Go Exports Pty Ltd v Livestock Shipping Services Pty Ltd - [2002] WASC 218

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: GO EXPORTS PTY LTD & ORS -v- LIVESTOCK SHIPPING SERVICES PTY LTD & ANOR [2002] WASC 218

CORAM: EM HEENAN J

HEARD: 9 AUGUST 2002

DELIVERED : 9 AUGUST 2002

FILE NO/S: CIV 1572 of 2002

BETWEEN: GO EXPORTS PTY LTD (ACN 098 628 221)
First Plaintiff
OURIMBAH HOLDINGS PTY LTD (ACN 066 249 367)
Second Plaintiff
PJ AND CM CARPENTER (A FIRM) (ABN 53 802 747 587)
Third Plaintiff
AND
LIVESTOCK SHIPPING SERVICES PTY LTD (ACN 084 806 404)
First Defendant
ITN PTY LTD (ACN 081 627 483)
Second Defendant
(BY ORIGINAL ACTION)
LIVESTOCK SHIPPING SERVICES PTY LTD (ACN 804 806 404)

Plaintiff
AND
GO EXPORTS PTY LTD (ACN 098 628 221)
First Defendant
PETER CARPENTER
Second Defendant
OURIMBAH HOLDINGS PTY LTD (ACN 066 249 367)
Third Defendant
(BY COUNTERCLAIM)

Catchwords:

Costs - Discrete issue - action continuing on other grounds - Costs to be taxed and paid immediately

Legislation:

Rules of the Supreme Court, O 66 r 12

Result:

Defendants to pay plaintiffs' costs to be taxed

Category: B

Representation:

Original Action

Counsel:

First Plaintiff                :     Mr T O Coyle
Second Plaintiff            :     Mr T O Coyle
Third Plaintiff               :     Mr T O Coyle
First Defendant             :     Mr P Hopwood
Second Defendant         :     Mr P Hopwood

Solicitors:

First Plaintiff                :     Phillips Fox
Second Plaintiff            :     Phillips Fox
Third Plaintiff               :     Phillips Fox
First Defendant             :     Cocks Macnish
Second Defendant         :     Cocks Macnish

Counterclaim

Counsel:

Plaintiff:     Mr P Hopwood
First Defendant             :     Mr T O Coyle
Second Defendant         :     Mr T O Coyle
Third Defendant           :     Mr T O Coyle

Solicitors:

Plaintiff:     Cocks Macnish
First Defendant             :     Phillips Fox
Second Defendant         :     Phillips Fox
Third Defendant           :     Phillips Fox

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

Nil

Case(s) also cited:

Nil

EM HEENAN J: I have before me applications by the plaintiffs in this action for orders for costs arising from the proceedings which were before the Court in June last. Those resulted in two orders: first, releasing Wesfarmers from the action and directing payment of the moneys held by Wesfarmers into a joint account controlled by the solicitors for the remaining parties together with incidental orders for the identification of the creditors associated with the Singapore shipping venture, and the second, dealing with orders for payment of those creditors and the disposition of the small residue which remained after the creditors had been satisfied.
The substance of the applications by the plaintiffs is that there should be orders for the defendants to meet those costs immediately after they have been taxed on the basis that they represent a separate identifiable area of the litigation on which the plaintiffs have succeeded. The plaintiffs also seeks a special order for costs under Rules of the Supreme Court O 66 r 12 enlarging the limit of costs which may be awarded beyond the limit imposed by item 23 of the relevant costs scale.
These applications are opposed by the defendants essentially for two grounds. The first ground asserts that the issues which were the subject of those orders are not distinct or separate from the litigation as a whole and that in any event the plaintiffs did not achieve substantial success or at least the success which they originally sought so that, consequently, even if there might ultimately be an entitlement for costs, any order for payment of those costs should await the outcome of the overall litigation. Implicit in that submission is an assumption that in the overall action something may be decided or emerge which might in part vindicate the action taken by the defendants in relation to the claim against the moneys held by Wesfarmers which were the subject of my two previous orders.
The second basis upon which the defendants rely for opposing orders for costs at this stage of the proceedings is that the amounts claimed are said to be excessive, having regard to the work done; that there is no evidence demonstrating any special character about these proceedings such as to justify an order for immediate taxation and payment of costs; and, that there is an overlap between the costs claimed in relation to these applications and the plaintiffs' preparation of the action generally for eventual trial.
It is necessary to say a little about the background of this action in order to deal with these competing submissions. The plaintiffs' claim, which was the subject of the litigation when commenced, was for orders allowing them access to moneys held by Wesfarmers representing the proceeds of a shipment of livestock to Singapore. The basis upon which the claim was opposed by the defendants at the outset was an allegation that the plaintiffs' conduct in obtaining the livestock and shipping it to Singapore was unlawful in a number of respects; that it involved the unlawful conversion or appropriation of some of the defendants' livestock or livestock which the defendants owned in partnership with the plaintiffs in various ways and/or that the plaintiffs had unlawfully taken advantage of opportunities for themselves which had been gained while the plaintiffs were acting in a fiduciary capacity for or with the defendants. If any of those allegations could have been substantiated, the defendants would have been in a position where they could pursue one or both of at least the following forms of redress: they could sue the plaintiffs for damages for conversion or misappropriation of its property, the livestock and obtain, if the case was proved, the value of the livestock so converted. On the other hand, they could waive that tort and seek an account from the plaintiffs of the profit wrongfully derived by the plaintiffs from the misuse of property obtained in a fiduciary capacity. Depending on whether or not a profit was made, they could obtain some share of that profit or compensation for the breach of the fiduciary duties thereby involved.
As those claims were being asserted, there was therefore reason to scrutinise closely the question of what was the status of the shipment of the livestock to Singapore; what expenses had been properly incurred in relation to the voyage and of the sale of the livestock at the other end and whether the defendants were in a position where they were claiming for conversion or damages by way of equitable compensation or for an account of a profit improperly made.
In any of these eventualities, it was obvious that Wesfarmers would not be liable to any other party. While it held the moneys, it made no claim to them except for its expenses and if the defendants waived the tort they would thereby accept liability for Wesfarmers' expenses. If they did not waive the tort and sued for conversion, it was not being suggested that Wesfarmers was a tortfeasor. There was, therefore, every reason to make orders to exclude Wesfarmers from the litigation, obtain control of the fund and identify its components.
Accordingly, any claims by the defendants against Wesfarmers could not be sustainable and once this position was explained that was readily accepted by the defendants. Once I had made the first order requiring the dissection of the moneys which were the proceeds of the voyage and an identification of those creditors associated with the voyage who should be paid from the proceeds, it emerged that all the creditors were entitled to be paid; that there was no basis upon which the defendants could or did assert that there had been conversion or misappropriation of any of their money or property and that, at least in relation to this transaction, there was no basis upon which a claim for misuse of fiduciary office or opportunity could be sustained against the plaintiffs.
That being the case, there was no objection, but indeed every justification, for an order for the payment to be made of the balance of the funds to the plaintiffs or to their use. What this has shown, therefore, is that as distinct from other areas of the litigation where issue has been joined as a result of the defence and counterclaim in which the defendants assert the plaintiffs are guilty of breaches of fiduciary obligations and other alleged wrongs, none of those allegations relates, to or impinges upon, this Singaporean shipment.
It was ultimately accepted before me that there was no basis upon which the defendants could advance any proprietary claim to the proceeds of the Singaporean shipment. This of necessity reveals that the disputes about the Singapore shipment were a separate and side issue and that there were, notwithstanding any reasonable cause for suspicion at the outset, no grounds upon which the defendants could assert a claim to the proceeds of the Singaporean shipments. It follows that the defendants' claims which involved an attempt to prevent Wesfarmers paying out the fund emerging from that shipment and the steps which were necessarily taken in order to identify the creditors and to decide whether or not the funds could be employed for the satisfaction of their claims all resulted from this unjustified claim by the defendants in relation to the proceeds of the Singaporean shipment.
I consider that the plaintiffs have succeeded in their claims in obtaining access to these moneys and that nothing has been shown which would justify the claims which were made by the defendants in relation to those moneys. It is not to the point that the plaintiffs did not immediately obtain an order for the payment of the funds as sought on the original injunction application. What the plaintiffs did obtain was an order which required identification and analysis of the fund to be undertaken which process led to an acceptance that the moneys were to be paid to the plaintiffs or to their order and that is what was done. When I say to the plaintiffs' order, I mean that it was accepted that the money should be paid to creditors of the plaintiffs whose debts had been incurred in relation to this voyage. Accordingly, I am of the view that the plaintiffs were substantially successful in relation to the orders and the relief sought. This was, for all practical purposes the entire relief which was being sought by the proceedings and the plaintiffs should have their costs.
I appreciate that in the other issues which have been joined on the defence and the counterclaim, many other allegations are made by the defendants against the plaintiffs, but they do not directly impinge upon or affect the Singapore shipment fund. That being the case, I see no reason why the plaintiffs should not recover their costs of those former issues or should have to wait until the ultimate disposition of the proceedings on other issues before recovering those costs.
Accordingly, I shall make orders that, the plaintiffs' costs of the injunction application and of the other application before me, shall be taxed immediately and that the moneys determined to be payable on taxation shall thereupon be payable in the ordinary way immediately upon the completion of the taxation. From what I have said, it should be apparent that I regard this as the appropriate order to follow from the success which the plaintiffs have experienced in obtaining what is, in effect, all that they were seeking by the original proceedings.
To the extent that the proceedings are continuing and involve issues arising from the defence and counterclaim, I regard those issues as quite distinct and separate from those arising from the dispute about the Singapore shipment. I also consider it to be the case that it is quite possible, indeed probable, that the resolution of the issues which are the subject of the defence and counterclaim, is likely to take a substantial period and involve a long delay before they are disposed of.
Costs are generally at the discretion of the Court and whatever the practice may be, I do not consider that there is any principle of law which requires that costs may only be taxed or paid at the ultimate disposition of the proceedings. Generally speaking, where matters are distinct and separate and the issue which they create has been distinctively resolved, costs should be ordered and paid by the party responsible.
In relation to the submissions that the draft bill of costs contains elements which are excessive or which are associated with the action as a whole as opposed to the injunction application, such as the claims for getting up, those are essentially matters for the taxing officer and I should not be concerned in them. I can only mention, for whatever guidance it may be for the taxing officer, that in the light of my conclusion that the disputes associated with the Singapore livestock shipment are distinct and separate, work done in connection with that aspect of the claim is essentially work done in achieving the relief which has been granted by the two orders which I have made. So there would not, therefore, seem to be any reason to withhold an allowance for costs properly incurred in dealing with that aspect of the case.
Nevertheless, the amount of the costs and the characterisation of the work done and claimed is something which should be carefully scrutinised by the taxing officer and I have no doubt that will occur if the matter does proceed to taxation. I am also satisfied from the fact that I have heard the submissions and dealt with the applications that the issues on the injunction application and the adjourned application were of a magnitude, importance and complexity which may well result in the costs exceeding the amounts allowed under item 23 of the scale which applied at the date the work was done. Whether in fact that is the case is something which can only be decided after a close examination of the costs has been undertaken on taxation. I consider, however, that it is distinctly possible that it will be found that fair remuneration to the solicitors for the plaintiffs will exceed the limit of the scale as it then stood, and accordingly I will make an order under O 66 r 12 that there be a special order for costs but that the taxing officer shall allow what he or she considers to be reasonable costs, having regard to the work done, its importance and the seniority of the personnel who undertook the work.
I consider that to be a better safeguard by committing the question of costs to the discretion of the taxing officer than making some arbitrary enlargement of the ceiling imposed by the scale which really should not be done unless the enlarged ceiling can fairly be said to be a possible sum which might properly be allowed on taxation. I am not in a position to say, one way or the other, whether the amount proposed on Mr Coyle's application of $24,000 is realistic or otherwise and I consider a taxing officer to be in a far superior position to undertake that responsibility. Accordingly, the orders which I propose are as follows:
1.The first defendant do pay the first plaintiffs' costs of the first plaintiffs' application dated 3 May 2002 and that such costs be taxed as soon as practicable and be paid upon completion of the process of taxation.
2.The first plaintiffs' costs be taxed on the basis that the taxing officer may allow reasonable costs, notwithstanding any limit on costs imposed by item 23 of the relevant scale of costs.
3.The work which may be claimed on that taxation may include work carried out in consequence of the orders which I made on 9 May 2002.
That deals with the principal application brought by the first plaintiff today. Mr Coyle foreshadowed an additional application concerning the costs of Wesfarmers in the earlier stage of these proceedings, but Mr Hopwood said, and I accept, that he did not appreciate that was an issue which was to be dealt with today and that he was not in a position to deal with it. Accordingly, I adjourn that application sine die. It will be for the parties to consider whether or not the principles which I have enunciated in these reasons go some way to assist in the resolution of any dispute over the Wesfarmers' costs.