George 218 Pty Ltd v Bank of Queensland Ltd
[2015] WASC 434 (S)
•2 DECEMBER 2015
GEORGE 218 PTY LTD -v- BANK OF QUEENSLAND LTD [2015] WASC 434 (S)
| Link to Appeal : | [2016] WASCA 56 [2016] WASCA 182 |
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASC 434 (S) | |
| 02/12/2015 | |||
| Case No: | CIV:2841/2013 | 27 NOVEMBER 2015 | |
| Coram: | MITCHELL J | 27/11/15 | |
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiffs' claim dismissed Judgment entered for defendant on its counterclaim | ||
| B | |||
| PDF Version |
| Parties: | GEORGE 218 PTY LTD PRADA PTY LTD TINA MICHELLE BAZZO GUCCE HOLDINGS PTY LTD BANK OF QUEENSLAND LTD |
Catchwords: | Banking and finance Guarantees Judgment sum, interest and costs issues Turns on own facts |
Legislation: | Civil Liability Act 2002 (WA), s 5AI, s 5AK Legal Profession Act 2008 (WA), s 280(2)(c) Rules of the Supreme Court 1971 (WA), O 21 r 3 |
Case References: | George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 The State of Western Australia v Collard [2015] WASCA 86 Wainwright v Barrick Gold of Australia Ltd [2014] WASCA 15 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- First Plaintiff
PRADA PTY LTD
Second Plaintiff
TINA MICHELLE BAZZO
Third Plaintiff
GUCCE HOLDINGS PTY LTD
Fourth Plaintiff
AND
BANK OF QUEENSLAND LTD
Defendant
Catchwords:
Banking and finance - Guarantees - Judgment sum, interest and costs issues - Turns on own facts
Legislation:
Civil Liability Act 2002 (WA), s 5AI, s 5AK
Legal Profession Act 2008 (WA), s 280(2)(c)
Rules of the Supreme Court 1971 (WA), O 21 r 3
Result:
Plaintiffs' claim dismissed
Judgment entered for defendant on its counterclaim
Category: B
Representation:
Counsel:
First Plaintiff : Mr P G Clifford & Mr A P Rumsley
Second Plaintiff : Mr P G Clifford & Mr A P Rumsley
Third Plaintiff : Mr P G Clifford & Mr A P Rumsley
Fourth Plaintiff : Mr P G Clifford & Mr A P Rumsley
Defendant : Ms K F Banks-Smith SC & Ms C A Petersen
Solicitors:
First Plaintiff : Alan Rumsley
Second Plaintiff : Alan Rumsley
Third Plaintiff : Alan Rumsley
Fourth Plaintiff : Alan Rumsley
Defendant : Lavan Legal
Case(s) referred to in judgment(s):
George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
The State of Western Australia v Collard [2015] WASCA 86
Wainwright v Barrick Gold of Australia Ltd [2014] WASCA 15 (S)
- MITCHELL J:
Background
1 On 16 November 2015, I delivered reasons for decision following a trial of preliminary issues in this matter.1 The trial was of all issues other than those raised by specified paragraphs of the pleadings, which were referred to in the order as 'Deferred Issues'. In broad terms the Deferred Issues concerned the plaintiffs' claim, in support of their applications for declarations that the Bank was not entitled to payment under the Guarantees, that the Bank and receiver breached duties allegedly owed to the plaintiffs.
2 I resolved the preliminary issues by determining that the Bank had established that the plaintiffs owed the Bank $2,274,515.87 as at 6 November 2013 and $3,211,311.44 as at 26 August 2015 under the Guarantees. I also concluded that cl 17 of the Guarantees operated to preclude the plaintiffs from relying on breaches of duties asserted in specified paragraphs of the statement of claim, so that the plaintiffs' claims which formed part of the Deferred Issues did not affect the Bank's entitlement to payment from the plaintiffs under the Guarantees. I expressed the view that it was therefore unnecessary to resolve the Deferred Issues to conclude that the plaintiffs' claim should be dismissed and the Bank should have judgment on the counterclaim.
3 In reaching those conclusions I noted two matters which had not been addressed by the parties' submissions. The first concerned the date at which the principal judgment sum should be awarded. The second issue concerned the rate of pre-judgment interest to be applied to the award. I indicated that, before making any final order in these proceedings, I would give the parties a further opportunity to address the precise amount which should be subject of judgment in favour of the Bank, and tender evidence as to the amount of pre-judgment interest if agreement cannot be reached as to that matter. The matter was adjourned to today for that purpose.
Judgment sum
4 The Bank initially sought leave to re-open its case to read the affidavit of Michael Clark sworn 20 November 2015. That affidavit sought to establish two matters. First, it sought to adduce evidence as to the interest rates applicable under the 2010 Loan Agreements between April 2014 and November 2015. Secondly, it sought to prove the amount the plaintiffs owed to the Bank under the Guarantees as at 10 April 2014.
5 However, during the course of submissions, senior counsel for the Bank withdrew the application for leave to reopen her case, and accepted that if judgment were to be entered today it should be in the amount of $2,274,515.87, being the amount established to be owing by the plaintiffs to the Bank on 6 November 2013, with simple interest at the rate of 6% per annum under s 31 and s 32 of the Supreme Court Act 1935 (WA). Subject to dealing with an issue arising under the Civil Liability Act 2002 (WA), I accept that it is appropriate to enter judgment for that sum on the counterclaim.
6 Interest at 6% per annum on the principal sum of $2,274,515.87 for the 751 days between 6 November 2013 and 27 November 2015 is $280,793.66. Adding this allowance for interest to the principal sum results in a judgment sum of $2,555,309.53.
Civil Liability Act
7 One of the Deferred Issues is a plea in par 27 (formerly par 52D) and par 28 (formerly par 53) of the plaintiffs' defence to the counterclaim. In those paragraphs it is pleaded that:
27. Where there is a shortfall which is caused by a breach of the duty of the Receiver to take all reasonable care in exercising the power of sale in respect of the property the claim is an apportionable claim for the purposes of the Civil Liability Act 2002.
28. If the Plaintiffs, or any of them, are found to be liable to the Defendant, as alleged, or at all:
28.1 The claims are apportionable claims for the purposes of the Civil Liability Act 2002;
28.2 The Receiver is a concurrent wrongdoer, for the purposes of the Civil Liability Act 2002;
28.3 Any liability of the Plaintiffs is limited under s 5AK(1) of the Civil Liability Act 2002.
(a) a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care (but not including any claim arising out of personal injury); or
(b) a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 2010 based on misleading or deceptive conduct;
9 The Bank's claim against the plaintiffs is a claim for a contractual debt under the Guarantees. I will assume in the plaintiffs' favour that a claim for a contractual debt may be a claim for 'damages' for the purposes of s 5AK. However, the Bank's claim under the Guarantees does not arise from any allegation that the plaintiffs failed to take reasonable care, or any claim based on misleading and deceptive conduct. Nor are the plaintiffs arguably 'concurrent wrongdoers', being persons whose acts or omissions caused any damage or loss resulting from anyone's failure to take reasonable care. As the Bank's claim against the plaintiffs is not an apportionable claim, and they are not concurrent wrongdoers, s 5AK does not operate to limit their liability to the plaintiff. Section 5AK(1) does not apply, and if s 5AK(2) applies it would provide for the plaintiffs' liability under the non-apportionable claim to be determined in accordance with ordinary legal rules.
10 The plaintiffs argue that the claim against them is 'for damages … arising from the receiver's and Bank's 'failure to take reasonable care', because if the receiver had taken reasonable care then the Bank would not have suffered the loss and would not have needed to call on the Guarantee. They therefore argue that the claim against them is an 'apportionable claim' for the purposes of the Civil Liability Act. I do not accept that submission, as it is plain that the claim must be for damages arising from a failure by the defendant or a person for whose conduct the defendant is responsible to take reasonable care. Further, even on the plaintiffs' argument, they would not be 'concurrent wrongdoers' whose liability is limited by s 5AK of the Civil Liability Act. That is because there is no suggestion that the plaintiffs caused the damage or loss resulting from the receiver's or Bank's alleged failure to take reasonable care.
11 The plea as to the Civil Liability Act is without legal merit, and cannot provide a defence to the Bank's action against the plaintiffs under the Guarantees. Although matters raised by the plea were not part of the trial of preliminary issues, there are no facts which could be proven which might assist the plaintiffs in relation to the legal defect in the plea.
12 Counsel for the plaintiffs indicated that, because the pleading about the Civil Liability Act is a deferred issue, he had not come to court prepared to make submissions about the issue. He had not considered a number of authorities which counsel for the Bank handed to the court from the bar table. However, the pleading as to this issue is the plaintiffs' pleading which was signed by junior counsel for the plaintiffs. The point was raised by the plaintiffs in submissions filed on 25 November 2015 as a reason why the resolution of preliminary issues should not lead to judgment being entered into in favour of the Bank. In those circumstances it was incumbent on counsel to be in a position to explain the legal basis on which the claim might succeed. Counsel for the plaintiffs was able to outline the plaintiff's case. If I thought that the claim might have legal merit then I would have been prepared to adjourn the matter for further submissions.
13 However nothing in counsel for the plaintiffs' submissions indicate any reasonable basis for thinking that the section might apply to limit the plaintiffs' liability to the Bank under the Guarantees. As s 5AK of the Civil Liability Act cannot apply to the present case on its terms as a matter of law, this plea does not provide any basis for denying judgment on the counterclaim to the Bank. The defective nature of the plea means that there is nothing to be gained from having a further trial of that issue, and it does not stand in the way of the conclusion that the way in which the preliminary issues were resolved means that the Bank is entitled to judgment on its counterclaim.
Plaintiffs' claim
14 The plaintiffs' statement of claim as it stood at the trial of the preliminary issues asserted a breach of duty by the Bank and the receiver, but did not plead that the plaintiffs had suffered any damage as a result of that breach of duty. The only relief claimed was for declarations that the Bank was not entitled to any payment from the plaintiffs under the Guarantees. For the reasons previously published, that claim must be dismissed.
15 The situation is complicated by the fact that, since I published my earlier reasons, the plaintiffs have filed a further amended statement of claim, purportedly pursuant to O 21 r 3 of the Rules of the Supreme Court 1971 (WA). The amendment introduces pleas that the plaintiffs have suffered loss and damage, and the Bank has been unjustly enriched, by reason of the breach of duties alleged. This substantially alters the basis on which the plaintiffs' claim was advanced.
16 Order 21 r 3 of the Rules provides that a party may amend any of its pleadings, without the leave of the Court, by filing its amended pleading not later than seven weeks before the date fixed for the start of the trial of the case. However, since the date of seven weeks before the date fixed for the trial of the case has already passed, the plaintiffs' amendment to the statement of claim was not authorised by O 21 r 3 of the Rules. So much was implicitly accepted by the parties when they sought leave to amend the pleadings prior to trial. The trial of preliminary issues under O 32 r 4 of the Rules is part of the 'trial of the case' for the purposes of O 21 r 3(1) of the Rules. I would grant the Bank's application to set aside the amended pleading under O 2 r 1(2) of the Rules.
17 However, the plaintiffs indicate that they now wish to pursue a claim for damages in respect of the alleged breaches of duty by the Bank and receiver. Such a claim for damages is not precluded by cl 17 of the Guarantees. The plaintiffs are concerned that if their action is wholly dismissed, an attempt to begin new proceedings would be characterised as an abuse of process.
18 It is generally inconsistent with principles of case management to allow a party to amend its pleading to agitate new matters in the period between the pronouncement of reasons for dismissing the claim and the making of an order to that effect. However, I am not prepared at this stage to shut the plaintiffs out of arguing that they should be granted leave to make an amendment to the existing pleading. That is, I will not wholly dismiss the plaintiffs' claim.
19 In the circumstances, the appropriate orders are that the amended statement of claim filed on 24 November 2015 be set aside, the plaintiffs' claim for declarations that the Bank is not entitled to any payment from the plaintiffs under the Guarantees should be dismissed and the plaintiffs should be given liberty to apply for leave to amend their statement of claim to plead a claim for damages against the defendant within 14 days.
Costs of the proceedings
20 The Bank has been wholly successful in the result of the proceedings. The plaintiffs' claim (as it stood at the time of trial) has been dismissed. Judgment has been entered for the Bank on the counterclaim. The Bank was successful on all of the issues which I dealt with in the course of my reasons. In my view, this is a case where the ordinary rule that costs follow the event should apply.2
21 The plaintiffs have provided a schedule of issues which they say were conceded or abandoned by the Bank during the course of the trial of preliminary issues. Having reviewed that schedule, I am not satisfied that any of the matters raised are of such significance as to justify a departure from the usual approach that costs follow the event. In my view it is appropriate to order that the plaintiffs pay the whole of the Bank's costs of the proceedings to date. The costs associated with the plaintiffs' new damages claim will be dealt with when that claim is resolved.
Removal of scale limits
22 The Bank seeks an order under s 280(2)(c) of the Legal Profession Act 2008 (WA) removing the costs limits provided for in items 3 (defence and counterclaim), 17 (preparation of case), 20(a) (counsel fee on brief) and 20(b) (senior counsel fee on brief) of the Legal Profession (Supreme Court)(Contentious Business) Determination 2014 and the Legal Profession (Supreme Court)(Contentious Business) Determination 2012.
23 I may make such an order if I am 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.
24 The applicable principles are well established. The following general principles are taken from the decision of the Court of Appeal in Wainwright v Barrick Gold of Australia Ltd:3
1. Section 280(2) requires that before making an order pursuant to its terms the court must form an opinion which has two components.
2. First, the court must determine that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate in the sense that there is a fairly arguable case that the bill to be presented to the taxing officer may properly tax at an amount which is greater than the limit which would be imposed by the relevant costs determination.
3. Second, the court must conclude that the inadequacy arises because of the 'unusual difficulty, complexity or importance of the matter'. The word 'unusual' in s 280(2) qualifies only the 'difficulty' of the matter and not its complexity or importance. The word 'unusual' in this context means unusual having regard to what one might describe as the usual run of civil cases determined in the Supreme and District Courts. That essentially involves the making of a value judgment by the court, having regard to the court's experience of the particular case when compared with the usual run of cases.
4. Having heard the matter and being familiar with the way in which the case was conducted and the issues which were litigated, the court is in a position to form the opinions required under the section as matters of impression rather than science or mathematics.
25 Joseph Abberton, a partner of the Bank's solicitors, has deposed that counsel and solicitors spent 470 hours getting up for trial in the period of 1 September 2015 until the commencement of the trial of preliminary issues on 5 October 2015. The time provided for preparation in the scale is 120 hours for solicitors and 3.5 days (or 35 hours) for each of senior and junior counsel. Having regard to that evidence and the nature of the case generally, I am satisfied that there is a fairly arguable case that the bill to be presented to the taxing officer may properly tax at an amount which is greater than the limit which would be imposed by the relevant costs determination.
26 I am also satisfied that the reason for the inadequacy of the scale is the complexity of the matter, which involved tracing business arrangements and a series of agreements over a period of just over 9 years, issues of construction concerning the Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cth)and a conventional estoppel argument which involved some complexity. Having sat through the trial, I am satisfied that the complexity of the case was such that the time reasonably taken by the Bank's legal representatives to perform the work required for the preparation of the case would have exceeded the maximum time provided for in the scale.
27 In the circumstances the appropriate course is to remove the limits for the specified items and leave the assessment of the value of work reasonably done to the taxing officer.
Orders
1. The plaintiffs' amended statement of claim filed on 24 November 2015 be set aside.
2. The plaintiffs' claim for declarations that the defendant is not entitled to any payment from the plaintiffs under the Deeds of Guarantee and Indemnity of or about 24 April 2006 is dismissed.
3. Judgment be entered for the defendant in the counterclaim in the sum of $2,555,309.53.
4. The plaintiffs, jointly and severally, pay the defendant the sum of $2,555,309.53.
5. The plaintiffs, jointly and severally, pay the defendant's costs of the action, including reserved costs, incurred up to 27 November 2015 to be taxed forthwith.
6. There be certificates for transcript of the hearings on 23 and 25 September 2015 and 5 - 7 October 2015.
7. For the purposes of taxing the defendant's costs, the limits on costs fixed in items 3, 17, 20(a) and 20(b) of the Legal Profession (Supreme Court) (Contentious Business) Determination 2014 and the Legal Profession (Supreme Court) (Contentious Business) Determination 2012 (as applicable) be removed.
8. The plaintiffs have liberty to apply for leave to amend their statement of claim to plead a claim for damages against the defendant within 14 days.
9. The matter be listed for further directions at 9.15 am on 27 January 2016.
1George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434.
2Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, [67]; The State of Western Australia v Collard [2015] WASCA 86 [25].
3Wainwright v Barrick Gold of Australia Ltd [2014] WASCA 15 (S) [7] - [9].
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