which was never open to the plaintiff on the Orders.
21There must be a consideration of whether the plaintiff's conduct in that later regard warrants any form of special costs order as contended for by the first and second defendants.
The registrar observed that the plaintiff's only significant success was in the upholding of her complaint as to the accumulated interest, and extra interest, under building contracts charged to the partnership for unpaid sums. The registrar noted, however, that all that was required to succeed in respect of that aspect was to establish that no notices were served as required under the contract, a matter the registrar described as being 'of short compass'.[15]
[15] Cheng v Lam [No 3] (S) [22].
The registrar's critical findings in respect of the plaintiff's costs were as follows:
23Having considered the limited matters in respect of which the plaintiff was successful on the taking of account, I am of the view that only one day of hearing time was required to hear any evidence and present any oral submissions in relation to all matters in which the plaintiff was successful. The plaintiff would also, of course, have had to consider the first and second defendants' account (and supporting documents), which would have taken time. Whilst the plaintiff's account (given she and Chan had matters they had to account for) was ultimately found to be deficient, it still had to be prepared (but only to the extent which would have complied with the Orders). Accordingly, taking into account the fact that limited preparation time (in the context of the whole taking of account) was also required in relation to those items, I am of the view that the plaintiff would be entitled to 10% of her preparation costs (on a party/party basis) up to the filing of the plaintiff's competing account, affidavits and submissions in early April 2019 (at which point the plaintiff's erroneous approach to the taking of account crystalised) limited as to that part of her account on which she was ultimately successful, that is, not including any parts of her account which sought an account on a basis not permitted under the Orders.
24The plaintiff would also be entitled to one day's hearing scale costs for counsel and an instructing senior practitioner attending the taking of account. The plaintiff would further be entitled to receive an allowance for the costs, on a party/party basis, of preparing and considering written submissions filed by the parties after the taking of account hearing concluded (limited as to those matters properly in issue).
25However, I am conscious of the need to avoid two sets of costs orders and the need to avoid the cost of satellite litigation which might flow from the need to tax two bills of costs so, as set out below, I have exercised my discretion and apportioned costs as between the parties so as to only necessitate the preparation of one bill of costs.
26From my above comments as to the plaintiff's costs position, it follows that I am of the view that it was the plaintiff's misconceived approach to the taking of account (as set out in Cheng v Lam [No 3] and Cheng v Lam [No 4] and the Court of Appeal in Cheng v Lam) which resulted in the vast majority of the costs incurred on the taking of account from the date on which the plaintiff filed her competing account (4 April 2019). Cheng v Lam [No 3] sets out in detail both the significant degree of success that the first and second defendants had in opposing both the objections taken by the plaintiff to items in the account and the erroneous basis on which the plaintiff contended the account should be taken. I do not propose to repeat all of those findings now save to observe that my findings were (save as to item 363) adopted by his Honour Justice Tottle and the basis on which the account was taken has been affirmed both by his Honour and the decision of the Court of Appeal.
27The question consequent on the success of the first and second defendants in those regards is, essentially, whether the first and second defendants should simply receive an ordinary award of the taxed costs or, whether there should be an order for costs to be assessed on an indemnity basis, as sought under paragraph 1 of the first and second defendants' minute. The alternative proposed costs order sought by the first and second defendants seeks 80% of their costs on an indemnity basis.
The registrar then dealt with the first and second defendants' costs and stated:
28The first and second defendants' costs of preparing their account (filed on 29 March 2019) would have been incurred in any event consequent on the Orders, so I find that the first and second defendant should receive 80% of those costs on a party/party basis up to the filing of the plaintiff's account on 4 April 2019. The first and second defendants were successful in defending the vast majority of the objections made by the plaintiff to their account. This is not a matter to be answered by regard to the quantum of the items objected to but by regard to the categories of objection and the first and second defendants were overwhelmingly successful on that analysis. The 20% discount for costs up to 4 April 2019 takes into account the costs allowance and methodology I have made and applied as to the plaintiff as set out at [23] and [25] above (allowing 10% for the plaintiff's costs and 10% for that part of their costs which the first and second defendants would consequently have to bear).
Next the registrar considered the question of whether an indemnity costs order should be made. The registrar recorded she had regard to the principles stated in Swansdale Pty Ltd v Whitcrest Pty Ltd,[16] and referred to a number of other authorities governing the award of indemnity costs.[17] The registrar referred to the contentions advanced by the first and second defendants in support of their application for indemnity costs and said that she had concluded that there should be an order for indemnity costs from 4 April 2019, being the date when the plaintiff filed her competing account, and the issues as to the form of the account had crystallised. The registrar said she had come to that conclusion for the following reasons:[18]
(i)The plaintiff persisted in pursuing an account in a different form and on a different basis, which form and basis was ruled to be unavailable under the Orders in the Interlocutory Decision. At no stage did the plaintiff make an application for the taking of account to be referred to a judge for determination and/or clarification of the Orders after the Interlocutory Decision.
(ii)Had there been genuine engagement on the part of the plaintiff with the interlocutory decision that was made, then the plaintiff's misguided persistence with a course of action not available to her (absent an appeal or an application for determination and/or clarification of the Orders to a judge being made and granted) could, and should, have been avoided, as the problems were obvious and were clearly articulated by the first and second defendants.
(iii)On that basis, there was an absence of sufficient or effective consideration by the plaintiff of both her position consequent on the Interlocutory Decision and whether the taking of account was proceeding in a cost effective manner. The taking of account could, and should, have been completed in a significantly shorter period of time. The first and second defendants were put in the position of having to engage in a much lengthier hearing and also having to respond to both much lengthier submissions, which were often not clearly articulated, and a form of account which was not available on the Orders.
39For those reasons it is appropriate in this matter for the court to indicate its displeasure with these events and do that by an order for indemnity costs in relation to the first and second defendants' costs from 4 April 2019, when the plaintiff's filed account and subsequent filed materials and submissions first tried to have the matter dealt with on a basis inconsistent with the Orders.
40I would respectfully adopt what was said by Wheeler J in Quancorp Pty Ltd v MacDonald [1999] WASCA 101 [7] (adopted by the Court of Appeal in Swansdale), that 'where a party has by its conduct unnecessarily increased the cost of litigation, it is appropriate that the party so acting should bear that increased cost'.
[16] Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) [10] (Pullin JA & K Martin J).
[17] Cheng v Lam [No 3] (S) [32] - [34].
[18] Cheng v Lam [No 3] (S) [38] - [40].
The registrar summed up her conclusions as follows:
41Accordingly, the first and second defendants' costs from the date after the filing of the plaintiff's account on 4 April 2019 should be paid as to 85% thereof on an indemnity basis. The 15% discount represents the allowance for the matters that I have determined the plaintiff is entitled to recover costs as set out in pars [24] and [25] above. I have allowed a 7.5% discount for the plaintiff's costs allowance, on a party/party basis, which is lower than indemnity, and 7.5% for that part of their costs which the first and second defendants would have consequently had to bear.
Grounds advanced by the plaintiff for not adopting the registrar's costs orders
The plaintiff relied on the grounds set out in her notice of appeal (amended at the hearing) as the reasons why the court should not adopt the registrar's costs orders. Those grounds were as follows:
1A.The learned Registrar erred in principle by making a costs order against the Plaintiff when the "starting point" for the award of costs in respect of taking accounts in a partnership action is either:
(i) all parties' costs be paid out of the partnership assets; or
(ii) each party bear her/his own costs.
1.The learned Registrar erred in principle by making a costs order against the Plaintiff in circumstances where money may well be paid by the First and Second Defendants to the Plaintiff as a result of the taking of the account.
2.If (which is denied) the conduct of the Plaintiff in the taking of the account was relevant to the exercise of the discretion as to the award of costs, then, as a matter of principle:
(a)the Plaintiff should have been deprived of the benefit of the costs order described in para 1 above rather than being ordered to pay the costs of the First and Second Defendants (whether on a party/party or indemnity basis) of the taking of the account; and
(b)the appropriate costs order was that the parties bear their own costs of the taking of the account.
3.In awarding the First and Second Defendants their costs of the taking of the account, the learned Registrar erred in awarding partial indemnity costs. Such an award of costs was an unreasonable exercise of discretion because the failure of the Plaintiff, before the Hon Justice Tottle and the Court of Appeal, in challenging the basis on which the learned Registrar conducted the taking of the account, did not thereby render the Plaintiff's conduct on the taking of the such as to warrant an indemnity costs order.
4.The learned Registrar's exercise of discretion in awarding partial indemnity costs to the First and Second Defendants was vitiated by an error of fact, being that the Plaintiff's "misconceived approach to the taking of account" caused the whole taking of account procedure to be unnecessarily protracted. Such a finding of fact is not supported by the transcripts of the hearings before the learned Registrar.
5.The learned Registrar's exercise of discretion in awarding costs (whether on a party/party or indemnity basis) to the First and Second Defendants was vitiated by the failure to take into account relevant considerations, being that:
(a) the learned Registrar made orders which fundamentally changed the way in which the taking of the account was to be conducted; &
(b)it was the fault of none of the parties that they had to carry out further work to comply with that change.
Applicable principles
The principles to be taken into account when considering whether a report prepared in accordance with a reference made under s 50(1) of the Supreme Court Act should be adopted are set out in my reasons for adopting the registrar's report.[19] It is unnecessary to repeat those principles in these reasons though it is perhaps helpful to note that an error of principle, an absence or excess of jurisdiction, a patent misapprehension of the evidence or perversity or manifest unreasonableness in fact finding will ordinarily be a reason for rejecting the report.[20] Mr Hannan accepted that the plaintiff is required to show a 'House v The King error'.[21]
[19] Cheng v Lam [No 4].
[20] Wilden Pty Ltd v Green [No 6] [2018] WASCA 198 [54] (Murphy, Mitchell & Beech JJA).
[21] House v The King [1936] HCA 40; (1936) 55 CLR 499, 504 - 505 (Dixon, Evatt & McTiernan JJ); ts 1201.
The grounds of objection
Ground 1A
There are two fundamental difficulties with ground 1A.
First, it was not contended before the registrar that the starting point was either the costs of all parties should be paid out of the partnership assets or each party should bear her or his own costs. The plaintiff's position in respect of costs before the registrar was that there should be a costs order made in her favour and this was so because, in effect, she contended she was the successful party.[22] It is not open to the plaintiff to develop a new argument at this stage in the proceedings. The following observations of the plurality in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand,[23] though rendered in the context of an appeal, apply with equal force to a party in the plaintiff's position:[24]
[W]hen a court is invited to make a discretionary decision, to which many factors may be relevant, it is incumbent on parties who contend on appeal that attention was not given to particular matters to demonstrate that the primary judge's attention was drawn to those matters, at least unless they are fundamental and obvious.
The alternative approach would permit a party to run one case before the primary judge and different cases on however many levels of appeal were open.
[22] Plaintiff's submissions filed on 16 September 2020.
[23] Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66.
[24] Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [120] - [121] (Gummow ACJ, Kirby, Hayne & Heydon JJ).
The second difficulty is par 9 of Chaney J's orders reserved the question of costs to the registrar taking the account. The discretion was not confined by reference to principles derived from cases dealing with the winding up of partnerships. As Mr McGowan stated in his submissions the starting point is that the question of costs was a matter for the registrar. The registrar did not make an error of principle by adopting an incorrect starting point. Ground 1A has no merit.
Ground 1
Ground 1 rests on the proposition that the plaintiff is to be regarded as the successful party because she had a 'significant measure of success on the taking of the account' and there 'may well be a net flow of funds' from the first and second defendants to the plaintiff following the taking of the account (albeit the plaintiff acknowledges there are further steps that must be taken before this can be ascertained).[25]
[25] Outline of submissions of plaintiff filed on 2 May 2022 [45].
In support of the proposition that she had a significant measure of success on the taking of account the plaintiff attached to her written submissions schedules identifying the items in the account on which she contends she was successful and attributing a monetary value to those items. The plaintiff put the final measure of her success at approximately $13.444 million.[26]
[26] Outline of submissions of plaintiff filed on 2 May 2022 [45(6)].
There are a number of difficulties with this ground.
First, it does not engage with the registrar's conclusion that the costs decision could not be based on a simple analysis of 'who succeeded and who failed' and that the proper approach should be to quantify the legal costs incurred in addressing the matters in respect of which the plaintiff was successful and by quantifying the legal cost consequences of the pointless pursuit of a basis for a taking of account which was never open to the plaintiff. The plaintiff has not demonstrated that by adopting this approach the registrar made an error of principle constituting a reason for not adopting the costs orders.
Secondly, in their written outline of submissions the first and second defendants responded in detail to the plaintiff's schedules and characterised them as constituting 'a misleading and grossly misrepresented view of the findings of the Registrar'.[27] The first and second defendants contend that the plaintiff has inflated the degree of her success by a margin of more than 2,100%.[28] They identified examples of duplication, triplication and quadruplication by the plaintiff of the figures. I have reviewed the approach taken by the plaintiff and accept the force of the criticisms advanced by the first and second defendants. It is unnecessary to go into the (considerable) detail in these reasons. It is sufficient to say that the plaintiff has overstated the measure of her success on the taking of the account to an extent that means that no reliance can be placed on her analysis.
[27] First and second defendants' submissions on appeal as to costs on taking of account filed on 16 May 2022 [53].
[28] First and second defendants' submissions on appeal as to costs on taking of account filed on 16 May 2022 [69].
Thirdly, while it is possible that there may be a net flow of funds to the plaintiff, as was pointed out by Mr McGowan, this depends on, among other matters, how properties retained by the plaintiff in her name are to be dealt with. If the plaintiff wishes to retain these properties, she will have to contribute an amount equivalent to the value of the asset retained by her which would alter the flow of funds.
In short, having regard to the second and third points made above, to the extent to which it is relevant, I do not accept that the plaintiff should be regarded as 'the successful party' for the purpose of determining the costs of the taking of account.
I do not accept that ground 1 constitutes a reason not to adopt the registrar's costs orders.
Ground 2
The essence of ground 2 is that the costs consequences of the registrar's views on the plaintiff's approach to the taking of the account should have been limited to depriving the plaintiff of her costs and should not have extended to making an order that the plaintiff pay part of the costs of the first and second defendants on an indemnity basis.[29]
[29] Outline of submissions of plaintiff filed on 2 May 2022 [46].
The difficulty with this ground is that it ignores the extent to which the plaintiff's approach extended the hearing and increased the work that had to be undertaken by the first and second defendants and thus the costs burden to be borne by them. As Mr McGowan contended, limiting the costs consequences of the plaintiff's misconceived approach to depriving her of her costs would visit the substantial additional costs burden of dealing with the plaintiff's misconceived approach on the first and second defendants.[30]
[30] ts 1220.
As recorded by the registrar the only significant matter on which the plaintiff was successful was a matter of short compass and all of the matters on which the plaintiff was successful could have been addressed in one day of hearing time. This must be considered in the context of a hearing that lasted nine days and involved the taking of a large amount of oral and documentary evidence.
I do not accept that ground 2 constitutes a reason not to adopt the registrar's orders.
Ground 3
Ground 3 challenges the registrar's decision to order that the plaintiff pay part of the first and second defendants' costs on an indemnity basis. In the plaintiff's outline of submissions, the essence of ground 3 was expressed to be that the registrar acted with the benefit of hindsight in making the costs orders because she relied on the decisions to adopt the report and the dismissal of the appeal against that decision as the basis for concluding the plaintiff acted unreasonably. There is no merit in this contention. The registrar referred extensively to the plaintiff's approach in her report of 19 February 2020.[31] She described the plaintiff's approach as misconceived.[32] She explained the difficulties with the plaintiff's approach and why she did not accept it should be followed. The reference by the registrar in the costs reasons to the affirmation of her views by the later decisions of this court and the Court of Appeal could not fairly be taken to imply that the registrar's views as to the plaintiff's conduct were formed with the benefit of hindsight. Ground 3 does not constitute a reason for not adopting the registrar's reasons.
[31] Cheng v Lam [No 3] [53] - [54], [72] - [74].
[32] Cheng v Lam [No 3] [72].
The plaintiff supported her challenge to the indemnity costs orders in ground 3 by reference to ground 4. As appears from what follows I have concluded that there is no merit in ground 4 so her reliance on that ground does not assist her.
Ground 4
This ground challenges the order for indemnity costs on the basis that the registrar's factual finding that it was the plaintiff's misconceived approach to the taking of the account which resulted in the vast majority of the costs incurred on the taking of account from the date on which the plaintiff filed her competing account, 4 April 2019. In support of this challenge the plaintiff presented an analysis of the transcript of the hearing (including a count of the number of times 'methodology' was mentioned) in an attempt to demonstrate that the plaintiff's approach did not have the consequences the registrar attributed to it.
The registrar is in the best position to determine whether the plaintiff's misconceived approach to the taking of the account resulted in the process being unnecessarily protracted. The judgment made by the registrar is necessarily subjective and is based on her assessment of the entire taking of account process. The burden imposed on the first and second defendants and the registrar cannot be assessed properly by a quantitative analysis of hearing hours of the nature undertaken by the plaintiff.
It is not for this court to read the transcript and consider all the evidence and form its own view of the facts. It is for the plaintiff to demonstrate error. The plaintiff's analysis and submissions do not demonstrate that the finding made by the registrar was perverse, manifestly unreasonable or was otherwise affected by reviewable error.
Ground 4 does not constitute a reason for not adopting the registrar's orders.
Ground 5
The plaintiff did not press ground 5.[33]
[33] ts 1221.
Conclusion
The registrar's costs orders will be adopted. I will hear the parties as to the form of the orders and costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
OK
Associate to the Honourable Justice Tottle
9 AUGUST 2022
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