GH1 Pty Ltd (in Liq) v Marnbu Projects Pty Ltd - [2022] WASC 416

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
CITATION:   GH1 PTY LTD (IN LIQ) -v- MARNBU PROJECTS PTY LTD [2022] WASC 416
CORAM:   CURTHOYS J
HEARD:   12 OCTOBER 2021
DELIVERED          :   8 DECEMBER 2022
FILE NO/S:   CIV 1653 of 2020
BETWEEN:   GH1 PTY LTD (IN LIQ)
Plaintiff
AND
MARNBU PROJECTS PTY LTD
First Defendant
ASHWOOD ASSETS PTY LTD
Second Defendant
OCEAN KEYS (WA) PTY LTD
Third Defendant
FLYNN DRIVE HOLDINGS PTY LTD
Fourth Defendant
BYFORD LAND COMPANY PTY LTD
Fifth Defendant
MAMMOTH CONTRACTING (WA) PTY LTD
Sixth Defendant
WALTHAMSTOW PTY LTD
Seventh Defendant
THE REGISTRAR OF TITLES
Eighth Defendant

Catchwords:

Practice and procedure - Application by first to fourth defendants for strike out - Fraud under s 68 of the Transfer of Land Act 1863 (WA) - Abuse of process - Issue estoppel - Deficiencies in application

Legislation:

Rules of the Supreme Court 1971 (WA), O 20 r 9
Transfer of Land Act 1863 (WA), s 68

Result:

Application for strike out dismissed

Category: B

Representation:

Counsel:

Plaintiff	:	J E Scovell
First Defendant	:	Dr J S Schoombee & A P Rumsley
Second Defendant	:	Dr J S Schoombee & A P Rumsley
Third Defendant	:	Dr J S Schoombee & A P Rumsley
Fourth Defendant	:	Dr J S Schoombee & A P Rumsley
Fifth Defendant	:	No appearance
Sixth Defendant	:	No appearance
Seventh Defendant	:	No appearance
Eighth Defendant	:	No appearance

Solicitors:

Plaintiff	:	HWL Ebsworth Lawyers
First Defendant	:	Alan Rumsley
Second Defendant	:	Alan Rumsley
Third Defendant	:	Alan Rumsley
Fourth Defendant	:	Alan Rumsley
Fifth Defendant	:	Alan Rumsley
Sixth Defendant	:	Alan Rumsley
Seventh Defendant	:	Taylor Smart
Eighth Defendant	:	State Solicitor's Office

Cases referred to in decision:

Batistatos v Roads and Traffic Authority of New South Wales [2007] HCA 27; (2006) 226 CLR 256
English v Vantage Holdings Group Pty Ltd [2021] WASCA 47
GH1 Pty Ltd, in Liquidation and Commissioner of Taxation (Taxation) [2017] AATA 1100
Goldsmith v Sperrings Ltd [1977] 1 WLR 478
Hunter v Chief Constable of the West Midlands Police [1982] AC 529
Jago v District Court (NSW) [1989] HCA 46; (1989) 168 CLR 23
Kuligowski v Metrobus [2004] HCA 34; (2004) 220 CLR 363
Moti v The Queen [2011] HCA 50; (2011) 245 CLR 456
Rogers v The Queen [1994] HCA 42
Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4
Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398
Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378
Westpac Banking Corporation v Dunn [2011] WASC 7
Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509

CURTHOYS J:

Introduction

The first to fourth defendants (defendants) apply to strike out certain paragraphs of the reamended statement of claim filed by the plaintiff, GH1 Pty Ltd (GH1) on 8 February 2021, pursuant to O 20 r 9 of the Rules of the Supreme Court 1971 (WA) (Rules).
The defendants provide two broad bases for bringing the application. First, that GH1's claims against the first and second defendants cannot amount to fraud for the purposes of s 68 of the Transfer of Land Act 1863 (WA) (TLA). Second, that the claims against the third and fourth defendants are an abuse of process or give rise to an issue estoppel because of determinations that have been previously made by the Administrative Appeals Tribunal (AAT).
The plaintiff contends that the defendants' application should be dismissed because of certain deficiencies in its application, and further, that these proceedings are not an abuse of process or the subject of an issue estoppel.
For the reasons that follow, I have dismissed the defendants' strike out application.

Procedural background

On 8 June 2020, GH1 filed an originating summons in these proceedings.
On 25 August 2020, the court ordered that the matter proceed on the basis of pleadings.
On 23 September 2020, GH1 filed and served a statement of claim.
On 15 October 2020, the first to fourth defendants filed a chambers summons seeking to strike out the plaintiff's statement of claim.
On 8 February 2021, the plaintiff filed an amended statement of claim (Statement of Claim).
On 23 August 2021, the first to fourth defendants filed an amended chamber summons seeking to strike out the Statement of Claim. The defendants maintain the objections to the pleadings on the basis that the plaintiff's amendments to the original statement of claim failed to cure the purported defects.

The application

By their chamber summons filed on 23 August 2021, the defendants seek orders that:
1.The time to bring this application be extended.
2.Pursuant to Order 20 Rule 19(1)(a), (b) and or (d), the claims pleaded against the Third and Fourth Defendants be struck out.
3.Further and in the alternative to 2 above, pursuant to Order 20 Rule 19(1)(a), (b) and or (d), the claims be pleaded claiming an interest in lot 3 on Diagram 21550, contained in certificate of title volume 1251 folio 380 and as subdivided into lot 23 on Deposited Plan 74597, contained in certificate of title volume 2852 folio 897 and lot 23 on Deposited plan 74597, contained in certificate of title volume 2852 folio 898, be struck out.
4.Further and in the alternative to 3 above, pursuant to Order 20 Rule 19(1 )(a),(b) and or (d), paragraphs 6(b), 11 , 12, 14, 15., 31, 34, 35, 36, 37, 38 and 39 of the Amended Statement of Claim filed 8 February 2021 be struck out in so far as they claim an interest in lot 3 on Diagram 21550 contained in certificate of title volume 1251 folio 390 and as subdivided into lot 23 on Deposited Plan 74597, contained in certificate of title volume 2852 folio 898.
5.Further and in the alternative to 2 above, pursuant to Order 20 Rule 19(1)(a), (b) and or (d), the claims pleaded claiming an interest in lot 4 on Diagram 21550, contained in certificate of title volume 1251 folio 380 be struck out and as subdivided into lot 24 on Deposited Plan 7 4598, contained in certificate of title volume 2854 folio 661, be struck out.
6.Further and in the alternative to 5 above, pursuant to Order 20 Rule 19(a), (b) and or (d), paragraphs 6(c), 11 , 12, 14, 15, 31, 34, 35, 36, 37, 38 and 39 of the Amended Statement of Claim filed 8 February 2021 be struck out in so far as they claim an interest in lot 4 on Diagram 21550, contained in certificate of title volume 1251 folio 380 be struck out and as subdivided into lot 24 on Deposited Plan 74598, contained in certificate of title volume 2854 folio 661.
7.Pursuant to Order 20 Rule 19(a), (b) and or (d), the claims pleaded against the First and Second Defendants be struck out.
8.Further and in the alternative to 7 above, pursuant to Order 20 Rule 19(a)(b) and or (d), paragraphs 20 and 48A of the Amended Statement of Claim filed 8 February 2021 be struck out.
9.Further and in the alternative to 7 above, pursuant to Order 20 Rule 19(1)(a), (b) and or (d), the claims pleaded claiming an interest in part of lot 2 on Diagram 21550, contained in certificate of title volume 1401 folio 595 be struck out.
10.Further and in the alternative to 8 above, pursuant to Order 20 Rule 19(1 )(a), (b) and or (d), paragraphs 6(a)(ii), 11 (b), 12, 14(b), 31 , 40(b), 45(a), 46, 48, 48A, 49, 57 and 58 of the Amended Statement of Claim filed 8 February 2021 be struck out in so far as they claim an interest in lot 2 on Diagram 21550, contained in certificate of title volume 1401 folio 595.
11.Such further order as this Court deems appropriate.
12.The Plaintiff pay the costs of the application to be taxed, if not agreed.
The defendants seek to strike out the abovementioned paragraphs of the Statement of Claim on the grounds that those paragraphs:
(a)plead material facts that do not support a cause of action because they have not been sufficiently pleaded;
(b)disclose no reasonable cause of action pursuant to O 20 r 19(1)(a) of the Rules;
(c)alternatively, may prejudice, embarrass or delay the fair trial of the action pursuant to O 20 r 19(1)(c) of the Rules; or
(d)alternatively, are otherwise an abuse of process of the court pursuant to O 20 r 19(1)(d).

General principles

Order 20 r 19 of the Rules relevantly provides:
Striking out pleadings etc.
(1) The Court may at any stage of the proceedings, subject to subrule (3), order to be struck out or amended any pleading, or the indorsement of any writ in the action, or anything in any pleading or in the indorsement on the ground that -
(a)it discloses no reasonable cause of action or defence, as the case may be; or
(b)it is scandalous, frivolous or vexatious; or
(c)it may prejudice, embarrass or delay the fair trial of the action; or
(d)it is otherwise an abuse of the process of the Court, and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.
(2)No evidence shall be admissible on an application under subrule (1)(a).
(3)An application for an order under subrule (1) must -
(a)be made within 21 days of the service of any pleading, or amended pleading, or writ to which the application refers; and
(b)where the application is to strike out certain pleadings, specify -
(i)the paragraph of subrule (1) under which the application is made; and
(ii)those parts of the pleadings which the applicant seeks to have struck out;
and
(c)where the application is to strike out the entire pleading, clearly indicate that intention in the application.
In English v Vantage Holdings Group Pty Ltd,[1] the Court of Appeal approved of the principles relating to striking out pleadings as set out by Smith J in Vantage Holdings Group Pty Ltd v Donnelly:[2]
[1] English v Vantage Holdings Group Pty Ltd [2021] WASCA 47 [55].
[2] Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398 [60].
The principles relevant to the strike out application are as follows:
(a)the essential functions of a pleading are to define and limit the issues for decision, to provide the basis for determining discovery and the admissibility of evidence for trial, and to ensure a fair trial by putting the other side on notice of the case it must meet;
(b)a statement of claim must not plead allegations at too high a level of generality. A pleading must be sufficiently particular to conform with one of the primary objects of pleadings, to inform the opposing party of the case that it must meet;
(c)a statement of claim must state specifically the relief or remedy claimed;
(d)the court should proceed with caution before striking out a pleading on the ground that it does not disclose a reasonable cause of action. While the court may determine a difficult question of law on such an application, it would usually be appropriate to leave the determination of such questions for trial;
(e)in alleging no reasonable cause of action:
(i)the question to be decided is not whether the facts pleaded are in themselves sufficient to give rise to a cause of action. Rather, the question is whether it would be open to the party (on its pleadings) to prove facts at the trial which would constitute a cause of action; and
(ii)'reasonable' means reasonable according to law. If the facts pleaded conceivably give rise to relief, then the cause of action should be held to be reasonable;
(f)the mere fact that a case appears weak is not of itself sufficient to strike out the action;
(g)in considering a strike out application, it is now necessary to consider the role of pleadings in the context of case management techniques. Case management considerations are not, however, necessarily antithetical to the observance of pleading rules. The objects of O 1 r 4A and 4B of the Rules of the Supreme Court 1971 (WA) are often promoted by a clear and precise statement of the issues for decision;
(h)provided a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action (or defence), and apprising the parties of the case that has to be met, the court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the court to be spent extensively debating the application of technical pleading rules that evolved in, and derive from, a very different case management environment;
(i)pleadings may be struck out on the ground that they may prejudice, embarrass or delay the fair trial of the action because they are evasive, they conceal or obscure the real questions in controversy, they are ambiguous or not reasonably intelligible, they raise immaterial or irrelevant issues, they fail to confine the issues or state the case of the party in question with reasonable particularity, or they raise a case in terms which are simply too general; and
(j)irrelevant or unnecessary pleas in a statement of claim will be struck out on the grounds that they will prejudice, embarrass or delay the fair trial of the action where the defendant must traverse the allegations and, thereby, raise false issues. (citations omitted)

GH1's pleaded case

Paragraph 1 of the Statement of Claim pleads in relation to GH1:
(a)at all material times, it was a corporation incorporated under the Corporations Act 2001 (Cth) (the Act);
(b)David Raymond Spencer was appointed as the administrator of the Plaintiff on 5 April 2017;
(c)William James Harris (Mr Harris) and Robert Michael Kirman (Mr Kirman) were appointed as replacement joint and several administrators of the Plaintiff on 19 April 2017; and
(d)Mr Harris and Mr Kirman were appointed as joint and several liquidators of the Plaintiff on 222 May 2017.
Paragraph 2 of the Statement of Claim pleads that GH1 was formerly the trustee of the following trusts for the following periods:
(a)the Gucce Holdings Trust from 1 July 2005 to 6 March 2014;
(b)the Gucce Farms Trust from 20 March 2006 to 8 March 2012; and
(c)the Gucce Family Trust from July 2006 to around June 2016.
Paragraph 3 of the Statement of Claim pleads that at all material times, Tina Michelle Bazzo was and remains the sole director and secretary of:
(a)115 Cambridge Street Pty Ltd ACN 124 686 880 (115 Cambridge);
(b)Abernethy Land Company Pty Ltd ACN 117 645 495 (Abernethy);
(c)the First Defendant;
(d)the Second Defendant;
(e)the Third Defendant;
(f)the Fourth Defendant;
(g)the Fifth Defendant;
(h)Fastbet Investments Pty Ltd ACN 124 463 770 (Fastbet); and
(i)Parkdale Assets Pty Ltd ACN 116 872 372 (Parkdale).
Paragraph 4 of the Statement of Claim pleads that at all material times, Allen Bruce Caratti was a director of:
(a)the Sixth Defendant;
(b)MNWA Pty Ltd ACN 101 717 177 (In Liquidation) (formerly known as Mammoth Nominees Pty Ltd) (MNWA);
(c)ACN 142 745 337 Pty Ltd (In Liquidation) (formerly known as Mammoth Civil Pty Ltd) (Mammoth Civil); and
(d)Nobile Nominees Pty Ltd ACN 602 751 995 (Nobile Nominees), by reason of acting in the position of a director of Nobile Nominees and the director of Nobile Nominees being accustomed to acting, and acting, in accordance with Mr Caratti's instructions or wishes.
Paragraph 5 of the Statement of Claim pleads that Mr Caratti and Ms Bazzo are, and have been at all material times, de facto spouses.

The properties

Paragraph 6 of the Statement of Claim pleads that between April 2005 and December 2007, GH1 purchased the following properties (Properties):
(a)Lot 1 Holmes Street, Southern River in the State of Western Australia more particularly described as Lot 1 on Diagram 21550 being the whole of the land in Certificate of Title volume 1250 folio 145 (Lot 1) and Lot 2 Holmes Street, Southern River in the State of Western Australia more particularly described as 2 undivided shares of Lot 2 on Diagram 21550 being the whole of the land in Certificates of Title (Lot 2):
(i)volume 1401 folio 594 and
(ii)volume 1401 folio 595,
(b)Lot 3, 155 Holmes Street, Southern River in the State of Western Australia more particularly Lot 3 on Diagram 21550 being the whole of the land in Certificate of Title volume 1251 folio 380 and which on 17 October 2014 was subdivided into 2 parcels as follows:
(i)Lot 22 on Deposited Plan 7 4597 being the whole of the land in Certificate of Title volume 2852 folio 897 which was transferred to the WA Planning Commission on 17 October 2014; and
(ii)Lot 23 on Deposited Plan 7 4597 being the whole of the land in Certificate of Title volume 2852 folio 898 (Lot 3);
from Wei-fan Chong pursuant to a written contract dated 1 August 2007 and for a purchase price of $1,889,999;
(c)Lot 4, 135 Holmes Street, Southern River in the State of Western Australia more particularly described as Lot 4 on Diagram 21550 and being the whole of the land in Certificate of Title volume 1205 folio 232 and which on 17 October 2014 was subdivided into 2 parcels as follows:
(i)Lot 24 on Deposited Plan 7 4598 being the whole of the land in Certificate of Title volume 2854 folio 661 (Lot 4); and
(ii)Lot 25 on Deposited Plan 7 4598 being the whole of the land in Certificate of Title volume 2854 folio 662 which was transferred to the WA Planning Commission on 17 October 2014,
from Peter William Lapham, Huw Robert Lapham and Vernon Michael Lapham pursuant to a written contract dated 21 October 2006 and for a purchase price of $1.6million; and
(d)170 Holmes Street, Southern River in the State of Western Australia more particularly described as Lot 3 on Diagram 62717 being the whole of the land in Certificate of Title volume 1654 folio 444 (170 Holmes St) from Sippets Nominees Pty Ltd pursuant to a written contract dated 18 April 2007 and for a purchase price of $1.1 million.
Paragraph 7 of the Statement of Claim pleads that between 5 April 2005 and 28 November 2007, GH1 entered into four funding arrangements with Suncorp-Metway Limited (Suncorp) to provide finance for the purchase of each of the Properties (Suncorp Loans).
Paragraph 8 of the Statement of Claim pleads that the Suncorp Loans were all secured by, amongst other things, first registered mortgages granted by GH1 to Suncorp and registered over the certificates of title for each of the Properties for each loan (Suncorp Mortgages).
Paragraph 9 of the Statement of Claim pleads that by a letter of offer dated 14 May 2008, the Suncorp Loans were amalgamated into a single loan for the sum of $8.48 million (Amalgamated Suncorp Loan), following which the Amalgamated Suncorp Loan remained secured by the Suncorp Mortgages.
Paragraph 10 of the Statement of Claim pleads that in October 2013, the Amalgamated Suncorp Loan and Suncorp Mortgages were assigned and transferred by Suncorp to MTGRP LLC (Amalgamated MTGRP Loan and MTGRP Mortgages).

Bare trustees

Paragraph 11 of the Statement of Claim pleads that on 29 June 2009 and 28 May 2010 respectively, Ms Bazzo, as director of 115 Cambridge Street Pty Ltd (115 Cambridge), Abernethy Land Company Pty Ltd (Abernethy), the third defendant, the fourth defendant and the fifth defendant (Bare Trustees), executed written declarations of trust that each of the Bare Trustees would hold each of Lot 1, Lot 2, Lot 3, Lot 4 and 170 Holmes St, Southern River, respectively on bare trust for GH1 (Bare Trusts).
Paragraph 12 of the Statement of Claim pleads that between 22 May 2009 and 24 May 2010, Mr Caratti and Ms Bazzo, on behalf of GH1, instructed agents and lawyers to make arrangements for, and to effect transfers of, the Properties to each of the respective Bare Trustees in accordance with the Bare Trust arrangements.

Paragraph 13 of the Statement of Claim pleads that by letter dated 21 July 2009, the Office of State Revenue granted an exemption under the Duties Act 2008 (WA) for GH1 to transfer Lot 1, Lot 2 and 170 Holmes St to 115 Cambridge, Abernethy and the fifth defendant respectively.
Paragraph 14 of the Statement of Claim pleads that pursuant to the Bare Trusts, GH1 transferred the Properties to each of the Bare Trustees.
Paragraph 15 of the Statement of Claim pleads that Ms Bazzo was on written notice of, and acknowledged in writing that, the transfer of the Properties to the Bare Trustees was pursuant to the Bare Trusts.

Solvency issue

Paragraph 16 of the Statement of Claim pleads that on 5 September 2014, the Deputy Commissioner of Taxation issued a statutory demand pursuant to s 459E of the Corporations Act 2011 (Cth) to GH1 for unpaid taxation.
Paragraph 17 of the Statement of Claim pleads that on 26 September 2014, GH1 brought an application in the Federal Court of Australia to set aside the statutory demand referred to in par 16. The application was heard on 10 and 11 September 2015 and the application was dismissed on 23 October 2015 (Failed Set Aside Application).
Paragraph 18 of the Statement of Claim pleads that on 25 October 2015, GH1 appealed the decision referred to in par 17 to the Full Federal Court of Australia. The appeal was heard on 17 May 2016 (Second Appeal Hearing) and the appeal was dismissed on 16 November 2016.
Paragraph 19 of the Statement of Claim pleads that GH1 applied for special leave to the High Court of Australia to appeal the decision referred to in par 18. The special leave application was heard and refused on 30 March 2017.
Paragraph 20 of the Statement of Claim pleads that GH1 failed to comply with the statutory demand referred to in par 16 and pursuant to s 459C of the Corporations Act 2001 (Cth), GH1 was presumed to be insolvent on and from 26 September 2014 (Solvency Issue).

Sale of 170 Holmes St

Paragraph 21 of the Statement of Claim pleads that prior to 4 May 2007, Sippets Nominees Pty Ltd (Sippets Nominees) was the registered proprietor of 170 Holmes St.
Paragraph 22 of the Statement of Claim repeats par 6(d) above regarding GH1's purchase of 170 Homes St from Sippets Nominees and states that the sale contract also contained the following additional terms:
(a)the Plaintiff agreed that it would hold a portion of 170 Holmes St, namely 2800 square meters including the homestead residence, on trust for Sippets Nominees (170 Retained Land);
(b)the Plaintiff agreed that, following settlement of the purchase of 170 Holmes St by the Plaintiff, it would subdivide 170 Holmes St and as part of that subdivision, it would create a separate certificate of title for the 170 Retained Land;
(c)the Plaintiff agreed that upon the subdivision of 170 Holmes St, it would transfer the newly created separate certificate of title for the 170 Retained Land to Sippets Nominees free of all encumbrances; and
(d)the Plaintiff agreed that Sippets Nominees may lodge a subject to claim caveat over the title for 170 Holmes St to notify of its interest in the 170 Retained Land.
Paragraph 23 of the Statement of Claim pleads that on 4 May 2007 and upon settlement of the sale of 170 Holmes St to GH1:
(a)the Plaintiff became the registered proprietor of 170 Holmes St including the 170 Retained Land; and
(b)Sippets Nominees registered caveat K179310 over the title for 170 Holmes St to notify of its claim in the 170 Retained Land.
Paragraph 24 of the Statement of Claim pleads that by a written contract dated 6 February 2015, Sippets Nominees agreed to sell and Nobile Nominees Pty Ltd as trustee for the Nobile Nominees Trust agreed to buy the '170 Retained Land' for $800,000 (Nobile Contract).
Paragraph 25 of the Statement of Claim pleads that on or about 24 June 2015, the fifth defendant entered into a written loan agreement with the seventh defendant (Sippets Loan). The Sippets Loan contained the following terms:
(a)the Fifth Defendant borrowed the sum of $3million from the Seventh Defendant and agreed to repay that sum in accordance with the terms and conditions of that loan agreement;
(b)the Fifth Defendant secured the Sippets Loan by a first registered mortgage N061964 granted by the Fifth Defendant to the Seventh Defendant over the whole of the land contained in the title for 170 Holmes St; and
(c)on 14 July 2015, the Seventh Defendant disbursed the Sippets Loan amount in accordance with a loan disbursement authority signed by both Ms Bazzo as director of the Fifth Defendant and Mr Caratti in his personal capacity, namely:
(i)$801,854.80 to Sippets Nominees;
(ii)$1,691,645.20 to MTGRP LLC;
(iii)$1,500 to MGB Legal; and
(iv)$505,000 retained by the Seventh Defendant for future drawdown and costs.
Paragraph 26 of the Statement of Claim pleads that on 14 July 2015, Nobile Nominees completed the Nobile Contract and Sippets Nominees withdrew caveat K179310 from the title of 170 Holmes St.

Walthamstow Amalgamated Loan

Paragraph 27 of the Statement of Claim pleads that on 22 September 2015:
(a)a portion of the Amalgamated MTGRP Loan was assigned to Optima Funding Pty Ltd;
(b)the remaining portion of the MTGRP Loan was repaid; and
(c)the MTGRP Mortgages were discharged.
Paragraph 28 of the Statement of Claim pleads that in September 2015, GH1 and the Bare Trustees:
(a)borrowed the sum of $5.5million from the Seventh Defendant (Walthamstow Amalgamated Loan);
(b)secured the Walthamstow Amalgamated Loan by:
(i)first registered mortgages granted by the Plaintiff and the Bare Trustees to the Seventh Defendant and registered over the title for each of Lot 1, Lot 2, Lot 3 and Lot 4 bearing registrations N 128824, N128825, N128825, N128829 and N128832; and
(ii)a second registered mortgage granted by the Fifth Defendant to the Seventh Defendant and registered over the title for 170 Holmes St bearing registration N 130287; and
(c)authorised the disbursement of $5.492 million from the Walthamstow Amalgamated Loan to Mammoth Civil by written disbursement authority signed by Ms Bazzo as director for each of the Plaintiff and the Bare Trustees and Mr Caratti in his personal capacity.

Angas Refinance Loan

Paragraph 29 of the Statement of Claim pleads that on 18 November 2013, GH1 in its own right and as trustee for the Gucce Family Trust, entered into a written loan agreement with Angas Securities Pty Ltd for a loan sum of $2.012 million but increased to $2.412 million on 10 December 2014 (Angas Loan).
Paragraph 30 of the Statement of Claim pleads that on 29 February 2016, after the transfer of the Properties to the Bare Trustees, the Angas Loan was assigned to the seventh defendant (Angas Refinance Loan) and thereafter, the fifth defendant:
(a)in its own right entered into a further written loan agreement with the Seventh Defendant to replace the terms of the Angas Refinance Loan (Angas Replacement Loan); and
(b)secured the Angas Replacement Loan by, amongst other things, a third registered mortgage granted by the Fifth Defendant to the Seventh Defendant over the title for 170 Holmes St bearing registration N263232.

Treatment of the Properties

Paragraph 31 of the Statement of Claim pleads that at all material times since the acquisition of the Properties, GH1 has, in its financial statements and in its dealings with the Australian Taxation Office (ATO), represented and treated the Properties as assets held in its own right.

GH1's first caveats

Paragraph 32 of the Statement of Claim pleads that on 2 June 2017 GH1's administrators, William Harris and Robert Kirman caused GH1 to register caveats N638833, N638834 and N638835 over the certificates of title for Lot 3, Lot 4 and 170 Holmes St respectively to notify of the Bare Trusts (First Caveats).
Paragraph 33 of the Statement of Claim pleads that on 28 March 2018, this court in proceedings CIV 1521 of 2018 made orders to extend the operation of the First Caveats pending further order of the court.

Demands for vesting

Paragraph 34 of the Statement of Claim pleads that on 12 July 2017, GH1 issued a letter of demand to each of the third defendant, fourth defendant and fifth defendant demanding that they execute and return transfer forms sufficient to transfer ownership of Lot 3, Lot 4 and 170 Holmes St back to GH1 pursuant to the Bare Trusts (First Demand).
Paragraph 35 of the Statement of Claim pleads that by letter dated 17 July 2017, the third defendant, fourth defendant and fifth defendant refused to comply with the First Demand.
Paragraph 36 of the Statement of Claim pleads that on 15 April 2020, GH1 issued letters to each of the third defendant, fourth defendant and fifth defendant demanding that title of Lot 3, Lot 4 and 170 Holmes St be transferred back to GH1 and noting that if they refused, GH1 would commence these proceedings (Second Demand).
Paragraph 37 of the Statement of Claim pleads that the third defendant, fourth defendant and fifth defendant failed to respond to the Second Demand and failed to transfer or make arrangements to transfer title of Lot 3, Lot 4 and/or 170 Holmes St to GH1.
Paragraph 38 of the Statement of Claim pleads that GH1 is entitled to orders to vest the Bare Trusts and orders for the title of Lot 3, Lot 4 and 170 Holmes St to be transferred back to GH1, subject to the Walthamstow Mortgages.

Purchases by first defendant and second defendant

Paragraph 39 of the Statement of Claim pleads that at all material times prior to 10 April 2016 and 15 April 2016, the Bare Trusts were valid and enforceable.
Paragraph 39A of the Statement of Claim pleads that on 1 April 2016, Ms Bazzo caused the first defendant and second defendant to be incorporated.
Paragraph 40 of the Statement of Claim pleads that:
(a)by a written contract dated 15 April 2016, 115 Cambridge, purportedly in its capacity as bare trustee for the Gucce Holdings Trust, agreed to sell and the first defendant as trustee of the Marnbu Trust agreed to buy Lot 1 for the sum of $1,995,000; and
(b)by a written contract dated 10 April 2016, GH1 as trustee for the Gucce Holdings Trust and Abernethy, purportedly as bare trustee for the Gucce Holdings Trust, agreed to sell and the second defendant as trustee for the Ashwood Assets Trust agreed to buy Lot 2 for the sum of $1,650,000 (Sales Contracts).
Paragraph 41 of the Statement of Claim pleads that the Sales Contracts were signed by Ms Bazzo on behalf of each of 115 Cambridge, Abernethy and GH1 as seller and Ms Bazzo on behalf of each of the first defendant and second defendant as buyer.
Paragraph 42 of the Statement of Claim pleads that by the Sales Contracts, Ms Bazzo on behalf of each of 115 Cambridge, Abernethy and GH1, represented that 115 Cambridge, Abernethy and GH1 held the legal title of Lot 1 and Lot 2 on trust for the Gucce Holdings Trust and that the Gucce Holdings Trust held a beneficial interest in Lot 1 and Lot 2.
Paragraph 43 of the Statement of Claim pleads that on or about 16 May 2016:
(a)Ms Bazzo caused 115 Cambridge and Abernethy to transfer Lot 1 and Lot 2 to the First Defendant and Second Defendant respectively by transfers N328170 and N328155 (Sales Transfer) which transfers were registered without the discharge of the respective Walthamstow Mortgages; and
(b)Ms Bazzo caused the First Defendant and Second Defendant to become the registered proprietors of Lot 1 and Lot 2 respectively.
Paragraph 44 of the Statement of Claim pleads that by two written deeds of assignment, acknowledgment and assumption (Deeds of Assignment) dated 13 May 2016 between the first defendant and second defendant and the seventh defendant, the first defendant and second defendant each agreed to perform the obligations of 115 Cambridge and Abernethy pursuant to the terms of the Amalgamated Walthamstow Loan.
Paragraph 45 of the Statement of Claim pleads that the conduct pleaded at pars 40 to 44 was engaged in by Ms Bazzo, and therefore each of the first defendant, the second defendant, 115 Cambridge and Abernethy, with the knowledge that:
(a)the Plaintiff, its own right, was beneficial owner of Lot 1 and Lot 2;
(b)(b) it was not in the best interests of the Plaintiff or its creditors, to enter into the Sales Contracts or for Lot 1 or Lot 2 to be transferred to the First Defendant and Second Defendant under the terms of the Sales Contracts;
(c)Ms Bazzo’s conduct gave rise to, or occurred in circumstances in which there was, a conflict between her duties as a director of the Plaintiff and her duties as a director of one or more of the First Defendant, the Second Defendant, 115 Cambridge and Abernethy;
(d)the Plaintiff would not, and was not intended to, receive any consideration for the transfer of Lot 1 or Lot 2, under the Sales Contracts, upon the First Defendant and the Second Defendant becoming registered proprietors of those Lots, respectively, or at all;
(e)the Failed Set Aside Application was dismissed on 23 October 2015;
(f)the Second Appeal Hearing was pending; and
(g)there was a Solvency Issue in relation to the Plaintiff.
Paragraph 46 of the Statement of Claim pleads that GH1 has never received any consideration in respect of the transfer of Lot 1 or Lot 2 from the first defendant or the second defendant, or at all.
Paragraph 47 of the Statement of Claim pleads that by reason of the facts pleaded at pars 40 to 46, Ms Bazzo dishonestly, failed to exercise her powers, and discharge her duties, as a director of GH1, in good faith and in the best interests of GH1, or for a proper purpose.
Paragraph 48 of the Statement of Claim pleads that the first defendant and second defendant deliberately and knowingly participated in, aided and facilitated the conduct pleaded at par 47.
Paragraph 48A of the Statement of Claim pleads that by their conduct, the first defendant and second defendant became the registered proprietors of Lot 1 and Lot 2, respectively, by fraud.
Paragraph 49 of the Statement of Claim pleads that in the alternative, the first defendant and second defendant entered into the Sales Contracts, completed the Sales Contracts and became the registered proprietors of Lot 1 and Lot 2 subject to, knowing of and accepting an obligation to carry into effect the Bare Trusts held over Lot 1 and Lot 2 and subject to a constructive or resulting trust in favour of GH1.
Paragraph 50 of the Statement of Claim pleads that GH1 first became aware of the Deeds of Assignment as pleaded in par 44 shortly after its solicitors conducted inspection of the files held by the seventh defendant on 17 August 2018.
Paragraph 51 of the Statement of Claim pleads that on or about 7 January 2020, upon receipt of copies of the Sales Contracts from the ATO, GH1 first became aware of the the fraud.
Paragraph 21 of the Statement of Claim pleads that on 12 February 2019, GH1 registered caveats 0089509 and 0089510 in respect of Lot 1 and Lot 2 respectively, notifying of its interest over the certificates of title for Lot 1 and Lot 2.
Paragraph 53 of the Statement of Claim pleads that on 25 March 2020, the first defendant registered an application with the eighth defendant pursuant to s 1388 of the TLA to remove GH1's caveat from the title of Lot 1 and the caveat was removed on 17 April 2020.
Paragraph 54 of the Statement of Claim pleads that by letter dated 15 April 2020 (Lot 1 Demand), GH1:
(a)advised the First Defendant that it would not make an application to this Honourable Court for orders to extend the operation of the caveat over Lot 1;
(b)demanded that the First Defendant return title of Lot 1 to the Plaintiff pursuant to the Bare Trust; and
(c)advised the First Defendant that if the First Defendant failed to comply the Lot 1 Demand, the Plaintiff would commence proceedings for recovery of Lot 1.
Paragraph 55 of the Statement of Claim pleads that by letter dated 15 April 2020 (Lot 2 Demand), GH1:
(a)demanded that the Second Defendant return title of Lot 2 to the Plaintiff; and
(b)advised the Second Defendant that if the Second Defendant failed to comply the Lot 2 Demand, the Plaintiff would commence proceedings for recovery of Lot 2.
Paragraph 56 of the Statement of Claim pleads that the first defendant and second defendant have failed to respond to the Lot 1 Demand and the Lot 2 Demand and have failed to transfer or make arrangements to transfer the titles of Lot 1 and Lot 2 to GH1.
Paragraph 57 of the Statement of Claim pleads that as a consequence of the matters pleaded at pars 39 to 49:
(a)the first defendant and second defendant obtained title to Lot 1 and Lot 2 by fraudulent means; and
(b)GH1 has suffered loss and damage.
Paragraph 58 of the Statement of Claim pleads that by reason of the matters pleaded at pars 39 to 57:
(a)the first defendant and second defendant hold Lot 1 and Lot 2 on constructive or resulting trust for GH1;
(b)GH1 is entitled to orders to vest the Bare Trust and constructive or resulting trust in favour of GH1; and
(c)GH1 is entitled to orders to transfer the titles of Lot 1 and Lot 2 back to GH1 subject to the Walthamstow Mortgages.

Equitable mortgage claim by sixth defendant

Paragraph 59 of the Statement of Claim pleads that the sixth defendant has lodged the following caveats with the eighth defendant for registration (Sixth Defendant's Caveats):
(a)caveat N997360 on 1 October 2018 over the title for Lot 1 which registered on the title of Lot 1;
(b)caveat N997022 on 28 September 2018 over the title for Lot 2 which was registered on the title of Lot 2;
(c)caveat N997378 on 1 October 2018 over the title for Lot 3 which has not been registered on the title and is held in the Registrar's Packet following the matters pleaded in paragraph 33; and
(d)caveat N997375 on 1 October 2018 over the title for Lot 4 which has not been registered on the title and is held in the Registrar’s Packet following the matters pleaded in paragraph 33.
Paragraph 60 of the Statement of Claim pleads that by the Sixth Defendant's Caveats, the sixth defendant claims that it has entered into a mortgage with each of the first defendant, second defendant, third defendant and fourth defendant (Sixth Defendants' Mortgages).
Paragraph 61 of the Statement of Claim pleads that the sixth defendant was aware and is on actual notice of the Bare Trusts prior to the execution of the Sixth Defendant's Mortgages and the Sixth Defendant's Caveats by reason of:
(a)Mr Caratti being the director of the sixth defendant; and
(b)the imputed knowledge from Mr Caratti to the sixth defendant of the matters pleaded at para 12.
Paragraph 62 of the Statement of Claim pleads that as a result of the matters pleaded at par 61:
(a)the Sixth Defendant was not bona fide accepting the Sixth Defendant’s Mortgages and lodging the Sixth Defendant’s Caveats with the Eighth Defendant for registration; and
(b)the Plaintiff’s interest in the Properties pursuant to the Bare Trusts and subsequent constructive trusts in respect of Lot 1 and Lot 2, take priority over any equitable interest in the Properties created for the benefit of the Sixth Defendant by Sixth Defendant’s Mortgages.

Subdivision of Lot 1

Paragraph 63 of the Statement of Claim pleads that on 12 December 2019, the first defendant lodged subdivision application 0306830 with the eighth defendant and on 20 April 2020, the first defendant lodged a subdivision application 0391247 with the eighth defendant, to subdivide Lot 1 via two stages.
Paragraph 64 of the Statement of Claim pleads that as at 1 September 2020, the first defendant was the registered proprietor of 16 lots which are the subdivided lots of the former Lot 1.

Relief

GH1 seeks the following relief:
1.A declaration that the First Defendant and Second Defendant hold the titles of Lot 1 and Lot 2 on constructive or resulting trust for the Plaintiff.
2.A declaration that the Third Defendant, Fourth Defendant and Fifth Defendant hold Lot 3, Lot 4 and 170 Holmes St on bare trust for the Plaintiff.
3.A declaration that the First Defendant to Fifth Defendant hold no proprietary interest in Lot 1, Lot 2, Lot 3, Lot 4 and 170 Holmes St.
4.An order that:
(a)the constructive or resulting trust for Lot 1 and Lot 2 do vest; and
(b)the bare trust for Lot 3, Lot 4 and 170 Holmes St, do vest, and the Eighth Defendant do register and transfer the titles of all of the Properties to the Plaintiff and that the respective Walthamstow Mortgages remain registered.
5.Costs.
6.Further or other relief as the Court thinks fit.

The substantive issues

The defendants provide two broad bases in support of the strike out application:
(1)GH1's claims against the first and second defendants cannot amount to fraud for the purposes of s 68 of the TLA; and
(2)GH1's claims against the third and fourth defendants are an abuse of process or give rise to an issue estoppel because of determinations that have been previously made by the AAT.
I will address each issue in turn before addressing other peripheral issues raised by the parties.

Claims against first and second defendants cannot amount to fraud

GH1 pleads that the first and second defendants, by their conduct, became the registered proprietors of Lot 1 and Lot 2, respectively, by fraud.
Fraud is a recognised exception to indefeasibility of title. Section 68(1) of the TLA provides:
Notwithstanding the existence in any other person of any estate or interest whether derived by grant or transfer of the fee simple from the Crown or otherwise which but for this Act might be held to be paramount or to have priority the proprietor of land or of any estate or interest in land under the operation of this Act shall except in case of fraud hold the same subject to such encumbrances as may be notified on the registered certificate of title for the land; but absolutely free from all other encumbrances whatsoever except the estate or interest of a proprietor claiming the same land under a prior registered certificate of title and except as regards any portion of land that may by wrong description of parcels or boundaries be included in the certificate of title or instrument evidencing the title of such proprietor not being a purchaser for valuable consideration or deriving from or through such a purchaser.
The defendants submit that the claims against the first and second defendants should be struck out for a failure to establish an arguable case of fraud under s 68 of the TLA.
Le Miere J summarised the relevant principles relating to fraud under the TLA in Westpac Banking Corporation v Dunn:[3]
The exception of fraud relates only to fraud by the current registered proprietor or her agent. There is no fraud on the part of a registered proprietor in merely acquiring title with notice of an existing unregistered interest or in taking a transfer with knowledge that its registration will defeat such an interest: Bahr v Nicolay (No 2) [1988] HCA 16; (1988) 164 CLR 604, 613 (Mason CJ & Dawson J), 653 (Brennan J). In Bahr v Nicolay Mason CJ and Dawson J said that 'not … all species of equitable fraud stand outside the statutory concept of fraud' (614). Their Honours said that actual fraud, personal dishonesty or moral turpitude lie at the heart of the indefeasibility provisions of the TLA. Their Honours said that s 68 and s 134 of the TLA should be construed strictly and the exception liberally and said:
[TLA s 68] restricts, in the interests of the indefeasibility of title, rights which would exist otherwise at law or in equity. And granted that an exception is to be made for fraud why should the exception not embrace fraudulent conduct arising from the dishonest repudiation of a prior interest which the registered proprietor has acknowledged or has agreed to recognise as a basis for obtaining title, as well as fraudulent conduct which enables him to obtain title or registration? In the context of s 68 there is no difference between the false undertaking which induced the execution of the transfer in Lok Yew and an undertaking honestly given which induces the execution of a transfer and is subsequently repudiated for the purpose of defeating the prior interest. The repudiation is fraudulent because it has as its object the destruction of the unregistered interest notwithstanding that the preservation of the unregistered interest was the foundation or assumption underlying the execution of the transfer. For the same reason the subsequent repudiation by a transferee of property of a limited beneficial interest in that property is fraudulent, when the transferee took the property on terms that the limited beneficial interest would be retained by the transferor. It is immaterial that the transferee 'may have been innocent of any fraudulent intent in taking the conveyance in absolute form' …(615 - 616).
[3] Westpac Banking Corporation v Dunn [2011] WASC 7 [7].
The defendants contended that the Statement of Claim only pleads a dishonest exercise of powers by the director, Ms Bazzo, and that it does not allege that there was any fraud on the part of the first and second defendants.[4] The pleading that the first and second defendants' knowing participation in the conduct of Ms Bazzo amounts to fraud was characterised as fundamentally and fatally flawed.[5]
[4] First to fourth defendant's submissions in support of application filed 18 June 2021 [7] (Defendant's Submissions).
[5] Defendant's Submissions [8].
The defendants submitted that knowledge that a prior unregistered interest will be defeated by registration is insufficient to constitute fraud by the person becoming the registered proprietor. Even if GH1 established knowledge of a breach of trust, the defendants submitted that it would not establish fraud for the purposes of s 68 of the TLA.[6]
[6] Defendant's Submissions [10]
GH1 submitted that contrary to the defendants' submissions, properly understood, its claims are that, by their own fraudulent conduct, the first and second defendants became the registered proprietors of Lots 1 and 2, such that they are not entitled to any proprietary interest in those properties by operation of s 68 of the TLA.[7]
[7] Plaintiff's submissions in opposition filed 16 July 2021 [14] (Plaintiff's Submissions).
GH1 sought to emphasise the context in which the alleged fraud is pleaded to arise, including:
(a)that the sale and transfer occurred in circumstances in which GH1 was presumed to be insolvent;
(b)it was not in GH1's best interests (or the interests of its creditors) that Lots 1 and 2 be transferred to the first and second defendants; and
(c)the transfer of the properties occurred when Ms Bazzo, as common director of GH1 and the first and second defendants, had a conflict of duties.[8]
[8] Plaintiff's Submissions [15].
GH1 submitted that its pleaded case is that the first and second defendants knew that GH1's interest in Lots 1 and 2 was being dishonestly misappropriated as a result of the conduct of their common director.[9] With that knowledge, the first and second defendants then deliberately and knowingly participated in, aided and facilitated that conduct. GH1 claims that it was by that conduct that the first and second defendants became the registered proprietors of Lots 1 and 2, that conduct amounting to fraud.[10]
[9] Plaintiff's Submissions [19]
[10] Plaintiff's Submissions [20].
GH1 accepted that notice of the existence of an unregistered interest or trust does not in itself constitute fraud.[11] However, GH1 submitted that fraud may relevantly occur where there is a collaboration and collusion of the seller and purchaser of land through common directors or where the object of the transfer of land is to cheat a person of a known existing right and a deliberate and dishonest trick causing an interest not to be registered.[12] The conduct of the first and second defendants was contended to fall within these categories.
[11] Plaintiff's Submissions [21].
[12] Plaintiff's Submissions [22] - [26].
In Westpac Banking Corporatin v Dunn, Le Miere J considered an application by Westpac to extend the operation of a caveat over land registered to a director on the basis that the director obtained the land through fraud. The director purchased the land from her own company and signed on behalf of each the seller and buyer for the transaction. At the time of signing the contract and effecting the transfer, the director had knowledge that she, as director of the seller company, had previously granted a fixed and floating charge to Westpac.
Le Miere J held that it may be arguable that the director's knowledge and actions fall within the fraud exception of s 68 of the TLA:[13]
[13] Westpac Banking Corporation v Dunn [10] - [11], [13].
It may be arguable that the circumstances of this case fall within the fraud exception. Before referring further to the fraud argument I will consider the 'in personam' exception. If the circumstances of this case arguably fall within the in personam exception it is not necessary that they also fall within the fraud exception.
In personam exception
A recognised exception to the principle of indefeasibility of title is where the registered proprietor has obligations enforceable against them personally. The so-called in personam exception recognises that a registered proprietor remains subject to obligations enforceable against them personally, even if those obligations require that the property in respect of which registration has been obtained must be dealt with in a particular manner.
…
It is not necessary or appropriate for me to form a final opinion whether or not the in personam exception applies in the circumstances of this case. It is sufficient that there is a serious question to be tried that it does. I find that there is a serious question to be tried, or prima facie case, that Ms Dunn has become subject to a constructive trust in favour of Westpac to the effect that she holds the land subject to the rights created in favour of Westpac by the Charge. M Dunn did not acknowledge the Charge, or assume the obligations imposed by the Charge, in the agreement by which she became registered proprietor of the property. But it is arguable that the circumstances referred to in [8] give rise to a constructive trust in favour of Westpac.
On GH1's pleaded case, the defendants were aware of the previous claims. On the pleaded case it cannot be said that they were innocent of any misconduct in the events that led to the transfer. The defendants arguably took title in a manner that involved personal dishonesty.
It is not an appropriate case in which to strike out the pleadings because no cause of action is disclosed.

Claims against third and fourth defendants are abuse of process or give rise to issue estoppel

GH1 claims against the third and fourth defendants in respect of Lots 3 and 4. The defendants seek to strike out these claims on the basis that they are an abuse of process or alternatively, are the subject of issue estoppel.
To that end, the defendants rely on a decision of the AAT in respect of an application made by GH1 on 24 April 2015 for review of a decision made by the Commissioner for Taxation. The AAT upheld the decision of the Commissioner disallowing in part GH1's objection to certain GST assessments. The AAT made the following findings:
(a)parcel 2 of Lot 2 was held by GH1 in its capacity as trustee for the Gucce Holdings Trust;[14]
(b)GH1 holds its interest in Lot 3 as trustee for the Gucce Holdings Trust;[15]
(c)GH1 holds its interest in Lot 4 as trustee for the Gucce Holdings Trust;[16] and
(d)GH1 wrongly claimed input tax credits for the earthwork services in relation to parcel 2 of Lot 2, Lot 3, and Lot 4, as GH1 was not the beneficial owner of the land and did not hold a relevant interest therein under the joint venture.[17]
[14] GH1 Pty Ltd, in Liquidation and Commissioner of Taxation (Taxation) [2017] AATA 1100 (14 July 2017) [23].
[15] GH1 Pty Ltd, in Liquidation and Commissioner of Taxation (Taxation) [24].
[16] GH1 Pty Ltd, in Liquidation and Commissioner of Taxation (Taxation) [25].
[17] GH1 Pty Ltd, in Liquidation and Commissioner of Taxation (Taxation) [94].
The defendants submitted that the claims against the third and fourth defendants are an abuse of process because GH1 seeks to relitigate an issue already decided in the AAT proceedings, namely, whether GH1 is entitled to a beneficial interest in Lots 3 and 4.
The court has an inherent jurisdiction to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute.[18]
[18] Hunter v Chief Constable of the West Midlands Police [1982] AC 529, 536; Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378, 393 (Mason CJ, Deane & Dawson JJ).
The onus of satisfying the court that a proceeding is an abuse of process is 'a heavy one'[19] and the procedure should be exercised 'only in the most exceptional circumstances'.[20]
[19] Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509, 529 quoting Goldsmith v Sperrings Ltd [1977] 1 WLR 478, 498.
[20] Williams v Spautz citing Jago v District Court (NSW) [1989] HCA 46; (1989) 168 CLR 23, 34.
As the Court of Appeal held in Sheraz Pty Ltd v Vegas Enterprises Pty Ltd,[21] the High Court has recognised that cases of abuse of process ordinarily involve at least one of three characteristics:
(a) a court's processes being invoked for an illegitimate or collateral purpose;
(b) the use of a court's procedures being unjustifiably oppressive to a party; or
(c) the use of a court's procedures bringing the administration of justice into disrepute.[22]
[21] Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4 [6].
[22] Moti v The Queen [2011] HCA 50; (2011) 245 CLR 456 [10]; Batistatos v Roads and Traffic Authority of New South Wales [2007] HCA 27; (2006) 226 CLR 256 [15]; Rogers v The Queen [1994] HCA 42;
I note that despite citing Sheraz in their submissions,[23] the defendants do not suggest that one or more of the above three characteristics are apparent in the circumstances of this case.
[23] Defendant's Submissions [27].
There is well-established authority that the principles of abuse of process are not confined by the doctrines of res judicata, issue estoppel and Anshun estoppel. A court may invoke these principles to prevent attempts to re-litigate an issue which has in substance been litigated and determined in earlier proceedings.[24]
[24] Sheraz [11].
GH1's essential submission is that the claim against the third and fourth defendants should not be struck out for abuse of process because the circumstances of these proceedings are fundamentally different from those before the AAT.[25]
[25] Plaintiff's Submissions [35].
As to issue estoppel, the defendants contend that GH1 should be estopped from seeking to relitigate the question of beneficial ownership of Lots 3 and 4 by virtue of the findings of the AAT.
In Kuligowski v Metrobus,[26] the High Court held that for issue estoppel to apply in subsequent proceedings, three elements must be satisfied:
(1)that the same question has been decided;
(2)that the judicial decision which is said to create the estoppel was final; and
(3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.
[26] Kuligowski v Metrobus [2004] HCA 34; (2004) 220 CLR 363 [21].
For an issue to have been determined in a previous proceeding, it must have been 'actually litigated and determined'.[27]
[27] Kuligowski [53].
The defendants submitted that in the proceedings before the AAT, GH1 accepted that its interest in Lots 3 and 4 were held in its capacity as trustee for the Gucce Holdings Trust. Accordingly, the defendants contend that the question of beneficial ownership has been actually litigated and determined.[28]
[28] Defendant's Submissions [36].
GH1 submitted that issue estoppel cannot apply to these proceedings because none of the defendants were parties to the AAT proceedings and further, because decisions of the AAT, being administrative rather than judicial in nature, are decisions of, or substitute decisions of, the decision maker.[29]
[29] Plaintiff's Submissions [40].
The overwhelming problem for the defendant in relation to issue estoppel is that none of the defendants were parties to the AAT proceedings.[30] Accordingly, the defendants' submissions must fail on its claims regarding issue estoppel.
[30] Kuligowski [21].
To the extent that abuse of process requires an examination of substance rather than form, pleadings are not the place to determine matters of substance.
Unlike Sheraz, there is no relationship between the liquidators and the former directors of the defendants. The defendants have not articulated any matters that would bring this case within the principles stated in Sheraz.
The grounds for striking out the pleadings on the basis of an abuse of process or issue estoppel are not made out by the defendants.

Non-joinder

Further to the above, the defendants submit that two parties, namely, 115 Cambridge and Abernathy, should be joined to these proceedings on the basis that they were parties to the impugned transactions and that GH1 alleges fraud against them in respect of the impugned transactions concerning Lots 1 and 2. The defendants assert that these proceedings should accordingly be stayed pending an application to join the two parties as defendants to the proceedings.[31]
[31] Defendant's Submissions in reply filed 24 August 2021 [14] - [15].
Order 18 r 6(1) of the Rules provides that 'no cause or matter shall be defeated by reason of misjoinder or non-joinder'. It is of course open for the defendants to apply to join those parties it says should be joined.[32]
[32] Rules of the Supreme Court 1971 (WA) O 16 r 6(2)(b).

Alleged deficiencies in the defendants' stay application

GH1 submits that the defendants' stay application should be dismissed as it fails to conform with the Rules because the defendants have failed to:
(a)confer with GH1 prior to filing this application, as required by O 59 r 9 of the Rules; and
(b)state the specific paragraphs of the pleading that they claim should be struck out, as required by O 20 r 19(2)(b) of the Rules.[33]
[33] Plaintiff's Submissions [2] - [3].
With respect to conferral issue, GH1 submitted that the defendants merely sent two emails prior to the filing of their chamber summons in support of the strike out application.[34]
[34] Plaintiff's Submissions [5].
The defendants seek to waive the necessity for conferral on the basis that the application completely deals with the claims against the first to fourth defendants.[35] GH1 contends that the defendants' arguments in favour of waiving conferral are inadequate and should not be accepted.[36]
[35] Memorandum of waiver of conferral filed 15 October 2020.
[36] Plaintiff's Submissions [6].
I am not persuaded that it is appropriate to dismiss the strike out application for a failure to confer. There was little, if any, prospect of conferral achieving anything in this case.
GH1 had already responded to the defendants' criticisms of its original statement of claim by filing an amended statement of claim.
As to the form of the strike out application, GH1 submitted that the defendants have failed to state with sufficient specificity the paragraphs of the pleading that they apply to strike out.[37]
[37] Plaintiff's Submissions [7] - [9].
I am satisfied that the defendants' amended chamber summons adequately sets out the paragraphs of the Statement of Claim that they seek to strike out.
Although the application was out of time, it was reasonable to bring the application as it was in the interests of justice that it be resolved at the time.

Orders

I accordingly make the following orders:
(1)Pursuant to O 29 r 19 of the Rules of the Supreme Court 1971 (WA), the time for the first to fourth defendants' to file the application to strike out the plaintiff's Statement of Claim be extended to 23 August 2021.
(2)The first to fourth defendants' application to strike out the plaintiff's Statement of Claim be dismissed.
(3)The plaintiff do file and serve any affidavit and submissions in support of an application for a special costs order by 23 December 2022.
4.The first to fourth defendants do file any affidavit and submissions in opposition by 13 January 2023.
5.The plaintiff's application for a special costs order be determined on the papers.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

SB
Associate to the Honourable Justice Curthoys

8 DECEMBER 2022

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: GH1 PTY LTD (IN LIQ) -v- MARNBU PROJECTS PTY LTD [2022] WASC 416 (S)
CORAM:   LUNDBERG J
HEARD:   ON THE PAPERS
DELIVERED          :   14 JUNE 2023
FILE NO/S:   CIV 1653 of 2020
BETWEEN:   GH1 PTY LTD (IN LIQ)
Plaintiff
AND
MARNBU PROJECTS PTY LTD
First Defendant
ASHWOOD ASSETS PTY LTD
Second Defendant
OCEAN KEYS (WA) PTY LTD
Third Defendant
FLYNN DRIVE HOLDINGS PTY LTD
Fourth Defendant
BYFORD LAND COMPANY PTY LTD
Fifth Defendant
MAMMOTH CONTRACTING (WA) PTY LTD
Sixth Defendant
WALTHAMSTOW PTY LTD
Seventh Defendant
THE REGISTRAR OF TITLES
Eighth Defendant

Catchwords:

Practice and procedure - Plaintiff's application for costs of the first to fourth defendants' unsuccessful strike-out application and for special costs orders - Items 10(a) and 10(c) of the 2020 Costs Scale - Orders sought to remove hourly limits - Appropriate form of costs orders - Turn on own facts

Legislation:

Legal Profession Act 2008 (WA), s 280
Legal Practitioners (Supreme and District Courts) (Contentious Business) Determination 2020 (WA), items 10(a) and 10(c)
Legal Profession Uniform Law Application Act 2022 (WA), s 141
Supreme Court Act 1935 (WA), s 37

Result:

First to fourth defendants to pay costs of the strike-out application
Plaintiff's application for special costs orders allowed

Category: B

Representation:

Counsel:

Plaintiff	:	No appearance
First Defendant	:	No appearance
Second Defendant	:	No appearance
Third Defendant	:	No appearance
Fourth Defendant	:	No appearance
Fifth Defendant	:	No appearance
Sixth Defendant	:	No appearance
Seventh Defendant	:	No appearance
Eighth Defendant	:	No appearance

Solicitors:

Plaintiff	:	HWL Ebsworth Lawyers
First Defendant	:	Alan Rumsley
Second Defendant	:	Alan Rumsley
Third Defendant	:	Alan Rumsley
Fourth Defendant	:	Alan Rumsley
Fifth Defendant	:	Alan Rumsley
Sixth Defendant	:	Alan Rumsley
Seventh Defendant	:	Taylor Smart
Eighth Defendant	:	State Solicitor's Office

Case(s) referred to in decision(s):

Armstrong Scalisi Holdings Pty Ltd v Piscopo (Trustee), in the matter of Collins [2017] FCA 423.
BCBC Singapore Pte Ltd v Pt Bayan Resources Tbk [No 5] [2023] WASC 116.
Bolt v Bolt [2023] WASC 162 (S).
C H Leaman Investments Pty Ltd v Tuesday Enterprises Pty Ltd as trustee for The Steele Investment Trust [2022] WASC 447 (S) [9].
City of Bayswater v Viva Energy Australia Pty Ltd [No 2] [2022] WASC 384 (S).
Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd [2014] WASC 469 (S).
Frigger v Lean [2012] WASCA 66.
Power and Water Corporation v Eni Australia BV [2022] WASC 376 (S).
Sino Iron Pty Ltd v Mineralogy [No 2] [2017] WASCA 76 (S).

Table of Contents

A. Introduction

B. Background

Strike-out Application

Reasons of Curthoys J

Directions in relation to costs

Relevant materials

C. Proposed Order 1 - costs of the Strike-out Application

D. Proposed Order 2 - special costs orders

Basis for the orders sought

Plaintiff's submissions

Defendants' submissions

Relevant principles

Analysis - first statutory criterion

Analysis - second statutory criterion

Form of the order

Role of solicitors

E. Proposed Order 3 - costs of the present application

F. Orders

ATTACHMENT A

LUNDBERG J:

A. Introduction

These reasons concern an application for costs, including special costs orders, made following a strike-out application determined by Curthoys J in December 2022. The application has been referred to me for determination.

B. Background

Strike-out Application

On 23 September 2020, the plaintiff (GH1) filed a statement of claim in this action (SOC). On 15 October 2020, the first to fourth defendants (the defendants)[38] filed a chamber summons seeking to strike-out the SOC. In response, on 8 February 2021, the plaintiff filed an amended statement of claim (ASOC). That led to the strike-out application being amended by the defendants on 23 August 2021, which was prior to the hearing on 12 October 2021 (the Strike-out Application).[39]
[38] The fifth to the eighth defendants did not participate in the interlocutory application to which these reasons relate. A reference to the defendants in these reasons does not include those parties.
[39] The orders sought by the defendants in the amended chambers summons were extracted by Curthoys J in his reasons: Reasons, [11].
The Strike-out Application required that Curthoys J consider two broad challenges as articulated by the defendants, which were said to justify the striking-out of certain of the plaintiff's claims. The plaintiff, which is a company in liquidation, brings claims for declarations to the effect that five parcels of land (described as Lot 1, Lot 2, Lot 3, Lot 4 and 170 Holmes Street) are held on constructive or resulting trust.
The first challenge was an assertion that the plaintiff's claims against the first and second defendants could not arguably amount to fraud for the purposes of s 68 of the Transfer of Land Act 1893 (WA) (TLA).[40]
[40] The plaintiff claims against the first defendant in relation to the land defined in the ASOC as Lot 1, which is said to have been sold in contravention of the plaintiff's rights for the sum of $1,995,000 (ASOC, [40(a)]). The plaintiff claims against the second defendant in relation to the land defined in the ASOC as Lot 2, which is said to have been sold in contravention of the plaintiff's rights for the sum of $1,650,000 (ASOC, [40(b)]).
The second challenge was an assertion that the plaintiff's claims against the third and fourth defendants were an abuse of process or gave rise to an issue estoppel because of determinations that had previously been made by the Administrative Appeals Tribunal (AAT).[41]
[41] The plaintiff claims against the third and fourth defendants in relation to the land defined in the ASOC as Lot 3 and Lot 4 respectively, which are said to have been transferred to those defendants in contravention of the plaintiff's rights (ASOC, [11] and [14]).
As to the first of these challenges, the plaintiff had submitted before Curthoys J that contrary to the submissions of the defendants, the plaintiff's claims were that, by their own fraudulent conduct, the first and second defendants became the registered proprietors of two lots, such that they were not entitled to any proprietary interest in those properties by operation of s 68 of the TLA.[42]
[42] Plaintiff's Submissions, [11] - [26]; Reasons, [90].
The plaintiff further submitted that it had pleaded that the first and second defendants knew that the plaintiff's interest in Lots 1 and 2 were being dishonestly misappropriated as a result of the conduct of their common director. With that knowledge, the first and second defendants then deliberately and knowingly participated in, aided and facilitated that conduct. The plaintiff claims that it was by that conduct that the first and second defendants became the registered proprietors of Lots 1 and 2, and that conduct amounted to fraud.[43]
Reasons of Curthoys J
[43] Plaintiff's Submissions, [11] - [26]; Reasons, [92].
In substance, Curthoys J granted the defendants an extension of time to file the Strike-out Application but ultimately dismissed the Strike-out Application itself.[44]
[44] Reasons, [126].
Ultimately, Curthoys J concluded that, on the pleaded case, there was an allegation that the defendants were aware of the previous claims. It therefore could not be said that they were innocent of any misconduct in the events that led to the transfer. The defendants arguably took title in a manner that involved personal dishonesty. It was thus not an appropriate case in which to strike-out the pleadings on the basis that no cause of action had been disclosed.[45]
[45] Reasons, [84] - [97].
As to the second challenge, Curthoys J analysed the defendants' submission that the claims against the third and fourth defendants were an abuse of process, or subject to an issue estoppel, because the plaintiff seeks to relitigate an issue already decided in the AAT proceedings, namely, whether the plaintiff is entitled to a beneficial interest in certain lots.
Curthoys J concluded that the defendants' submission on issue estoppel must fail because none of the defendants were parties to the AAT proceedings. The abuse of process challenge also failed. His Honour accepted the plaintiff's submission that the present proceedings are fundamentally different from those before the AAT. To the extent that abuse of process requires an examination of substance rather than form, pleadings are not the place to determine matters of substance.[46]
[46] Reasons, [98] - [115].
I note that, if the Strike-out Application had succeeded, the plaintiff's claims against this set of defendants would have been struck out in their entirety, leaving claims only as against the fifth to the seventh defendants.
Directions in relation to costs
His Honour made directions to allow the plaintiff to file materials in support of an application for a special costs order. The defendants were permitted an opportunity to file responsive materials. The application for special costs was ordered by Curthoys J to be determined on the papers. That application was referred to me by his Honour for determination.
The costs orders sought by the plaintiff are that:
(a)the defendants do jointly and severally pay the plaintiff's costs of the Strike-out Application (Proposed Order 1);
(b)any limit of hours fixed by the relevant costs scale be removed in relation to the costs payable (Proposed Order 2); and
(c)the defendants pay the plaintiff's costs of the application for special costs itself (Proposed Order 3).
Relevant materials
I have before me the following primary materials for the purposes of determining the question of costs:
(a)the reasons for decision of Curthoys J in GH1 Pty Ltd (In Liq) v Marnbu Projects Pty Ltd [2022] WASC 416;
(b)the written submissions filed and served on behalf of the plaintiffs dated 22 December 2022 (Plaintiff's Submissions), together with the attached minute of proposed orders dated 22 December 2022;
(c)the affidavit of Cassandra Michelle Guy sworn 22 December 2022, filed and served on behalf of the plaintiff (Guy Affidavit); and
(d)the written submissions filed and served on behalf of the defendants dated 18 January 2023 (Defendants' Submissions).
In addition, I have access to, and have reviewed, the materials which were filed by the parties for the purposes of the Strike-out Application,[47] as well as the underlying pleadings which were under challenge.[48] Given the nature of this costs application, and the materials relied upon by the parties, there is no difficulty with me determining the application, and I am at no disadvantage in doing so, even though I was not the judicial officer who determined the substantive application.

C.Proposed Order 1 - costs of the Strike-out Application
[47] Consisting of the chamber summons filed 15 October 2020, the amended chambers summons dated 23 August 2021, and the written submissions and affidavit material filed by the parties for the purposes of the Strike-out Application.
[48] Being the SOC and the ASOC.

I can dispose of Proposed Order 1 very briefly as there appears to be no opposition thereto. [49] In any event, it is an order that logically follows from the result of the Strike-out Application given the general rule that costs should follow the event.[50] The inclusion of the language in Proposed Order 1 of 'jointly and severally' is probably unnecessary but there is no reason not to include that language for the avoidance of doubt.
[49] Plaintiff's Submissions, [2]; and Defendants' Submissions, [3].
[50] Rules of the Supreme Court 1971 (WA) (RSC), O 66 r 1(1).
I will therefore make an order substantially in terms of Proposed Order 1. Consistent with the court's Practice Directions, the order should require payment of the costs 'forthwith', rather than 'in any event'.[51]

D.Proposed Order 2 - special costs orders
Basis for the orders sought
[51] PD 4.7.1.

The application for an order for special costs is made pursuant to s 141(3) of the Legal Profession Uniform Law Application Act 2022 (WA) (Uniform Law). From a timing perspective, both parties proceeded on the basis that the Uniform Law applies to govern the present application for special costs, although as the predecessor provision is in identical terms nothing would seem to turn on this question.[52]
[52] Legal Profession Act 2008 (WA) (LPA), s 280(2).
Section 141(3) of the Uniform Law provides as follows:
(3) Despite subsection (1), 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 any or all 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.
The defendants oppose the making of any special costs order pursuant to s 141(3) and submit that, if I accept their position in this regard, the costs of the costs application itself should be the defendants' costs (and be set off against the claim for costs made by the plaintiff).[53]
[53] Defendants' Submissions, [4] and [22].
The terms of Proposed Order 2 as sought by the plaintiff are in broad terms. The order sought is that any limit of hours fixed by the relevant costs scale be removed. The plaintiff does not seek that the maximum hourly and daily rates for solicitors and counsel be raised in any respect.
The scale which applies to the work carried out by the practitioners engaged by the plaintiff is the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2020 (2020 Costs Scale). The 2020 Costs Scale applies in respect of work undertaken between 1 July 2020 and 30 June 2022.
Plaintiff's submissions
Although the order sought is broadly drafted, the Plaintiff's Submissions draw attention to item 10(a) and item 10(c) of the 2020 Costs Scale. GH1 submits that the scale limit for these items is inadequate.
As to item 10(a), the 2020 Costs Scale prescribes a maximum allowance of $13,530 for counsel other than senior counsel (with a maximum daily rate of $4,510). The allowance for senior counsel is $20,460 (with a maximum daily rate of $6,820). These limits are effectively calculated by reference to the hourly limits (comprised of two days of preparation and one day for hearing).
Item 10(c) relates to consent orders and has a maximum scale limit of $561, with the work to be performed by a senior practitioner with a maximum allowance of 1 ½ hours. The maximum allowable hourly rate for a senior practitioner is $495 per hour. For more junior solicitors, lower maxima are prescribed.[54]
[54] 2020 Costs Scale, clause 11 (Maximum hourly and daily rates).
GH1 submits that the issues arising on the Strike-out Application were sufficiently complex in nature that it is appropriate to remove the scale limits in respect of item 10(a). GH1 points to the number and seniority of counsel briefed by the plaintiff on the matter, the seriousness of the allegation raised by the defendants (going to matters of fraud), the importance of the interlocutory application to GH1 itself, the factual complexity of the matter, the comprehensive submissions which were filed, the appropriateness of having GH1's specialist lawyer (Ms Guy) attend at the hearings, the time period over which the Strike‑out Application was progressed, the unnecessary additional materials filed by the defendants, and the staggered manner in which the defendants identified relevant authorities.[55]
[55] Plaintiff's Submissions, [7].
As to item 10(c), GH1 submits that the allowance for one hour of a senior practitioner's time is simply inadequate. This inadequacy arises because GH1 experienced unusual difficulty in 'its failed attempts to confer with the Defendants to progress the application and the action and the necessity to relist the matter before the Court'.[56]
[56] Plaintiff's Submissions, [8].
In general terms, the plaintiff submits that the limits in the scale for these matters are inadequate based upon the number of hours properly and necessarily expended by the plaintiff's lawyers.[57] The inadequacies are said by the plaintiff to arise from the legal issues canvassed in the Strike-Out Application, the complexity of the issues, and the importance of the outcome to the plaintiff's substantive claim.[58]
[57] Plaintiff's Submissions, [9].
[58] Plaintiff's Submissions, [10].
The Guy Affidavit attaches a draft bill of costs (which is Attachment CMG1). A draft bill of costs is not always required for these applications, but the detailed draft bill attached to Ms Guy's affidavit is of considerable utility on this application. The draft bill of costs quantifies the relevant work undertaken by the plaintiff's lawyers as set out in the table below (claimed pursuant to item 10(a)):

Date

Description of Work

Scale

Amount

13.10.2020

to

14.07.2022

First to Fourth Defendants application to strike out the Statement of Claim filed on 15 October 2020 and amended on 23 August 2021 (including hearing and preparation).

10(a)

$32,240.05

Date	Description of Work	Scale	Amount
13.10.2020 to 14.07.2022	First to Fourth Defendants application to strike out the Statement of Claim filed on 15 October 2020 and amended on 23 August 2021 (including hearing and preparation).	10(a)	$32,240.05

The foregoing assessment is supported by schedule 1 to the draft bill of costs, which provides an itemised breakdown of the work undertaken. I have extracted that schedule in Attachment A. The schedule identifies 14 separate work streams or events said to have been undertaken or have taken place over the period from 13 October 2020 (which is just prior to the initial Strike-out Application being filed) through to 14 July 2022 (which consists of communications with the court regarding the outcome of the application).
To put this in some additional perspective, the amount assessed in the draft bill of costs in respect of item 10(a) is approximately $32,000 in fees, which amount is said to have been predominantly incurred over a 12 month period.
As one might naturally expect, the major work streams over this period were the preparation of written submissions in opposition to the Strike-out Application (item 7 in schedule 1), the preparation of affidavit material (item 8), considering the amendments to the chamber summons (item 10), considering the defendants' submissions (also item 10), and attending the hearing before Curthoys J on 12 October 2021 (item 13).
Defendants' submissions
The defendants resist the special costs order on the basis that it has not been demonstrated that the scale is inadequate for the costs which have been reasonably and properly incurred in relation to the Strike-out Application and, in any event, the matter is not unusually difficult, complex or important.[59]
[59] Defendants' Submissions, [4].
The defendants note that the scale allowance for item 10(a) is predicated on a one day hearing with two days preparation. They note the Strike-out Application was only a half‑day hearing. It is said by the defendants that the costs claimed include those for senior counsel (9 hours drafting submissions and 2.5 hours in conference), yet senior counsel did not appear at the hearing.
The defendants also submit that certain work undertaken by the plaintiff's solicitors in this case ought to properly have been undertaken by counsel. They also point to alleged duplication in the work undertaken as between solicitors and counsel.

Further, the defendants submit that certain aspects of the draft bill of costs are not properly part of the costs recoverable on the Strike-out Application. In this regard, they point to work undertaken by the plaintiff in preparing an amended pleading and to certain work which it is said forms part of the discovery item.
The defendants also submit that certain work claimed as conferral should not be claimed under item 10(a), and it is a matter for the taxing registrar to determine whether those items are reasonably and properly incurred.
As to whether the matter is unusually difficult, complex or important, as noted above, the defendants submit the plaintiff cannot satisfy any of these criterion. They describe the Strike-out Application as a half-day hearing which dealt with only two points.[60] The issues were interlocutory in nature, there was no cross-examination, and no expert evidence. There was no urgency and no complex questions of law. It was, as put by the defendants, a pleadings dispute with no significant affidavit evidence, nor any disputed issues of fact.[61]
Relevant principles
[60] The two points are described by Curthoys J in his reasons for decision: Reasons, [82].
[61] Defendants' Submissions, [20] - [21].
Pursuant to s 37 of the Supreme Court Act 1935 (WA), the court has a wide discretion to award costs. The discretion regarding costs has been described as 'absolute, unconfined or unfettered, although a discretion that must be exercised judicially, not arbitrarily or capriciously, or on grounds unconnected with the litigation': Frigger v Lean [2012] WASCA 66 [53] (Newnes and Murphy JJA and Allanson J).
The specific principles applicable to the determination of this aspect of the special costs application are those expressed by the Court of Appeal in Sino Iron Pty Ltd v Mineralogy [No 2] [2017] WASCA 76 (S) (Buss P, Murphy and Beech JJA), among other authorities. Although the court was dealing with the predecessor legislation in that case, the current provision is in the same terms as the repealed provision. Accordingly, the principles expressed as applicable to the predecessor provision continue to apply.[62]
[62] City of Bayswater v Viva Energy Australia Pty Ltd [No 2] [2022] WASC 384 (S) [25] (Acting Master Strk, as her Honour then was); C H Leaman Investments Pty Ltd v Tuesday Enterprises Pty Ltd as trustee for The Steele Investment Trust [2022] WASC 447 (S) [9] (Hill J); and Bolt v Bolt [2023] WASC 162 (S) [128] (Vandongen J, as his Honour then was).
The provision operates, in effect, to give the successful party the opportunity to recover those costs which have been reasonably and properly incurred where, in the court's opinion, the scale is inadequate because of the unusual difficulty, complexity or importance of the matter. These elements are to be addressed as matters of impression, rather than as matters of detailed evaluation, precision or science.[63]
[63] Sino Iron Pty Ltd v Mineralogy [No 2] [11].
In general terms, the provision is protective of the successful party in litigation, and serves the administration of justice, by facilitating, within the limits imposed by the statutory criteria, the operation of the general principle that a successful party is entitled to its costs of the litigation.[64] Of course, an order under s 141(3) does not, of itself, mean that a successful party will recover all of the costs it has incurred, or seeks from the unsuccessful party. It is the task of a taxing registrar to consider the reasonableness and necessity for the work undertaken and to make a judgment about the remuneration reasonably required.[65]
[64] Sino Iron Pty Ltd v Mineralogy [No 2] [11].
[65] Sino Iron Pty Ltd v Mineralogy [No 2] [11].
As to the statutory criteria, the court may make an order under s 141(3) if satisfied of two things. First, that the amounts allowed under the relevant scale item are inadequate in the sense that there is a fairly arguable case that the bill of costs may tax out at an amount which is greater than the amount allowable under the scale (because of the limits expressed within the scale). Second, that the inadequacy of the costs allowable arises because of the unusual difficulty, complexity or importance of the matter.
For the purposes of assessing whether to exercise the powers conferred by s 141(3), it will not ordinarily be necessary for the court to determine what amount should be allowed on taxation, but only whether there is a fairly arguable case that a greater amount should be allowed than that which is allowable under the relevant determination.[66] Further, a special costs order will not be warranted simply by reference to the effort of the successful party, which may have been disproportionate in all of the circumstances.
[66] Sino Iron Pty Ltd v Mineralogy [No 2] [11]; and Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd [2014] WASC 469 (S) [7] (Le Miere J).
As to the second criterion referred to above, the following passage from the Court of Appeal's decision in Sino Iron Pty Ltd v Mineralogy [No 2] is apposite:
[15]The word 'unusual' in s 280(2) of the Act 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 court. 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: Wainwright v Barrick Gold of Australia Limited. Also, the reference to 'importance' in this context allows the court to have regard to the significance of the issues that arose in the litigation. Significance can arise either because of the significance of the issues to the parties, or because of the significance of the issues to other prospective parties, or to the public or community generally: Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq).
Archer J discussed the meaning of the word 'importance' in this statutory context in BCBC Singapore Pte Ltd v Pt Bayan Resources Tbk [No 5] [2023] WASC 116 [75] - [79]. Her Honour noted that cases in which importance had been demonstrated included cases involving the risk of significant professional damage, test cases, or cases which involved enormous sums of money. This approach must be tailored where special costs orders are sought in relation to a particular interlocutory application. In those circumstances, the relevant assessment is focused on the particular application before the court, and its significance, rather than the entirety of the proceedings.
Analysis - first statutory criterion
As to the first criterion in s 141(3), it is necessary for the court to form an assessment as to whether it is fairly arguable that a taxing registrar may find that the costs incurred by the plaintiff in doing work that was necessary and reasonable to prepare for and appear at the hearing of the Strike-out Application may be allowed in an amount greater than those amounts allowed in item 10(a) of the 2020 Costs Scale.
As to the content and scope of the maximum amounts allowed in the 2020 Costs Scale which I have earlier mentioned, I note that:
(a)the rates in item 10(a) are the maximum daily rates that are applicable for work done by counsel in relation to proceedings in chambers;
(b)the rates relate to work done both in preparation for, and while appearing at, a hearing in chambers;
(c)the rates are based on a hearing that does not exceed one day, and on the assumption that the time spent in preparing for a hearing in chambers will not exceed two days (representing an overall allowance of 30 hours);[67] and
(d)there is no separate allowance for preparation of the case, for preparation of written submissions, or for the attendance of instructing legal practitioners, and such work is thus covered by the allowance in the scale.[68]
[67] Clause 16(c) of the 2020 Costs Scale states that the maximum number of hours allowed for the daily rate is 10 hours.
[68] Power and Water Corporation v Eni Australia BV [2022] WASC 376 (S) [130] (Allanson J).
In my view, and approaching the issue as a matter of impression, I consider it is fairly arguable that the amount of costs allowable under the 2020 Costs Scale (having regard to the time and other limits in item 10(a)) would be inadequate having regard to the plaintiff's bill of costs. The affidavit evidence of Ms Guy, and the tables which have been prepared by her, expose the nature and intensity of the necessary work which she deposes was undertaken to defend the application.
Ms Guy estimates the work involved took far longer than the 30 hours otherwise allowed in item 10(a), resulting in an estimate claim for this item in excess of $32,000. There are a number of features of the application which appear to have contributed to the additional work involved, and which properly led to senior counsel being briefed and the involvement of multiple practitioners (although it is noted that senior counsel did not appear at the ultimate hearing before Curthoys J).[69]
[69] Guy Affidavit, Attachment CMG-1.
In particular, it is evident to me that the arguments required to be grappled with by counsel and solicitors, to assist the court, were relatively complex and the inclusion of fraud allegations (as well as the role of common directors and the applicability of the exception to s 68 of the TLA) introduced a further layer of gravity and complexity to the process. The submissions filed by the plaintiff draw upon 29 authorities across a range of substantive law areas. A significant volume of material was adduced by the defendants in respect of the application, including a large volume of material from the related AAT proceedings.[70] The application itself also proceeded, from cradle to grave, over a relatively lengthy time period with the staggered provision of additional authorities by the defendants, which in my experience, can introduce additional burdens of work, multiple reviews of the matter, and resulting costs implications that may fairly be allowed on taxation.
[70] Guy Affidavit, Attachment CMG-2 and CMG-3.
I recognise there are criticisms raised by the defendants as to the necessity for all of the claimed work to have been undertaken in resisting the application, including a criticism of the duplication of effort as between solicitors and counsel. The taxing registrar will be best placed to fully assess the validity of these criticisms and it is rather difficult for this court to form final views on such matters, on an application such as this. Importantly, my assessment does not preclude the taxing registrar forming views, upon his or her closer inspection of the materials produced, that certain work is not allowable.
On the basis of the materials presented to the court on this application, the fact that particular tasks, such as the drafting of detailed written submissions, involved more than one practitioner's time, does not inevitably lead to a conclusion that work was duplicated. It may equally allow for the conclusion that the practitioners in question engaged in a process of preparing, reviewing, and refining the work product, as well as pursuing additional issues, to develop a sharper final document for the assistance of the court.
I note that the 2020 Costs Scale does not allow, in item 10, for the attendance of practitioners at the relevant hearing, other than counsel. The nature of the present application was such that, in my opinion, the plaintiff was justified in having the attendance of an instructing solicitor at the hearing. I would therefore expressly allow the attendance of a senior practitioner instructing at the hearing as part of the special costs ordered.
I do not accept the balance of the Plaintiff's Submissions in relation to the appropriateness of special costs orders concerning item 10(c). That item concerns work undertaken in relation to 'consent orders including conferral but excluding extraction'. The 2020 Costs Scale allows 1.5 hours for a junior practitioner, with a maximum allowance of $528. The submissions on this issue, and the limited affidavit evidence,[71] are not sufficient to enable the court to conclude that it is fairly arguable that the plaintiff's costs may be taxed and certified in amounts greater than the scale limit of $528 in respect of each consent order required to be prepared.
Analysis - second statutory criterion
[71] Plaintiff's Submissions, [8]; Guy Affidavit, [7] - [9].
As to the second criterion, I have considered whether the inadequacy of the costs allowable in respect of item 10(a) arises because of the unusual difficulty, complexity, or importance of the matter. I approach these issues as matters of impression rather than matters of detailed evaluation, precision, or science. On this approach I find the second criteria to have been satisfied insofar as I accept the inadequacy of the scale amount arises because of the importance of the Strike-out Application, as well as because of the complexity of the application.
The application was important because of its significance to the parties in dispute. I say this because, a successful strike-out of the relevant paragraphs of the plaintiff's pleading on this application would have meant the complete dismissal of the plaintiff's claims against these particular defendants, in their entirety. Claims against the other defendants would have remained. However, the potential loss of claims against one set of defendants is, in my opinion, a matter in respect of which a plaintiff is justifiably likely to be greatly concerned, given the likely forensic consequences for the litigation and the potential narrowing of the recovery and enforcement avenues which may follow from such an outcome.
As to the complexity involved, I have formed this view from a review of Curthoys J's decision and the submissions filed by the parties, noting the fraud allegations which were the subject of those submissions. It is not necessary that I find the application involved 'unusual' complexity. My conclusion can be reached having regard to the nature and substance of the legal issues which were the subject of the hearing.
Accordingly, I am of the opinion that it is fairly arguable that the amount of costs allowable in respect of the Strike-out Application (having regard to the maximum allowable amounts in item 10(a) to the 2020 Cost Scale) would be inadequate, and that this arises because of the importance and complexity of the particular application.
Form of the order
I therefore propose to make a special costs order pursuant to s 141(3) of the Uniform Law in relation to item 10(a), but not as to item 10(c). To give effect to my reasons, the order will be drafted to allow for the taxation assessment to be undertaken:
(a)without the limit of time expressed in item 10(a);
(b)without the limit of the maximum amounts expressed in item 10(a) (which follows, of course, from the preceding sub-paragraph);
(c)so as to permit regard to be had to the costs of briefing senior counsel and junior counsel, and for the involvement of counsel and solicitors in preparation of the application; and
(d)so as to permit regard to be had to the attendance of a senior practitioner instructing at the hearing.
The foregoing can be achieved by way of an order which removes the limits on costs fixed by item 10(a) of the 2020 Costs Scale (which, for the avoidance of doubt, will not have the effect of modifying the maximum hourly or daily rates of any of the practitioners involved), together with a clarifying statement as to the scope of the assessment (leaving the ultimate question of reasonableness to the taxing Registrar).
Role of solicitors
I wish to make one brief observation as to the defendants' reliance on the comments of Rares J in Armstrong Scalisi Holdings Pty Ltd v Piscopo (Trustee), in the matter of Collins [2017] FCA 423 [20] - [29]. His Honour's comments, quite properly, emphasise the important role of counsel in preparing and drafting both pleadings and submissions, and also raise valid concerns as to processes implemented by law firms which can involve the duplication of work by solicitors, particularly where that work ought to have been undertaken by counsel in the first instance.
His Honour's comments on the costs of access to justice being minimised, and the importance of lawyers avoiding duplication of effort and costs, are as applicable in this court (and in this State) as they are in the Federal Court of Australia (and in New South Wales).
However, to the extent the defendants seek to deploy in the present case the entirety of his Honour's comments,[72] particularly as to the distinctive role of counsel and litigation solicitors, that must be tempered by the quite different litigation practice environment which exists in Western Australia, and the fused profession in which we operate. Litigation solicitors in Western Australia regularly undertake work that might otherwise be attended to by independent counsel at the bar in other States, including the drafting of pleadings and submissions, and the making of significant forensic judgments in cases which they manage. Indeed, the 2020 Costs Scale and the most recent scale both recognise that, where those practitioners who are not barristers appear in court or undertake certain work, their costs will be recoverable as counsel in respect of various items, including item 10.[73] What must naturally be avoided in the litigation process is unnecessary and wasteful duplication of work, which enlarges costs.

E.Proposed Order 3 - costs of the present application
[72] Defendants' Submissions, [12].
[73] I refer to the 2020 Costs Scale, clause 11 - Table A (note *).

Given that I will order that the plaintiff's application for special costs orders (i.e. Order 2) should be allowed, it is appropriate that the costs fairly attributable to the special costs application be the plaintiff's.

F. Orders

For the foregoing reasons, I will order that:
1.The first to fourth defendants are to forthwith, jointly and severally, pay the plaintiff's costs of and incidental to the application to strike-out the plaintiff's statement of claim dated 25 September 2020 (filed on 15 October 2020) and amended on 23 August 2021 (Application), to be taxed if not agreed.
2.Pursuant to s 141(3) of the Legal Profession Uniform Law Application Act 2022 (WA):
(a)the plaintiff's costs of the Application be assessed without regard to the limits on costs fixed by item 10(a) of the Legal Profession (Supreme and District Courts) (Contentious Business) Costs Determination 2020; and
(b)any assessment of the plaintiff's costs in this regard be performed on the basis that allowance be made for the briefing of senior counsel and junior counsel, for the involvement of counsel and solicitors in preparation of the application, and for the attendance at the hearing of the Application by an instructing senior practitioner.
3.The first to fourth defendants do forthwith pay the plaintiff's costs of the special costs application referred to in order 2 above, to be taxed if not agreed.

ATTACHMENT A

PLAINTIFF'S QUANTIFICATION OF WORK UNDERTAKEN AS ITEMISED IN THE PLAINTIFF'S DRAFT BILL OF COSTS

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

SAO
Associate to the Honourable Justice Lundberg

14 JUNE 2023