Frigger v Professional Services of Australia Pty Ltd [No 2]
[2011] WASCA 103 (S)
•3 JUNE 2011
FRIGGER -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 2] [2011] WASCA 103 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2011] WASCA 103 (S) | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:51/2010 | 11 APRIL, 3 JUNE 2011 & ON THE PAPERS | |
| Coram: | PULLIN JA NEWNES JA MAZZA J | 3/06/11 | |
| 1/08/11 | |||
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Appellants jointly and severally pay 50% of first and second respondents' costs of the appeal including all reserved costs to be taxed Appellants jointly and severally pay the third and fourth respondents' costs of preparing their written submissions on costs dated 13 June 2011 and the affidavit of David William John made 10 June 2011 but otherwise there be no order as to the costs of the appeal as between the appellants and the third and fourth respondents There be liberty to apply | ||
| B | |||
| PDF Version |
| Parties: | ANGELA FRIGGER HARTMUT FRIGGER PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD (Subject to Deed of Company Arrangement) DONALD CAMPBELL-SMITH as Executor of the Estate of MARTIN PAUL BANNING (Dec) COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQ) MERVYN KITAY Liquidator of the Third Respondent |
Catchwords: | Determination of costs of appeal Whether appellants successful in the appeal Turns on own facts |
Legislation: | Corporations Act 2001 (Cth), s 471A(2), s471A(2A) Supreme Court Act 1935 (WA), s 37(1) |
Case References: | Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394 Keet v Ward [2011] WASCA 139 Laws v Australian Broadcasting Tribunal (1989) ALD 522; (1989) 85 ALR 659 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : FRIGGER -v- PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD [No 2] [2011] WASCA 103 (S) CORAM : PULLIN JA
- NEWNES JA
MAZZA J
DECISION : 1 AUGUST 2011 FILE NO/S : CACV 51 of 2010 BETWEEN : ANGELA FRIGGER
- HARTMUT FRIGGER
Appellants
AND
PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD (Subject to Deed of Company Arrangement)
First Respondent
DONALD CAMPBELL-SMITH as Executor of the Estate of MARTIN PAUL BANNING (Dec)
Second Respondent
COMPUTER ACCOUNTING & TAX PTY LTD (IN LIQ)
Third Respondent
MERVYN KITAY Liquidator of the Third Respondent
Fourth Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : MASTER SANDERSON
Citation : PROFESSIONAL SERVICES OF AUSTRALIA PTY LTD (Administrator Appointed) -v- COMPUTER ACCOUNTING AND TAX PTY LTD [No 3] [2010] WASC 93
File No : COR 2 of 2010
Catchwords:
Determination of costs of appeal - Whether appellants successful in the appeal - Turns on own facts
Legislation:
Corporations Act 2001 (Cth), s 471A(2), s471A(2A)
Supreme Court Act 1935 (WA), s 37(1)
Result:
Appellants jointly and severally pay 50% of first and second respondents' costs of the appeal including all reserved costs to be taxed
Appellants jointly and severally pay the third and fourth respondents' costs of preparing their written submissions on costs dated 13 June 2011 and the affidavit of David William John made 10 June 2011 but otherwise there be no order as to the costs of the appeal as between the appellants and the third and fourth respondents
There be liberty to apply
Category: B
(Page 3)
Representation:
Counsel:
Appellants : Mr D W Thompson
First Respondent : Mr B W Ashdown
Second Respondent : Mr B W Ashdown
Third Respondent : Mr A D Kirk
Fourth Respondent : Mr A D Kirk
Solicitors:
Appellants : David Thompson
First Respondent : Holborn Lenhoff Massey
Second Respondent : Holborn Lenhoff Massey
Third Respondent : Freehills
Fourth Respondent : Freehills
Case(s) referred to in judgment(s):
Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394
Keet v Ward [2011] WASCA 139
Laws v Australian Broadcasting Tribunal (1989) ALD 522; (1989) 85 ALR 659
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
(Page 4)
1 REASONS OF THE COURT: The parties are in dispute about the costs orders to be made concerning the appeal. At the hearing on 3 June 2011 when reasons for judgment were published, the appellant sought an order that the respondents pay 90% of the appellants' costs of the appeal to be taxed. The first and second respondents sought an order that the appellants pay 50% of the first and second respondents' costs to be taxed and the third and fourth respondents sought an order that there be no order as to costs as between the appellant and the third and fourth respondent. An order was made on 3 June 2011 that the parties should file written submissions and affidavits and that the decision about costs of the appeal would be made on the papers.
2 In the written submissions filed by the appellants, they again seek an order that the respondents pay 90% of their costs to be taxed. The first and second respondents still seek an order that the appellants pay 50% of the first and second respondents' costs to be taxed but now, in the alternative, seek an order that the appellants pay the costs incurred after 5 August 2010, being the date of rejection of a Calderbank offer. The third and fourth respondents submit that they proposed, on 3 June 2011, that there be no order for costs if 'the matter could be resolved without the need for more costs to be incurred'.
3 The appeal was instituted by Mr and Mrs Frigger as second appellants. The Friggers also named the third respondent as the first appellant. They should not have done so because a liquidator had been appointed and there was no consent of the liquidator or leave of the court to institute the appeal on behalf of the company: s 471A(2) and s 471A(2A), Corporations Act 2001 (Cth). The appeal notice revealed that the appellants sought to set aside the winding up order and the costs orders made against the Friggers.
4 The institution of proceedings in the name of the third respondent meant that the liquidator had to become involved even though the real protagonists were the Friggers and the first and second respondents. Ultimately, the irregularity in the name of the parties was dealt with by consent at a hearing before Newnes JA on 13 August 2010 when there was an order made that the third respondent cease to be the first appellant and be joined as the third respondent. At the same time, the liquidator was joined as the fourth respondent.
5 When the appellant's case was filed on 21 July 2010, the grounds of appeal contained a par 1 reading:
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- The appeal in relation to the order to wind up the first appellant is not pressed.
- The reference to the first appellant is a reference to the party which is now the third respondent. At a hearing on 28 July 2010 before Newnes JA, the appellants confirmed that the Friggers intended to only appeal against the costs orders of the matter below.
6 As a result, on 3 August 2010, the solicitors for the first and second respondents wrote a Calderbank letter offering, inter alia, to consent to the appeal being allowed on various terms including that the order for fixed costs be set aside and that the costs be taxed but with uplift orders. This was adopted by the third and fourth respondents in a letter from their solicitors dated 5 August 2010. These proposals were rejected out of hand by Mrs Frigger who sent an email to the first and second respondents' solicitors which read '[t]here will be no early settlement of the appeal'.
7 Before and at the hearing of the appeal, the primary and perhaps the only objective of the Friggers was to overturn the costs order so that they had no liability at all to pay costs. This was evidenced by the fact that in the appellant's case, the 'orders sought' proposed orders setting aside the costs orders. There was no alternative proposal that there should be an order that costs be paid by the Friggers but to be taxed rather than fixed. During the hearing of the appeal, counsel for the Friggers, in effect, stated that in the alternative, they sought an order that the Friggers pay costs to be taxed (ts 76 - 77). The Friggers failed to achieve their primary objective. They won on the alternative which left them liable to pay costs to be taxed.
8 If regard is only paid to the orders made by this court then the appellants appear to have succeeded. The orders that they pay costs to be fixed were set aside and in lieu an order was made that they pay costs to be taxed. An examination only of the orders does not disclose that the appellants failed in their primary objective.
9 However, the victory in obtaining the orders that costs be taxed rather than fixed may be a pyrrhic victory. An example is provided in relation to another costs order made in the proceedings below (COR 2 of 2010). Simmonds J made an order that the Friggers pay costs to be taxed regarding their unsuccessful application to set aside the appointment of a provisional liquidator. At the hearing before the master on 6 May 2010, the first and second respondents asked for those costs to be fixed at $13,200.55. This was resisted and the master refused to make an order fixing the costs which had been ordered by Simmonds J to be taxed.
(Page 6)
- Subsequently, those costs were taxed and allowed in the sum of $13,644.54 which was higher than the costs which the respondents had proposed as the costs to be fixed. If that is the outcome after taxation of the costs in question here, then the Friggers will have had no victory at all. The appeal will have been a futile and disadvantageous exercise for them.
10 However, if costs are taxed out at less than the fixed costs orders, then they will have gained some advantage out of the appeal. In that sense the appellants will have succeeded to some extent depending on the outcome of the taxation. However, one thing is clear and that is that the Friggers will have to pay some costs.
Principles governing costs
11 In Keet v Ward [2011] WASCA 139, this court made the point that costs of and incidental to all proceedings in court are in the discretion of the court: s 37(1) of the Supreme Court Act 1935 (WA), but that the discretion conferred is not an unfettered discretion. It is a discretion which must be exercised judicially: [17]. The court went on to say:
The Rules of the Supreme Court 1971 (WA) provide guidance about the sound exercise of the discretion. Order 66 r 1(1) Rules of the Supreme Court provides that subject to the express provisions of any statute and of the rules of court, and without limiting the generality of the discretion to make a costs order, the court will generally order that the successful party to any action or matter recovers his costs. Order 66 r 1(3) provides that, 'where a party though generally successful in an action has, by the introduction of some issue or issues on which he has failed, increased the costs the court may order such party to pay the costs of such issue or issues'. These rules reflect the general law. Notwithstanding O 66 r 1(3), courts are generally reluctant to apportion costs on the basis of success or failure on particular issues arising in the course of the trial. In Cretazzo v Lombardi (1975) 13 SASR 4, at 16, Jacobs J said:
I would wish to sound a note of cautious disapproval of applications … to apportion costs according only to the success or failure of one party or the other on the various issues of fact or law, which arise in the course of a trial … trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case.
His Honour noted that:
There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the
- severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.
- See also Doric Products Pty Ltd v Lockwood Security Products Pty Ltd [2002] FCA 282; (2002) 54 IPR 495 [10] (Hely J). See also Australian Trade Commission v Disktravel [2002] ATPR 41-85. [18] - [20].
12 However, deciding what amounts to success is not always revealed merely by reading the orders of the court. Where an appellant has been successful in obtaining what is, in effect, a variation in their favour of orders below, there may remain valid reasons to not award costs in favour of the appellant where the appellant has not been successful in the underlying, real contest: Laws v Australian Broadcasting Tribunal (1989) ALD 522; (1989) 85 ALR 659, 677. Where appellants have only won a nominal victory then the court may not award costs. Success in proceedings is to be determined by the 'reality' of the circumstances involved: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [70] (McHugh J); Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394, 401.
Application of principles to the circumstances of this case
13 The Friggers failed on the primary issue which was about whether the Friggers should be ordered to pay any costs at all. In that sense the appellant has not succeeded. It is the respondents who have succeeded on that primary contest. On the other hand, the Friggers have succeeded in obtaining an order that costs be taxed in lieu of the order that costs be fixed. The costs should, therefore, follow success on the primary issue but with an adjustment to recognise that the Friggers did succeed in obtaining an order that the costs be taxed in the usual way rather than being fixed.
14 The first and second respondents have proposed that the appellants should jointly and severally pay 50% of the first and second respondents' costs of the appeal including all reserved costs to be taxed and that is the order that should be made.
15 The third and fourth respondents proposed at the hearing on 3 June 2011, that there be no order as to costs of the appeal as between the appellants and the third and fourth respondents, but have subsequently filed submissions asking for an order for costs. Because they had to incur
(Page 8)
- further costs making their submissions on costs of the appeal and having convinced the court that the appellants should not be awarded costs, the third and fourth respondents should have the costs of preparing their written submissions concerning the costs of the appeal. Thus, there should be an order that the appellants pay the third and fourth respondents' costs of preparing written submissions concerning costs of the appeal dated 13 June 2011 and the preparation of the affidavit of David William John, dated 10 June 2011.
16 The third and fourth respondents say in their submissions that as a consequence of conferral between the solicitors for the appellants and the third and fourth respondents, the third and fourth respondents understand that the appellants do not seek an order that the sum of $20,021.30 already paid by the appellants to the liquidator, be repaid, on the understanding that there will only be an obligation to repay the appellants if costs are taxed at a figure lower than the costs already paid. Nevertheless, there should be liberty to apply about this aspect. The orders of the court will be:
(a) the appellants jointly and severally pay 50% of the first and second respondents' costs of the appeal including all reserved costs to be taxed;
(b) the appellants jointly and severally pay the third and fourth respondents' costs of preparing their written submissions on costs dated 13 June 2011 and the affidavit of David William John made 10 June 2011 but otherwise there be no order as to the costs of the appeal as between the appellants and the third and fourth respondents;
(c) there be liberty to apply.
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