Deputy Commissioner of Taxation for the Commonwealth of Australia v Robinswood Pty Ltd
[2005] WASC 67 (S)
•29 APRIL 2005
DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA -v- ROBINSWOOD PTY LTD [2005] WASC 67 (S)
| Link to Appeal : |
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| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2005] WASC 67 (S) | |
| Case No: | CIV:2300/1997 | 29 OCTOBER, 1-5, 8-12, 16-18, 22-25, 29 NOVEMBER, 2, 6-8 DECEMBER 2004, 29 APRIL, 12 MAY 2005 | |
| Coram: | WHEELER J | 29/04/05 | |
| 12/05/05 | |||
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Defendants to pay the plaintiff's costs | ||
| B | |||
| PDF Version |
| Parties: | DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA ROBINSWOOD PTY LTD (ACN 008 844 488) MADDELIENE CARATTI VENETIAN NOMINEES PTY LTD GRANGEFIELD HOLDINGS PTY LTD EXCELCO MINING PTY LTD MINE EXC PTY LTD |
Catchwords: | Practice and procedure Costs Special costs orders Whether matter of unusual complexity Whether costs should be apportioned between defendants Turns on own facts |
Legislation: | Legal Practice Act 2003 (WA), s 215 Rules of the Supreme Court 1971 (WA), O 66 r 2(e) |
Case References: | Eastland Technology Australia Pty Ltd v Whisson [2002] WASC 150(S) Trade Practices Commission v Nicholas Enterprises Pty Ltd (1979) 28 ALR 201 Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58(S2) Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 12 MAY 2005 FILE NO/S : CIV 2300 of 1997 BETWEEN : DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA
- Plaintiff
AND
ROBINSWOOD PTY LTD (ACN 008 844 488)
Defendant
- Plaintiff
AND
MADDELIENE CARATTI
Defendant
(Page 2)
FILE NO/S : CIV 2320 of 1997 BETWEEN : DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA
- Plaintiff
AND
VENETIAN NOMINEES PTY LTD
Defendant
- Plaintiff
AND
GRANGEFIELD HOLDINGS PTY LTD
Defendant
- Plaintiff
AND
EXCELCO MINING PTY LTD
Defendant
- Plaintiff
AND
(Page 3)
- MINE EXC PTY LTD
Defendant
Catchwords:
Practice and procedure - Costs - Special costs orders - Whether matter of unusual complexity - Whether costs should be apportioned between defendants - Turns on own facts
Legislation:
Legal Practice Act 2003 (WA), s 215
Rules of the Supreme Court 1971 (WA), O 66 r 2(e)
Result:
Defendants to pay the plaintiff's costs
Category: B
Representation:
CIV 2300 of 1997
Counsel:
Plaintiff : Mr S Owen-Conway QC & Mr R E Lindsay
Defendant : No appearance
Solicitors:
Plaintiff : Australian Government Solicitor
Defendant : No appearance
(Page 4)
CIV 2318 of 1997
Counsel:
Plaintiff : Mr S Owen-Conway QC & Mr R E Lindsay
Defendant : Mr P V Batros
Solicitors:
Plaintiff : Australian Government Solicitor
Defendant : Dawson Davies
CIV 2320 of 1997
Counsel:
Plaintiff : Mr S Owen-Conway QC & Mr R E Lindsay
Defendant : Mr P V Batros
Solicitors:
Plaintiff : Australian Government Solicitor
Defendant : Dawson Davies
CIV 2321 of 1997
Counsel:
Plaintiff : Mr S Owen-Conway QC & Mr R E Lindsay
Defendant : No appearance
Solicitors:
Plaintiff : Australian Government Solicitor
Defendant : No appearance
(Page 5)
CIV 2322 of 1997
Counsel:
Plaintiff : Mr S Owen-Conway QC & Mr R E Lindsay
Defendant : No appearance
Solicitors:
Plaintiff : Australian Government Solicitor
Defendant : No appearance
CIV 1126 of 1998
Counsel:
Plaintiff : Mr S Owen-Conway QC & Mr R E Lindsay
Defendant : No appearance
Solicitors:
Plaintiff : Australian Government Solicitor
Defendant : No appearance
Case(s) referred to in judgment(s):
Eastland Technology Australia Pty Ltd v Whisson [2002] WASC 150(S)
Trade Practices Commission v Nicholas Enterprises Pty Ltd (1979) 28 ALR 201
Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58(S2)
Case(s) also cited:
Nil
(Page 6)
1 WHEELER J: I have had the opportunity of reading the two sets of written submissions. I commence with a little background, which is that on 28 April I made available my written reasons in this matter for collection from 10 am, with judgment to be delivered at 2.15 pm on the 29th, the following day.
2 Paragraph 223 of those reasons directed the plaintiff to recalculate an amount in relation to the defendant Robinswood and directed the parties to confer in relation to the quantum of the judgment. There was no direction that there be a conferral in relation to costs. It appears the calculation took longer than I had expected, and the plaintiff's calculations were available only very close to the time of judgment, which was delivered at 2.15 pm. At that stage only Maddeliene Caratti and Venetian Nominees were represented by counsel. Though the solicitors for Robinswood, at that stage at least, remained on the record, it appears that they took the view it was not appropriate to appear because of the recent voluntary administration of that company.
3 The plaintiff moved for orders for judgment in specified amounts and sought predictable costs orders, they being that the defendants pay the plaintiff's costs and orders lifting the scale limit in respect of various items. Counsel for the defendants was, he said, embarrassed and wished to check the quantum of calculation in relation to the two defendants I have already mentioned, that is, Venetian Nominees and Maddeliene Caratti, and wished for further time to develop submissions in relation to whether there should be some apportionment of costs between the defendants. He foreshadowed also that he might wish to make submissions about aspects of the motion to lift the scale limits.
4 It appeared that, because of the time taken by the calculation of quantum, the plaintiff at that stage had not - until very shortly prior to judgment - advised the defendants' counsel of the orders which would be sought in relation to costs. I gave those two defendants until 4 pm the following Thursday, 5 May, to make further written submissions, with the plaintiff some few further days to make another written response. Detailed written submissions were received from the two defendants, prepared by counsel.
5 There were four things I noted about them:
(1) No issue was taken with the plaintiff's calculations of the quantum of the defendants' liability, and I therefore will make orders proposed by the plaintiff in that respect.
(Page 7)
- Because of the statutory interest accruing from day-to-day, and to avoid the necessity of recalculation, I will, as the parties agree appears to be the appropriate course, date my orders from 29 April.
- (2) Next, I noticed the submissions went well beyond those foreshadowed, seeking, inter alia, orders that the plaintiff pay the two defendants' costs of the trial.
(3) The submissions were accompanied by two affidavits, although no leave had been given to file the affidavits. However, the letters which were annexed to the affidavits were material which I had before me at an earlier time and I do propose to take notice of them.
(4) It seemed to me that those submissions were wholly without merit.
6 This last view led me to cause a letter to be written to the parties offering the defendants the opportunity to make oral submissions with a view to persuading me that the issues that they raised were fairly arguable. It appeared to me that if they were not, it would not be just to put the plaintiff to the expense of reply. I have heard the oral submissions. I remain of the view that the issues raised by the defendants are not fairly arguable. I note that the written and oral submissions were made by counsel who were not the trial counsel, and I assume for that reason counsel were not as acutely aware as I am of their lack of merit, my view being formed, at least in significant part, by my experience over the whole course of this matter, including the numerous interlocutory applications.
7 I now deal with the submissions made, taking the written submissions first of Ms Coulson, in reverse order.
8 Order 59 r 9 of the Rules of the Supreme Court1971 (WA) is raised. It is applicable to applications in chambers, not to moving for orders on the delivery of judgment and seems to me to be quite irrelevant.
9 Next, and significantly, the whole of the plaintiff's application for special costs orders and for a certificate for second counsel is opposed on the basis that none of the factors in s 215 of the Legal Practice Act2003 (WA) are applicable.
10 Some part of that submission is occupied with the proposition that the plaintiff's minute is defective, in that it does not indicate the grounds upon which the plaintiff seeks to rely, and that there is no affidavit evidence supporting the contention of unusual difficulty or complexity, or
(Page 8)
- even indicating that the scale limit has been exceeded. Astonishingly, my own earlier decision in Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58(S2) was cited in Ms Coulson's written submissions in that context. I say "astonishingly" because a considerable portion of that earlier decision was devoted to explaining that it is not necessary to waste time and incur costs in preparing long (or indeed any) affidavits explaining to a trial Judge what she already knows as a result of having been present for the trial. It is where a trial Judge may not be aware of what had led to unusual costs that evidence and explanation is necessary.
11 In this case I was not only the trial Judge, but I managed this matter since its entry into the long causes list in, I think, 2001. I have sat through numerous interlocutory applications in which counsel for the defendants referred to the unusual complexity of the matter and of the difficulties occasioned to his instructing solicitors as a result. I have dealt with the novel pleading and evidentiary points and novel abuse of process arguments. I have had at trial numerous charts, spreadsheets, written submissions and other documents to assist me to understand the intricate and interlinked affairs of the six defendants. My reasons delivered on 29 April refer to the complex cross-referencing of thousands of documents, and their cross-referencing with the evidence given at the criminal trial, which was necessary for the plaintiff to make out its case. I am perfectly satisfied that this matter was of unusual complexity and I have no doubt that the prescribed scale items must have been exceeded, and in respect of at least some items very considerably exceeded.
12 It is also my view that the matter was difficult. To an extent it did not have to be, but the conduct of the trial by the defendants made it so. There was a blanket refusal to admit even obvious facts. For example, it was not until during the closing stages of the trial that counsel for the defendants conceded that those whose names appeared in the relevant schedules were indeed natural persons. There were unsuccessful appeals by the defendants from interlocutory rulings. Constitutional arguments were raised.
13 Further, there were dramatic shifts in the defendants' case and in the defendants' running of their case. For example, shortly prior to trial the defence was amended to allege that all of those persons, if they were natural persons, in the schedules were engaged by Sergio Caratti. That allegation was not relied on at trial, although I do not actually recall it being expressly abandoned. Lengthy witness statements were produced from two proposed witnesses for the defendants and Mr Sutherland was cross-examined on them at length. Those witnesses did not give evidence.
(Page 9)
- The defendants insisted until shortly prior to trial that the plaintiff call a significant number of witnesses and, just before trial and at trial, then agreed that their evidence could be admitted by consent. Not long before the trial two of the defendants had a liquidator appointed, apparently at the instigation of those controlling the defendants.
14 The list I have recited is not exhaustive. It does, I think, reveal, however, that the progress of this matter went beyond the evolutionary change and development that any action will naturally undergo as trial approaches and during trial, and involved more than mere issues of fact, however complex. For that reason, the plaintiff could not rely upon a coherent and consistent "case theory" on the part of the defendants but had to prepare for any eventuality.
15 The matter was of unusual difficulty. I have to say that at times it appeared to me during the course of the management of this case that the plaintiff's obviously meticulous preparation for trial was obsessive and over-meticulous, but with hindsight I do not now think that it was.
16 Because of the difficulty and complexity of the matter, I would increase the scale items as requested by the plaintiff by removing the limits. It will, of course, be up to the taxing officer to determine how far in excess of scale costs have properly been incurred.
17 Because of the reasons outlined above and because of the importance of the action to the plaintiff involving, as it does, a significant amount of money, I would certify for two counsel.
18 I turn then to the question of whether costs should be apportioned between the defendants and I can deal with that, I hope, relatively briefly. These matters were consolidated at an early stage pursuant to O 83 r 1. There was a consolidated defence in relation to all defendants but Maddeliene Caratti and her defence differed from the others only in that I permitted her to raise an issue which the other defendants were not permitted to raise. For those defendants not then in liquidation the same issues were run at trial by counsel without differentiation, save that again in relation to Maddeliene Caratti and Venetian Nominees additional matters were raised.
19 Order 66 r 2(e) provides that if there are several defendants and the plaintiff has a verdict against them, each of them shall be liable to the plaintiff for the entire costs although they defended separately (defending separately did not occur in this case). There is a proviso allowing the Court from time to time to make an order or orders as between several
(Page 10)
- defendants apportioning the liability as between themselves and the recovery of contribution.
20 In my view, that ordinary principle of joint and several liability provided by O 66 r 2(e) is applicable to this consolidated action. There is one verdict - that is, one judgment - although different amounts are specified in relation to the different defendants.
21 It is suggested that I should depart from the joint and several liability rule because either: the evidence relating to these two defendants occupied significantly less time; or the quantum ordered was smaller in relation to them. It seems to me the latter is not an adequate reason for departure.
22 As to the former, I have referred in my reasons delivered 29 April to the interlinking of the evidence in relation to all of those defendants and see no need to repeat all that I have said in those written reasons. The evidence in relation to these defendants was more than merely the evidence which directly related to their employees. It encompassed a significant body of other evidence. I should add that there were, in addition to the joint and interlinked issues, additional issues raised by these two defendants which the other defendants did not raise, they being the imprest account argument in relation to both defendants and, in relation to Maddeliene Caratti, an issue about whether there was a partnership and an abuse of process argument. The role of these defendants in the trial was therefore a substantial one and, in my view, the joint and several liability rule should apply.
23 I should add that it was suggested in the oral submissions this morning that it would be unjust for these two defendants to be at risk of the whole of the costs, given that a number of defendants are in liquidation and may be unable to meet any order for costs. As to that, I refer to Trade Practices Commission v Nicholas Enterprises Pty Ltd (1979) 28 ALR 201, a decision of Fisher J of the Federal Court, followed by Templeman J in Eastland Technology Australia Pty Ltd v Whisson [2002] WASC 150(S). In relation to a very similar submission in a complex matter, Fisher J said, having researched the issue and found little authority on the point, that the plaintiff as the successful party is prima facie entitled by way of indemnity to its costs of the action, and that if one of the unsuccessful defendants is unable or unwilling to meet its share of the obligation, the misfortune should be that of its "partner in crime" and not of the plaintiff. It seems to me that that is an appropriate principle to follow.
(Page 11)
24 I deal next with the alleged settlement offer. On 3 September 2004 these defendants wrote to the Australian Taxation Office; not to the Australian Government Solicitor, the solicitors for the plaintiff, nor even to the Perth office, but to the Albury-Wodonga office where account payments are settled. They wrote in the following terms. In relation to Venetian Nominees, the letter read:
"Dear sir. We attach our cheque for $110,000 in full and final settlement of our debt and all costs in this matter."
25 That letter, although it refers to "this matter", contains no reference to the action, or other reference. It has been written on Venetian Nominees' letterhead with Venetian Nominees' addresses. A similar letter was written by Maddeliene Caratti. The letter simply bears her name and the Redcliffe office address and reads:
"Dear sir. I attach a cheque for $45,000 in full and final settlement of my debt and all costs in this matter."
26 Again, although there is a reference to "this matter", there is nothing identifying the matter or alluding to the fact that there is an action on foot.
27 The amounts which were paid were the amounts which were said at about that time to be the amounts which the Australian Taxation Office had advised these defendants were owing - there seems to be no issue about that - rounded up to the nearest $1000. If one were to regard it as an offer of settlement, there would be about $500 in respect of each defendant over the amount of the debt which might be thought to be referable to costs.
28 On that very shaky foundation in the first set of written submissions the following propositions are built: that it was an offer of settlement; that the offer was accepted; or that, if it was not accepted, the failure to accept was unreasonable and the defendants should have their costs after that date. It is that last proposition which is really reinforced by the oral submissions this morning.
29 So far from being clearly an offer, it was at the time at which that correspondence came to light baffling to the plaintiff and to me what was intended by the payment. Before trial the plaintiff moved for judgment on the basis that the payments and accompanying letters constituted an admission of liability, a submission which was renewed on the first day of the trial. There was argument about that and in reasons delivered on 4 November last year I held that I was not prepared to find that there had
(Page 12)
- been any admissions. I did not find there had been an offer to settle, although that was, as I noted, one possible interpretation. Counsel for the defendants at the time had then, of course, the opportunity to say that if it was not clear that there was an offer to settle, his instructions were that it was and that such an offer was reiterated. He did not. I still do not know what to make of that payment and I would not be prepared to make any positive finding about what it was meant to be. However, payment was made.
30 Even if there had been an offer to settle in those terms, however, in my view it would be far from unreasonable for the plaintiff to reject an offer which gave it but $500 in costs in respect of each defendant at that time. The plaintiff was, of course, wholly successful at trial against all defendants and I can now, having heard the evidence, say that it seems to me that on the facts that success was always inevitable. The plaintiff's costs by September of last year would have been in the hundreds of thousands of dollars and perhaps even in the millions. It is, it seems to me, preposterous to suggest that the plaintiff should have settled for the sums offered in respect of these defendants as to costs.
31 Finally, in supplementary written submissions for which I gave no leave, but which I nevertheless consider, the defendants raised the question of the costs reserved in respect of the plaintiff's application during the course of the trial to amend the statement of claim, which application was withdrawn. That application was precipitated by the defendants' late amendment of their defence to raise the issue of Sergio Caratti's role. It was withdrawn because I foreshadowed that it seemed to me that it might lead to some adjournment of the trial and not because of any ruling on my part that it lacked merit. In those circumstances, it seems to me that it is appropriate not to regard it as a discrete event and to allow the plaintiff to have the costs of that argument and that application.
32 I am also asked to make a direction to the taxing officer in relation to the preparation which must necessarily have been undertaken in relation to the criminal trial. I do not think it is necessary to make a direction. I would observe that, of course, the plaintiff is entitled to its costs of this trial and not of any previous trials and I am sure the taxing officer will be astute to ensure that there is no double counting of earlier preparation. I would also expect, of course, the taxing officer to take into account the observations I have made this morning about the difficulty and complexity of the trial and the manner in which it was run.
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