Frigger v Clavey Legal Pty Ltd [No 3]
[2015] WADC 21 (S)
•12 MARCH 2015
FRIGGER -v- CLAVEY LEGAL PTY LTD [No 3] [2015] WADC 21 (S)
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WADC 21 (S) | |
| Case No: | CIV:1221/2011 | ON THE PAPERS | |
| Coram: | HERRON DCJ | 12/03/15 | |
| PERTH | 19/10/15 | ||
| 21 | Judgment Part: | 1 of 1 | |
| Result: | Order for indemnity costs made | ||
| PDF Version |
| Parties: | ANGELA FRIGGER HARTMUT FRIGGER CLAVEY LEGAL PTY LTD |
Catchwords: | Costs Indemnity costs Unreasonable and improper conduct of litigation Calderbank offer |
Legislation: | Corporations Act 2001 (Cth) District Court of Western Australia Act 1969 (WA) Legal Profession Act 2008 (WA) Supreme Court Act 1935 (WA) |
Case References: | Atwell v Roberts [2013] WASCA 37 (S) Calderbank v Calderbank [1975] 3 All ER 333 Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S) Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Flotilla Nominees Pty Ltd v Western Australia Land Authority (2004) 28 WAR 95; [2003] WASC 122 (S) Ford Motor Company of Australia Ltd v Lo Presti (2010) 41 WAR 1; [2009] WASCA 155 Frigger v Clavey Legal Pty Ltd [No 3] [2015] WADC 21 Frigger v Professional Services of Australia Pty Ltd [No 3] [2014] WASCA 69 Glew v Frank Jasper Pty Ltd [2008] WASCA 186 Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2] (2005) 13 VR 435 Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASA 254 (S) Town of Port Hedland v Hodder [No 2] [2012] WASCA 212 (S) Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 19 OCTOBER 2015 FILE NO/S : CIV 1221 of 2011 BETWEEN : ANGELA FRIGGER
- First Plaintiff
HARTMUT FRIGGER
Second Plaintiff
AND
CLAVEY LEGAL PTY LTD
Defendant
Catchwords:
Costs - Indemnity costs - Unreasonable and improper conduct of litigation - Calderbank offer
Legislation:
Corporations Act 2001 (Cth)
District Court of Western Australia Act 1969 (WA)
Legal Profession Act 2008 (WA)
Supreme Court Act 1935 (WA)
Result:
Order for indemnity costs made
Representation:
Counsel:
First Plaintiff : On the papers
Second Plaintiff : On the papers
Defendant : On the papers
Solicitors:
First Plaintiff : Not applicable
Second Plaintiff : Not applicable
Defendant : MDS Legal
Case(s) referred to in judgment(s):
Atwell v Roberts [2013] WASCA 37 (S)
Calderbank v Calderbank [1975] 3 All ER 333
Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S)
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Flotilla Nominees Pty Ltd v Western Australia Land Authority (2004) 28 WAR 95; [2003] WASC 122 (S)
Ford Motor Company of Australia Ltd v Lo Presti (2010) 41 WAR 1; [2009] WASCA 155
Frigger v Clavey Legal Pty Ltd [No 3] [2015] WADC 21
Frigger v Professional Services of Australia Pty Ltd [No 3] [2014] WASCA 69
Glew v Frank Jasper Pty Ltd [2008] WASCA 186
Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2] (2005) 13 VR 435
Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASA 254 (S)
Town of Port Hedland v Hodder [No 2] [2012] WASCA 212 (S)
Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190
- HERRON DCJ:
Introduction
1 On 12 March 2015 I delivered reasons for decision Frigger v Clavey Legal Pty Ltd [No 3] [2015] WADC 21 dismissing the plaintiffs' action and ordering that:
1. The plaintiffs' action be dismissed and there be judgment for the defendant.
2. The plaintiffs pay the defendant's costs including any reserved costs to be taxed.
3. The defendant have liberty to apply within 21 days for any special costs order.
2 Pursuant to the order for liberty to apply for special costs orders, on 2 April 2015 the defendant filed a minute of proposed orders for indemnity costs or, alternatively, special costs orders in the following terms:
1. In substitution for order 2 made by his Honour Judge Herron on 12 March 2015, the plaintiffs pay all the costs incurred by the defendant in the action except insofar as they are of an unreasonable amount or have been unreasonably incurred, so that subject to the above exceptions the defendant is completely indemnified by the plaintiffs for its costs.
2. Alternatively, from 14 June 2013, the plaintiffs pay all the costs incurred by the defendant in the action except insofar as they are of an unreasonable amount or have been unreasonably incurred, so that subject to the above exceptions the defendant is completely indemnified by the plaintiffs for its costs.
3. Alternatively:
(1) the plaintiffs pay the defendant's costs of the transcript incurred by the defendant during the action;
(2) the defendant's costs under item 17 and 20(b) and (d) be taxed without reference to the limits fixed under the Supreme Court scale of costs.
4 For the reasons that follow I have determined the defendant is entitled to an order for indemnity costs.
Background
5 The plaintiffs commenced this action by writ filed on 12 April 2011.
6 In November 2012 the trial in the action was listed for five days commencing on 17 June 2013. On 12 June 2013 the trial dates were vacated on the application of the plaintiffs by her Honour Wager DCJ who also ordered that the plaintiffs pay the defendant's costs thrown away by the adjournment of the trial to be taxed if not agreed in any event.
7 In September 2013 the trial was re-listed for five days commencing on 31 March 2014. On 28 March 2014 his Honour Derrick DCJ vacated the trial dates and ordered the plaintiffs pay the defendant's costs of the trial thrown away by the adjournment to be taxed and paid forthwith.
8 The further re-listed trial proceeded before me on 15 - 19 September 2014, 13 - 17 October and 22 - 23 October 2014.
9 The defendant seeks indemnity costs orders on the basis of the plaintiffs' improper conduct, or alternatively on the basis of the plaintiffs' unreasonable refusal of the defendant's Calderbank offer.
10 Alternatively, if I am not prepared to make an order for indemnity costs, the defendant seeks a special costs order.
Jurisdiction to award costs
11 Pursuant to s 64(3) of the District Court of Western Australia Act 1969 (WA) and s 37(1) of the Supreme Court Act 1935 (WA), a judge of the District Court has a broad discretion to determine the costs to be paid by the plaintiffs to the defendant.
12 In Glew v Frank Jasper Pty Ltd [2008] WASCA 186 [14] – [16] the Court of Appeal said:
The usual costs order is one for party and party costs. An order for indemnity costs will only be made if there is some special or unusual feature in the case that justified departure from the ordinary practice. The court has jurisdiction to make an indemnity costs order whenever justice requires such an order: see Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190, 191.
Most indemnity costs orders involve circumstances where there has been some element of improper or at least unreasonable conduct on the part of the parties or their legal advisers. See the examples given in Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122(S); (2003) 28 WAR 95 [9]. If there has been improper or unreasonable conduct in the conduct of litigation, then an indemnity costs order may be made as a mark of disapproval on the part of the court about that conduct.
However, speaking generally, an indemnity costs order will not be made if the costs which would be recovered by an order for party and party costs or a special costs order would result in the recovery of the successful party's legal costs.
13 In Flotilla Nominees Pty Ltd v Western Australia Land Authority (2004) 28 WAR 95; [2003] WASC 122 (S) [8] – [9] Pullin J said:
The usual costs order is one for party and party costs. An order for indemnity costs will only be made if there is some special or unusual feature in the case to justify a departure from the ordinary practice. In effect, the court has jurisdiction to make an indemnity costs order whenever justice requires such an order. Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190 at 191; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233. When the justice of the case does require such an order, then the court will have a discretion as to whether the order should be made.
Many examples can be found where an indemnity costs order has been made. Suffice it to say that most of these involve some element of improper, or at least unreasonable, conduct on the part of the parties or their legal advisors in relation to the case. See the examples given by Sheppard J in Colgate-Palmolive v Cussons (supra)at page 233 and the circumstances referred to in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 and in Unioil's case. Thus, the making of allegations of fraud knowing them to be false, or the commencement of proceedings for some ulterior motive, or in wilful disregard of known facts or the established law, or the making of allegations which ought never to have been made, or the undue prolongation of a case on groundless contentions, and even an unreasonable refusal to accept an offer of compromise, may lead to indemnity costs orders. See Colgate-Palmolive v Cussons (supra) at 233. The creation of false issues by tactical denials or failures to admit the facts may, in the circumstances of particular cases, lead to such an order: Unioil's case. An action commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success, may lead to such an order because such action might be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts or the clearly established law. See Fountain Selected Meats (supra).
14 Further, [25] he said:
Having said all of that, however, there is still a place for indemnity costs orders. It will be appropriate in cases where there has been improper or unreasonable conduct on the part of a party or his legal advisors. An order for an indemnity costs order is a mark of disapproval on the part of the court about the improper or unreasonable conduct of litigation, even though there should not be much difference in the costs recovered under such an order compared with recovery under a properly formulated special costs order. If the conditions warrant an indemnity costs order, it is likely that the Judge making the order will be more inclined to allow an increase in the hourly rates or an increase in the limits. An order detailing those increases should, in my opinion, be made even where indemnity costs orders are made.
- See also Ford Motor Company of Australia Ltd v Lo Presti (2010) 41 WAR 1; [2009] WASCA 155 [63] Frigger v Professional Services of Australia Pty Ltd [No 3] [2014] WASCA 69.
15 The categories in which the court can exercise the discretion to make an order for indemnity costs order are not closed: Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190, 191.
16 The defendant submits an order for indemnity costs in its favour ought be made because of the plaintiffs' improper conduct on the following grounds:
(a) without reasonable grounds, the plaintiffs alleged fraud on the defendant's part until they abandoned the claim on the second day of the trial ([20] of my reasons);
(b) the plaintiffs' approach to discovery was manifestly inadequate and unfair to the defendant ([139] of my reasons);
(c) Mrs Frigger gave untruthful, misleading and or intentionally false evidence ([101], [138], [143], [148], [169] of my reasons); and
(d) as a result of the plaintiffs' allegation of fraud, the plaintiffs' approach to discovery, and Mrs Frigger's conduct in giving evidence, the action was unduly prolonged.
17 In their amended statement of claim filed 7 October 2011, the plaintiffs pleaded that the defendant falsely created evidence to support a defence of loss of trust and confidence as its ground for termination of the costs agreement with the plaintiffs; in effect, it was an allegation of an attempt to pervert the course of justice against the defendant. It was a particularly serious allegation of fraud. This pleading was maintained in some form or another through to the eventual trial of the action.
18 By a minute of proposed re-amended substituted statement of claim dated 25 March 2014, prepared by the plaintiffs' solicitors Peter J Griffin & Co and settled by Mr John Brooksby as counsel, it was proposed that the allegation of fraud be abandoned. In its written submissions the defendant submits it can be inferred that before the minute was finalised and settled by counsel, counsel and the plaintiffs' solicitors considered the evidentiary basis for the fraud allegation, advised the plaintiffs of the basis upon which an allegation of fraud can be made and the requirements for the making of an allegation of fraud, advised the plaintiffs there was no proper basis upon which the allegation could be made and that it ought be abandoned and took the plaintiffs' instructions in that regard. The plaintiffs in their detailed and lengthy written submissions filed in response to the defendant's written submissions do not dispute or challenge the factual basis upon which I am asked to draw the inference, nor do they submit that the inference cannot be reasonably drawn.
19 I accept the defendant's submission. In my view not only is it, on the balance of probabilities, a reasonable inference, it is the only inference that can be reasonably drawn. In summary, I find the plaintiffs were advised by counsel there was no proper basis upon which an allegation of fraud could be made and that it ought be abandoned. Despite that advice the plaintiffs persisted with an allegation of fraud.
20 Ultimately, although Peter J Griffin & Co remained on the court record as the plaintiffs' solicitors, Mr Brooksby did not remain as counsel and when the trial proceeded before me other counsel appeared on behalf of the plaintiffs.
21 As I explained in my reasons [17] – [20] when the trial before me commenced on 15 September 2014, counsel who then appeared on behalf of the plaintiffs applied to filed a re-amended substituted statement of claim in accordance with a minute dated 1 September 2014 signed by the plaintiffs. That minute was not the same as the minute of proposed re-amended substituted statement of claim dated 25 March 2014 settled by counsel. The minute of 1 September 2014 maintained an allegation of fraud. For the reasons I explained I refused the application to file a re-amended substituted statement of claim in accordance with the minute dated 1 September 2014. However, during his opening address counsel for the plaintiffs abandoned any allegation of fraud against the defendant and I ordered par 13 of the re-amended substituted statement of claim dated 13 December 2013 be deleted. The allegation of fraud was only abandoned after senior counsel for the defendant made submissions regarding the adequacy of the pleading and how the case had been opened on behalf of the plaintiffs.
22 In those circumstances the defendant submits that the plaintiffs made the allegation of fraud without any, or any sufficient, supporting evidence and maintained the allegation when they knew or ought to have known there was no reasonably arguable basis for it and in circumstances where no evidence was ever adduced in support of the application. I accept that submission.
23 In their written submissions filed in opposition to the defendant's application for indemnity costs on the basis of the plaintiffs' improper or unreasonable conduct, the plaintiffs, in summary, submit:
1. That the defendant's conduct in relation to the retainer agreement between the parties and in the course of the litigation is conduct calculated to occasion unnecessary litigation or expense or is conduct involving the doing of a wrongful act in the course of the retainer agreement [15] – [17].
2. That the defendant through its legal advisors has unnecessarily prolonged the length of the litigation and the trial and unnecessarily raised issues by:
(a) opposing the filing and exchange of witness statements; and
(b) cross-examined Mrs Frigger on issues irrelevant to the issues in dispute 'for the sole purpose of the gratuitous character assassination of Mrs Frigger' [12], [78], [82(f)], [87].
1. That prior to the trial Ms Zohar and Mr Clavey discussed their oral evidence to ensure it coincided [40].
2. The opposition to the provision of witness statements was for the purpose of the forensic tactics of the defendant to cross-examine Mrs Frigger on irrelevant issues [41].
3. The defendant's witnesses gave false evidence at trial [65].
4. The defendant ambushed the plaintiffs by refusing to file witness statements [68].
5. Had the plaintiffs not been ambushed by the defendant, the plaintiffs would not have withdrawn their fraud allegations [68].
6. The defendant's approach to discovery was a forensic tactic to conceal the false documentary and oral evidence of Mr Clavey and Ms Zohar [73(f)].
7. Evidence was concealed from the plaintiffs until the last day of the trial [75].
8. Mr Clavey perjured himself in his affidavit of 13 April 2010 [79].
9. The allegations of perjury and fraud had been made out against Mr Clavey and Ms Zohar [102].
10. As a result of the defendant's misconduct there ought to be no order for costs [76].
25 Therefore, having, at the commencement of the trial through their counsel, withdrawn the allegation of fraud against the defendant, the plaintiffs renew and elaborate upon the allegation of fraud and now make allegations of perjury.
26 I reject the plaintiffs' submissions. They are without foundation or substance. They are entirely unmeritorious. All that they do is seek to emphasise the plaintiffs' determination to make serious allegations against the defendant (Mr Clavey and Ms Zohar) without any proper basis for such allegations, in circumstances where, in March 2014, they were advised there was no proper basis for making an allegation of fraud and it ought be abandoned, and after the allegation was actually abandoned at trial by counsel for the plaintiffs because, I infer, they were again advised there was no proper basis for the allegation and it must be abandoned. Despite no further evidence being produced or any sensible further basis being advanced to make such serious allegations, the plaintiffs, who are no longer legally represented in this action, persist with the allegations. Those matters underline and, without more, readily make the case for why an order for indemnity costs ought be made, that is, to mark the court's disapproval about the improper and unfounded allegations of fraud and perjury made by the plaintiffs.
27 In such a case, an indemnity costs order is appropriate: Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, 233; Flotilla [9]
28 I am satisfied there was no proper or sufficient basis upon which the allegation of fraud could be made. No evidence was, or has been, produced to support or justify the allegation. Essentially, the only thing relied upon in support of the allegation was Mrs Frigger's unsubstantiated allegation that the defendant's contemporaneous file notes were not prepared when they were purported to be prepared and were created at some later time. It was an allegation entirely devoid of merit and ought not have been made or maintained. Certainly it is an allegation which ought not have been renewed or persisted with. The renewed allegation of fraud and the fresh allegation of perjury are equally lacking in substance and merit.
29 I am satisfied the plaintiffs by maintaining the allegation of fraud against the defendant after receiving legal advice to withdraw the allegation when they were represented by counsel, Mr Brooksby, and then to renew the allegation after they withdrew it at the commencement of the trial, after receiving further legal advice from counsel, constitutes improper and unreasonable conduct on the part of the plaintiffs. I am satisfied that in those circumstances it is appropriate that an order for indemnity costs be made. Subject to what I will shortly explain in relation to the consequences of the defendant's Calderbank offer dated 21 May 2013, I would have been prepared to make an order that the plaintiffs pay the defendant's costs of the action on an indemnity basis from 25 March 2014 to reflect my disapproval of the plaintiffs' improper and unreasonable conduct in persisting with the fraud allegation after receiving legal advice to abandon the allegation.
Inadequate and unfair discovery
30 At [139] of my reasons for decision I conclude for the reasons therein set out that the plaintiffs' approach to discovery was inadequate and unfair to the defendant. The plaintiffs' inadequate approach to discovery persisted up to and throughout the trial.
31 In my reasons for decision I made adverse credibility findings against Mrs Frigger and found she was an unreliable, dishonest and untruthful witness who deliberately falsely represented the financial status of Computer Accounting and Tax Pty Ltd (CAT).
32 I am satisfied that because of the complexity and variety of issues raised by the plaintiffs and because it was necessary for the defendant to address Mrs Frigger's credibility, the length of the trial was unnecessarily prolonged. It was necessary to consider and deal with a large volume of documentation arising from a multitude of court actions in which the plaintiffs and their former company CAT are or were involved and in which affidavits, in particular by Mrs Frigger, were filed annexing documentation giving in many instances inconsistent, contradictory and implausible explanations. It was necessary for the defendant to spend considerable time preparing for the trial and in preparing to cross-examine Mrs Frigger on the evidence given by her in this action and in the multitude of other court actions, to reveal inconsistencies in her evidence and to establish that she was not a credible witness. The defendant submits, which submission I accept, that Mrs Frigger's inadequate approach to discovery, the maintenance of the allegation of fraud until after the commencement of the trial, the need to deal with a large volume of documentation filed in a multitude of court actions and to respond to the multiple issues raised by the plaintiffs, unnecessarily prolonged the duration of the trial and caused the defendant to incur considerable unnecessary costs. The defendant submits that in those circumstances an order for indemnity costs ought be made to mark the court's disapproval of the plaintiffs' wholly improper conduct of this litigation. It is submitted an indemnity costs order should compensate the defendant for all of the costs it has incurred in the action except those costs that are unnecessarily incurred or are of an unreasonable amount.
33 I find the plaintiffs' conduct of the litigation, including their inadequate approach to discovery, was improper and unreasonable and that an order for indemnity costs in favour of the defendant is in such circumstances warranted.
Calderbank offer
34 By letter dated 21 May 2013 the defendant made an offer to the plaintiffs to settle the action for the sum of $35,000, the terms of settlement, if the offer was accepted, to be formalised in a deed of settlement. That letter set out in considerable detail the basis upon which the defendant considered each of the claims brought by the plaintiffs was bound to fail. In relation to the allegation of fraud it was pointed out there was no evidence to support the allegation.
35 Further, the defendant's solicitors submitted to the plaintiffs they would be unable to prove CAT's solvency at trial, meaning that all loss flowing from the winding up of CAT was a loss which would have occurred in any event regardless of the involvement of the defendant. In other words even if the defendant was at fault the plaintiffs did not suffer any loss as a result. The defendant expressed the view that the plaintiffs' claims were bound to fail at trial and the offer was made purely on commercial grounds to avoid the costs and inconvenience of a trial. The offer was expressed to be open for acceptance until 4.00 pm on 14 June 2013, the last working day before the trial was originally due to commence on 17 June 2013.
36 Importantly, the letter concluded in the following terms:
If the Offer is not accepted, then I will refer the Court to this correspondence as to the issue of costs.
This Offer is made pursuant to the principles set out in the decision of Calderbank v Calderbank [1973] 3 All ER 333 and other decisions applying the principles arising from that decision. In accordance with the principles in Calderbank, an application for indemnity costs will be made if the final outcome for you in relation to the claim is not more favourable than that contained in this Offer.
The Offer is open for acceptance until 4.00pm on 14 June 2013. Please communicate the plaintiffs' acceptance in writing by no later than the stipulated time.
As stated above, I reserve the right to refer the Court to this correspondence as to the issue of costs and appropriate indemnity costs.
37 By letter dated 29 May 2013 the plaintiffs rejected that offer and advised they would accept $430,000 in full and final settlement of its claim against the defendant. The plaintiffs maintained, or at least were not prepared to abandon, the allegation of fraud that the defendant had fabricated evidence.
Legal principles of a Calderbank offer
38 There is a distinction between whether a party's conduct in the course of litigation should result in an award of indemnity costs on the one hand and whether a party has unreasonably rejected a Calderbank offer on the other: Ford Motor Company [63].
39 It is well established that, if a party unreasonably rejects a Calderbank offer, the court may consider making an order for indemnity costs in favour of the offeror: Ford Motor Company of Australia Ltd v Lo Presti [16], [23] – [24].
40 All the relevant facts and circumstances must be considered in determining whether the rejection was unreasonable, including:
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree's prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed; and
(f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it: Ford Motor Company of Australia Ltd [17], [19], citing with approval: Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority [No 2] (2005) 13 VR 435 [25].
41 The concept of unreasonableness is not to be qualified by words such as manifestly, plainly, or so unreasonable, which suggest a more stringent test: Ford Motor Company of Australia Ltd [28].
42 Whether rejection was unreasonable is to be assessed at the time the offer was rejected and without the benefit of hindsight. The court should not determine the issue of unreasonableness by adopting the judgment sum ultimately awarded as a yardstick to measure the reasonableness or unreasonableness of rejection of the offer: Ford Motor Company of Australia Ltd [89].
43 The mere fact that the recipient of a Calderbank offer is ultimately worse off than he or she would have been had the offer been accepted does not mean that its rejection was unreasonable: Ford Motor Company [18].
44 The party who makes a Calderbank offer that is rejected bears the onus of satisfying the court that it should make an order for indemnity costs in its favour: Ford Motor Company [21].
45 The plaintiffs submit the defendant cannot rely on the Calderbank offer in circumstances where the plaintiffs were unaware what the defendant's oral evidence would be and where the defendant refused to consent to the exchange of witness statements. It was therefore, it is submitted, not unreasonable for the plaintiffs to reject the Calderbank offer.
46 The plaintiffs also repeat their submission that the defendant's witnesses gave false evidence at trial and therefore it was not unreasonable for the plaintiffs to reject the offer.
47 Finally, the plaintiffs' submit that the offer contained a condition that if accepted the plaintiffs were required to sign a deed of release on behalf of CAT in the stay application, the winding up application and the DOCA application, which was contrary to s 471A(1) Corporations Act 2001 (WA). Therefore, it is submitted, the offer was incapable of being accepted because it required the plaintiffs to sign a deed of release on behalf of CAT in circumstances where their powers over CAT had ceased. The rejection of the offer, that is, conditional on the release on unrelated proceedings may, it is submitted, be considered reasonable.
48 I am satisfied that for the following reasons the plaintiffs' rejection of the defendant's Calderbank offer was unreasonable:
1. The offer which was made, 26 days before the trial was due to commence on 17 June 2013 and before the trial dates were vacated on 12 June 2013, was in my view, made at a sufficiently early stage in the history of the District Court proceedings, which if it had been accepted would have avoided the considerable costs incurred by the defendant in proceeding to trial.
2. The offer, which was open for acceptance until 4.00 pm on 14 June 2013, allowed for a sufficient length of time for the plaintiffs to consider the offer.
3. The extent of the compromise offered, which was expressed as a commercial offer, would have met a significant part of the plaintiffs' costs noting that the plaintiffs in their letter of 29 May 2013 rejecting the offer said they were advised by counsel that their legal costs would be in the order of $50,000.
4. The plaintiffs' prospects of success were in my view negligible. In its letter to the plaintiffs, the defendant expressed the view that the claims in the action were bound to fail. In my view at the time that offer was expressed, and without having regard to the decision I have since reached, the defendant's assessment was a realistic one.
5. The letter addressed each of the plaintiffs' pleaded alleged causes of action explaining in detail and at length why the defendant believed the plaintiffs would not succeed at trial. Essentially that letter reflected the defendant's defence to the plaintiffs' causes of action and how the defendant conducted its defence at trial.
6. The terms of the offer were, as I have already observed, set out in considerable detail and in my view were set out in clear terms. I reject the plaintiffs' submission that the offer was incapable of being accepted because it required the plaintiffs to sign a deed of release on behalf of CAT in circumstances where they had no authority to do so. In my view the terms of the offer which referred to the terms of settlement needing to be formalised in a deed of settlement, simply reflected the causes of action pleaded by the plaintiffs in their statement of claim against the defendant.
7. Section 471A of the Corporations Act 2001 (Cth) states that the powers of an officer of a company are suspended during the company's winding up. In my view the defendant's written offer of settlement did not require the plaintiffs to sign a deed of release on behalf of CAT where they were prevented from doing so because of s 471A. All that the Calderbank letter did was identify the various causes of action alleged against the defendant and require the plaintiffs in their personal capacity to release and discharge the defendant from all claims in the action and arising from the action. The defendant's solicitors would clearly have known of the effect of s 471A and would have known the plaintiffs could not have entered into a deed of release on behalf of CAT.
7. Therefore, I reject the plaintiffs' submission that the offer was incapable of being accepted in the terms proposed by the defendant.
8. Finally, the offer foreshadowed that in the event the offer was not accepted and in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333 an application for indemnity costs would be made if the final outcome for the plaintiffs was not more favourable than that contained in the offer.
49 In my view the defendant's Calderbank offer was made in clear and unambiguous terms. The plaintiffs' rejection of the offer was unreasonable.
50 Therefore in those circumstances and on this further basis I also conclude the defendant is entitled to an order in its favour for indemnity costs and I accordingly make such an order.
51 I am satisfied it is proper and reasonable that the plaintiffs be ordered to pay the defendant's costs on an indemnity basis from the date when the Calderbank offer expired on 14 June 2013.
Special costs orders
52 Finally, the defendant, in the event I am not prepared to make an order for indemnity costs, seeks a special costs order pursuant to s 280(2) of the Legal Profession Act 2008.
53 The District Court has jurisdiction to make a special costs order by reason of s 280(2) of the Legal Profession Act 2008 (WA) which relevantly states:
(2) … 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.
55 The court is in a position to form the opinions required under the section as matters of impression rather than science or mathematics: Atwell v Roberts [2013] WASCA 37 (S) [15].
56 The word unusual in section 280(2) of the LPA qualifies only the difficulty of the matter and not its complexity or importance: Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S) [5].
Applicable scales
57 The plaintiffs commenced this action in April 2011. The scales applicable to the costs sought by the defendant are therefore:
(a) Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010 (WA) (2010 Scale) to 31 October 2012;
(b) Legal Practitioners (Supreme Court) (Contentious Business) Determination 2012 (WA) (2012 Scale) from 1 November 2012 to 30 June 2014; and
(c) Legal Practitioners (Supreme Court) (Contentious Business) Determination 2014 (WA) (2014 Scale) from 1 July 2014.
58 Clause 3 in each of the 2010 Scale, 2012 Scale and 2014 Scale sets out that the determinations made therein apply to proceedings in the District Court.
Costs determination is inadequate
59 The defendant submits that, based on the estimates set out in Ms Duthie's affidavit, of 21 August 2015 items 17, 20(b) and 20(d) of the defendant's bill of costs for this action would properly be taxed at amounts higher than those amounts allowed in the scales:
ITEM | DESCRIPTION | AMOUNT ALLOWED | ESTIMATE OF AMOUNT CLAIMED |
|
| $56,760.00 | $130,890.76 |
|
| $30,195.00 | $57,612.50 |
|
| $77,165.00 | $88,550.00 |
60 On this basis, the defendant submits that the costs that will be allowed by a taxing officer under the applicable scales will be inadequate.
Unusual difficulty, complexity or importance
61 Having established that the amounts allowed under the applicable scales are likely to be inadequate, the Court must determine that this inadequacy arises because of the unusual difficulty, complexity or important of the matter.
62 In its written submissions the defendant submits:
62. The factual matrix of the action was complex. The allegations made by the plaintiffs against the defendant required detailed consideration of the following:
(a) The claim made by the plaintiffs against Professional Services of Australia Pty Ltd and the estate of Martin Banning – Supreme Court, CIV 2265 of 2006;
(b) The appeal by Professional Services of Australia Pty Ltd and the estate of Martin Banning – Supreme Court, CACV 76 of 2008 and CACV 118 of 2014;
(c) Special leave application by the plaintiffs to the High Court – P47 of 2009;
(d) Supreme Court matters involving the winding up of CAT, the liquidator of CAT, the deed of company arrangement of CAT – CIV 2001 of 2009, COR 2 of 2010 and CIV 2765 of 2010; and
(e) Court of Appeal matters involving the winding up of CAT and issues with the liquidator – CACV 51 of 2010, CACV 23 of 2012 and CACV 24 of 2013.
…
69. In these circumstances, the court should be satisfied that the importance of the matter requires the making of a special costs order.
63 As I have already determined the defendant is entitled to an order for indemnity costs on the basis of the plaintiffs' improper and unreasonable conduct and also on the basis that the plaintiffs' rejection of the defendant's Calderbank offer was unreasonable, it is unnecessary for me to decide whether the defendant is entitled to a special costs order. However, because the defendant's application for special costs orders has been the subject of detailed written submissions by both parties, I propose to briefly consider the application. Also I accept that even if there has been unreasonable conduct by the plaintiffs in the running of their case, an indemnity costs order will not necessarily be made if the costs would be covered by a special costs order. If the conditions warrant an indemnity costs order, an order detailing an increase in the scale limits should still be made: Flotilla [11], [24], [25]
64 I accept and am satisfied by the materials placed before me by the defendant (Ms Duthie's affidavit of 21 August 2015), and from my knowledge of the matter and how the trial was conducted, and the issues which were canvassed at trial, that the applicable scale limits are likely to be inadequate to meet the costs of the defendant in successfully defending the plaintiffs' claim. I am satisfied that because of the large volume of documentation that the defendant needed to become familiar with, involving the multiple actions in which the plaintiffs were involved and the numerous affidavits sworn by Mrs Frigger at various times, which, as I found in my reasons for decision, contained numerous and significant inconsistencies reflecting adversely on her credibility, that the factual issues were unusually complex or difficult such as to justify an order being made that the defendant be entitled to tax its costs with regard to the limits allowed by the relevant cost scales. I accept the defendant's submissions in this regard.
65 I am also satisfied for the reasons advanced by the defendant that this matter falls within the meaning of the word 'importance' in s 280(2) of the ALP because of the need to address the serious allegation of fraud made against the defendant, Mr Clavey and Ms Zohar which obviously affected their reputation and credibility. I am satisfied that it was necessary for the defendant to descend into the degree of detail it did and to become familiar with the large volume of documentation because of the serious allegations raised by the plaintiffs against the defendant, Mr Clavey and Ms Zohar, which justifies an order being made that the defendant tax its costs without regard to the limits fixed by the cost scales.
Transcript costs
66 The defendant also seeks an order pursuant to O 69 r 3 of the Rules of the Supreme Court 1971 (WA) that the expense of obtaining the transcript of the trial and of various directions hearings be made.
67 I am satisfied it was reasonable and necessary for the proper conduct of the trial and the interlocutory proceedings the defendant obtained the transcript. Accordingly, I make an order the plaintiffs pay the defendant the cost incurred by the defendant in obtaining the transcript both of the trial and of any interlocutory proceedings.
68 There is one final matter I need to briefly deal with.
69 After I received each of the parties written submissions and materials pursuant to the orders made by me at the directions hearing on 13 August 2015 as referred to above [3], the defendant by its solicitors wrote to my associate on 16 September 2015 seeking leave to file a further affidavit to be sworn by Ms Duthie in response to the submissions and affidavit filed by the plaintiffs in opposition to the defendant's application. The plaintiffs oppose the defendant being given leave to file the further affidavit.
70 I have not read the further affidavit of Ms Duthie. As will be evident from these reasons, I have found it unnecessary to consider any further evidence in determining the defendant's application. For the sake of completeness I formally refuse the defendant's application for leave to file the further affidavit of Ms Duthie.
Summary
71 In summary, I order:
1. The plaintiffs pay the defendant's costs of the action, including reserved costs before 14 June 2013 on a party and party basis to be taxed;
2. The plaintiffs pay all the defendant's costs of the action from 14 June 2013 except insofar as they are of an unreasonable amount or have been unreasonably incurred so that subject to the above exclusions the defendant is completely indemnified by the plaintiffs for its costs from 14 June 2013, including the costs of this application for costs.
3. The defendant's costs under items 17, 20(b) and 20(d) be taxed without reference to the limits fixed under the Supreme Court scale of costs.
4. The plaintiffs pay the defendant's costs of obtaining the transcript incurred by the defendant.
0
15
4