Fagan v Morien
[2008] WASC 54 (S)
•15 APRIL 2008
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA IN CHAMBERS |
| CITATION | : | FAGAN -v- MORIEN [2008] WASC 54 (S) |
| CORAM | : TEMPLEMAN J | ||
| HEARD |
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| DELIVERED |
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| SUPPLEMENTARY | |||
| DECISION |
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| FILE NO/S |
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| BETWEEN | : TIMOTHY MICHAEL FAGAN |
Plaintiff
AND
NEIL EDOUARD MORIEN
First Defendant
BOAB FINANCE ACCOUNTING PTY LTD
(ACN 088 316 358)
Second Defendant
RORTES MANAGEMENT INVESTMENTS PTY
LTD (ACN 087 349 228)Third Defendant
Catchwords:
Costs - Application to set aside judgment in default of defence and application to cross-examine on supporting affidavit - Unexceptional outcome on application to set aside judgment - Voluminous material on application to cross-examine - Applications inextricably linked - Whether award costs before trial - Whether indemnity or special costs order
[2008] WASC 54 (S)
Legislation:
Nil
Result:
Costs reserved
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr A Metaxas |
| First Defendant | : | Mr P D C Robinson |
| Second Defendant | : | No appearance |
| Third Defendant | : | Mr P D C Robinson |
Solicitors:
| Plaintiff | : | Metaxas & Hager |
| First Defendant | : | Williams & Hughes |
| Second Defendant | : | No appearance |
| Third Defendant | : | Williams & Hughes |
Case(s) referred to in judgment(s):
Fagan v Morien [2008] WASC 54
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd
(1988) 81 ALR 397
Heartlink Ltd v Jones [2007] WASC 254 (S)
SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26 (S2)
| TEMPLEMAN J | [2008] WASC 54 (S) |
TEMPLEMAN J: In a judgment delivered on 15 April 2008, I held that judgment entered by the plaintiff in default of defence should be set aside on the ground of irregularity: Fagan v Morien [2008] WASC 54. I held further that the plaintiff should not be given leave to cross-examine the defendant on an affidavit he had filed in support of his application to set the judgment aside: [77].
2 The parties have since filed outlines of submissions in relation to
costs and have requested me to deal with that issue on the papers. The defendant's responsive submissions were served one day later than directed. I will, however, receive them - despite objection from the plaintiff. No prejudice results from the slight delay.
3 The plaintiff accepts that usually, a plaintiff will be ordered to pay
the defendant's costs of setting aside a judgment obtained irregularly. However, in this case, the plaintiff submits that costs should be reserved to the trial judge because the defence is 'shadowy and inconsistent with contemporaneous documents': and because there is affidavit evidence which is said to contradict at least part of the defence.
4 In my view, these considerations are irrelevant to the costs of the
application to set aside the judgment. That is because, as I said in my reasons, I considered that the irregularity was very significant and resulted in a situation which was, for practical purposes, unworkable: [76].
That being so, the defendant was entitled as of right to have the judgment set aside and entitled to defend the claim, as he wished.
6 The issue then, is whether costs should be taxed under the scale or
whether, as the defendant contends, he should be awarded costs on an
indemnity basis or on the basis of a special costs order.7 The defendant relies on a letter dated 6 November 2007 from his
solicitors to the plaintiff's solicitors in which they expressed the view that the judgment was irregular and that the defendant was entitled to have it set aside. The defendant's solicitors sought the plaintiff's consent to this course. They said:
If your client does not consent and it is necessary for our client to apply to the Court and the application is successful (and in our view it will be) we will refer to this facsimile in support of an application for indemnity costs.
8 This is clearly not a Calderbank letter. It is an expression of the
defendant's opinion which clearly, the plaintiff was not obliged to accept.
The letter therefore provides no basis for awarding indemnity costs.
| TEMPLEMAN J | [2008] WASC 54 (S) |
The defendant submits alternatively, that the application to set aside
the judgment:
… was necessitated and continued almost solely by reason of the plaintiff maintaining a position that was untenable in circumstances where the plaintiff, properly advised, should have known his position had no real prospects of success, or was advanced with wilful disregard for known facts or clearly established law.
That submission is derived from the decision in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397, 401. As Roberts-Smith J held in SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26 (S2) [50]:
The type of case referred to in Fountain is therefore only one example of cases in which indemnity costs may be awarded. It applies not only to a plaintiff but to a party who persists in the defence to a case which it knows, or ought to have known if it had competent legal advice, to be hopeless, and so causes unnecessary expense and cost to the plaintiff (Penfold v Higgins [2003] NTSC 89 at [6]; BC200304556).
10 In the present case, the plaintiff contended, until the commencement
of the hearing, that the judgment had been obtained regularly. That was clearly an untenable position. However, the plaintiff persisted in his alternative contention that the irregularity had been cured by an order of a case management registrar.
11 I held that that argument was equally untenable. However, many
arguments are rejected on that basis, without the proponent being visited with an indemnity costs order. In the present case, the circumstances were unusual: and there was no 'clearly established law' which could be applied.
12 I do not think it appropriate, therefore, to make an order for
indemnity costs of the application to set aside the judgment. In any event, there was very little that could be said, either for or against the argument that the registrar's order had cured the irregularity. In other words, untenable though the argument might have been, an order for the defendant's costs to be taxed on the scale (or fixed in accordance with Practice Direction No 4 of 2007) would be likely to have provided an adequate degree of reimbursement for the defendant.
13 In my view, the real problem in the present case was the plaintiff's
application to cross-examine the defendant on his affidavit sworn in support of his application to set aside the default judgment. That was a
| TEMPLEMAN J | [2008] WASC 54 (S) |
relatively short affidavit in which the defendant explained why he had not
filed a defence and summarised the defence which he wished to file.14 In response, the plaintiff filed an affidavit of three pages to which he
exhibited some 100 pages of correspondence and other documents, including an affidavit filed by the defendant in District Court proceedings some two years previously.
15 In response to that affidavit, the defendant filed an affidavit of five
pages to which he annexed over 120 pages of timesheets and inter-solicitor correspondence. This affidavit was served on the plaintiff's solicitors at about midday on the day before the hearing of the application to set aside the judgment and the application to cross-examine the defendant on his affidavit.
16 Counsel for the plaintiff accepted at the hearing that the discretion to
permit cross-examination on affidavits filed in interlocutory proceedings was 'rarely exercised' (ts 28). However, the defendant could not exclude the possibility that the discretion might be exercised in the present case. That being so, it was prudent, and therefore reasonable, for the defendant to consider in detail the materials relied on by the plaintiff in his affidavit of 15 February 2008 and to respond to it. I do not think it relevant for present purposes that his responsive affidavit was filed only the day before the hearing and that the plaintiff therefore had no proper opportunity to deal with it. He could have had an adjournment, at the defendant's cost, in order to do so.
17 The defendant claims that as a result of the need to deal with these
interlocutory exchanges, he has incurred substantial costs, far in excess of
those recoverable on the relevant scale.18 In these circumstances, the defendant seeks a special costs order
pursuant to s 215(2) of the Legal Practice Act 2003 (WA). That provision permits a judicial officer to order the payment of costs above the scale if the scale is inadequate 'because of the unusual difficulty, complexity or importance of the matter'.
19 In the present case, it may be said that the work carried out by the
defendant's solicitors in preparing for the application to cross-examine the defendant on his affidavit was much more difficult than would ordinarily be expected in an application of that kind, and therefore involved 'unusual difficulty': see generally, Heartlink Ltd v Jones [2007] WASC 254 (S).
| TEMPLEMAN J | [2008] WASC 54 (S) |
20 However, even if that was so, I think it would be unjust to require the
plaintiff to pay the costs of the application if it transpired that the evidence on which the defendant sought to rely was (as the plaintiff submits) unsatisfactory in some way.
21 If that was the case, it would not become apparent until the trial.
Therefore, although I can see merit in the argument that this application stands alone and that the associated costs issue should be resolved now, I think the fairer course is to reserve the question to the trial judge.
22 Because the application to set aside the judgment is inextricably
linked with the application to cross-examine the defendant on his affidavit, I consider that the costs of both applications should be dealt with at the same stage.
The order will therefore be that the costs of both applications will be reserved. The action should now be programmed for mediation and trial.
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