Currie v Currie [No 3]
[2018] WASC 306
•9 OCTOBER 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: CURRIE -v- CURRIE [No 3] [2018] WASC 306
CORAM: LE MIERE J
HEARD: 30 JANUARY 2018
DELIVERED : 9 OCTOBER 2018
FILE NO/S: CIV 1237 of 2013
BETWEEN: BRUCE MICHAEL CURRIE
Plaintiff
AND
GRAEME JOHN JAMES CURRIE
First Defendant
ANDREW JOHN CURRIE
Second Defendant
FILE NO/S: CIV 1848 of 2015
BETWEEN: GRAEME JOHN JAMES CURRIE in his own capacity and as trustee for THE GLENAYR TRUST
Plaintiff
AND
BRUCE MICHAEL CURRIE in his own capacity and as trustee for THE GLENAYR TRUST NO 2
Defendant
Catchwords:
Procedure - Costs - Indemnity costs order - Whether defence at trial was hopeless - Whether failing to discover important document was misconduct - Whether unreasonable rejection of a Calderbank offer
Procedure - Costs - Special costs order - Whether special costs order to raise limits in scale should be made
Legislation:
Legal Profession (Supreme Court) (Contentious Business) Determination
Legal Profession Act 2008 (WA), s 280(2)
Result:
No indemnity costs orders
Special costs order to raise scale limits made
Category: B
Representation:
CIV 1237 of 2013
Counsel:
| Plaintiff | : | Mr P G Donovan |
| First Defendant | : | Mr N D C Dillon |
| Second Defendant | : | Mr N D C Dillon |
Solicitors:
| Plaintiff | : | MDS Legal |
| First Defendant | : | AustAsia Legal Pty Ltd |
| Second Defendant | : | AustAsia Legal Pty Ltd |
CIV 1848 of 2015
Counsel:
| Plaintiff | : | Mr N D C Dillon |
| Defendant | : | Mr P G Donovan |
Solicitors:
| Plaintiff | : | AustAsia Legal Pty Ltd |
| Defendant | : | MDS Legal |
Case(s) referred to in decision(s):
Currie v Currie [2018] WASCA 30
Currie v Currie [No 2] [2017] WASC 312
Ford Motor Co of Australia Ltd v Lo Presti (2009) 41 WAR 1
Walker v Citigroup Global Markets Pty Ltd [2005] FCA 1866
LE MIERE J:
Summary
The first defendant, Mr Graeme Currie (Graeme), farmed in partnership with his wife, Mrs Erica Currie at Bruce Rock. Mr and Mrs Currie have four children including Andrew and Bruce.
Bruce commenced proceedings (CIV 1237 of 2013) against Graeme and Andrew claiming that Graeme is obliged to assign or transfer ownership to Bruce of a part of the Currie Farm comprised of properties referred to as Glenayr Farms on the principles of proprietary estoppel. Graeme commenced proceedings (CIV 1848 of 2015) against Bruce claiming that Bruce is indebted to him in the sum of $1,198,700 as a debt pursuant to a right of subrogation. The sum was paid from the proceeds of the sale of part of the Glenayr Farms properties to pay back part of a debt Bruce owed to Rabobank Australia Ltd which was guaranteed by Graeme. The actions were tried together.
I found that Bruce assumed that Graeme would transfer the Glenayr Farms properties to him by will or at some earlier time, this assumption was induced or encouraged by Graeme, Bruce had acted to his detriment in reliance upon the assumption and it would be against conscience for Graeme to be permitted to depart from the assumption: Currie v Currie [No 2] [2017] WASC 312. I made declarations to the effect that Graeme holds the remaining Glenayr Farms properties on constructive trust for Bruce and an order that Graeme transfer to Bruce the legal title to those properties on condition that Bruce pays $100,000 to Graeme and causes any guarantee by Graeme over the Glenayr Farms properties to be discharged. I dismissed Graeme's cross‑claim. I dismissed Graeme's action, CIV 1848 of 2015.
The parties have made conflicting applications for costs. The parties are agreed that costs should follow the event in that Graeme should pay Bruce's costs of each of the 2013 and 2015 actions. There is controversy as to the basis upon which Bruce's costs should be assessed and whether Bruce should pay Andrew's costs of the 2013 action. Bruce applies for an order that Graeme pay his costs on an indemnity basis or alternatively for a special costs order raising the limits under the applicable Legal Profession (Supreme Court) (Contentious Business) Determination (Scale). Graeme opposes an indemnity costs order. Graeme agrees that the Scale limits should be raised in relation to some but not all items and further that the hourly rates should not be raised. Andrew seeks an order that Bruce pay his costs of the 2013 action. That is opposed by Bruce.
For the reasons which follow I will order that Graeme pay Bruce's costs of the 2013 action and the 2015 action but not on an indemnity basis. Bruce's costs of the 2013 action should be taxed without regard to the limits in the Scale and without regard to the hourly limits in the Scale applying to work undertaken by Mr Donovan, Mr Quinlan SC and Mr Cuerden SC. Bruce should pay Andrew's costs of the 2013 action in filing and serving a memorandum of appearance, filing and serving a defence and giving discovery. Bruce's bill of costs in the 2013 and 2015 actions and Andrew's bill of costs in the 2013 action should be taxed at the same time.
Indemnity costs principles
Bruce seeks an indemnity costs order on three bases. First, Graeme unreasonably rejected a Calderbank offer and Bruce obtained judgment on terms more favourable to him than the terms of the offer. Secondly, Graeme defended the action in circumstances where, properly advised, he should have known that he had no chance of success. Thirdly, Graeme's conduct in the course of defending the case was improper or unreasonable.
A Calderbank offer will not justify an award of indemnity costs unless its rejection was unreasonable: Ford Motor Co of Australia Ltd v Lo Presti (2009) 41 WAR 1 (Lo Presti). In deciding whether the rejection of a Calderbank offer was unreasonable regard should ordinarily be had to at least the following:
(a)the stage of the proceeding at which the offer was received;
(b)the time allowed to the defendant to consider the offer;
(c)the extent of the compromise offered;
(d)the defendants' prospects of success assessed at the date of the offer;
(e)the clarity with which the terms of the offer were expressed; and
(f)whether the offer foreshadowed an application for indemnity costs in the event of the defendant rejecting it.
See Lo Presti at [19].
An indemnity costs order may be made against a party who persists in a defence which he knows, or ought to have known if he had competent legal advice, to be hopeless and who, in doing so, thereby causes unnecessary expense and cost to the plaintiff.
An indemnity costs order may be appropriate against a defendant who engages in misconduct in connection with the litigation. An unexplained failure to discover an important document or other misconduct may, but does not automatically, justify an indemnity costs order. An indemnity costs order aims to compensate an opponent for unnecessary costs incurred as a result of the misconduct. Where the misconduct results in unnecessary costs being incurred by the successful party an indemnity costs order may be appropriate.
The Calderbank offer
The Calderbank offer was in a letter from Bruce's solicitor to Graeme's solicitor of 12 May 2017. The offer was made a month before the commencement of the trial. Graeme was then aware of the legal basis of Bruce's claim and the evidence he would adduce in support of his claim. Graeme is ultimately worse off than if he had accepted the offer.
It cannot be assumed that rejection of a reasonable offer of itself amounts to an unreasonable rejection. The court must have regard to all of the circumstances. I find that the rejection of the offer was not unreasonable so as to justify an order for indemnity costs. There are two principal matters which lead me to that conclusion.
The first matter is that the offer required Graeme to capitulate at a late stage of the proceedings. The offer was of a genuine compromise, not merely a token one. There were two elements of the offer which made it a compromise. Bruce offered to pay to Graeme $100,000 and that each party bear their own costs. However, the offer required Graeme to surrender the subject matter of the proceedings ‑ the Glenayr Farms.
The second factor is that Graeme and his legal advisors considered the legal basis of Bruce's claim and the evidence, particularly the documentary evidence, relevant to it and concluded that Graeme was likely to be successful. A rejection of an offer is not necessarily reasonable because the party and his legal advisors have turned their minds to the legal and factual issues and concluded that they have reasonable prospects of success. A finding of unreasonableness in rejecting a Calderbank offer can be substantiated by an inference that the reasons for rejection advanced or inferred are legally or factually inadequate. However, I do not find that to be so in this case. The matter must be assessed at the time that Graeme rejected the offer. I am not satisfied that a reasonable person in Graeme's position, giving proper consideration to the evidence to be adduced and properly advised about the law, should have assessed his prospects of success to be so low that it was unreasonable to reject the offer.
I note that Graeme has appealed against all of the orders I made after trial. In the course of hearing Graeme's application for a stay of those orders pending the appeal Mitchell JA said that he is satisfied that some of the grounds are arguable and have reasonable prospects of succeeding in a manner that results in some relief being granted to Graeme: Currie v Currie [2018] WASCA 30. Mitchell JA said that any proper assessment of the merits of many of the grounds of appeal would require a careful assessment of all of the evidence led at trial and he was not in a position to undertake that task on a stay application. Nevertheless, his Honour's observation offers some support for the contention that Graeme's case was not hopeless.
Defence not hopeless
At trial in general I accepted the evidence of Bruce and his witnesses. I did not find Graeme to be a credible or reliable witness. In general I did not accept the evidence of Andrew and placed no reliance on Ms Erica Currie's evidence. In general I accepted the analysis and application of the law advanced by Bruce and did not accept a number of legal arguments advanced by Graeme. I substantially determined the factual and legal issues in favour of Bruce. However, it does not follow that Graeme's case was hopeless in the sense that no reasonable person properly advised would reasonably have persisted with his defence.
The case was complex. It involved the dealings between family members over a period of more than 10 years. It involved some difficult questions of law concerning the application of the principles of proprietary estoppel to promises to transfer property by will or at some earlier time. I am not satisfied that Graeme's case was so hopeless that he should be ordered to pay costs on an indemnity basis.
Misconduct
Bruce says that there are two aspects of Graeme's conduct of the action which amount to misconduct justifying an order for indemnity costs. First, Graeme failed to discover important documents during the trial. Secondly, the entirety of Graeme's case was based on evidence which was found to be not credible.
At [34] of my judgment I found that Graeme had failed to discover the copy of Lara's notes of the 29 March 2006 Currie family meeting with his handwritten annotations made shortly after the meeting notwithstanding that he had discovered a clean copy of the notes without his annotations. I found that it is likely that Graeme did not give the document to his solicitors and did not discover it because it is inconsistent with the evidence he gave in his witness statement and adverse to his case. Graeme gave no adequate explanation for his failure to discover the document. It was important. Graeme's conduct in failing to discover the document was misconduct in connection with the litigation. However, I am not satisfied that Graeme's failure to discover the document caused Bruce to incur substantial costs that he would not otherwise have incurred. I will order Graeme to pay Bruce's costs of the action including the costs of the trial. Those costs will include the costs incurred by Bruce's lawyers in subpoenaing the documents which led to obtaining the notes and the costs incurred in arguing that they were not privileged from inspection.
A finding that a party's evidence is not credible or reliable or that a party has fabricated evidence does not automatically justify an indemnity costs order. For example, Dal Pont in the Law of Costs (4th ed, 2018) refers to Walker v Citigroup Global Markets Pty Ltd [2005] FCA 1866 at [16.71] (footnote 364) where there had been a finding that the witness was unreliable, which included a finding that he had fabricated some of his evidence to support the respondent's case. At [31] and [32] Kenny J concluded that, in the context of the entire proceeding, the conduct of the witness did not take the case so far outside the ordinary range of cases as to justify an award of indemnity costs. I have found that Graeme was not a credible or reliable witness, that Andrew was not a truthful or reliable witness and that he coloured his evidence to support Graeme's case and Mrs Erica Currie was not a reliable witness. However, I did not find that this case involved a concerted effort by those witnesses to present a false defence. I am not satisfied that the conduct of Graeme and his witnesses takes the case so far outside the ordinary range of cases so as to justify an award of indemnity costs.
Special costs order
Section 280(2) of the Legal Profession Act 2008 (WA) provides that if a court is of the opinion that the amount of costs allowable in respect of a matter under a cost determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court may do all or any of the following ‑
(a)order the payment of costs above those fixed by the determinations;
(b)fix higher limits of costs than those fixed in the determination;
(c)remove limits on costs fixed in the determination;
(d)make any order of give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.
I am satisfied that the amount of costs allowable in respect of the matter under the relevant costs determinations is inadequate. I reach that decision having regard to the draft bill of costs annexed to the affidavit of Mr Bourke sworn 8 November 2017 and my own knowledge of the case as the trial judge and for some time case manager.
I am satisfied that the amount of costs allowable under the relevant costs determination is inadequate because of the unusual difficulty, complexity and importance of the matter. Counsel for Graeme agrees that the costs allowable under the relevant determinations is inadequate because of the importance of the matter. I am also satisfied that the matter was one of unusual difficulty, having regard to the application of the principles of proprietary estoppel to the facts of the case. I am also satisfied that the matter is one of complexity having regard to the witness testimony and documents relating to dealings between family members over a long period of time.
There are two issues concerning the special costs order. First, the order proposed by Graeme is that the costs of the trial be taxed on a party/party basis without regard to the maximum allowances fixed for items 1(a), 1(c), 7(b), 10(a)‑(c), 17, 20(b)‑(e), 24(a), 24(d), 24(e) and 25(d) of the Scale. The items referred to cover most of the items of work undertaken by Bruce's solicitors. I have found that the amount of costs allowable under the determinations is inadequate because of the unusual difficulty, complexity and importance of the matter. The appropriate order is that Bruce's costs be taxed without regard to the limits on costs fixed in the relevant determinations.
The second issue is whether the hourly rates set out in Table A of the Scale should be raised. Bruce engaged senior and experienced practitioners and counsel whose usual hourly rates are greater than the hourly rates set out in the Scale. It was appropriate for Bruce to retain an experienced senior practitioner and experienced senior counsel whose hourly rates exceed those set out in the Scale because the matter is one of unusual difficulty, complexity and importance. However, it is not appropriate to raise the hourly rates for all of the fee earners who undertook work for Bruce. I will order that the limit on the hourly rates of Mr Donovan, Mr Quinlan SC and Mr Cuerden SC be removed.
Andrew's costs
Bruce commenced this action against Graeme. Bruce joined Andrew as a party after Justice Allanson, who was then the case manager, suggested that it would be appropriate to do so because Bruce pleaded that the discussions at the 29 March 2006 meeting and the actions and conversations otherwise pleaded in the statement of claim gave rise to an agreement between Bruce, Graeme and Andrew. Bruce did not claim any relief against Andrew but joined him as a defendant. Andrew filed a memorandum of appearance on 9 October 2014 and a defence on 10 November 2015. Furthermore, counsel for Graeme and Andrew, Mr Dillon, informed the court that Andrew had given discovery of some documents. Bruce informed Andrew and Graeme that he abandoned his claim in contract in his submissions served on 2 June 2017, about 10 days before the commencement of the trial. Andrew took no part in the trial except as a witness called by Graeme.
Bruce says that Andrew chose to participate in the action when he could have filed a notice to abide by the outcome of the action. That is true, but does not mean that Andrew should not have his costs.
Andrew was represented by the same solicitors as Graeme. Andrew chose to align his interests with those of Graeme. Andrew gave evidence on behalf of Graeme. I found that Andrew was not a truthful or reliable witness and that he coloured his evidence to support Graeme's case. Andrew's evidence added to the length of the trial and the costs incurred by Bruce. In all the circumstances it is appropriate that Andrew recover his costs in so far as he incurred costs separately from Graeme but limited to the costs of entering a memorandum of appearance, filing and serving his defence and giving discovery. It is not appropriate that Andrew should recover any further costs because he did not otherwise incur costs separately from Graeme and his evidence, which I found to be untruthful, added to the length and costs of the trial.
There will be no special costs order in favour of Andrew. There is no evidence that the costs recoverable under the relevant Scales are inadequate. Indeed, having regard to the limited role played by Andrew in the litigation there is no basis for a special costs order in his favour.
Conclusion
There should be orders to the following effect. First, Graeme should pay Bruce's costs of the 2013 action and the 2015 action. Secondly, Bruce's costs of the 2013 action should be taxed without regard to the limits in the Scale. Thirdly, Bruce's costs should be taxed without regard to the hourly limits in the Scale applying to work undertaken by Mr Donovan, Mr Quinlan SC and Mr Cuerden SC. Fourthly, Bruce should pay Andrew's costs of the 2013 action in filing and serving a memorandum of appearance, filing and serving a defence and giving discovery. Fifthly, Bruce's bill of costs in the 2013 action and 2015 action and Andrew's bill of costs in the 2013 action should be taxed at the same time.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RK
ASSOCIATE TO THE HONOURABLE JUSTICE LE MIERE9 OCTOBER 2018
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