Civil Properties Pty Ltd v Miluc Pty Ltd - [2010] WADC 123

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: CIVIL PROPERTIES PTY LTD -v- MILUC PTY LTD [2010] WADC 123

CORAM: STEVENSON DCJ

HEARD: 9 AUGUST 2010

DELIVERED : Delivered Extemporaneously on 20 AUGUST 2010 typed from tape and edited by Trial Judge

FILE NO/S: CIV 684 of 2007

BETWEEN: CIVIL PROPERTIES PTY LTD
Plaintiff
AND
MILUC PTY LTD
Defendant

Catchwords:

Indemnity costs - Claim brought in wilful disregard of known facts - Action commenced or continued in circumstances where applicant properly advised should have known there was no chance of success

Legislation:

Planning and Development Act 2005, s 159

Result:

Indemnity costs awarded against plaintiff

Representation:

Counsel:

Plaintiff: Mr G J Douglas
Defendant: Mr P G McGowan

Solicitors:

Plaintiff: Hotchkin Hanly
Defendant: Cornerstone Legal

Case(s) referred to in judgment(s):

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397

STEVENSON DCJ: I am going to give brief reasons for decision now in respect of the matters concerning the issue of costs arising out of the judgment I handed down this morning whereby I dismissed the plaintiff's claim in these proceedings.
At the time I handed down the reasons for decision, I was met by an application on the part of the defendant for a costs order on the basis that the plaintiff pay its costs on an indemnity basis.
The usual costs order is that the unsuccessful party pay the successful party's costs to be taxed, unless otherwise agreed. In view of the order sought by the defendant, which was at a time before either counsel had had an opportunity to read my reasons for decision, I offered the plaintiff the opportunity to come back today, or later in the week, after filing written submissions, if it chose, on the issue of costs.
These reasons for decision are informed by the discussions I have had with both counsel in respect of this aspect of the matter, namely, costs.
As noted in par 66.1.16A of "Seaman", there must be something in the conduct of the party against whom the order is sought that makes it appropriate for the court to take the unusual step of ordering indemnity costs.
The learned authors of "Seaman", at p 12,703, go on to say:
"Furthermore, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he or she had no chance of success, the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of known facts or the clearly established law. In those circumstances, an award of solicitor and client or indemnity costs should be considered."
In this case, the defendant's application is based on its contention that there was a wilful disregard of known facts by the plaintiff in maintaining its claim in these proceedings, and that the claim itself was "utterly misconceived".
As I mentioned in submissions to Mr Douglas a short while ago, an application of this nature carries with it the need for reflection and insight on the part of both the trial Judge and counsel for the parties. Insofar as the position of the trial Judge is when met with an application of this nature it is, of course, necessary and obviously appropriate that the trial Judge consider the application objectively and totally impassionately, which of course is in some cases difficult because the trial Judge will have heard the evidence and made findings of fact in order to determine the issues in dispute between the parties.
Likewise, there is on the part of counsel, in particular counsel for the party faced with the prospect of an indemnity costs order, some difficulty in being objective by reason of the fact that he or she will have argued the case, and as a result of the decision, have obviously lost.
There is, however, undisputedly, a jurisdiction in the court which permits the trial Judge to make an order that indemnity costs be paid in the circumstances where it is appropriate, and I accept at the outset that it is not the usual costs order that follows on the determination of proceedings between parties.
In this regard, I note what Woodward J said in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 400 ‑ 401, where he said that the court's discretion in this regard is, "absolute and unfettered, but must be exercised judicially".
He also went on to say:
"I believe that it is appropriate to consider awarding solicitor and client or indemnity costs whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success."
For the purpose of these submissions, I have, consistent with the way in which I approached my reasons for decision, divided the issues that it was necessary for me to consider and determine into what I have called the factual matter and, secondly, the legal construction issue which concerns whether or not the phrase "service ducts" in s 159(3)(b)(iii) of the Planning and Development Act 2005 includes the installation of water and sewer mains by the original subdivider.
As I have indicated, hopefully in my reasons for decision, the factual context in which the plaintiff's claim concerning the factual matter falls to be concerned or determined was not controversial. The fact of the matter is the plaintiff was privy to a contribution scheme in respect of the Urban 7 area under the Shire of Kalamunda Planning Scheme, and participated within that outline development plan and associated contribution schedules over a period of time in a way that made it plain that the plaintiff did not at the relevant time object to the underlying principle and approach adopted by the Shire at the behest of the Planning Commission to deal with the necessary infrastructure upgrades in the area on the basis that it would involve a number of subdevelopers of whom the plaintiff and the defendant were but two.
In the course of the relevant time period the Shire, having identified and the plaintiff having agreed that an infrastructure upgrade to the relevant portion of Apricot Street was necessary, allocations between the affected owners of land in the area were determined and identified by a schedule.
At a point in time the plaintiff, because its subdivision was ahead of the defendant's subdivision, approached the Shire, in particular Mr Milward, in order to hasten the development of the relevant portion of Apricot Street to assist with the presentation of its lots which it was subdividing and which were part of Lot 2.
I have expressed the view that, in my opinion, the plaintiff's case purported to rely upon an x‑ray picture at one moment in time of the contribution schedules and the implication of the outline development scheme application by the Planning Commission and has shut its eyes to the surrounding circumstances before and after and, most importantly, its own conduct afterwards in respect of the contribution schedules.

Inserted from the transcript during submissions, p 293

(As I think I have indicated earlier, my view is you cannot take an x‑ray at a particular nanosecond in the history of this matter and determine legal rights based on it. That is unrealistic, and that is not the way the law operates. The submission you just made, as hopefully is apparent from my reasons, is that you cannot just take one chapter out of a book and make findings of fact and law based on one chapter. You need to understand the chapter before and the chapter afterwards.
That is why I began today to say what I said at the outset; that if one reads the book - unless you can persuade me otherwise, I cannot see how the plaintiff could have succeeded in relation to that first issue that we are talking about, and I have called the factual issue. I just do not see it.)
In my view, there can be no doubt, based on the evidence put before the Court, that on any view of that material the defendant did contribute, for the purpose of s 159 of the Act, to the upgrade of Apricot Street. And that, in my view, was the only reasonable interpretation that could have been applied to the evidentiary material which was known at all times to the plaintiff and in particular, Mr McKellar.
The effect is that on any reasonable view of the factual material the defendant did contribute by its payment of the $39,700 to the Shire, which was derived from the contributions which were in schedules, which were in turn derived from the outline development plan, which were in turn made the subject of conditions by the Planning Commission on the relevant subdivisions in the U7 area.
There was no relevant objection at any stage by the plaintiff in relation to the operation of the contribution schedules, or indeed, to what Mr Milward did at the request of the plaintiff, as evidenced in his letter to the plaintiff and to the defendant on 17 December 2002.
All of that was to assist the plaintiff. And yet the plaintiff's claim seems to be mounted on the basis that the result of its request to the Shire to be permitted to undertake a part of the necessary works should be confined to just that, without reference to the context or circumstances in which the request was made or the work actually done by the plaintiff in the context of the ODP.
The trial also gave rise to a legal issue which concerned the construction of s 159(3)(b)(iii) of the Act. And in my view, notwithstanding the fact that there was before my decision one other decision in relation to the construction of that subsection, which I did not follow in the facts of this particular case, does not, in my view, defeat the defendant's application for indemnity costs in respect of that issue either.
The plaintiff's statement of claim in the action was not predicated on a plea in the alternative in respect of those costs. And in any event, for the reasons which inform the resolution of the factual issue to which I have referred, logically the defendant must have contributed to those costs, in any event, for the same reasons that I have held in respect of the factual issue.
In my opinion, for those reasons and based on the discussion with counsel, I am persuaded in the circumstances that it is appropriate that the costs order in this particular case be one that the costs of the defendant be taxed on an indemnity basis.
I propose to make orders in terms of the defendant's minute of proposed orders dated 9 August 2010, namely that:
1.The plaintiff's claim be and is hereby dismissed.
2.The plaintiff bear the defendant's costs of the action to be taxed on an indemnity basis, being all the costs incurred by the defendant except insofar as they are of an unreasonable amount or have been unreasonably incurred.

The qualification in order 2 is, of course, a matter for the taxing officer.
In view of what is said in "Seaman" at par 66.1.16 on the issue, it may be worthwhile, if I may be so bold as to suggest to the parties, that they exchange relevant material before proceeding to a taxation because it may well be that the result of a taxation is that there is little or no material difference between the taxed costs on either basis.
Can I thank both counsel for your assistance as I did at the trial and also today. That completes today's matter. The Court will adjourn.