Dakin Farms Pty Ltd v Elite Grains Pty Ltd - [2012] WADC 43

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: DAKIN FARMS PTY LTD -v- ELITE GRAINS PTY LTD [2012] WADC 43

CORAM: COMMISSIONER GETHING

HEARD: 21 MARCH 2012

DELIVERED : 30 MARCH 2012

FILE NO/S: CIV 2787 of 2011

BETWEEN: DAKIN FARMS PTY LTD
First Plaintiff
BALWYN NOMINEES PTY LTD
Second Plaintiff
AND
ELITE GRAINS PTY LTD
First Defendant
RODNEY NORMAN CULLETTON
Second Defendant
IOANNA CULLETTON
Third Defendant

Catchwords:

Practice and procedure - Costs - Indemnity costs - Special costs orders - Orders removing scale limits

Legislation:

Legal Profession Act 2008 (WA) s 280

Result:

Appeal from Deputy Registrar dismissed

Representation:

Counsel:

First Plaintiff                :     Mr C P K Russell
Second Plaintiff            :     Mr C P K Russell
First Defendant             :     Mr T Lethbridge
Second Defendant         :     Mr T Lethbridge
Third Defendant           :     Mr T Lethbridge

Solicitors:

First Plaintiff                :     King and Wood Mallesons
Second Plaintiff            :     King and Wood Mallesons
First Defendant             :     Kott Gunning
Second Defendant         :     Kott Gunning
Third Defendant           :     Kott Gunning

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

Bray v Ryan [1999] WADC 66
Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2011] WASC 268 (S2)
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S)
Hazart Pty Ltd v Rademaker (1993) 11 WAR 26
Heartlink Ltd v Jones As Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
Hodgkinson v Doepel & Associates Architects Pty Ltd [2006] WASC 237 (S)
Miller v Evans [2010] WASC 127 (S)
O'Rouke v P & B Corporation Pty Ltd [2008] WASC 36 (S)
SDS Corporation v Pasdonnay Pty Ltd [2004] WASC 26 (S)
Staley v Pivot Group Pty Ltd [No 6] [2010] WASC 228
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129

COMMISSIONER GETHING: By writ filed 24 August 2011, the plaintiffs claimed:
(a)the price of oats sold and delivered by the first plaintiff to the first defendant;
(b)certain payments due under an agreement by which the first plaintiff provided swathing and harvesting services to the first defendant; and
(c)damages for repudiation by the second and third defendants of lease between them and the second plaintiff.
I was advised from the bar table that the total amount of the claim is in the vicinity of $300,000.
By application dated 18 October 2011 the defendants sought a stay of the action pending the outcome of an arbitration commenced by the defendants against the plaintiffs with Grain Trade Australia (GTA) on 6 September 2011. The court made orders by consent programming the application through to a special appointment after 2 January 2012.
It is apparent from the affidavit material filed that there is a factual dispute between the parties as to whether the GTA Rules and the GTA Arbitration Rules were incorporated into the sale agreement between the first plaintiff and first defendant. The arbitration was commenced pursuant to the GTA Arbitration Rules.
In its submissions filed 20 December 2011, the defendants stated that the issue of the terms of the sale agreement could not be determined without cross‑examination of the deponents of the affidavits filed in relation to the stay application. The defendants filed a minute of proposed orders on 16 January 2012 setting out a program of orders for this to occur.
At the hearing on 18 January 2012, the defendants sought an adjournment of the stay application and orders for the cross‑examination of the deponents of the various affidavits. After hearing argument, Deputy Registrar Harman declined the application. There was then a short adjournment following which counsel for the defendants withdrew the application. There was then argument as to the appropriate costs order. The order sought by counsel for the plaintiffs was for the scale limits to be removed.
The final orders made by the deputy registrar were to:
(a)dismiss the application by the defendants to adjourn the application;
(b)dismiss the stay application;
(c)order that the defendants pay the plaintiffs' costs of the application in any event; and
(d)order the defendants to file their defence within 14 days.
In its notice of appeal dated 30 January 2012 the plaintiffs challenged only the costs order. In lieu of the order made, the plaintiffs sought either an order for indemnity costs or an order extending the limit of the relevant scale. The specific terms of the orders sought were:
2(a)the Respondents (Defendants) pay all the costs incurred by the Appellants (Plaintiffs) except in so far as they are of an unreasonable amount or have been unreasonably incurred, so that the subject to those exceptions the Appellants (Plaintiffs) are completely indemnified by the Respondents (Defendants) for their costs;
(b)in the alternative to 2(a), there be a special costs order in favour of the Appellants (Plaintiffs) to extend the limit of the Supreme Court Scale of Costs for item 10 and the Taxing Master in taxing the bill of costs of the Appellants (Plaintiffs) do make reasonable allowance having regard to the work done without regard to the limits in item 10 under the Supreme Court Scale of Costs.
(c)the costs assessed pursuant to 2(a), alternatively, pursuant to 2(b), are to be paid forthwith.
The plaintiffs filed an affidavit of Katie Pope in support of the appeal, dated 28 February 2012. Ms Pope is a solicitor employed by the plaintiffs' solicitors. Among other things, Ms Pope deposes to having spent some 51 hours preparing for the application. From the bar table I was advised that her charge out rate is $420 per hour. The plaintiffs were represented by counsel at the hearing on 18 January 2012. I am not aware of the fee charged by counsel.

Preliminary issue

There was a preliminary issue raised as to whether the plaintiffs could seek an order for indemnity costs and for the payment of costs forthwith in the hearing before me as it was not sought before the deputy registrar.
If a party is 'dissatisfied with a decision of a registrar the party may appeal to a judge': District Court Rules 2005 (WA) (DCR) r 15(1). The appeal is 'by way of a new hearing of the matter that was before the registrar' DCR r 15(6). It is a 'complete review de novo': Hazart Pty Ltd v Rademaker (1993) 11 WAR 26, 28.
The 'decision' of Deputy Registrar Harman under appeal was the decision in relation to costs. The 'matter' in which the decision was made was the defendants' application dated 18 October 2011. As a complete review de novo, it is as if I were hearing the 'matter' for the first time. It would have been open at the hearing of the 'matter' on 18 January 2012 for the plaintiffs to have sought orders for the payment of costs on an indemnity basis or for the payment of costs forthwith. It is thus open for the plaintiffs to seek these orders before me on the review de novo of the 'matter'.

Issues for determination

The principles in relation to the making of an award for indemnity costs were summarised by the Court of Appeal (Pullin JA, Kenneth Martin J) in Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) [10]:
The principles applicable to the making of indemnity costs orders in litigation may be briefly summarised, as follows:
1.A superior court, in its inherent jurisdiction, may make an indemnity costs order (see also Supreme Court Act 1935 s 37, and Legal Profession Act 2008 s 280).
2.An indemnity costs order departs from the usual costs disposition order, whereby costs are awarded on a party/party basis: EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59.
3.The court's discretion as to the making of an indemnity costs order is a discretion that must be exercised judicially. In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397, 400 Woodward J said:
'Courts in both the United Kingdom and Australia have long accepted that solicitor and client costs can properly be awarded in appropriate cases, where "there is some special or unusual feature in the case to justify the court exercising its discretion in that way".' (emphasis added)
4.To obtain an indemnity costs order, it is not the case that the successful party needs to show a collateral purpose, or establish some species of fraud against the unsuccessful party. In J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 303 French J by reference to the observations of Woodward J in Fountain Selected Meats, said:
'It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case'.
5.Furthermore, in Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Unreported, FCA, 3 May 1991) (referred to by Ipp J in Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190, 191) French J observed:
'The categories in which the discretion may be exercised are not closed.'
6.Competing principles need to be balanced in assessing the making of a potential award of indemnity costs. In Quancorp Pty Ltd v MacDonald [1999] WASCA 101 [7], Wheeler J observed:
'On the one hand, a party should not be discouraged, by the prospect of an unusual costs order, from persisting in an action where its success is not certain. Uncertainty is inherent in many areas of law, and the law changes with changing circumstances. It is inappropriate that a case be too readily characterised as 'hopeless' so as to justify an award of indemnity costs to the successful party. However, 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. Persisting in a case which can only be characterised as 'hopeless' is an example of the type of conduct which may lead the court to a view that the party whose conduct gave rise to the costs should bear them in full.'
7.An indemnity costs order may be appropriate in situations which are shown to involve some element of improper, or at least unreasonable, conduct by a party or the party's legal advisers: see Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225, 233 (Sheppard J), referred to by Pullin J in Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [9].
8.A properly crafted special costs order may obviate the need for an indemnity costs order, where components of cost scale items are allowed above the applicable scale ceiling: see Flotilla [20] - [24].
9.An indemnity costs order may not be appropriate if the claimed costs would be likely to be recovered under the standard order for party and party costs, or under a special order raising or removing a scale ceiling allowance: Flotilla [11]. In Unioil (No. 2) (193), Ipp J observed:
'However, counsel for the plaintiffs was unable to identify any costs so incurred that would not be covered by an order for party and party costs. An order for indemnity costs on this ground is therefore not warranted.'
10.Nonetheless, an indemnity costs order will constitute an appropriate sanction marking the disapproval of improper or unreasonable conduct: see Brookvista Pty Ltd v Meloni [2009] WASCA 180 [32], Flotilla [25]. In Flotilla Pullin J said [26]:
'A solicitor should not, in my view, resort to an application for an indemnity costs order merely to secure the recovery which could be achieved by a properly formulated special costs order, unless the unsuccessful party's conduct is genuinely to be impugned by the successful party.'
The power to make special costs orders is contained in Legal Profession Act 2008 (WA) (LPA)¸ s 280(2), as follows:
… if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following ‑
(a)order the payment of costs above those fixed by the determination;
(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 or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.
It thus appears that the sequence in which I should determine the issues before me is as follows:
(a)Is the amount of costs allowable under the scale inadequate?
(b)If so, are there grounds for making a special costs order?
(c)In view of (b), is an order for indemnity costs appropriate?
(d)Should the costs be payable forthwith?

Is the amount of costs allowable under the scale inadequate?

In relation to an application pursuant to LPA s 280(2), the principles may be summarised as follows:
(a)in order for the court to make a special costs order under s 280(2) the court must firstly form an opinion that the costs otherwise allowable would be inadequate and second form an opinion that such inadequacy arises because of the unusual difficulty, complexity or importance of the matter: Heartlink Ltd v Jones As Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) (Martin CJ) [11]; Miller v Evans [2010] WASC 127 (S) [30];
(b)the requirement of inadequacy will be demonstrated if the applicant shows that there is a fairly arguable case that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit that would be imposed by the relevant costs determination: Heartlink [16], [25]; Miller [31]; and
(c)because the determination would ordinarily be made in advance of taxation, it is a matter of impression rather than of detailed evaluation: Heartlink [22]; Miller [32];
The relevant scale is the Legal Practitioners Supreme Court (Contentious Business) Determination 2010 (WA) ('Scale'). The Scale limit for an interlocutory application in the District Court is set by item 10(a) at $10,230.
In submissions, counsel for the plaintiffs stated that the amount of the bill is likely to be in the vicinity of $25,000, as follows:
(a)51 hours of Ms Pope's time at $420 per hour, totalling $21,240;
(b)the bill would include counsel's fees;
(c)it is fairly arguable that counsel would charge at least the scale rate of $341(cl 10);
(d)from the court file it is apparent that counsel settled the submissions and appeared at the hearing which lasted about two hours; and
(e)it is fairly arguable that counsel's fees would be at least 10 hours at $341, totalling $3,410.
The process of taxation is summarised in the following passage from the decision in Bray v Ryan [1999] WADC 66 [37]:
In the final analysis it is necessary to first, identify what services were necessary in the particular case and secondly, objectively assess a reasonable allowance for such services by applying the Rules, the Determination and the underlying principles thereof and thirdly, measure the amount actually claimed in the bill for the services against the objective assessment in order to determine whether or not the amount claimed is reasonable and what adjustment, if any, should be made.
The key aspects of the services provided were:
(a)reviewing the defendants' application and Mr Culleton's affidavit;
(b)preparing affidavits of Mr Lester (17 November 2011) and Mr D'Arcy (17 November 2011);
(c)reviewing the defendants' submissions dated 20 December 2011 (9 pages);
(d)preparing the plaintiffs' submissions dated 13 January 2012 (9 pages); and
(e)attending the hearing on 18 January 2012.
The notes to item 10(a) in the Scale state that the scale maximum is based on two days preparation and one day's hearing.
The Supreme Court in its Consolidated Practice Direction has published a Schedule of Standard Costs Orders (Exclusive of Disbursements) (par 4.7.1.1). In that schedule, the allowance for a special appointment before a judge or master is $1,782 plus $550 per extra hour of hearing time (item 2.4). This is based on 4.5 hours of a senior practitioner's time. There is also the provision for an allowance for preparing affidavits (items 2.2 and 1.5).
I do not consider it fairly arguable that a reasonable allowance for the services set out in par [20] would exceed the Scale amount of $10,230. From my review of the file, it was a routine two hour special appointment before a registrar. If a reasonable allowance for a hearing of this level of work and complexity does not fall within the Scale maximum, there is little point in having a Scale maximum.
However, in the event that the matter proceeds further, it is appropriate that I consider the second limb of the inquiry in LPA s 280(2).

Are there grounds for making a special costs order?

In relation to the second part of the inquiry in LPA s 280(2), the relevant law may be summarised as follows:
(a)in regard to unusual difficulty, complexity or importance, the court can have regard to whether the work done was appropriate to the significance of the issues that arose in the litigation, to the parties or the public or to the community generally Heartlink [19]; Miller [32];
(b)'unusual' in LPA s 280(2) qualifies 'difficulty' only and not 'complexity' or 'importance': SDS Corporation v Pasdonnay Pty Ltd [2004] WASC 26 (S), at [102] - [106]; Hodgkinson v Doepel & Associates Architects Pty Ltd [2006] WASC 237 (S) [33];
(c)'unusual' means unusual having regard to what one might describe as the usual run of civil cases in the Supreme Court and the District Court: O'Rouke v P & B Corporation Pty Ltd [2008] WASC 36 (S) [23]; and
(d)the assessment of the question of whether or not there is 'unusual difficulty, complexity or importance' is essentially a value judgment having regard to the court's experience of the particular case and compared to the usual run of cases: O'Rourke [23] - [24].
In relation to the issue of 'importance', counsel for the plaintiffs referred to the following passage in Heartlink [17] - [19]:
17It is common ground between the parties that the word 'unusual' qualifies only the expression 'difficulty' and does not qualify the words 'complexity' or 'importance'. Another issue was, however, raised in argument in relation to those words, and that concerns the meaning to be given to the word 'importance'. Heartlink submits that the criterion of importance cannot be met having regard to the interests of the parties only, but must, in order to be satisfied, import an element of importance to the community.
18I cannot see any reason in policy or principle why the word 'importance' should be construed in this way. If it had been the intention of the legislature to require the court to give consideration to an issue of community or public importance, then I think it would have been reasonable to expect the legislature to use words that would connote that meaning, such as the well-known phrase 'public importance' which is found in a number of other legislative provisions.
19It seems to me that by reference to 'importance' in this context, the legislature is allowing the court to have regard to the question of whether the work done was appropriate to the significance of the issues that arose in the litigation. Significance can arise either because of the significance of the issues to the parties or because of the significance of the issues to other prospective parties or to the public or to the community generally…
The overall approach to an application pursuant to LPA s280 is seen from the following comments of Hall J in Miller [36] - [37]:
36In regards to the importance of the matter, it would be too easy to dismiss the matters at issue in this case as being a neighbourhood dispute. The matter was considered to be of great importance to the parties and, as I have noted, proceeded over six days. It could also be fairly argued that the issues are of significance to prospective parties given that the restrictive covenant at issue in this case is one that burdens other properties in the area. One of the matters at issue at the trial was the interpretation of the covenant and the nature of structures which are covered by it. I accept that that is a matter of significance to others beyond the parties to this action.
37However, those factors alone do not convince me that the matter was of unusual difficulty, complexity or importance. The usual order of party/party costs might be too readily departed from if cases such as this were thought to justify the exercise of the power under s 215(2). No doubt an argument could be made for almost every case that is difficult, complex or important in some respect or other. Certainly the parties might often see it that way. In my view the issues in this case would not in themselves justify an order in broad terms. However, I do accept that (had it been necessary to do so) an order that would have permitted costs for counsel's attendance at mediation and preparation of the closing submissions would have been appropriate.

Hall J was discussing the power in Legal Practice Act 2003 (WA) s 215 which is in substantially identical terms to LPA s 280(2).
In exercising the power in LPA s 280(2), I should also have regard to the fact that the processes and procedures of the District Court are to be conducted, among other things, so as best to ensure that the costs to the parties are proportionate to the value, importance and complexity of the subject matter in dispute. This requirement is obtained from Rules of the Supreme Court 1971 (WA) O 1 r 4B, which provides:
4B. Case flow management, use and objects of
(1)Actions, causes and matters in the Court will, to the extent that the resources of the Court permit, be managed and supervised in accordance with a system of positive case flow management with the objects of ‑
(a)promoting the just determination of litigation; and
(b)disposing efficiently of the business of the Court; and
(c)maximising the efficient use of available judicial and administrative resources; and
(d)facilitating the timely disposal of business; and
(e)ensuring the procedure applicable, and the costs of the procedure to the parties and the State, are proportionate to the value, importance and complexity of the subject matter in dispute; and
(f)that the procedure applicable, and the costs of the procedure to the parties, are proportionate to the financial position of each party.
(2)These rules are to be construed and applied and the processes and procedures of the Court conducted so as best to ensure the attainment of the objects referred to in subrule (1).
The plaintiffs submitted that the application was unusually difficult and complex on two bases. The first was that it was necessary to consider legislation that was enacted in the United Kingdom, New South Wales and Western Australia. Difficult issues, including jurisdictional issues, arose in relation to the interaction of the various legislative provisions. Questions also arose as to the applicability of the law of foreign jurisdiction to proceedings in the District Court.
The second was that the defendants filed two lists of authorities and also provided the plaintiffs with details of further additional authorities the evening before the hearing. The additional authorities relied on by the defendants had not been referred to in the defendants' submissions and when the plaintiffs' solicitors were notified of the additional authorities there was no indication given as to the relevance of those authorities to the matters in dispute between the parties.
The defendants submitted that the case was not unusually difficult or complex. They submitted that the plaintiffs did not provide any evidence to suggest that the application was any more important than any other ordinary interlocutory application.
In oral argument, counsel for the plaintiffs conceded that the application did not involve any issues of wider public or community importance. I asked counsel for the plaintiffs what factors distinguished the present application from every other two hour special appointment in the District Court registrars' list. The only factor he could identify was that, if the stay application was successful, it would stay not only the claim relating to the oats sold and delivered, but also the other two claims. These other two claims could not be the subject of a finding in the arbitration. The effect of the stay would be to deprive the plaintiffs of the opportunity to pursue these claims pending the arbitration.
The factor identified by counsel for the plaintiffs does not distinguish the present application from, say, a routine summary judgment application. Arguably, the consequences for a party defending a summary judgment application are more 'important' to them than the present application as it involves a substantive determination being made against them. The worst case for the present plaintiffs was a stay pending the arbitration.
In my view, compared to the usual run of District Court chambers applications, there is nothing about the present application that is unusually difficult or complex or important. This is especially so given the dicta above requiring me to determine this issue having regard to Supreme Court applications as well as those in this court. It was a run of the mill arbitration stay application, complicated by a factual dispute as to whether or not the arbitration agreement was incorporated into the terms of the agreement between the parties. I accept that the outcome was important to the parties, but only in the sense that the outcome of a significant interlocutory application will be important to any party concerned. It is of the same relative importance to the parties as, say, an application for summary judgment or for security for costs.
I am not persuaded that it is appropriate to remove the limits on costs fixed in the Scale.
As an alternative, the defendants submitted that I should remove, or perhaps increase, the limits on the hourly rates set out in the determination. This power is open to the Court in LPA s 280(2).
The court should not order that the hourly rates to apply in assessing costs should be in excess of the hourly rates allowed in the Scale merely because a party's solicitor or counsel have charged at a higher rate: Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2011] WASC 268 (S2) [7].
The purpose of the hourly rate is to set a benchmark for use in costs determinations based on current practice in the legal profession in Western Australia. This point is made by Pullin J in Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); 28 WAR 95 [22]:
The whole point of the existing scale is that the rates are struck by reference to what is being charged within the profession. It is true that the hourly rates can only be an average or mean of the upper rates determined in the survey, and there will be some cases where the unusual complexity or importance of the case warrants the special expertise of the practitioner involved and warrants an increase in the hourly rate. In some cases not involving unusual complexity or importance, the higher rates paid will not be recoverable. A party is always entitled to the luxury of retaining the highest paid practitioners in the conduct of their case, but they cannot always expect to recover these costs from the other party.
No evidence is provided by the plaintiffs as to the particular expertise or experience of Ms Pope, Mr Abbott (counsel) or any other person who may have performed work for the plaintiffs. There is also no evidence led as to why the case was of such 'unusual complexity or importance' that the case 'warrants the special expertise of the practitioner involved and warrants an increase in the hourly rate'. No evidence is provided by the plaintiffs as to the rate charged by counsel, or even that counsel's hourly rate is in excess of the hourly rate allowed under the Scale.
I decline to make an order increasing the maximum hourly rates.

Is an order for indemnity costs appropriate?

It is possible that an order for the payment of indemnity costs may lead to an order in excess of the scale. Accordingly, it is appropriate that I consider an order for the payment of costs on an indemnity basis as a separate head.
I have set out the law generally in relation to the payment of indemnity costs in par [13] above.
The plaintiffs submit that the defendants' application was misconceived on the basis that there was insufficient evidence that there was a binding arbitration agreement between the parties. Their solicitors appeared to have prepared the application on the basis that it was sufficient that there be an arguable case that there was an arbitration agreement, the issue to be determined by the arbitrator. It later accepted that the District Court had to make a factual finding as to whether a valid arbitration agreement existed.
The plaintiffs relied on the decision in Staley v Pivot Group Pty Ltd [No 6] [2010] WASC 228 (S), where an indemnity costs order was considered appropriate [18]. Kenneth Martin J made remarks about the plaintiff's conduct in that case being:
(a)'the plaintiff's ongoing adjustments to its case' [22];
(b)the case had 'hallmarks of a work in progress as it continued to evolve' [18]; and
(c)'the conduct of the trial in that evolving way, in my view, was wholly unnecessary and unreasonable, reflecting inadequate preparation by way of proofing of witnesses and a failure to come to grips with some in principle deficiencies in the claim at a much earlier time' [18].
The plaintiffs further submit that the defendants conducted the litigation in a manner that increased their costs. In particular, the plaintiffs assert that the defendants changed their position in relation to the application two times, necessitating additional work by their lawyers.
The defendants' initial approach between 18 October 2011 and 19 December 2011 was that the GTA should determine whether a valid arbitration agreement existed. The District Court only needed to be satisfied that it was arguable that an arbitration agreement existed in order to grant the stay and that this could be determined at a three hour special appointment before a registrar.
Between 20 December 2011 and 28 December 2011, the defendants' position was that the District Court needed to determine whether a valid arbitration agreement existed in order to grant the stay, and, in accordance with the approach adopted in the United Kingdom, that the matter needed to be dealt with at a hearing before a judge.
Between 29 December 2011 and 15 January 2012, the defendants' position was that the District Court needed to make a 'factual finding' about whether a valid arbitration agreement existed in order to grant to stay. The defendants' position was that 'such a factual finding must of course be made a Judge', but only after the deponents to the affidavits that had been filed at that time had been cross-examined and further affidavits had been filed.
The defendants submitted that:
(a)there is no suggestion that the stay application was commenced or continued for an improper purpose or with an ulterior motive, or that there was any element of fraud;
(b)the stay application was not hopeless until the application for leave to cross examine witnesses was refused, following which the defendants promptly withdrew the application; and
(c)there was nothing in the way in which the defendants conducted the application that would warrant the making of an order for indemnity costs, and
(d)in particular, the final orders sought by the defendants did not change and its position at all relevant times was clear on the face of its submissions.
I agree with the defendants' submissions. There is no material before me suggesting that there was some element of improper, or at least unreasonable, conduct by the defendants. The decision of their counsel not to proceed with the stay application, having lost the application for leave to cross examine the deponents of the affidavits, represented a pragmatic response with a view to managing the costs of the action in a proportionate manner. The plaintiffs, as applicants for this order, bear the onus of persuading the court that there is a reason to depart from the usual order whereby costs are awarded on a party/party basis and make an order for indemnity costs. They have not discharged this onus.

Should the costs be payable forthwith?

The District Court does not have a usual practice of ordering the payment of costs from interlocutory hearings on a forthwith basis. The usual order is for the costs to be payable in any event. The practice in this court is not to make an order for payment of costs forthwith unless there is something out of the ordinary so as to warrant the making of such an order.
In the present case, there is nothing in the material before me which justifies departing from the usual practice of the District Court.

Determination

For the reasons I have set out above, the appropriate costs order in relation to the application heard on 18 January 2012 was the one made by Deputy Registrar Harman. This is that the defendants pay the plaintiffs' costs of the application in any event. I make this order. I therefore also dismiss the appeal. I will hear from the parties as to the costs of the appeal.