Eastland Technology Australia Pty Ltd v Whisson
[2002] WASC 69
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: EASTLAND TECHNOLOGY AUSTRALIA PTY LTD -v- WHISSON & ANOR [2002] WASC 69
CORAM: MASTER BREDMEYER
HEARD: 15 MARCH 2002
DELIVERED : 5 APRIL 2002
FILE NO/S: COR 18 of 2002
BETWEEN: EASTLAND TECHNOLOGY AUSTRALIA PTY LTD (ACN 059 479 391)
Applicant
AND
MAXWELL EDMUND WHISSON
First RespondentDEAN BRIAN PRESTIDGE
Second Respondent
Catchwords:
Corporations - Statutory demand - Costs
Legislation:
Nil
Result:
Costs ordered on a party/party basis
No certificate for Queen's Counsel
Category: B
Representation:
Counsel:
Applicant: Mr P I Jooste QC & Mr E J Picton-Warlow
First Respondent : Mr B W Ashdown
Second Respondent : Mr B W Ashdown
Solicitors:
Applicant: John Picton-Warlow
First Respondent : Williams & Co
Second Respondent : Williams & Co
Case(s) referred to in judgment(s):
Buddies Liquor Pty Ltd v Wah Lai Investment (Australia) Pty Ltd [2001] NSWSC 337
Goldspar Australia Pty Ltd v Kwa Design Group Pty Ltd (1999) 17 ACLC 456
Polaroid Australia Pty Ltd v Minicomp Pty Ltd (1998) 16 ACLC 511
Case(s) also cited:
B&M Quality Constructions Pty Ltd v Buyrite Steel Supplies Pty Ltd (1995) 13 ACLC 88
Carb Royale Pty Ltd v Tonkin [2000] VSC 399
Cullimore v Lyme Regis Corporation [1962] 1 QB 718
D&S Group of Companies Pty Ltd v O'Connor Investments Pty Ltd 91997) 15 ACLC 1794
David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265
Eden Bay Pty Ltd v Bennett and Co (1997) 15 ACLC 1634
Four Seasons Constructions Pty Ltd v Eastern Metropolitan Regional Council [2000] WASC 277
Graywinter Properties Pty Ltd v Gas and Fuel Superannuation Fund (1996) 14 ACLC 1703
Hassle v Commissioner of Patents (1987) 9 IPR 565
Missay Pty Ltd v Seventh Cameo Nominees Pty Ltd [2000] VSC 397
Portfield Enterprises Pty Ltd v Galvin Engineering Pty Ltd [1999] WASC 72
Robowash Pty Ltd v Robowash Finance Pty Ltd [2000] WASCA 409
Turner Equity Pty Ltd v Melvista Park Pty Ltd, unreported; SCt of WA; Library No 960033; 18 January 1996
Woodward v Sarsons [1875] LR 10 CP 733
MASTER BREDMEYER: This is a reserved decision on costs. On 27 February 2002, I heard the applicant's application to set aside a statutory demand. The demand issued by the respondents upon the applicant was for $623,965.02. It issued on 21 December 2001.
After hearing argument, I reserved my decision. I gave my decision on 15 March 2002 and ordered that the statutory demand be set aside, as I considered that the sums claimed in it were genuinely disputed. The successful applicant has asked for indemnity costs and a certificate for senior counsel.
A special case needs to be made out for indemnity costs. I have referred to Polaroid Australia Pty Ltd v Minicomp Pty Ltd (1998) 16 ACLC 511, Goldspar Australia Pty Ltd v Kwa Design Group Pty Ltd (1999) 17 ACLC 456 and Buddies Liquor Pty Ltd v Wah Lai Investment (Australia) Pty Ltd [2001] NSWSC 337. These three cases discuss when indemnity costs might be ordered on the setting‑aside of a statutory demand. None of them actually ordered indemnity costs. The applicant said that this demand bordered on an abuse of process. The applicant said that the respondents knew very well that the sums mentioned in the demand were genuinely in dispute because they are the subject of another action, COR 347 of 1999 which is scheduled for a 10‑day trial before a Judge of this Court beginning on 4 April 2002. The applicant said that this demand which issued in December 2001 was a pre‑emptive strike. As seen, it was for a very large sum and, if successful, would have thwarted the applicant, who is the plaintiff in the other action, from proceeding with the other action. The applicant also said that this demand came out of the blue, as it were; that the respondents had made no previous demands for the ETA licence fees.
The applicant has had a forensic win. It has succeeded in having the statutory demand set aside and I consider it should get its costs on the "costs follow the event" rule. However, I do not consider that the applicant has made out a special case for indemnity costs. The respondents have an answer as to why this demand was not preceded by letters of demand or invoices. The reason is that it was not until late 2001, when a company related to the applicant issued a prospectus, that the applicant knew what sums ETA had made on its ETA products. So, it was only then that that respondents had the information necessary to calculate the licence fees said to be due to them. Secondly, I do not consider that the respondents' argument was devoid of merit. On the contrary, I had quite some difficulty initially appreciating the applicant's argument. An initial reading of cl 3 of the licensing agreement of January 1999, as varied by the variation agreement of June 1999, gives the impression that the applicant is required to pay to the respondents licence fees of 10 per cent on the ETA products and licence fees of 15 per cent on the Di‑Med products. It is only after a careful reading of the whole agreement, in particular cl 2 and the opening words of cl 3, that I appreciated that this agreement did not licence the ETA products to the plaintiff. It only licensed the Di‑Med products to the plaintiff. As I mentioned, in my reasons, the reference to "licence fee" of 10 per cent in relation to the ETA products, is misleading. It would have been clearer if the clause had read "a fee equal to 10 per cent of all upfront fees … received from any licence, sub‑licence or assignment of any of the ETA products".
Other factors which I think deprive the applicant of indemnity costs are that it did not prepare an outline of submissions. Had it done that, I suppose there was a possibility (albeit slight) that the respondents may have conceded the application. Those submissions would have given the respondent prior notice of the applicant's construction argument. Also, the case took about three hours to argue. I did not keep a precise note of the time. There was no reference on the applicant's part to case law. The argument turned on the explanation and construction of documents. In the circumstances, I consider costs should be awarded on a party party basis.
The applicant applied for a certificate for senior counsel. I do not propose to grant that, although I appreciated the skilled argument given by senior counsel, and I can see why the applicant would want to brief senior counsel. Over $600,000 was at stake and a loss would probably have thwarted the company's major trial listed for hearing on 4 April. Also, Mr Jooste QC has been retained to conduct that trial on behalf of the applicant. I note also that the respondents have engaged senior counsel for that trial. Nevertheless, the argument for the applicant did not involve reference to case law. It involved reference to documents and the construction of agreements, but the level of difficulty was not beyond that of a competent solicitor or junior. Also, the level of fees allowed for this kind of application is $15,000. I refer there to item 21 of the costs scale: "Originating motion, originating summons or originating application". That fee involves two days' preparation, a one‑day hearing and a getting‑up of 30 hours by a senior partner. I am not fixing the fee. I will leave that to the agreement of the parties, or to the Taxing Master. But I consider a maximum of $15,000 allowable under that item is sufficient to recompense the applicant for the work done by its solicitors and counsel in this application. I note also that its affidavit in support was meagre and I made some criticisms of that in my judgment on the merits.
I will order the respondent to pay the applicant's costs of the application, including any reserved costs on a party and party basis, to be taxed if not agreed.
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