Choice Constructions Pty Ltd v Janceski [No 3]
[2011] WASC 358 (S)
•21 DECEMBER 2011
CHOICE CONSTRUCTIONS PTY LTD -v- JANCESKI [No 3] [2011] WASC 358 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2011] WASC 358 (S) | |
| Case No: | CIV:1500/2005 | 18 JANUARY & 30 APRIL 2012 & ON THE PAPERS | |
| Coram: | SIMMONDS J | 21/12/11 | |
| 12/06/12 | |||
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Orders to be made | ||
| B | |||
| PDF Version |
| Parties: | CHOICE CONSTRUCTIONS PTY LTD METODIJA JANCESKI DOSTA JANCESKI |
Catchwords: | Procedure Recovery action by mortgagee Orders on judgment Principal and interest Procedure Recovery action by mortgagee Costs Whether costs order overrode contractual rights to costs in the mortgage Construction of contractual rights Indemnity costs both of and incidental to recovery action and other indemnity costs |
Legislation: | Supreme Court Act 1935 (WA), s 37 |
Case References: | Bank of Baroda v Panessar [1987] Ch 335 Bank of Western Australia Ltd v Ponga (Unreported, WASC, Library No 980697, 2 December 1998) Choice Constructions Pty Ltd v Janceski [No 3] [2011] WASC 358 Fitzgerald v Masters (1956) 95 CLR 420 Garcia v National Australia Bank Ltd [1998] HCA 48; (1998) 194 CLR 395 Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2) [1993] Ch 171 Rayner v Australia and New Zealand Banking Group Ltd [2003] WASCA 264 Rumball v Mortimore [2000] WASC 126 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 12 JUNE 2012 FILE NO/S : CIV 1500 of 2005 BETWEEN : CHOICE CONSTRUCTIONS PTY LTD
- Plaintiff
AND
METODIJA JANCESKI
First Defendant
DOSTA JANCESKI
Second Defendant
Catchwords:
Procedure - Recovery action by mortgagee - Orders on judgment - Principal and interest
Procedure - Recovery action by mortgagee - Costs - Whether costs order overrode contractual rights to costs in the mortgage - Construction of contractual rights - Indemnity costs both of and incidental to recovery action and other indemnity costs
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Legislation:
Supreme Court Act 1935 (WA), s 37
Result:
Orders to be made
Category: B
Representation:
Counsel:
Plaintiff : Mr B W Duckham
First Defendant : In person
Second Defendant : No appearance
Solicitors:
Plaintiff : B W Duckham & Co
First Defendant : In person
Second Defendant : No appearance
Case(s) referred to in judgment(s):
Bank of Baroda v Panessar [1987] Ch 335
Bank of Western Australia Ltd v Ponga (Unreported, WASC, Library No 980697, 2 December 1998)
Choice Constructions Pty Ltd v Janceski [No 3] [2011] WASC 358
Fitzgerald v Masters (1956) 95 CLR 420
Garcia v National Australia Bank Ltd [1998] HCA 48; (1998) 194 CLR 395
Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2) [1993] Ch 171
Rayner v Australia and New Zealand Banking Group Ltd [2003] WASCA 264
Rumball v Mortimore [2000] WASC 126
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- SIMMONDS J:
Introduction
1 This is my judgment on the plaintiff's application (the plaintiff's application) for further orders following judgment in the action (the plaintiff's action). The plaintiff's action is to enforce a second mortgage over property of the defendants. The second defendant died following the reservation of judgment in the action but before delivery of judgment in it; the first defendant is his widow. I note that it appears no legal representative of the second defendant appears to have been appointed, and thus there has been no separate participation for the second defendant's estate in the proceedings on the plaintiff's application.
2 I begin by providing background to the plaintiff's application, in which I also describe that application and the programming orders which led to this judgment. I then analyse the issues arising out of the parties' submissions to me. The final section of this judgment is my conclusion and orders or call for orders.
Background
3 Much of this background is taken from my judgment in the plaintiff's action, Choice Constructions Pty Ltd v Janceski [No 3] [2011] WASC 358. None of this background is in issue.
4 On 27 April 2005 the plaintiff commenced the plaintiff's action by writ with statement of claim. The plaintiff was the mortgagee under a second mortgage granted by the defendants over their home. Their home was on Collingwood Street in Dianella (the Collingwood Street property). The Collingwood Street property was Lot 223 on Plan 9063 and all of the land comprised in Certificate of Title Volume 132 Folio 138A and the defendants were shown as its registered proprietors jointly. The plaintiff's second mortgage was dated 21 July 2004 (Choice's 2004 second mortgage) and replaced the plaintiff's previous second mortgage over the Collingwood Street property granted by the defendants (Choice's 2002 second mortgage) to secure vendor's credit granted by the plaintiff. This credit was granted by the plaintiff as the vendor to the defendants' son Michael (Michael) of a property in Janet Street, West Perth (the Janet Street property).
5 On various days between 22 September 2009 and 11 August 2010 there was a trial in the plaintiff's action. The sole issues in the trial were those raised by the defendants' claim that Choice's 2004 second mortgage
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- should be set aside on unconscionability grounds or on the basis of the principles from Garcia v National Australia Bank Ltd [1998] HCA 48; (1998) 194 CLR 395.
6 The defendants were self-represented throughout the trial, although they had the assistance throughout of a McKenzie friend.
7 The defendants were also self-represented for the purposes of the plaintiff's application.
8 On 21 December 2011 I delivered judgment in the plaintiff's action. For the reasons in Choice Constructions [No 3] I concluded that the defendants had not made out their case Choice's 2004 second mortgage should be set aside on either of the two bases they had advanced.
9 At the hearing on the delivery of the judgment in Choice Constructions [No 3] I made two orders. One was judgment for the plaintiff. The other (my costs order of 21 December 2011) was in the following terms:
The plaintiff's costs of this action, including any reserved costs, to be taxed if not agreed.
10 By application dated 10 January 2012 the plaintiff applied for orders that it be granted possession of the Collingwood Street property, that such further and other orders as appropriate be made, and that provision be made for the costs of the application. I call this application, as elaborated upon from time to time as I will indicate, the plaintiff's application.
11 On 16 January 2012 the plaintiff filed an affidavit of Joseph Michael Anthony Nardizzi bearing the title 'Affidavit of [Mr Nardizzi] and Annexures 'JN-1' to 'JN-4' in Support of [the plaintiff's application] Sworn 16 January 2012' (the Nardizzi affidavit of 16 January 2012). Mr Nardizzi at all material times has been a director of the plaintiff.
12 By chamber summons dated 18 January 2012 the defendants applied for a stay of enforcement of Choice's 2004 second mortgage pending the outcome of their appeal against Choice Constructions [No 3] in CACV 3 of 2012. The defendants by that chamber summons also applied for an adjournment of the plaintiff's application as well as certain other orders (the defendants' chamber summons).
13 At a hearing on 18 January 2012 I dismissed the defendants' chambers summons with no order as to costs (o 1) and made an order for the defendants to deliver to the plaintiff possession of the Collingwood
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- Street property by 8 February 2012 (o 2). I also made programming orders (my programming orders of 18 January 2012) as follows:
3. The plaintiffs are to provide the defendants with a minute of orders, together with any affidavit or affidavits in support of that minute, with respect to the payment in accordance with the terms of [Choice's 2004 second mortgage] of the Principal Sum and interest thereon that would include, for the calculation of the total due to the last date indicated in [Mr Nardizzi's affidavit of 16 January 2012], a reference to that affidavit, within 7 days of today's date.
4. Within 14 days after the provision of this minute to the defendants, the defendants may provide such evidence by affidavit as they see fit with reference to that minute, and such written submissions as the defendants see fit with respect to that minute, and the plaintiff may likewise provide written submissions with respect to that minute. After the expiry of the 14 days specified in this order, his Honour may make orders as to the payment of the Principal Sum and interest thereon upon the papers, unless within 7 days of the provision of the last of any of the papers described in these orders, either party requests a hearing or his Honour on his own motion concludes that a hearing is appropriate.
5. With respect to the payment in accordance with the terms of [Choice's 2004 second mortgage] of costs and expenses and interest thereon, the same orders mutatis mutandis as in orders 2 and 3 (relating to the Principal Sum and interest thereon) above; …
15 On 25 January 2012 the plaintiff filed a document bearing that date entitled 'Minute of Orders Sought by the Plaintiff Filed Pursuant to [my programming orders of 18 January 2012]' (the plaintiff's Minute). The orders sought by the plaintiff's Minute were as follows:
1. The Defendant [sic] pay the Plaintiff the principal sum of [Choice's 2004 second mortgage] being $152,822.51.
2. The Defendant [sic] pay the Plaintiff interest on the principal sum in the amount of $189,491.27 up to 23 January 2012 and 16 % per annum thereafter until payment.
3. The Defendant [sic] pay the Plaintiff's costs of enforcing [Choice's 2004 second mortgage] fixed at $313,087.47 at 23 January 2012.
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- 4. The Defendant [sic] pay interest on such enforcement costs calculated from 17 January 2012 at the rate of 16% per annum and thereafter until payment.
5. The Defendant [sic] pay the Plaintiff's costs of finalising particulars of judgment.
16 On the same date, 25 January 2012, the plaintiff's solicitor sent a copy of the plaintiff's Minute by e-mail to the first defendant care of the e-mail address of Michael.
17 Also on the same date, 25 January 2012, the plaintiff filed an affidavit of Mr Nardizzi entitled 'Affidavit of [Mr Nardizzi] in Support of Particular and Further Judgment Sworn 25 January 2012' (the Nardizzi affidavit of 25 January 2012), while on that date the plaintiff's solicitor sent a copy of the Nardizzi affidavit of 25 January 2012 to the first defendant by post addressed to her at the Collingwood Street property.
18 On 3 February 2012, Pullin JA of the Court of Appeal dismissed an application by the defendants to that court for a stay of the judgment in Choice Constructions [No 3].
19 On 7 February 2012 the plaintiff's solicitor sent by post addressed to the first defendant at the Collingwood Street property and an address in Ballajura a document entitled 'Plaintiff's Submissions in Support of Minute of Proposed Final Judgment Filed Pursuant to [my programming orders of 18 January 2012]' (the plaintiff's submissions). It is common ground that by 7 February 2012 the first defendant had moved out of the Collingwood Street property, and she had filed in CACV 3 of 2012, but not in CIV 1500 of 2005, notice of an address for service in Ballajura that corresponded with that in the posting by the plaintiff's solicitor, except as to unit number. The plaintiff's submissions were not filed in the court until 30 April 2012.
20 On 15 February 2012 orders for seizure and delivery and for seizure and sale of the Collingwood Street property were issued under Civil Judgments Enforcement Act 2004 (WA). Subsequently the Collingwood Street property was sold and sale proceeds, after deductions for the first mortgage over the Collingwood Street property and selling expenses, in the amount of $274,915.49 as at 17 May 2012, are held in the account of a settlement agent pursuant to one of the orders I made on 30 April 2012 which I reach next.
21 On 30 April 2012 a hearing was held before me at my instance. I wished to identify which documents called for by my programming orders
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- of 18 January 2012 had been created and provided by the parties to one another. At that hearing, after hearing from the parties, I made the following orders (my orders of 30 April 2012):
1. The plaintiff has 14 days, namely by 4 pm, 14 May 2012, to provide such further affidavit or affidavits as it sees fit with respect to its claim for principal and interest, and costs and interest on those costs, in accordance with [the plaintiff's Minute of 25 January 2012], such affidavits to be filed with the court and to be provided to [the first defendant] at her address being Unit 11, 28 Luton Close, Ballajura WA.
2. The plaintiff also have liberty to file and serve in the same way as in order 1 any supplementary submissions with respect to the plaintiff's Minute of 25 January 2012 by 4 pm 14 May 2012.
3. The defendants have liberty to file any affidavit or affidavits with reference to the plaintiff's Minute of 25 January 2012 and serve such affidavit or affidavits on the address for service for the plaintiff, namely BW Duckham & Co, Level 1, 33 Barrack Street, Perth WA 6000 by 4 pm 14 May 2012.
4. The defendants have liberty to file and serve, as described in order 3, written submissions with respect to the plaintiff's Minute of 25 January 2012 by 4 pm 14 May 2012.
5. Costs of today be reserved and the parties have liberty to include submissions as to costs in the submissions these orders provide for.
6. After 14 May 2012 his Honour may make orders on the papers filed under [my programming orders of 18 January 2012] and under [my orders of 30 April 2012], unless within 7 days of the provision of the last of any of those papers either party requests a hearing, or his Honour on his own motion concludes that a hearing is appropriate.
7. The balance of the proceeds of the sale of [the Collingwood Street property] made by the plaintiff by reference to [Choice's 2004 second mortgage] less the expenses of the sale and payment to the first mortgagee be held by A1 Conveyancing on trust pending a further order of the court.
23 On 14 May 2012 the defendants filed a document entitled 'Defendants' Submissions Filed Pursuant to [my orders of 30 April 2012]' (the defendants' submissions). At about the same time the plaintiff informed the court that it would need an extension of time to comply with
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- my orders of 30 April 2012 as to further affidavits and supplementary submissions. Also at about the same time Michael indicated that the first defendant might be prepared to agree to an extension of time without a hearing.
24 On 17 May 2012 the plaintiff filed an affidavit of Mr Nardizzi entitled 'Affidavit of [Mr Nardizzi] in Support of Orders for Special Costs and Other Orders Sworn 17 May 2012' (the Nardizzi affidavit of 17 May 2012).
25 Also on 17 May 2012 the plaintiff filed a document entitled 'Plaintiff's Supplementary Submissions Filed Pursuant to [my orders of 30 April 2012]' (the plaintiff's supplementary submissions).
26 On 22 May 2012 my associate communicated with the parties by e-mail to the plaintiff's solicitor and to the defendants care of Michael indicating that, if the parties did not file a memorandum of consent orders extending the relevant times under my orders of 30 April 2012 or seek a hearing, I would treat those times as extended appropriately and make my determination on the papers filed. My associate's e-mail allowed for a response by 4 pm 25 May 2012. No further filings were made by either party by that date and time.
27 Accordingly, this determination is made on the papers comprising the Nardizzi affidavit of 16 January 2012; the Nardizzi affidavit of 25 January 2012; the plaintiff's Minute; the plaintiff's submissions; the defendant's submissions; the plaintiff's supplementary submissions; and the Nardizzi affidavit of 17 May 2012.
28 I note there is no affidavit material for the defendants.
29 I turn to consider the issues as framed by the parties' submissions.
The defendants' position on liability
30 The defendants' submissions state that they 'do not admit to liability of any kind to the plaintiff'. The defendants' submissions refer in this respect to the defendants' inability to secure legal representation during the trial.
31 In my view these are matters that were for the defendants to raise in any appeal against Choice Constructions [No 3]. They do not go to the orders to be made on the plaintiff's application. This is except insofar as the defendants' submissions in this respect may be taken as a call on the
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- plaintiff to make its case for the orders it seeks. I so take the defendants' submissions.
Principal and interest
32 The defendants' submissions include the claim that they have no liability for interest or (as will be seen) costs, charges, damages and expenses in connection with or incidental to Choice's 2004 second mortgage. I return below to those costs, charges, damages and expenses.
33 My concern here is in relation to the plaintiff's Minute, orders 1 and 2.
34 Order 1 covers principal. As to principal, the defendants' submissions take no position other than that which I associated with their position as to liability.
35 Order 2 concerns interest, the defendants' submissions as to which I have referred to.
36 I turn to consider whether or not the plaintiff has made its case for those orders.
37 Choice's 2004 second mortgage is annexure 'JN-2' to the Nardizzi affidavit of 16 January 2012. There was no contest at trial that this mortgage was duly executed and the defendants were in default under its terms.
38 Those terms include (cl 5) that the defendants are to pay to the plaintiff on demand the 'Money Secured', provided that, if the defendants punctually pay interest (as provided for in cl 6) and the 'Principal Sum', in the manner on the dates stated in the Schedule, the plaintiff would make no demand.
39 The 'Money Secured' is defined (in cl 3.1(8)(a)) to include the 'Principal Sum', which in turn is defined (in cl 3.1(12) read with Schedule, Item 4) as $152,822.51 and is further described (in Schedule Item 5, 'Date of Advance of the Principal Sum') as '[a]lready advanced'. I took this as a reference to the advance of the vendor's credit under Choice's 2002 second mortgage which Choice's 2004 second mortgage replaced. The amount referred to is that specified in the plaintiff's Minute order 1. By the provisions of the Schedule, and subject to the payment on demand of an indemnity to which I will return below, the Principal Sum was repayable at any time prior to 3 September 2006 (Schedule, Item 6).
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40 The 'Money Secured' is also defined (in cl 3.1(8)(c)) to include 'interest', while the defendants are required (by cl 6) to pay interest on demand at the 'Prescribed Rate specified in the Schedule' on the 'Money Secured' or on so much as from time to time is owed by the defendants from the Date of Advance of the Principal Sum. I describe the Prescribed Rate, which are in fact two rates, below. Interest (by Schedule, Item 7) is payable three monthly in advance. If (by cl 6.1) the defendants pay interest punctually and have not committed any breach of any representation, covenant, agreement, condition or stipulation on the part of the defendants in Choice's 2004 second mortgage or any collateral security then interest is payable at the 'Reduced Rate' specified in the Schedule (Schedule, Item 3).
41 On the uncontradicted evidence in the Nardizzi affidavit of 16 January 2012 and the Nardizzi affidavit of 25 January 2012 the only payments made under or for the purposes of Choice's 2004 second mortgage were of $30,974.35, from proceeds of the sale of the Janet Street property. Those payments (the payments) were of the amounts of $29,853.15 and $1,121.20 on 3 January 2006 and 28 February 2006, respectively. There is no contest that the payments were properly applied by the plaintiff towards the amounts due and payable for interest on the Principal Sum under Choice's 2004 second mortgage, as indicated in the Nardizzi affidavit of 16 January 2012 and the Nardizzi affidavit of 25 January 2012. There can be no contest that in the events described in this paragraph of my reasons the rate of interest applicable to the Principal Sum (and to the other moneys making up the Money Secured) was simple interest, at the Prescribed Rate. The Prescribed Rate was 13% for the period 4 September 2002 to 3 September 2004, both dates inclusive, and thereafter 16% (Schedule, Item 3).
42 It follows in my view that the plaintiff is entitled to an order in terms of the plaintiff's Minute, order 1; and, to the extent the amount of interest the plaintiff's Minute, order 2 is correctly calculated, including crediting of the payments, the plaintiff is also entitled to an order in terms of that other order.
43 I have examined the table of calculations and statement of credit in the annexure 'JN-4' to the Nardizzi affidavit of 16 January 2012, and updated the calculations to 23 January 2012 on the basis, as stated in the Nardizzi affidavit of 25 January 2012, that no payments were made after the last date to which the earlier affidavit related. I find that the calculations and crediting have been done so as to produce a figure for interest on the Principal Sum no higher than the amount due and payable
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- under Choice's 2004 second mortgage. I note in passing that Choice's 2004 second mortgage appears to have interest accrue for the day of 4 September 2002, which is not included in the calculation.
44 I further note that there is provision in Choice's 2004 second mortgage (cl 22.2) which in my view has the effect that security does not merge in the judgment following Choice Constructions [No 3].
45 It follows, in my view, that the plaintiff is entitled to orders in terms of both orders 1 and 2 in the plaintiff's Minute.
46 I turn now to orders 3 and 4 in the plaintiff's minute.
Enforcement and other costs and interest
47 I begin by noting, as I have previously, that the defendants' submissions assert that the plaintiff is not entitled to claim 'any and all costs, charges, damages and expenses which the plaintiff incurs or becomes liable for in connection with or incidental to [Choice's 2004 second mortgage]'. The defendants' submissions put this submission on the basis that Choice's 2004 second mortgage cl 3.1(8)(f) 'clearly gives this right only to the defendants (Mortgagors)'.
48 Choice's 2004 second mortgage cl 3.1(8)(f) defines as part of the Money Secured the following (emphasis added):
all costs charges damages and expenses which the Mortgagor incurs or becomes liable for in connection with or incidental to this Mortgage.
49 In my view 'Mortgagor' in cl 3.1(8)(f) is clearly an error. It would make no sense to include as part of the Money Secured such items that the Mortgagor incurred or became liable for. This may be seen most clearly from the opening words of Choice's 2004 second mortgage cl 5.1, which are:
To pay to the Mortgagee on demand the Money Secured or such part thereof as shall be specified in the demand …
50 It is clear to me that 'Mortgagor' in cl 3.1(8)(f) is a clerical error and should be read as corrected to 'Mortgagee'. No order for rectification of Choice's 2004 second mortgage is required or appropriate. See Carter on Contract LexisNexis Butterworths, as at 29 May 2012 [22-380] at n7; and Fitzgerald v Masters (1956) 95 CLR 420, 426 - 427 (Dixon CJ and Fullagar J).
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51 I next note that the plaintiff's supplementary submissions state that the plaintiff seeks orders for payment of 'enforcement costs … incurred on a solicitor/own client basis'. The plaintiff's supplementary submissions identify those costs as appearing both in the Nardizzi affidavit of 16 January 2012 and the Nardizzi affidavit of 17 May 2012. The latter affidavit in [2] states that it details and annexes copies of tax invoices referred to in the Nardizzi affidavit of 16 January 2012 and that 'all of such expenses related to [Choice's 2004 second mortgage], the enforcement of the mortgage, proceedings and implementing the judgment'. Further, that affidavit states that 'all such tax invoices have been paid in full'.
52 It would appear from the dates of the earliest invoices annexed to the Nardizzi affidavit of 17 May 2012, in October 2003, February 2004 and July 2004, that the amounts they refer to cannot be costs of enforcing Choice's 2004 second mortgage, while it is not apparent from the invoices for October 2003 and February 2004 how they are within Choice's 2004 second mortgage cl 3.1(8)(f) as costs 'in connection with or incidental to [Choice's 2004 second mortgage]' (emphasis supplied). The plaintiff's Minute, orders 3 and 4, relate only to enforcement costs of Choice's 2004 second mortgage. As will appear, however, the plaintiff appears no longer to seek orders in those terms.
53 The plaintiff's supplementary submissions also note my costs order of 21 December 2011 and appear to accept that such order is for costs on a party and party basis. I do not consider that it could be successfully contended that my costs order of 21 December 2011 could be construed otherwise. See Bank of Western Australia Ltd v Ponga (Unreported, WASC, Library No 980697, 2 December 1998) 6 (Sanderson M), referred to with approval in Rumball v Mortimore [2000] WASC 126 [13] (Owen J).
54 My costs order of 21 December 2011 may be contrasted with the Special Condition (2), headed 'Indemnity', in Item 10 of the Schedule to Choice's 2004 second mortgage. The plaintiff's supplementary submissions refer me to that provision, which reads in part as follows:
Except in the case of fraud, wilful misconduct or gross negligence by the Mortgagee, each of the Mortgagor and the Borrower must on demand indemnify the Mortgagee against any loss cost or expenses (including legal fees, costs and disbursements (on a solicitor/own client basis)) which the Mortgagee may sustain or incur as a consequence of:
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- (a) any sum payable by the Mortgagor and the Borrower as the case may be under this Mortgage or any Collateral Security not being paid when due; or
(b) the occurrence of any default or potential default.
55 I also note Choice's 2004 second mortgage cl 17.1(1) and (3), to the latter of which the plaintiff's supplementary submissions call my attention: those sub-clauses read as follows:
17 Costs
17.1 That the Mortgagor shall upon demand (which may be made at any time notwithstanding anything herein contained or implied to the contrary) pay:
(1) All costs and valuation fees incurred by the Mortgagee in connection with this Mortgage including, and without limiting, the costs (as between solicitor and client) of instructions for and preparation stamping registration and discharge hereof; and
(2) …
(3) Any costs incurred by the Mortgagee in the exercise or attempted exercise of the Mortgagee's remedies powers or rights hereunder; …
57 On the authorities the language of costs liability in a mortgage in the form of 'solicitor/own client' and 'all costs' should be construed as meaning costs on an indemnity basis. See on the language of 'solicitor/own client' (emphasis supplied) Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2) [1993] Ch 171, 187 (Scott LJ for the court of Sir Stephen Brown P, Stocker and Scott LJJ); and on the language 'all costs' see Bank of Baroda v Panessar [1987] Ch 335, 355 (Walton J), quoted in Gomba 192. I consider the latter construction would extend to 'any costs' in cl 17.1(3). While there is authority that there is a difference between costs on an indemnity basis and costs on a 'solicitor/client' basis that authority also notes the difference in this jurisdiction is not great. See Rumball (2000) [33]. I consider that 'all costs' in cl 17.1(1) should be given the meaning I have described notwithstanding the use in the same sub-clause of 'solicitor and client' costs and to give the meaning of indemnity costs to those latter costs. This would align with the language
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- in Special Condition (2) quoted and with the language of 'all costs' in cl 3.1(8)(f).
58 On these conclusions as to the construction of Choice's 2004 second mortgage Special Condition (2), cl 3.1(8)(f) and cl 17.1(1) and (3), does my costs order of 21 December 2011 displace the entitlement of the plaintiff to costs, charges and expenses under those provisions so construed?
59 I should immediately note that any such displacement could only be so far as costs of and incidental to the proceedings in the plaintiff's action are concerned, and not for other costs, such as those in Choice's 2004 second mortgage cl 17.1(1). See Rumball (2000) [31]. I note that only cl 17.1(3) and Special Condition (2) appear to be limited to the first kind of costs. Indeed the costs included in the three earliest invoices in the Nardizzi affidavit of 17 May 2012 previously referred to (those of October 2003, February 2004 and July 2004) as they appear on their face cannot be other than costs which are not costs of or incidental to the plaintiff's action for the purposes of Choice's 2004 second mortgage.
60 However, I note that in the hearing at which my order as to costs of 21 December 2011 was made no reference was made to the plaintiff's costs entitlements under Choice's 2004 second mortgage; my order as to costs of 21 December 2011 on its face makes no reference to such entitlements; and I did not adjudicate on whether or not the plaintiff should be deprived of those costs pursuant to such entitlements. In those circumstances, the plaintiff is not precluded from seeking orders to recover those entitlements. See Rumball (2000) [27] - [30], citing other authorities.
61 Further, while an order for one party to pay another its costs of or incidental to proceedings in this court is always discretionary (see Supreme Court Act 1935 (WA) s 37 and Gomba 194 on the corresponding English provision), such an order does not affect contractual or equitable rights of a mortgagee to retain its costs out of the mortgaged property or the proceeds of its sale (Gomba 192).
62 The plaintiff's supplementary submissions in fact state that a 'further and suitable further costs order' in the following terms could be made:
The Defendants indemnify the Plaintiff in respect to all costs and disbursements incurred on a solicitor/own client basis together with interest at the rate of 16% per annum from the date each item is incurred.
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63 I took this 'further and further suitable costs order' to be a statement by the plaintiff it no longer presses for an order in terms of the plaintiff's Minute orders 3 and 4. Rather, it seeks an order for all costs including costs other than those of or incidental to the plaintiff's action, and interest on the costs sought, all as made payable by Choice's 2004 second mortgage. Further the costs order the plaintiff seeks is of an indemnity kind. That is to say I take this order to be for 'all costs and disbursements incurred' in accordance with the plaintiff's contractual entitlements.
64 Orders of an indemnity kind, when they are made in the exercise of the discretion under Supreme Court Act s 37, are of course subject to an exception. That is, in that context at least that is what 'indemnity costs' means. The costs so ordered are except in so far as they are of an unreasonable amount or have been unreasonably incurred. See Civil Procedure Western Australia LexisNexis Butterworths [66.1.16.1] as at 30 May 2012. This of course means that the burden of showing the exception applies is on the party resisting the claim to costs.
65 On the authority of Gomba (see 186 read with cl 2 of the mortgage in that case, which is set out at 179) the exception referred to should be seen as applicable to the costs provisions in Choice's 2004 second mortgage I have referred to, Special Condition (2), cl 3.1(8)(f) and cl 17.1(1) and (3). This is a matter of the 'true construction' of the clauses (Gomba 186), and applies to the plaintiff's entitlement to costs whether they are of or incidental to the plaintiff's action or otherwise.
66 True it is that the final orders made in Rumball [36], also a mortgage enforcement action, were in the following terms, which did not include on their face any qualification:
The plaintiffs are entitled to a declaration that the defendant is liable to pay non-litigation costs arising from the defendant's default to the plaintiffs. Consequently, I order that:
1. The defendant pay to the plaintiffs, from the substitute security fund, the plaintiffs' non-litigation costs incurred as a result of the defendant's default.
2. The non-litigation costs incurred as a result of the defendant's default be taxed if not agreed, and that they include the costs to the plaintiffs of the preparation and taxation of the bill (if necessary).
3. The balance of moneys held in the substitute security fund be paid out to the defendant.
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67 However, I do not consider Owen J in Rumball meant by that order that the mortgagor was to pay to the mortgagees there 'any non-litigation costs incurred as a result of the defendant's default', whether or not it could be shown that they were unreasonably incurred or unreasonable in amount. The matter appears not to have been addressed in submissions to his Honour. And it would be inconsistent with the ordinary meaning of an order for indemnity costs in this court which appears from his Honour's judgment to be the measure of the mortgagor's costs liability: see Rumball (2000) [33] - [35].
68 I consider then that the order the plaintiff now seeks as to costs, understood as I have indicated and modified to reflect that understanding, is one which I should make. To the extent the order goes to costs of or incidental to the plaintiff's action, it is an exercise of the court's discretion as to costs which reflects the contractual right of the plaintiff, as ordinarily the exercise of the court's discretion in such a case should do. See Rayner v Australia and New Zealand Banking Group Ltd [2003] WASCA 264 [25] (Murray and Parker JJ), referring with approval (see [26]) to Gomba 193 - 194.
69 I also consider that the costs order I should make should be further modified to provide for the costs of and incidental to the plaintiff's action to be taxed if they are not agreed. This appears to be the standard costs order in mortgage enforcement actions, including for non-litigious costs of and incidental to the action, and allows for the defendants to have the costs of and incidental to the plaintiff's action, which I understand to be the bulk if not all of the costs sought, to be reviewed by a taxing officer of the court. However, that taxation should be at the cost of the defendants, as provided for by order 2 from Rumball (2000) [36].
70 Finally, the order I should make should substitute for my costs order of 21 December 2011, which accordingly should be vacated.
71 I turn now to the costs of finalising judgment.
Costs of finalising judgment
72 The plaintiff's Minute, order 5, set out above, would have the defendants pay such costs.
73 As indicated in the previous reasons, the plaintiff has largely been successful in persuading me to make further orders of the kinds, if not always in the terms, it seeks. Although there were difficulties with the provision of some of the relevant papers to the first defendant as I have
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- indicated earlier, I consider the plaintiff made efforts in good faith and for the most part reasonably to meet the requirements in my programming orders of 18 January 2012 to provide her with them. For that reason I do not consider that those difficulties were such as to deny the plaintiff all or a part of its costs of finalising judgment.
74 I note the order for costs of the plaintiff's application I made on 18 January 2012 (my order of 18 January 2012 as to the costs of plaintiff's application), which was as follows:
1. The plaintiff is to have its costs of the application, fixed in the amount of $2,800.
75 I consider that my order of 18 January 2012 as to the costs of the plaintiff's application is one fixing the costs of the application for particular judgment as at the hearing that day, as an exercise of the costs discretion in Supreme Court Act s 37 but without regard to the plaintiff's contractual rights in Choice's 2004 second mortgage. Although the matter of those rights was addressed in that application, no argument was addressed to me as to their implications for the order I should make as to the costs of the application, I made no reference to those rights and I did not adjudicate upon them. This, on the authority of Rumball (2000) [27] - [30] and authorities there cited, means I am not prevented from making an order for the costs of finalising the particulars of judgment, including costs of the kind the subject of my order of 18 January 2012 as to the costs of the plaintiff's application, to reflect those rights. Those rights in my view would extend to such costs. Further, the order I should make in the exercise of my costs discretion should ordinarily reflect those rights.
76 However, the plaintiff's Minute order 5 does not on its face appear to seek to have the order for the plaintiff's costs of finalising particulars of judgment reflect its contractual rights. On Ponga 6 approved in Rumball (2000) [13] the plaintiff's Minute order 5 is limited to party and party costs. At the same time, I consider the 'further and further suitable costs orders' the plaintiff now seeks, and a modified version of which I would make, would extend to such costs.
77 I will hear from the parties as to what order, if any, I should make with respect to the costs of finalising particulars of judgment.
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Conclusion and orders
78 For the foregoing reasons I would make, from the plaintiff's Minute, orders 1 and 2; I would make a modified form of the 'further and further suitable costs orders' in the plaintiff's supplementary submissions; and I will hear from the parties as to the order to make, if any, with respect to the costs of finalising the particulars of judgment.
0
6
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