Clarke v R D Miles and Co Pty Ltd - [2020] WASC 367

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   CLARKE -v- R D MILES & CO PTY LTD [2020] WASC 367
CORAM:   MASTER SANDERSON
HEARD:   ON THE PAPERS
DELIVERED          :   13 OCTOBER 2020
PUBLISHED           :   13 OCTOBER 2020
FILE NO/S:   COR 139 of 2013
BETWEEN:   JACQUELINE MARIE CLARKE
Plaintiff

AND

R D MILES & CO PTY LTD
First Defendant

LEE GAVIN MILES
Second Defendant

Catchwords:

Costs - Indemnity costs order sought on winding up - Turns on own facts

Legislation:

Legal Profession Act 2008 (WA)

Result:

The first defendant pay the plaintiff's costs to be taxed and paid out of the assets of the company

The first defendant pay the second defendant's costs of the application to set aside the costs orders made on 19 May 2020 to be taxed and paid out of the assets of the company

Category: B

Representation:

Counsel:

Plaintiff	:	No appearance
First Defendant	:	No appearance
Second Defendant	:	No appearance

Solicitors:

Plaintiff	:	MJ McPhee Barrister And Solicitor
First Defendant	:	No appearance
Second Defendant	:	HWL Ebsworth Lawyers (Perth)

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

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

MASTER SANDERSON:

These reasons deal with an issue as to costs. On 19 May 2020 I made the following order:
The first defendant pay the plaintiff's reasonable costs for all work done in relation to the affairs and winding up of R D Miles & Co Pty Ltd from 25 September 2008 to and including the date for the order of liquidation on the 29th day of July 2019 without reference to the limitations on the scale as to maximum amounts except in relation to hourly rates.
This order was made ex parte and as it turns out without notice to the second defendant. By a chamber summons filed 28 May 2020, the second defendant applied to set aside the cost orders made against the first defendant. One of the main arguments of the plaintiff in answer to the second defendant's chamber summons was that the second defendant was not directly affected by the order as to costs made against the first defendant and therefore had no standing to apply to set aside the orders. After hearing argument, I determined the better course was to set aside the costs order. I did so without directly determining whether or not the second defendant had standing to bring the application. Looking closely at the order I had made, I was not satisfied its form was appropriate. For that reason alone, it seemed to me preferable the order be set aside. Once that was done I saw no difficulty in the second defendant making submissions and in effect opposing the cost orders sought by the plaintiff. It was then determined both the plaintiff and the second defendant should file submissions and I would determine the costs issue.
The relevant facts can be briefly summarised. The proceedings concerning an application to wind up the first defendant. The plaintiff commenced the proceedings on 12 July 2013. In support of the application the plaintiff relied on five affidavits, the first of which, sworn by the plaintiff herself, was the largest. It ran to 172 pages. There were 146 pages of correspondence. The bulk of the rest of the affidavit being made up by company searches and the like. The other four affidavits were mechanical in nature. Appearances were filed by the first and second defendants in August 2013. The second defendant was joined to the action on 26 August 2013 and an appearance was filed in September 2013. No positive steps were taken by any party to the action between September 2013 and July 2019. The point was made by the second defendant and I accept, that proceedings were not active for the majority of the time and the proceedings were not complex.
On 15 July 2019 the defendants filed notices of change of lawyers and a memorandum of consent orders to wind up the first defendant and to appoint Mr Neil Cribb as liquidator. These orders were made on 29 July 2019, with the question of costs reserved. In August and September 2019, Mr Cribb filed two reports as to the affairs of the defendant. On 30 April 2020 the plaintiff sent a letter to the court requesting the matter be listed for mediation to hear the parties about a special costs application. No formal application was filed and until raised by the second defendant, no evidence was filed in support of the request. As I have indicated above, I made the costs order sought by the plaintiff on 19 May 2020. That has now been set aside.
The thrust of the second defendant's submissions is two‑fold. First, the usual order as to costs is that they be paid at the scale rate in priority. It is not generally the case an indemnity costs order is made in favour of a party bringing a winding up application. Special circumstances are required before such an order can be made. Second, the form of the orders originally made extended beyond the power of the court. I accept this latter submission. In large measure, that is why I set aside the costs order made in May.
In opposing the order for indemnity costs, the second defendant makes a number of points. First, any application for a special costs order is made pursuant to s 280(2) of the Legal Profession Act 2008 (WA). Such an application is to be made within 30 days of judgment. The second defendant makes the point the application is out of time and leave has not been sought to extend the time for bringing the application. In answer to that, the plaintiff points out that this court in its inherent jurisdiction, has the power to make an indemnity costs order. Reference is made to Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, 410. I accept that submission. The issue of costs here is one to be determined in the inherent jurisdiction of the court.
The submissions lodged on behalf of the plaintiff are extensive. Essentially the argument put by the plaintiff is that resistance to the winding up application was unreasonable because it was always clear winding up would be the end result of the application. There was effectively no other option available. On the plaintiff's view, that should have been obvious to the second defendant and therefore there should have been no resistance to the plaintiff's application. That, it was said, justified an order for indemnity costs.
One of the difficulties with the plaintiff's submissions is that heavy reliance is placed on work done which may have assisted in winding up but was not actually work directed to the application. Of course, if an indemnity costs order is made it will be for the taxing officer to determine what items should be included in the bill and which items fall outside the scope of the costs properly incurred. But that still leaves to be determined the question of whether or not an indemnity costs order is appropriate.
On balance, I am not satisfied such an order would be appropriate. Taken in the overall, there is simply no evidence available which would justify a conclusion that properly advised, the second defendant should have consented to the winding up order. It must be remembered, this is not a costs application brought against the second defendant. The costs are to be paid by the first defendant. If an application had been made against the second defendant, different criteria would have applied. But in the circumstances of this case, I am not satisfied visiting an indemnity costs order on the first defendant would be appropriate.
Accordingly, the order will be that the first defendant pay the plaintiff’s costs to be taxed and paid out of the assets of the company.
Turning to the costs associated with the second defendant's application to set aside the costs order, the second defendant was successful and ought have his costs. These should be taxed and paid out of the assets of the company.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CB
Associate to Master Sanderson
13 OCTOBER 2020