Deepsilver Pty Ltd v Aquatherm Australia Pty Ltd
[2007] WADC 160
•14 SEPTEMBER 2007
DEEPSILVER PTY LTD -v- AQUATHERM AUSTRALIA PTY LTD [2007] WADC 160
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WADC 160 | |
| Case No: | CIV:2415/2003 | 13 AUGUST 2007 | |
| Coram: | COMMISSIONER SCHOOMBEE | 14/09/07 | |
| PERTH | |||
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiff to pay the defendant's costs bar half a day of the trial Defendant to pay the plaintiff's costs of half a day of the trial | ||
| PDF Version |
| Parties: | DEEPSILVER PTY LTD (ACN 067 776 354) AQUATHERM AUSTRALIA PTY LTD (ACN 059 578 782) |
Catchwords: | Costs Late amendments Change in substance of defence Time spent arguing amendments |
Legislation: | Nil |
Case References: | Capolingua v Phylum Pty Ltd (1989) 5 WAR 137 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 Monier Ltd v Metalwork Tiling Co of Australia Ltd (No 2) (1987) 43 SASR 588 Ritter v Godfrey (1920) 2 KB 47 Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
AQUATHERM AUSTRALIA PTY LTD (ACN 059 578 782)
Defendant
Catchwords:
Costs - Late amendments - Change in substance of defence - Time spent arguing amendments
Legislation:
Nil
Result:
Plaintiff to pay the defendant's costs bar half a day of the trial
Defendant to pay the plaintiff's costs of half a day of the trial
(Page 2)
Representation:
Counsel:
Plaintiff : Mr S Pentony
Defendant : Mr P Redding
Solicitors:
Plaintiff : Hotchkin Hanly
Defendant : Redding & Associataes
Case(s) referred to in judgment(s):
Capolingua v Phylum Pty Ltd (1989) 5 WAR 137
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Monier Ltd v Metalwork Tiling Co of Australia Ltd (No 2) (1987) 43 SASR 588
Ritter v Godfrey (1920) 2 KB 47
Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129
(Page 3)
1 COMMISSIONER SCHOOMBEE: In this matter I gave judgment for the defendant on 23 February 2007. The plaintiff's claim for damages was dismissed and the defendant's counterclaim for damages in the amount of $36,517.01 was allowed. On the day that judgment was handed down the defendant's solicitors presented a minute of proposed orders, dated 23 February 2007, which included orders regarding costs. However, at the hearing both parties indicated that an order for costs was not sought at that stage as the parties had not agreed on the cost orders in the minute of proposed orders but were likely to be able to do so in future. Accordingly, the matter of costs was reserved to a later date to be dealt with upon application by either party.
2 The defendant's solicitors have now applied for costs orders to be made and have filed a further minute of proposed costs orders, dated 14 June 2007. Pursuant to this minute the defendant seeks an order that the plaintiff pay its costs of the claim and counterclaim, including all reserved costs, to be taxed. The defendant also requests that orders be made by this court directing the taxing officer to allow for various items of costs. The minute of proposed orders further asks for a certificate for transcript.
3 At the hearing of the outstanding costs issues the plaintiff opposed the cost orders sought by the defendant and submitted that the defendant should not be entitled to recover all of its costs from the plaintiff because of the late amendments made by the defendant which caused the trial to run for longer than would otherwise have been the case. Counsel for the defendant further submitted that it was unnecessary for this Court to give the directions to the taxing officer as sought by the defendant.
4 The main issue upon the hearing regarding costs was whether this was an appropriate matter for the Court to deviate from the settled practice that in the absence of special circumstances a successful litigant should receive his or her costs: Ritter v Godfrey (1920) 2 KB 47 at pp 52 - 53.Counsel for the plaintiff referred the Court to the three categories outlined by Atkin LJ in Ritter v Godfrey(supra) at p 60 which would constitute a basis for the exercise of the court’s discretion to deny a successful defendant his or her costs. These categories are the following:
(1) where the defendant has brought about the litigation;
(2) where the defendant has done something connected with the institution or the conduct of the suit calculated to occasion unnecessary litigation and expense; or
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- (3) where the defendant has done some wrongful act in the course of the transaction of which the plaintiff complains.
5 In Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129 at pp 152 – 154, Kaye J with whom McGarvie J agreed, came to the conclusion that the court's discretion as to costs ought not to be fettered by the rules formulated by Atkin LJ in Ritter v Godfrey and that the circumstances in which a departure from the settled rule was justified should not be limited to the three categories relied upon by Atkin LJ.
6 Counsel for the defendant referred the court to two cases where a late amendment to the grounds of defence was held to be a "special circumstance" which justified a departure from the settled practice regarding costs: Capolinguav Phylum Pty Ltd (1989) 5 WAR 137 and Monier Ltd v Metalwork Tiling Co of Australia Ltd (No 2) (1987) 43 SASR 588. At the time of hearing of the application for costs I had not had the opportunity of reviewing these cases and therefore reserved judgment on the matter of costs.
7 In Capolingua v Phylum Pty Ltd (supra), Ipp J decided that there should be no order as to costs even though the defendant had been successful at trial. There were a number of reasons why Ipp J came to this conclusion. The main issue regarding the defendant's conduct of its defence was that it only became apparent during the opening by counsel for the defendants on the afternoon of the second day of the trial what the real basis of the defendant's case was. Further, the details of the defence only became crystallised on the fourth and last day of the trial when amendments to the defence where sought and granted. Those amendments involved replacing the existing defence with an entirely new pleading which bore little resemblance to the earlier document (at p 139). Further, the defendant's case was based substantially on a construction of the documents and Ipp J came to the conclusion that if the defence had been properly revealed at an earlier stage the issues would have been particularly well suited for decision as preliminary points. Had the matter been decided on preliminary points, the trial would have concluded in less than two days (at p 138). In addition, the Principal Registrar's memorandum indicated that the defendant had failed to co-operate at the mediation conference scheduled by the court. Ipp J was of the view that if the defendant had been more co-operative during the mediation, the issues for trial would probably have been better identified and reduced (at pp 139 - 140). Further, the defendant failed to deliver a statement of issues and a list of topics to be covered in submissions which failure also contributed to the lack of definition of the relevant issues at trial (at
(Page 5)
- p 140). As a result unnecessary issues were dealt with during the trial (at p 138).
8 In Monier Ltd v Metalwork Tiling Co of Australia Ltd (No 2) (supra) Jacobs J ordered that the unsuccessful plaintiff pay only one third of the defendants' costs of the action after the adjournment had taken place. The adjournment came about when on the first day of the trial the defendants raised the fact that they wished to file a counterclaim. The plaintiff had brought an action against the defendants for infringement of its registered design and would have succeeded on that action but for the counterclaim raised by the defendants which alleged that the plaintiff's design was invalid. The trial judge allowed an adjournment giving the defendants the opportunity to file the counterclaim. The reasons provided by Jacobs J for the costs order made were that the defendants' product amounted to a fraudulent imitation and the conduct of the defendants in copying the plaintiff's design was "so blatant as almost to invite litigation" (at p 592). Further, the defendants had not discovered the documents on which they sought to rely in attacking the validity of the plaintiff's design and had given certain assurances in the course of interlocutory proceedings that the issue of validity was not in dispute (at p 592). His Honour also noted that the issue of infringement upon which the plaintiff succeeded occupied about two thirds of the time of the trial, although that fact, standing alone, would not have been decisive to the decision to deviate from the usual order as to costs (at p 591).
9 I accept that a late amendment to the grounds of defence may under certain circumstances justify a departure from the settled practice that the successful party should be entitled to its costs. However, whether a late amendment in itself or taken together with other factors is sufficient to cause a departure from the usual rule clearly depends on the circumstances of each particular matter and also remains in the discretion of the court.
10 In the present case, the plaintiff relied upon the fact that four amendments were made to the defendant's defence shortly prior to and during the course of the trial. The trial commenced on 4 September 2006. The first amendment relied upon was made on 21 August 2006 when the defendant's solicitors advised the plaintiff's solicitors that the defendant was not pursuing its counterclaim for loss and damage for conversion and/or negligence and/or breach of contract. In my view the fact that the defendant relinquished part of its counterclaim did not cause any unnecessary costs to be incurred during the trial nor can it be said to have encouraged the litigation. There were no submissions made by the
(Page 6)
- plaintiff to the effect that unnecessary costs had been incurred in preparing a defence in response to those allegations in the counterclaim which were no longer proceeded with after 21 August 2006.
11 The second amendment relied upon by the plaintiff was made by the defendant on 1 September 2006 (the Friday before the commencement of the trial on Monday, 4 September 2006). The amendments made on this occasion introduced two implied terms of the agreement between the plaintiff and the defendant which terms I found in the judgment delivered earlier in this matter to have been breached by the plaintiff. These implied terms were the following:
"7.4.7 Impliedly, the Plaintiff would:
7.4.7.1 exercise its best efforts to promote the sale of the Aquathem product in Western Australia;
7.4.7.2 render faithful and loyal service to the Defendant, maintain a relationship of trust and confidence with the Defendant and not do anything inconsistent with the continuance of confidence between the Plaintiff and the Defendant."
13 At the time of the hearing of the application to amend on 1 September 2006, counsel for the plaintiff did not seek an adjournment on the basis that the proposed amendments would prejudice its case.
(Page 7)
14 At the hearing of the submissions on costs counsel for the plaintiff did not argue that prior to the amendments sought by the defendant on 1 September 2006, the plaintiff would have succeeded on the pleadings as they then stood because the implied term to exercise best efforts and the implied term not to do anything inconsistent with a relationship of trust and confidence had not yet been pleaded. This approach may have been taken by reason of the fact that the original defence already contained the following allegation:
"7.4.6 the Defendant's Agency Agreement could be terminated by the defendant without notice to the Plaintiff in the event of: -
...
7.4.6.2 any acts or conduct of the Plaintiff which were inconsistent with or contrary to the Defendant's endeavours to establish a market for the Aquatherm piping system in Australia and in particular in Western Australia."
16 I did not deal in the reasons for my judgment in this matter with par 7.4.6 because counsel for the defendant indicated during argument in closing that it was no longer necessary to rely on this implied term by reason of the decision in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41. I also held in my earlier reasons (at par 165) that it was not necessary for the defendant to rely on this implied term because the implied term regarding best efforts to promote the sale of the Aquatherm product already required the plaintiff not to engage in conduct which was inconsistent with the defendant’s endeavours to establish a market.
17 I am of the view that it is not necessary to decide whether the plaintiff would have succeeded in its claim if the amendments made on 1 September 2006 had not been sought or granted. For purposes of exercising the discretion with regard to costs, the issue is in my view whether there had been any indication by the defendant prior to the start of the trial that it would rely on a defence to the effect that the plaintiff had acted inconsistent with or contrary to the defendant’s rights or
(Page 8)
- interests under the agreement or whether this was a defence which was raised for the first time midway through the trial.
18 The allegation in par 7.4.6 had been pleaded in a "rolled-up" manner in that the plaintiff did not first plead that there was an implied term that the plaintiff would not do anything inconsistent with or contrary to the defendant's endeavours and then pleaded that there was also an implied term that the agreement could be terminated upon breach of the former term. Further, par 7.4.6 did not initially indicate that this was an implied term.
19 The plaintiff had asked further and better particulars of the defence, including whether the term in par 7.4.6 was alleged to have been oral, in writing or implied. The defendant had pleaded in par 7.3 of the defence that the agreement was partly in writing, partly by conduct and partly to be implied, but had not indicated which term was in writing, which oral and which implied. In answer to the plaintiff's request for particulars the defendant incorrectly replied that the plaintiff's request constituted a request for evidence and was improper. Although the defendant should have told the plaintiff which term was in writing, which oral and which implied, the plaintiff did not press for a proper answer and may have assumed that such a term was to be implied on the basis of the correspondence exchanged between the parties.
20 Even though the defendant had not fully and properly pleaded its defence prior to 1 September 2006 and had not adequately answered the request for particulars, I am of the view that this is not a case where the plaintiff was totally unaware of the line of defence that the defendant would run until the beginning of or even later in the trial. Paragraph 7.4.6.2 gave some indication of the essence of the defendant's defence and the remainder of the original pleading also indicated to the plaintiff that the defendant's defence was based on allegations that the plaintiff acted inconsistently with the defendant's endeavours to establish a market and that the plaintiff did not exercise its best efforts to promote the sale of the Aquatherm product. In par 7.5 the defendant had pleaded that in about February 2003 Mr Higgins had stated to Mr Rosenberg of Aquatherm GmbH of Germany that the plaintiff wished to purchase the Aquatherm piping system directly from Germany. In par 7.8.2 the defendant had pleaded that the arrangement between the plaintiff and Galvins was commercially less favourable to Galvins than could have been made available by the plaintiff. In par 7.8.3 the defendant had pleaded that the plaintiff's arrangements with Galvins put at risk the ability of the defendant to expand the market for the Aquatherm piping
(Page 9)
- system in Western Australia. Although the implied terms pleaded and the breaches allegedly committed by the plaintiff were considerably expanded upon in the amendments of 1 September 2006, the basic framework of the defendant's defence had been disclosed prior to that.
21 In its submissions on costs the plaintiff also relied on a further set of amendments sought by the defendant and granted by the Court on 6 September 2006. These amendments consisted of further changes to the implied term regarding best efforts and the addition of two further implied terms to the effect that the plaintiff would not deprive the defendant of the benefit of the promotion and sales of the Aquatherm product in Western Australia and that the plaintiff would do all such things as necessary on its part to enable the defendant to have the benefit of the agreement. The amendments on this occasion also included a number of factual allegations regarding the formation of the agreement and the arrangement between the plaintiff and Galvins. As was the case with the amendments made on 1 September 2006, in my view, the amendments made on 6 September 2006 did not mean that the defendant raised a totally new defence which the plaintiff had not taken into account before.
22 The plaintiff’s counsel further relied in his submissions on the fact that on the last day of the trial and after the evidence had been completed, the defendant again amended its defence by pleading that the agreement consisted of a third letter exchanged between the plaintiff and the defendant. The letter had been tendered by defendant's counsel during the course of the trial and although it was only relied upon as forming part of the agreement when leave to make the amendment was applied for, I am of the view that this conduct by the defendant does not justify any order as to costs which deviates from the usual order. The amendment did not mean that the plaintiff suddenly had to meet a totally different defence than what had been presented up to that stage.
23 In my view none of the amendments sought by the defendant and granted shortly prior to and during the trial resulted in a set of circumstances which falls within the three categories identified in Ritter v Godfrey(supra). The defendant's conduct of the case also bears no resemblance to the factual situation in either Capolingua v Phylum Pty Ltd (supra) or Verna Trading v New India Assurance(supra). The defendant did make a number of amendments to its pleading shortly prior to and during the trial. However, this is not unusual. Counsel for the plaintiff did not argue that these amendments caused it prejudice in the sense that the plaintiff was unable to deal with the issues raised by the amendments and the plaintiff did not request an adjournment of the trial.
(Page 10)
- It was also not argued by counsel for the plaintiff that if the amendments had not been made, the plaintiff would have succeeded in its claim. I am therefore of the view that there is no reason to divert from the settled rule that the successful party is entitled to its costs.
24 There is, however, one aspect regarding the conduct of the trial which I am prepared to take into account in exercising my discretion with regard to costs. Counsel for the defendant effectively conceded during submissions on costs that about half a day on the second day of the trial was wasted by the parties making submissions about the meaning and effect of the defendant's defence as amended on 1 September 2006 and by the adjournment for most of the afternoon on that day to enable the defendant to prepare a further amendment to its defence.
25 The transcript indicates that the major proportion of the morning of the second day was spent by counsel for both sides making submissions as to what evidence counsel for the defendant was entitled to deal with in cross examination of Mr Higgins, representing the plaintiff, and the meaning and effect of the defence as it then stood. After the lunch adjournment counsel for the defendant applied for an adjournment to allow him to formulate a further amended defence. Although more than half a day was spent arguing about and dealing with the defendant's pleading and further amendments, it seems fair to me to conclude that not all of that time spent was occasioned by the inadequate pleading by the defendant. Some of the submissions regarding the ambit of the pleading and the evidence that could be led were legitimately made by both parties in order to properly define the scope of the pleading as may often happen in any trial.
26 I am however prepared to make an order that the plaintiff pay the defendant's costs of the trial, to be taxed, minus half a day on the second day of the trial. By "half a day" I do not refer to the period after the lunch adjournment only, but to half the costs of a full day.
27 Counsel for the plaintiff also sought orders as per par 2 of the minute of proposed cost orders dated 14 June 2007 which orders are essentially directions to the taxing officer to make certain allowances.
28 Paragraph 2.1 of the minute of proposed cost orders provides for a direction to the taxing officer to make an allowance for conferences and consultations with counsel. Conferences and consultations with counsel are not specifically listed as an item in the sale of costs. Seaman, Civil Procedure Western Australia, Vol 1, notes at par 66.18.2 that conferences
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- and consultations with counsel fall within the items for getting up for trial which are listed in the scale of costs and that a special allowance for conferences or consultations should only be made where it is clear that they were necessary, out of the ordinary, and inadequately remunerated by any item in the scale.
29 No evidence was placed before me to the effect that the items for getting up for trial in the scale of costs would be insufficient in this instance to cover the conferences and consultations with counsel and that it is necessary to make a special order in this regard. Accordingly, I have come to the conclusion that no special order should be made. This does not mean that conferences and consultations cannot be allowed for by the taxing officer as part of the costs for getting up.
30 I am prepared to make the directions sought in the remainder of par 2 of the minute of proposed costs orders. Although the taxing officer may allow for most of these costs in any event, the court has had the advantage of seeing and hearing the witnesses and can confirm that the witnesses in respect of whom the relevant costs are sought were necessary to support the defendant's case.
31 The defendant should also be entitled to a certificate for transcript.
32 Accordingly, I make the following orders with regards to costs:
(1) The plaintiff to pay the defendant's costs of the claim and counterclaim, including all reserved costs, to be taxed if not agreed, save for half a day's costs on the second day of the trial.
(2) The defendant to pay the plaintiff's costs of half a day on the second day of the trial, to be taxed if not agreed.
(3) Orders pursuant to pars 2.2 – 2.9 inclusive and par 3 of the minute of proposed cost orders, dated 14 June 2007, filed by the defendant's solicitors.
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