Grove v Simon DIRK KENWORTHY-GROEN as executor of the estate of William Grove [No 3]
[2023] WASC 185
•1 JUNE 2023
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: GROVE -v- SIMON DIRK KENWORTHY-GROEN as executor of the estate of WILLIAM GROVE [No 3] [2023] WASC 185
CORAM: MASTER SANDERSON
HEARD: 30 AUGUST 2022 & 16 NOVEMBER 2022
DELIVERED : 7 APRIL 2023
PUBLISHED : 1 JUNE 2023
FILE NO/S: CIV 1369 of 2021
BETWEEN: JOHN GROVE
Plaintiff
AND
SIMON DIRK KENWORTHY-GROEN as executor of the estate of WILLIAM GROVE
First Defendant
SIMON DIRK KENWORTHY-GROEN
Second Defendant
ANDREW HENDRICK GROVE
Third Defendant
GROVE SUPERANNUATION PTY LTD AS TRUSTEE FOR THE GROVE SUPERANNUATION FUND (ACN 113 205 495)
Fourth Defendant
Catchwords:
Practice and procedure - Applications to strike out defence - Turns on own facts
Legislation:
Trustees Act 1962 (WA)
Result:
Defence of first and second defendants struck out and defence of third defendant to stand
Category: B
Representation:
Counsel:
| Plaintiff | : | P D C Robinson |
| First Defendant | : | L A Tsaknis |
| Second Defendant | : | L A Tsaknis |
| Third Defendant | : | M van der Kwast |
| Fourth Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Williams & Hughes |
| First Defendant | : | Fort Knox Legal |
| Second Defendant | : | Fort Knox Legal |
| Third Defendant | : | Dwyer Durack |
| Fourth Defendant | : | Croftbridge |
Case referred to in decision:
Streeter v Western Areas Exploration Pty Ltd [No 2] [2011] WASCA 17
MASTER SANDERSON:
These reasons deal with applications by the plaintiff to strike out certain paragraphs of the first, second and third defendants' amended defence. The application so far as it relates to the third defendant was heard first, followed some time later by the application in relation to the first and second defendants. The first and second defendants are represented by the same solicitors. The third defendant is represented by another firm of solicitors. The fourth defendant, also separately represented, took no part in this application. There is a good deal of overlap between the submissions made by the plaintiff in relation to the strike out application, so far as it concerns the third defendant and the submissions in relation to the first and second defendants. There is also a good deal of overlap between the submissions made on behalf of each of the defendants. Nonetheless, the applications were separate and distinct and these reasons deal with them separately. In relation to both applications, an extension of time was necessary. The delay in bringing the applications can be explained by the complex nature of the matters in dispute and the fact that the parties engaged in negotiation in an attempt to resolve their differences. In each case, it is appropriate to grant an extension of time.
Application to strike out part of the third defendant's defence
The document the plaintiff attacks is in fact the third defendant's further further further amended defence dated 7 June 2022. For the sake of these reasons, I will simply refer to the 'defence'. The application relates to pars 12(b)(iv)(A), 12(b)(iv)(B), 14B, 14C, 14D and 16 of the defence. To understand why these paragraphs are attacked, it is necessary to say something about the plaintiff's statement of claim and the way in which the defence overall is framed.
The present extant statement of claim was endorsed on an amended writ of summons filed 10 August 2021. The parties to these proceedings are related and without wishing to give offence, I will refer to them by their Christian names. The plaintiff (John) is the son of the late William Grove and Margaret Grove. He is the brother of the late Sonja Grove. He is also the brother of the second defendant (Simon) and the third defendant (Andrew). The B.E. Lynn Trust was established by Deed of Trust (Trust Deed) on 8 November 1971. When it was established, Margaret was the trustee. At all material times, the beneficiaries were John, Simon, Andrew and Sonja. John pleads that under the terms of the Trust Deed, the power to appoint or remove a trustee vested in Margaret or her legal personal representative. Further, it is pleaded that the assets of the trust will be held upon trust in equal shares for such of John, Simon, Andrew and Sonja who attained the age of 21. On 14 November 1971, by Deed, Margaret appointed William as trustee of the Trust.
Margaret died on 16 June 1977. On 30 August 1990, Sonja turned 21. John pleads that when Sonja turned 21, the trustee of the Trust held the trust assets in equal shares for John, Simon, Andrew and Sonja 'and each beneficiary had an absolute and indefeasible entitlement to their respective share'. Sonja died on 27 July 1992 without issue and on 24 June 1993, letters of administration in respect of Sonja's estate were granted to William. William died on 30 October 2015. On 8 February 2016, Simon was granted probate of William's estate. John pleads that by operation of s 45(2) of the Trustees Act 1962 (WA), Simon was 'capable' of exercising or performing any power which William was capable of exercising prior to his death. That statutory right continues until the appointment of a new trustee. John pleads Simon has declined or refused to perform his role of trustee and has despite requests, refused to provide John with 'information' about the trust.
Paragraphs 15 through to 24 of the statement of claim appear under the subheading 'The B.E. Lynn Trust'. By par 15, it is said that between August 1990 and August 2015, William used the trust as a vehicle to channel profits to Sonja's estate 'in order to reduce the trust's tax liability'. Paragraph 16 then deals with the value of the assets said to be held by the trust in the 25 year period between August 1990 and August 2015. Paragraph 17 is central to John's case. I will quote it in full:
17. By resolution dated 21 August 2015 (executed on 29 August 2015) William as trustee of the B.E. Lynn Trust purportedly resolved that the corpus of the B.E. Lynn Trust be distributed as follows:
Beneficiaries
John Grove The first $570,000.00 is to be distributed to Mr. John Grove. This distribution will be satisfied by deducting $270,000.00 from his Debit loan account with the BE Lynn Trust and $300,000.00 from his company's Debit loan account (Talmalmo Holdings Pty Ltd) in the books of the trust.
Simon Grove 50% of the remainder, from which will be deducted his Beneficiary Current Account balance of $84,074.90Dr.
Andrew H Grove The balance, to which will be added his Beneficiary Current Account balance of $87,287.44Cr.
(the August 2015 Resolution).
It is clear from the above – and it is pleaded by pars 18 and 19 of the statement of claim – that John received nothing by way of distribution pursuant to the August 2015 resolution. It is pleaded everything went to Andrew and Simon and the trust now has virtually nothing. John says the August 2015 resolution amounted to a breach of trust by William and he wants an account. John pleads the rationale for the August 2015 Resolution in pars 22, 22A and 22B. Those paragraphs read as follows:
22.On or about 10 June 2015 (a month before the August 2015 Resolution was passed) William prepared a memorandum in which William:
22.1acknowledged John was entitled to a 1/3rd of the assets of the B.E. Lynn Trust (with Andrew and Simon having the other 1/3rd); and
22.2expressed a desire to ensure John did not receive his share of the B.E. Lynn Trust assets.
Particulars
Memorandum from William Grove dated 10 June 2015. A copy may be inspected at the offices of the Plaintiff's solicitors.
22A.William sought, by way of the August 2015 Resolution, to offset debts purportedly owed by John and Talmalmo Holdings Pty Ltd to the B.E. Lynn Trust against John's share of the trust assets in circumstances where:
22A.1John did not owe the B.E. Lynn Trust $270,000;
22A.2Talmalmo Holdings Pty Ltd did not owe the B.E. Lynn Trust $300,000; and
22A.3alternatively, William was not entitled to offset $300,000 purportedly owed by Talmalmo Holdings Pty Ltd to the B.E. Lynn Trust against John's entitlement as a beneficiary of the Trust.
22B.In the premises pleaded in paragraphs 2, 3, 4, 9, 22 and 22A above, William's breach of fiduciary duty pleaded at paragraphs 21 above was dishonest in that it was calculated to:
22B.1deprive John of his share of the B.E. Lynn Trust assets; and/or
22B.2benefit Andrew and Simon at the expense of John,
in a manner not permitted by the terms of the Trust Deed.
The remainder of the statement of claim deals with allegations Simon and Andrew were knowingly concerned in William's breach of trust. The pleading also deals with the alleged transfer of the assets of the trust to the fourth defendant. These paragraphs are not strictly relevant to this application save in one respect. In par C of the prayer for relief, John seeks an account of all transactions made by William in his capacity as trustee of the B.E. Lynn Trust between 6 May 2015 and the date of the account. The reason for that limited period is that the writ in this matter was issued on 6 May 2021. So the operative limitation period on John's case expires on 6 May 2015. The pleaded operation of the limitation period is not an issue between the parties.
Turning then to the defence, by par 8A, Andrew admits the making of the August 2015 Resolution and says it was validly made by William 'in his discretion as the trustee of the trust'. By par 8B, Andrew pleads that although John did not receive cash or shares under the August 2015 Resolution, he was released from certain obligations and thus obtained a benefit. The effect of pars 8A and 8B is to put in issue the validity of the August 2015 Resolution and its effect on John. John has no difficulty with that plea.
By par 9, Andrew pleads a series of transactions of which he was aware which meant that money and shares went into and came out of the trust. All of these transactions appear to relate to the period subsequent to the August 2015 Resolution and once again, John takes no issue with these paragraphs. By par 16 of the defence, Andrew contends that 'if John is entitled to an account of Bill's (William's) trusteeship of the trust (which is denied) as pleaded in paragraph C of the relief sought, it should not confine itself to the period pleaded being 6 May 2015 and the date of the account but should take into account all of the advances that may have been made to all of the beneficiaries including…'. The transactions Andrew says ought to be included in the account include the transactions pleaded at pars 12(b)(iv)(A), 12(b)(iv)(B) and 14C.
As John correctly says, par 16 must be read in the context of par 14C. By par 14C, Andrew asserts John is barred from equitable relief by reason of laches because, in effect, the defendants will be prejudiced if they are required to determine John's entitlement to one quarter of the Trust assets in that inter alia, 'many of the documents that would confirm or disprove that John has received a benefit from the Trust as pleaded in par 14C herein no longer exist'. Paragraph 14D asserts that in the event John was entitled to a quarter of the Trust on Sonja's 21st birthday, Andrew is barred from relief by reason of laches for the reasons pleaded in par 14C(a) ‑ (d). John says the complained effect of pars 14C and 16 is two‑fold. First, Andrew contends the account sought by the plaintiff must be expanded to 'take into account all of the advances that may have been made to all of the beneficiaries'. It is then said this is not possible because the documents required to determine what benefits John has received from the Trust no longer exist and so the claim must fail for gross laches.
In his written submissions, counsel for John advanced two reasons why he said pars 14C and 16 disclosed no reasonable defence. The relevant paragraphs read as follows:
Reason 1
16.The starting point with laches is to identify the time at which the plaintiff came to know of the facts giving rise to their equity. The equity on which John relies is:
16.1that the August 2015 Resolution was made in breach of trust or fiduciary duty; and
16.2a beneficiary's entitlement to an account from the trustee (which is founded on the mere relationship and for which the cause of action exists from the moment of the creation of the trust at any time for the preceding 6 years).
17.Nothing pleaded by Andrew in paragraph 14C has anything to do with:
17.1when John became aware of his claim for breach of the August 2015 Resolution;
17.2why laches bars relief in respect of the breach of trust / fiduciary duty in making the August 2015 Resolution and distributing assets pursuant to it; and
17.3why laches bars John from seeking relief in respect of an account for the 6 year period for which it is sought (6 May 2015 to the date of the account).
Reason 2
18.The laches defence is illogical and circular because Andrew is not in substance pleading a laches defence to John's claim. Rather, Andrew is pleading laches in effect as a defence to his own claim that all the transactions made by the trustee must be accounted for, but this cannot be determined due to the passage of time and the destruction of documents.
19.It is not open to Andrew to plead by way of defence matters that pre-date the August 2015 Resolution by decades which on his own case he cannot prove, and then say his inability to prove them means John is not entitled to relief in respect of the August 2015 Resolution or an account of transactions from 6 May 2015. In other words, Andrew cannot laches his own defence. The Plaintiff is aware of no authority in which laches has been applied by the Court in the manner in which Andrew seeks to apply it to this case.
In response, Andrew relies upon the decision of the court of appeal in Streeter v Western Areas Exploration Pty Ltd [No 2] [2011] WASCA 17. It is submitted that there are two forms of laches. One requires delay and acquiescence or consent. In this type of laches, knowledge is an essential criteria. A second category is 'delay and prejudice'. There is no need to prove knowledge in such a case. The third defendant says it is well established that the loss of evidence including the death of a material witness is 'prejudice' for the purposes of the defence. As to pars 17.2, 17.3 and 18 of John's submissions, Andrew says John's pleaded claim is that:
(a)John was entitled to one quarter of the Trust since 1992;
(b)John did not get 25% of the Trust in the August 2015 resolution; and
(c)therefore John did not get his entitlement from the Trust.
Taken together then, the account John seeks is not the only or principle remedy he seeks. Rather, John wants the court to agree he is entitled to 25% of the Trust and has been since 1991. On behalf of Andrew, it was submitted that if John is correct, then to determine his entitlement, it is necessary to look at the entirety of the administration of the Trust and work out John's entitlement based on any distributions of capital made to them since 1991.
As to the limitation point, Andrew says that since equitable payments can be offset even if the limitation period has expired, any payments made to John since 1992 can and should be taken into account when determining John's entitlement. In par 18 of her written submissions, counsel concluded as follows:
18.To summarise – Andrew says:
(a)the argument is not circular – it is pointing out that it is not possible to determine John's entitlement based on a claim that he had a vested indefeasible claim to one quarter of the Trust;
(b)the argument applies to the August 2015 Resolution as it is not possible to determine whether John's distribution per the August 2015 Resolution was correct or not, due to his delay; and
(c)not only can enquires be made prior to the limitation period to determine John's entitlement, they must be made, as without it, his entitlement cannot be determined.
To articulate the nature of the dispute between the parties is to highlight its complexity. Limitation questions should not as a rule be determined before trial. Here the issues of fact and law – particularly of law – are complex and should not be considered in isolation. I accept as were said by counsel for John, that if the defence in its present form stands, the issue of discovery would be complicated. But that fact cannot, in and of itself, mean an equitable limitation defence cannot be raised. The way the matter is pleaded at the moment is tolerably clear given the complicated factual background. In those circumstances, I would not be prepared to strike out the paragraphs complained of.
John also submits pars 14C and 16 ought be struck out as an abuse of process. It was submitted the laches defence is premised on the proposition that it is necessary to determine any and all transactions made by the trustee to determine what John's entitlement was to the assets at the date of the August 2015 Resolution. Andrew accepts the effect of this plea is to expand the scope of the account sought by John to any and all transactions made by the trustee over a 30 year period. John says this is impermissible for three reasons. First, Andrew cannot, via the defence, in effect run a counterclaim for an account broader than the one sought by John. If Andrew contends an account must be brought for all transactions over the course of the Trust, he must do so by way of counterclaim against the trustee. To do so in a defence as opposed to bringing a counterclaim is an abuse of process.
Second, it is said the limitation period for an account is six years. On that basis, Andrew's claim for an account of all transactions is statute‑barred and it is an abuse of process.
Third, on behalf of John, it was submitted the matters Andrew contends need to be taken into account are not matters which are pleaded in a conventional sense. Rather, Andrew raises a host of allegations in respect of which the parties will need to give discovery. More importantly, it is an abuse of process for a party to seek to plead 'material facts' and put those facts in issue when the same party contends those facts will not and cannot be proved.
The third defendant acknowledges that some of the matters pleaded in pars 14C and 16 predate the August 2015 Resolution by decades. It is also acknowledged that if the pleadings are allowed to stand, it will result in increasing the length of the trial by a substantial amount. Nonetheless, it was submitted that to determine John's entitlement to the Trust on the basis he had a vested indefeasible entitlement to the Trust since 1992, it is not possible to ignore payments that have been advanced to him from 1992 to 2015. Furthermore, Andrew says pars 12(b)(iv)(A) and 12(b)(iv)(B) are pleaded in response to John's allegation in par 29 of the amended statement of claim that Andrew knew the August 2015 Resolution was a breach of trust. The paragraphs complained of provide the factual context of Andrew's state of knowledge when he assessed the validity of the August 2015 Resolution.
On balance, I am satisfied the arguments advanced on behalf of Andrew carry the day. During the course of her submissions, counsel for Andrew made the point that John's complaints must be considered. If it is the case the August 2015 Resolution was a breach of trust, then all of the payments made to various individuals at various times after the date the parties' interests was settled, must be considered. To do anything else was not to adequately adjust the rights and interests of the parties so as to represent a fair outcome. There can be no doubt Andrew recognises the difficulties involved in this exercise. I am not satisfied the position is so clear that Andrew should be precluded from raising these points when the matter is heard. I am not satisfied the paragraphs complained of should be struck out as an abuse of process.
John complains of par 14B of the defence. Properly considered, John says Andrew asserts John acquiesced in William's:
(a)failure to distribute the Trust in 1991 when the beneficiaries' interest vested;
(b)failure to distribute income derived from the Trust pursuant to cl 1 of the Trust Deed;
(c)failure to account to the beneficiaries of the Trust; and
(d)use of the Trust for his own purposes.
John correctly says the basis of his alleged acquiescence is set out in pars 14B(e) ‑ 14B(h). Paragraph 14D(b) further asserts John is barred from relief by reason of laches because Andrew says John was aware of his entitlement to his interest in the Trust. John says the pleading is liable to be struck out because it pleads inconsistent facts in the alternative when Andrew knows one or other is false. The argument is put this way. John says Andrew's primary case is that the August 2015 Resolution was made by William 'validly in his discretion as trustee for the Trust'. However, in par 14B(a), Andrew asserts 'further, Andrew says that John acquiesced to Bill's failure to distribute the Trust in 1991 when the beneficiaries' interest vested' and in par 14B(e) that 'John knew he had an equitable right being from 1991: a right to demand payment of one quarter of the capital of the Trust to himself' and 'a right to one quarter of the income from the trust'. Inherent in this plea is the contention that the B.E. Lynn Trust was a fixed trust to which John had an indefeasible interest in 1991 and John knew that to be the case. In other words, the primary case relies on the factual position that the B.E. Lynn Trust was objectively discretionary but the 'further' case relies on the factual position that the B.E. Lynn Trust was a fixed trust. John says this is not simply a case of pleading claims in the alternative but rather pleading claims that require fundamentally inconsistent factual foundations.
In response, Andrew says John has misunderstood his case. He says on the pleadings both parties agree that the trust vested in 1991. Both parties also agree that in 1991, each sibling had a quarter interest in the Trust. John says the interests were fixed. Andrew agrees subject to the exercise of discretionary power in cl 2 of the Trust Deed. Where the parties disagree is on the question of whether the interests were indefeasible in 1991. John says they were. Andrew says they were not because they could be divested by the exercise of the power in cl 2 of the Trust Deed. Andrew says his pleading is not to the effect the Trust was discretionary. Rather, it is a hybrid trust that had fixed entitlements subject to the discretion contained in cl 2 of the Trust Deed. Thus, his arguments are not inconsistent.
For the reasons advanced by Andrew, I would accept this plea can stand. It raises a short point as to the effect of cl 2 of the Trust Deed. It would be inappropriate to attempt to determine that question independent of the trial of the action. I am satisfied the plea is in all respects proper and should stand.
Finally, John says the acquiescence defence cannot be made out. John says Andrew contends John acquiesced in the Trust being administered by William contrary to John's knowledge of his 'equitable right' of which he is said to have known from 1991. Correctly, John says acquiescence requires contemporaneous and informed acceptance or standing by conduct that would otherwise be an infringement of rights. It is essential that the alleged acquiecsor had full knowledge of their rights both as to fact and law. On this basis, John says there are three reasons why par 14B discloses no reasonable defence.
First, it is said there is no factual foundation for the proposition that John had full knowledge of his rights in fact and in law dating from 1991. All of the matters particularised in pars 14B(e) ‑ 14B(g) are matters that deal with the alleged administration of the Trust but not John's knowledge of his rights from 1991. Second, it is said the breach of which John complains is the making of the August 2015 Resolution. There are no facts pleaded for the proposition that John acquiesced to the August 2015 Resolution being made or that he even knew that it had been made. Third, it is said the acquiescence defence relies on the fundamental proposition that because John is alleged to have 'committed some acts in which he indicated he consented to the Trustee doing whatever the Trustee wanted to do with the Trust', he therefore acquiesced to the breach in distributing assets pursuant to the 2015 resolution. Essentially, Andrew argues that knowing that he had a vested entitlement to the Trust, John allowed his father to deal with the trust property as he wished. This had two consequences. First, he delayed enforcing his rights so that in view of the history of the management of the Trust, he is now barred from the relief he seeks. Second and in the alternative, it is said that by allowing his father to act as he wished in relation to the Trust, he can not now withdraw that view and demand that one action be taken as if the behaviour to which he has acquiesced did not occur.
In my view, the pleading in its present form ought be allowed to stand. The approach taken by John is very narrow. Effectively, he says acquiescence can only run if it is established by Andrew that John acquiesced in the August 2015 Resolution. To acquiesce, he must have known the resolution was made and he must have been aware of its effect. The way Andrew puts his case is to say that it is continual – that is to say, John was aware of breaches of trust prior to the August 2015 Resolution and took no action. Andrew says when the whole of the conduct of John is taken into account, it amounts to acquiescence. The position is arguable and I would not be prepared to strike out the parts of the defence to which objection is taken.
Defence of the first and second defendants
The plaintiff objects to pars 35 to 84 of the defence of Simon (I will refer to Simon although he is sued in two capacities). These paragraphs appear under a subheading in the defence 'Satisfaction, consent acquiescence and laches'. There are then further subheadings which should probably be subsubheadings. For instance, there is a subheading 'Kalgoorlie properties' but this does not appear to relate to a particular defence. Rather it forms part of the overall plea which is then shoehorned into sections marked 'acquiescence', 'laches' and so on. It would appear that what the draftsman has done is plead what are said to be material facts and then cherrypicked these material facts to give rise to particular defences. It does not make for a clear, easy to read pleading.
It is John's position that pars 82, 83(A), 83(B) and 84 should be struck out as disclosing no reasonable defence and therefore the underlying paragraphs in support of those defences (pars 35 to 81) should be struck out as a consequence. The submissions in support of the application make it clear John does not object to all of the pars 35 to 81. Rather, it is submitted there are fundamental deficiencies with the pleas of satisfaction, consent, acquiescence and laches and there is much irrelevant and ambiguous material pleaded in the supporting paragraphs. John says Simon ought be given leave to replead the defence in a form that does not embarrass or delay a fair trial of the action.
The difficulty with the pleading as it stands at the moment is that it is difficult to know where the material facts are (insofar as there are material facts in the various paragraphs). This can be illustrated by reference to the plea of satisfaction. In Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (5th Edition), the learned authors deal with satisfaction in this way (par 32-005):
A is under an obligation to B. Intending to satisfy the obligation, A tenders no exact performance but its substantial equivalent. In certain cases, equity says that if B accepts what is tendered, A's obligation is satisfied. In other words, B is not put to an election. B may insist on literal performance of A's obligations, or may accept what A offers in satisfaction. But B may not do both.
In relation to acquiescence, presumably the plea is estoppel by acquiescence. If that is the case, the various aspects of estoppel must be pleaded – reliance, detriment and so on. As to laches, it would appear the first and second defendants are relying upon the delay with prejudice. How a defence of satisfaction can run with a defence of acquiescence and laches is an issue raised by John and not satisfactorily answered by Simon. It requires further consideration.
What a party has to plead is material facts. Our system of pleading does not mandate the pleading of causes of action. Here the defence has pulled together certain paragraphs by saying pars (a), (b) and (c) are pleaded as a defence of satisfaction and pars (a), (f), (g) and (h) are pleaded as a defence of laches. This may be one of those cases where the person drafting the defence might simply concentrate on pleading material facts without referencing those facts to particular defences. It may then be the case John, properly advised, admits the facts, confident they cannot establish a defence. That may be a way forward for both parties. But at the moment John has a reasonable complaint – the paragraphs complained of are simply too confusing.
On publication of these reasons, the parties should confer and attempt to agree orders. If no agreement is possible, each party should provide a minute of proposed orders and short submissions dealing with any dispute as to costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MM
Associate
1 JUNE 2023
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: GROVE -v- SIMON DIRK KENWORTHY-GROEN as executor of the estate of WILLIAM GROVE [No 3] [2023] WASC 185 (S)
CORAM: MASTER RUSSELL
HEARD: 14 MARCH 2024
DELIVERED : 7 MAY 2024
FILE NO/S: CIV 1369 of 2021
BETWEEN: JOHN GROVE
Plaintiff
AND
SIMON DIRK KENWORTHY-GROEN as executor of the estate of WILLIAM GROVE
First Defendant
SIMON DIRK KENWORTHY-GROEN
Second Defendant
ANDREW HENDRICK GROVE
Third Defendant
GROVE SUPERANNUATION PTY LTD AS TRUSTEE FOR THE GROVE SUPERANNUATION FUND (ACN 113 205 495)
Fourth Defendant
Catchwords:
Costs - Application to strike out pleadings - Plaintiff's application to strike out parts of third defendant's defence unsuccessful - Whether 'usual orders' in unsuccessful summary judgment application apply to unsuccessful strike out application - Costs to follow event - Plaintiff to pay third defendant's costs - Turns on own facts
Costs - Application to strike out pleadings - Plaintiff's application to strike out parts of first and second defendants' defence successful - Costs to follow event - First and second defendants to pay plaintiff's costs - Turns on own facts
Legislation:
Supreme Court Act 1935 (WA) s 37
Rules of the Supreme Court 1971 (WA) O 16, O 20 r 19(1)(a), r 19(1)(b), r 19(1)(c), r 19(1)(d), O 59 r 9(1), O 66 r 3(1), O 66 r 10(1)
Consolidated Practice Directions 4.3.2, 4.7.1(7)
Result:
Plaintiff to pay third defendant's costs of strike out application
First and second defendants to pay plaintiff's costs of strike out applications
Category: B
Representation:
Counsel:
| Plaintiff | : | P D C Robinson |
| First Defendant | : | L A Tsaknis |
| Second Defendant | : | L A Tsaknis |
| Third Defendant | : | A R Christiansen |
| Fourth Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Williams & Hughes |
| First Defendant | : | Fort Knox Legal |
| Second Defendant | : | Fort Knox Legal |
| Third Defendant | : | Jackson McDonald |
| Fourth Defendant | : | Croftbridge |
Case(s) referred to in decision(s):
Bowesco Pty Ltd v Read [2012] WASC 340
Chalmsbury Nominees Pty Ltd v Alita Resources Ltd (Receivers and Managers Appointed) (Subject to Deed of Company Arrangement) [2023] WASC 97 (S)
Crage v Wooles [2021] WASC 406
Deidler v Boroweic [No 2] [2023] WASC 396 (S)
Grove v Simon Dirk Kenworthy-Groen as executor of the estate of William Grove [No 3] [2023] WASC 185
Hughes v St Barbara Ltd [2011] WASCA 234 (S)
Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164
Oshlack v Richmond River Council (1998) 193 CLR 72
R&I Bank of Western Australia Ltd v Lombardo (Unreported, WASC, BC9201128, 26 June 1992)
Ridgepoint Corp Pty Ltd v McCallum Donovan Sweeney (A Firm) [2011] WASC 167
Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388
MASTER RUSSELL:
Introduction
The plaintiff, John Grove, the second defendant, Simon Dirk Kenworthy‑Groen, and the third defendant, Andrew Hendrick Grove, are brothers. With no disrespect, I will refer to them and other family members, most of whom share the same surname, by their first names.
Simon is the first defendant in his capacity as executor of the estate of the late William Grove. He is also the second defendant in his own capacity.
On 1 June 2023, reasons for decision of Master Sanderson were published in relation to applications in this proceeding: Grove v Simon Dirk Kenworthy-Groen as executor of the estate of William Grove [No 3] [2023] WASC 185 (Reasons).
The Reasons relate to two separate applications by John to strike out certain paragraphs of:
(a)Andrew's further further further amended defence dated 7 June 2022 (FFFAD), which was heard by Master Sanderson on 30 August 2022; and
(b)Simon's further further re‑amended defence (FFRAD), which was heard by Master Sanderson on 16 November 2022.
In the Reasons, the Master stated that upon publication of the Reasons the parties should confer and attempt to agree orders as to costs and, if agreement was not possible, each party should provide a minute of proposed orders and short submissions dealing with costs.
The parties attempted to have the matter relisted before Master Sanderson to make submissions as to costs. Unfortunately, the matter could not be heard by Master Sanderson between publication of the Reasons on 1 June 2023 and his retirement. The parties have conferred and have been unable to reach agreement in relation to costs.
On 14 March 2024, I heard separately from counsel for John and Andrew, and then from counsel for John and Simon (as first and second defendant) in relation to costs and orders to give effect to the Reasons.
In these reasons, I deal firstly with costs and orders to give effect to the Reasons in so far as they relate to John's application to strike out parts of Andrew's FFFAD. I then deal with costs and orders to give effect to the Reasons relating to John's application to strike out parts of Simon's FFRAD.
The fourth defendant, Grove Superannuation Pty Ltd as trustee for the Grove Superannuation Fund, did not take part in the hearings before Master Sanderson or the hearings before me on 14 March 2024.
Overview of John's claim
John brings his claim as a beneficiary under the B E Lynn Trust (Trust), which was established by a deed of trust on 8 November 1971 (Trust Deed). William Grove, John's, Simon's and Andrew's late father, was appointed trustee of the Trust on 14 November 1971.
John claims that, under the terms of the Trust Deed, the assets of the Trust were to be held on trust in equal shares for such of the beneficiaries who attained age 21 years. The beneficiaries were John, Simon, Andrew and their late sister Sonja Grove, who turned 21 on 30 August 1990.
Sonja died on 27 July 1992. She did not have any children. On 14 June 1993, letters of administration in respect of her estate were granted to William (also referred to as Bill). He died on 30 October 2015, and Simon was granted probate of his estate.
John claims that, by operation of s 45(2) of the Trustees Act 1962 (WA), as the legal personal representative of William, who was the last surviving trustee of the Trust, Simon became and remains interim trustee of the Trust until a new trustee is appointed. John claims Simon has declined or refused to perform the role of trustee of the Trust and, despite requests, has refused to provide John with information about the Trust.
In essence, John claims that a resolution dated 21 August 2015 (executed on 29 August 2015) (August 2015 Resolution) concerning distribution of Trust funds amounted to a breach of trust or fiduciary duty by William. John received nothing by way of distribution pursuant to the August 2015 Distribution. He claims that everything went to Simon and Andrew and there is virtually nothing left in the Trust. Details of the August 2015 Resolution, the distribution under it and the alleged breaches are set out in the statement of claim and in the Reasons.
John seeks an account and brings claims against Simon and Andrew for knowing assistance and knowing receipt in breach of trust and fiduciary duties owed by William as trustee of the Trust. He seeks a declaration that Simon and Andrew hold money and/or assets transferred to them pursuant to the August 2015 Resolution on constructive trust for him.
In addition to the declaration, John seeks:
(a)an account for the profits made by Simon and Andrew as a consequence of the transfer to them pursuant to the August 2015 Resolution;
(b)further or alternatively, equitable compensation from Simon, Andrew and/or William's estate; and
(c)an account of all transactions made by William in his capacity as trustee of the Trust and/or his agents acting on his behalf (whether authorised or purportedly authorised) in his capacity as trustee of the Trust between 6 May 2015 and the date of the account.
The application to strike out parts of Andrew's FFFAD
By chamber summons filed on 9 June 2022 and amended chamber summons filed on 23 June 2022, John sought the following orders:
1.The time for the Plaintiff to make this application be extended to 9 June 2022.
2.Pursuant to Order 20 Rule 19(1)(a), 19(1)(c) and/or 19(1)(d) Rules of the Supreme Court 1971 (WA), paragraphs 12(b)iv)(A), 12(b)iv)(B), 14B, 14C, 14D and 16 of the Third Defendant's Further Amended Defence dated 7 June 2022 be struck out.
3.The requirements of Order 59 rule 9(1) be waived in relation to the application to strike out paragraphs 14B and 14D.
4.The Third Defendant pay the costs of this application, including conferral, to be taxed if not agreed.
The relevant factual and procedural background, the parties' pleaded cases and the basis of the application are set out in the Reasons. It is not necessary for me to repeat the Reasons in detail. What follows is a summary.
In essence, Andrew admits the making of the August 2015 Resolution and says it was validly made by William in his discretion as trustee of the Trust. He says that although John did not receive cash or shares under the August 2015 Resolution, he received a benefit by being released from certain obligations. Andrew denies John is entitled to the relief claimed, or any relief.
The Master accepted John's submissions that paragraph 16 of the FFFAD must be read in the context of paragraph 14C. He did not accept that those paragraphs disclosed no reasonable defence.
By paragraph 16 of the FFFAD, Andrew denies John is entitled to the account sought, but says, in effect, that if he is, it should not be confined to the period pleaded from 6 May 2015 to the date of the account. He says it should take into account all of the advances that may have been made to all beneficiaries, including whether or not certain transactions were effected, or amounts paid.
The transactions Andrew says ought to be included in the account include those pleaded at paragraphs 12(b)(iv)(A), 12(b)(iv)(B) and 14C. Paragraph 12(b)(iv)(A) and 12(b)(iv)(B) (along with other subparagraphs in paragraph 12 of the FFFAD) are pleaded in response to the allegation in paragraph 29 of the statement of claim that Andrew received assets of the Trust knowing the August 2015 Resolution was a breach of trust, or fiduciary duty.
Paragraph 14B pleads the basis of John's alleged acquiescence in the alleged breaches. Paragraphs 14C and 14D each assert that John is barred from equitable relief by reason of laches, for the reasons pleaded, including that because of the passage of time, many of the documents that would confirm or disprove the matters pleaded no longer exist and William, who had first‑hand knowledge of those matters, has died and cannot give evidence.
The submissions made on behalf of John and Andrew are summarised in the Reasons. Ultimately, the Master found that each of the impugned pleas should stand. He observed that to articulate the nature of the dispute between the parties highlights its complexity. He stated that the issues of fact and law are complex and should not be considered in isolation. He accepted that if the FFFAD in its present form stands, the issue of discovery would be complicated. However, that was not a reason to strike out the pleas. Nor did it mean that an equitable limitation defence cannot be raised.
Ultimately, on the basis articulated in the Reasons, the Master accepted the arguments advanced on behalf of Andrew as to why the plea in each case should stand. He stated that the way the matter is pleaded is tolerably clear given the complicated factual background. He declined to strike out the paragraphs the subject of the application stating, in effect, that they were matters appropriately the subject of determination at trial and not an abuse of process.
The costs of the application
The parties each filed an outline of submissions in support of their respective applications for costs on 18 October 2023. Andrew also filed an outline of responsive submissions on 25 October 2023. I do not repeat the parties' submissions. I have given due consideration to them.
John's position in relation to costs
Though John's application to strike out the parts of the FFFAD complained of was unsuccessful, he seeks an order that the costs of the application be costs in the cause. It was submitted on John's behalf that the focus of the application was that there was no reasonable defence raised by the relevant pleas or that the defence pleaded was impermissible. As such, his counsel contended that it is analogous to a defendant's summary judgment application made on the basis that a plaintiff's statement of claim discloses no reasonable cause of action.
Counsel for the plaintiff relied upon two earlier decisions of Master Sanderson in which the costs of a strike out application were ordered to be in the cause: Crage v Wooles[1] and Bowesco Pty Ltd v Read.[2] He also relies on R&I Bank of Western Australia Ltd v Lombardo.[3]
[1] Crage v Wooles [2021] WASC 406 [16] ‑ [17].
[2] Bowesco Pty Ltd v Read [2012] WASC 340 [15] ‑ [16].
[3] R&I Bank of Western Australia Ltd v Lombardo (Unreported, WASC, BC9201128, 26 June 1992) pages 15 and 21 (Anderson J).
In essence, it was submitted on John's behalf that though the application was unsuccessful, and the Master held that the points complained of ought to be allowed to stand and be determined at trial, John may ultimately be vindicated at trial on those points. It was submitted that, in those circumstances, the appropriate order as to costs of the strike out application is costs in the cause.
Andrew's position in relation to costs
Andrew's position in relation to costs is that the usual course that costs follow the event should apply. The application was unsuccessful and, as the unsuccessful applicant, John should pay Andrew's costs of the application, including conferral.
It was submitted on behalf of Andrew that the application is not analogous to a summary judgment application. John's attack on the relevant parts of the FFFAD was not simply about the pleading not disclosing a reasonable defence.
It was also submitted on Andrew's behalf that the usual course is not to order costs in the cause on an unsuccessful summary judgment application. His position is that will not necessarily be so, referring to the commentary in Civil Procedure Western Australia[4] in relation to the discouragement of interlocutory and pleadings disputes. In any event, it was submitted that there is no usual or special rule relating to the costs of strike out applications, or that such costs be in the cause.
[4] Lexis Nexis, Civil Procedure Western Australia [14.8.1].
Applicable principles as to costs
The principles relating to costs are well established. Under s 37 of the Supreme Court Act 1935 (WA), the court has a wide discretion to award costs. However, the discretion is not unfettered and must be exercised judicially.[5]
[5] Oshlack v Richmond River Council (1998) 193 CLR 72 [21] - [22], [134] and Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 [24] - [25]; Hughes v St Barbara Ltd [2011] WASCA 234 (S) [5] and Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388 [48] ‑ [50].
Costs will usually follow the event so that generally the court will order that the successful party to any action or matter recover their costs.[6]
[6] RSC O 66 r 1(1).
The plaintiff did not make an application for summary judgment. However, given he seeks to characterise his strike out application as analogous to an application for summary judgment, it is necessary to consider whether, as the plaintiff submits, the 'usual rule' in an unsuccessful summary judgment application is that costs be in the cause.
The principles applicable to costs orders where an application for summary judgment is unsuccessful were recently summarised by Hill J in Chalmsbury Nominees Pty Ltd v Alita Resources Ltd (Receivers and Managers Appointed) (Subject to Deed of Company Arrangement),[7] as follows:
[6]The usual order where an application for summary judgment is dismissed is that the costs of the application are in the cause. It is only in exceptional cases that costs will be awarded to the party who successfully opposed the application (Whitehall Holdings Pty Ltd v Custom Credit Corporation Ltd (Full Court, Supreme Court of WA, Lib No 920347, 19 June 1992).
[7]There has been some discussion as to whether this 'ordinary rule' should be reconsidered given modern case management practices (See Ridgepoint Corporation Pty Ltd v McCallum Donovan Sweeney (A Firm)[2011] WASC 167 (S)). In NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd, the Court of Appeal held there was no basis to doubt the correctness of the ordinary rule. However, it was noted that while this is the ordinary rule, it is not fixed or inviolable (NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd[2020] WASCA 107 [113] (Murphy JA, Beech and Vaughan JJA agreeing).
[8]Where a reasonable party ought to have known it had no reasonable prospects of success of obtaining summary judgment, it may not be just for the applicant, even if successful at trial, to have the costs of the failed interlocutory application (NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [112]).
[7] Chalmsbury Nominees Pty Ltd v Alita Resources Ltd (Receivers and Managers Appointed) (Subject to Deed of Company Arrangement) [2023] WASC 97 (S).
It is recognised that the 'usual rule' where an application for summary judgment is dismissed, is that the costs of the application will be in the cause, though it is not a fixed rule. There may be cases where the circumstances warrant a departure from the usual or ordinary rule. However, there is no usual or ordinary rule in relation to strike out applications per se. The cases relied upon in support of John's submissions do not, in my view, demonstrate there is a usual or ordinary rule as to the appropriate orders as to costs in a strike out application.
In Crage v Wooles, the Master characterised the strike out application as being 'really an application for summary judgment on a counterclaim', an application under O 16 of the Rules of the Supreme Court 1971 (WA) (RSC). It was a relatively simple case of adverse possession. He dismissed the plaintiff's strike out application, ordered costs thrown away by the amended defence and counterclaim and made an order that the costs of the application be in the cause.
Bowesco Pty Ltd v Read was primarily a summary judgment application, with a strike out application in the alternative. The orders made in each of those cases and in R&I Bank of Western Australia Ltd v Lombardo do not support the existence of a usual or ordinary rule.
That orders have been made in other cases that costs be in the cause in an unsuccessful strike out application does not mean that will be so in every case. As Whitby J observed in Deidler v Boroweic [No 2],[8] determining costs orders is 'inherently discretionary and each case must be considered on its own merits. The fairest outcome is what the court is aiming to achieve in exercising its discretion'.
[8] Deidler v Boroweic [No 2] [2023] WASC 396 (S) [55], referring to Ridgepoint Corp Pty Ltd v McCallum Donovan Sweeney (A Firm) [2011] WASC 167 [6], [10] (K Martin J).
As to when costs orders may be made, RSC O 66 r 10(1) provides:
Costs may be dealt with at any stage of the proceedings or after the conclusion of the proceedings, and any order of the Court for the payment of costs may require the costs to be paid forthwith notwithstanding that the proceedings are not concluded.
Though costs remain in the discretion of the court, Consolidated Practice Direction (CPD) 4.7.1(7) provides '… the Court will generally order that interlocutory costs ordered to be paid to a party are to be paid forthwith or by a particular date, rather than in any event'.
The appropriate orders as to costs as between John and Andrew
As has been noted, whilst there may be examples of strike out applications in which costs have been ordered to be in the cause, each case must be considered on its own circumstances and merits.
The basis upon which John brought his application to strike out parts of the FFFAD was not confined to the impugned paragraphs disclosing no reasonable defence under RSC O 20 r 19(1)(a). He also argued they were an abuse of process (under RSC O 20 r 19(1)(c)) or, if allowed to stand, would prejudice delay or embarrass the fair trial of the action (under RSC O 20 r 19(1)(b)). In oral submissions at the hearing of the application before the Master on 30 August 2022, counsel for the plaintiff stated that the grounds relied upon were not mutually exclusive.
The Master was not satisfied that the points raised in relation to the impugned paragraphs of the FFFAD ought be struck out on the basis they disclosed no arguable defence or as an abuse of process as was submitted, nor on any of the other bases.
I am not satisfied that the issues raised are such that they should be compared to an unsuccessful claim for summary judgment and that the costs of John's unsuccessful application to strike out those parts of the FFFAD ought be in the cause. John did not bring an application for summary judgment and did not seek to strike out the FFFAD as a whole on the basis there is no reasonable or arguable defence.
There is no reason, in my view, in the circumstances of the application why costs should not follow the event in the ordinary course and John should pay Andrew's costs of the application. Such costs should also include the costs of conferral. Conferral is required by RSC O 59 r 9 and in accordance with CPD 4.3.2.
Conclusion and orders as between John and Andrew
For these reasons, John is to pay Andrew's costs of the strike out application, including costs of conferral. Such costs are to be taxed if not agreed and shall be payable forthwith in accordance with CPD 4.7.1(7).
The orders sought in John's strike out application included an order that the requirements of RSC O 59 r 9(1) be waived in relation to the application to strike out paragraphs 14B and 14D. I am minded to make that order, subject to any matter either John or Andrew wish to be heard on, as it was not addressed at the hearing before me on 14 March 2024.
I will also hear from counsel for John and Andrew as to the final form of orders as to costs, to give effect to the Reasons and to progress the proceeding. Subject to hearing from them, it seems to me the orders as to costs and to give effect to the Reasons should include:
1.The plaintiff has leave to bring his application by amended chamber summons filed on 23 June 2023 (Application).
2.The requirements of O 59 r 9(1) of the Rules of the Supreme Court 1971 (WA) be waived in relation to the application to strike out paragraphs 14B and 14D.
3.The Application is dismissed.
4.The plaintiff is to pay the third defendant's costs of the Application, including costs of conferral, to be taxed if not agreed and payable forthwith.
The parties should file a minute of any alternative form of orders contended for by 14 May 2024.
The application to strike out parts of Simon's FFRAD
By chamber summons filed on 19 August 2022, John applied to strike out paragraphs 35 ‑ 84 of Simon's FFRAD pursuant to RSC O 20 r 19(1)(a), r 19(1)(c) and r 19(1)(d) (August 2022 Application).
As submitted by John, the August 2022 Application was the culmination of a long series of conferral and amendments to Simon's defence. The FFRAD is the fourth time Simon has amended his defence and the second time John has applied to strike it out.
The first application was made by chamber summons filed on 8 December 2021 (December 2021 Application), by which John applied:
(a)for further and better particulars of paragraphs 27, 31.6 and 31.7 of Simon's further amended defence dated 2 December 2021 (December 2021 Defence); and
(b)to strike out paragraph 19(b) of the December 2021 Defence.
The December 2021 Defence was filed following lengthy correspondence between John and Andrew's lawyers about its adequacy between September 2021 and filing of the December 2021 Application.
The December 2021 Application was listed for hearing on 17 February 2022 before Master Sanderson. Before that application was heard, there were further communications between John and Andrew's lawyers, the details of which are referred to in the plaintiff's written submissions and the affidavits referred to in them. The hearing of the December 2021 Application did not proceed. Simon had foreshadowed filing a further amended defence and that he needed further time to do so.
Simon and John each filed submissions and, at the hearing on 17 February 2022, the Master ordered Simon to file a further amended defence by 22 April 2022. Costs were reserved.
The further re‑amended defence was not filed until 20 May 2022. John raised further concerns about the adequacy of that pleading. After further communications between John's and Simon's lawyers, the FFRAD was filed on 25 July 2022. Following further conferral about the adequacy of the FFRAD, John made the August 2022 Application, in which he sought the following orders:
1.Pursuant to Order 20 Rule 19(1)(a), 19(1)(c) and/or 19(1)(d) of the Rules of the Supreme Court 1971 (WA), paragraphs 35 ‑ 84 of the First and Second Defendants' Further Further Re‑Amended Defence dated 25 July 2022 be struck out.
2.The First and Second Defendants pay the Plaintiff's costs thrown away by reason of the amendments to the Further Re‑Amended Defence made on 25 July 2022 to be taxed if not agreed.
3.The First and Second Defendants pay the Plaintiff's costs of the Plaintiff's application dated 8 December 2021 as against the First and Second Defendants, including the costs of conferral, to be taxed if not agreed.
4.The First and Second Defendants pay the costs of this application, including conferral, to be taxed if not agreed.
At the hearing before me on 14 March 2024, counsel for John and Simon each made submissions in relation to the costs of the August 2022 Application and also in relation to the costs thrown away by reason of the amendments to the further re‑amended defence dated 25 July 2022 and the costs of the December 2021 Application.
The August 2022 Application
The Reasons in so far as they relate to the impugned paragraphs of the FFRAD, paragraphs 35 to 84, are brief. The Master stated:[9]
[9] Reasons [30] ‑ [32] (Master Sanderson).
30The difficulty with the pleading as it stands at the moment is that it is difficult to know where the material facts are (insofar as there are material facts in the various paragraphs). This can be illustrated by reference to the plea of satisfaction. In Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (5th Edition), the learned authors deal with satisfaction in this way (par 32-005):
'A is under an obligation to B. Intending to satisfy the obligation, A tenders no exact performance but its substantial equivalent. In certain cases, equity says that if B accepts what is tendered, A's obligation is satisfied. In other words, B is not put to an election. B may insist on literal performance of A's obligations, or may accept what A offers in satisfaction. But B may not do both.'
31In relation to acquiescence, presumably the plea is estoppel by acquiescence. If that is the case, the various aspects of estoppel must be pleaded - reliance, detriment and so on. As to laches, it would appear the first and second defendants are relying upon the delay with prejudice. How a defence of satisfaction can run with a defence of acquiescence and laches is an issue raised by John and not satisfactorily answered by Simon. It requires further consideration.
32What a party has to plead is material facts. Our system of pleading does not mandate the pleading of causes of action. Here the defence has pulled together certain paragraphs by saying pars (a), (b) and (c) are pleaded as a defence of satisfaction and pars (e), (f), (g) and (h) are pleaded as a defence of laches. This may be one of those cases where the person drafting the defence might simply concentrate on pleading material facts without referencing those facts to particular defences. It may then be the case John, properly advised, admits the facts, confident they cannot establish a defence. That may be a way forward for both parties. But at the moment John has a reasonable complaint - the paragraphs complained of are simply too confusing.
John's submissions in relation to costs
It was submitted on behalf of John that there is no reason for the court to depart from the usual order that costs follow the event, and Simon should pay the costs of the August 2022 Application, including any reserved costs and costs of conferral, to be taxed if not agreed and paid forthwith in accordance with CPD 4.7.1(7).
John also seeks the costs of the December 2021 Application which were reserved on 17 February 2022, including any reserved costs and costs of conferral, to be taxed if not agreed and paid forthwith. In essence, this is on the basis that (as set out in John's written submissions), the hearing of the December 2021 Application did not proceed because Simon conceded the defence needed to be further amended. Those amendments did not cure the deficiencies and resulted in the successful August 2022 Application. It was not until receiving a letter in January 2022 from Simon's lawyers that John was informed Simon sought to make further amendments to his defence. John submits that it follows that Simon should also pay the plaintiff's costs of the December 2021 Application, including conferral, to be taxed if not agreed and paid forthwith.
John also seeks the costs thrown away by the amendments to the further re‑amended defence dated 25 July 2022, to be taxed if not agreed. That is, the costs he incurred because of the amendments made by Simon to the defence he filed on 20 May 2022, and then superseded by the FFRAD filed on 25 July 2022.
Paragraphs 19(e) and 23
At the hearing of the August 2022 Application, John's counsel submitted that if paragraphs 35 ‑ 84 of the FFRAD were struck out, paragraphs 19(e) and 23 would also need to be struck out because those paragraphs rely on and repeat paragraphs the subject of the strike out application. That was repeated at the hearing before me on 14 March 2024, but that those paragraphs should be struck out in addition to paragraphs 35 ‑ 84.
Simon's submissions in relation to costs
It was submitted on behalf of Simon, in effect, that the cost orders should reflect that the first and second defendants were, in the circumstances of the case, substantially the successful parties. This appears to be based on an erroneous conclusion that the Master did not strike out impugned paragraphs 35 ‑ 84 of the FFRAD. Though the Master did not expressly state in the Reasons that those paragraphs of the FFRAD were struck out, it is clear from the Reasons and from the result stated on the cover page that they were struck out:
Result:
Defence of first and second defendants struck out and defence of third defendant to stand.
It was also submitted on Simon's behalf that it is neither necessary nor appropriate for orders to be made that Simon (in his capacity as the first and second defendant) pay John's costs thrown away by reason of the amendments to the defence of 25 July 2022. It was said this is because no costs thrown away have been identified, no reply has been filed, no discovery has been requested or taken place, and any costs thrown away are the subject of RSC O 66 r 3(1).
As to the costs of the December 2021 Application, Simon's position is that the further and better particulars sought were not pursued by John and the application to strike out paragraph 19(b) was included in the August 2022 Application. It was initially submitted in the written submissions filed that Simon ought to have the reserved costs of the December 2021 Application '[t]o the extent that the first and second defendants were substantially successful on the [August 2022 Application], including paragraph 68 of the Defence, and given the application for particulars … was abandoned by [John]'.
It was submitted on Simon's behalf that the appropriate order as to costs is that John pay 75% of Simon's costs of the December 2021 Application and of the August 2022 Application, including costs reserved on 17 February 2022 and 9 August 2022, and the costs of conferral, to be taxed if not agreed.
In oral submissions, Simon's counsel submitted there should be no order as to costs in respect of the December 2021 Application.
The appropriate orders and costs orders as between John and Simon
The submissions made on behalf of Simon were largely based on the erroneous understanding that Master Sanderson did not strike out the impugned paragraphs of Simon's FFRAD. As stated earlier in these reasons, it is clear from the Reasons and the 'Result' stated that the Master's decision was to strike out paragraphs 35 ‑ 84 of the FFRAD.
It follows that paragraph 19(e) and the last sentence of paragraph 23 should also be struck out, as was submitted before Master Sanderson and again before me, because they refer to and rely on particulars in paragraphs 43, 44, 45, 55, 56, 57, 58, 59, 60, 66, 67, 68.1 and 68.15, which have been struck out. It was largely accepted by Simon's counsel that the particulars included in those paragraphs be the subject of any further amendment or substitution of Simon's defence.
Counsel for Simon and John both appeared to share the view that any further amendments, given the number of iterations of the defence, would be best dealt with by the filing of a substituted defence. John's counsel submitted it would be appropriate for a marked‑up copy to also be provided to identify the further amendments made. It seems to me, for the sake of clarity, the way forward is for a substituted defence to be filed by Simon, with a marked-up copy being made available to the parties and the court. The parties should confer as to the appropriate form of orders and timing for filing of a substituted defence, noting Simon has already had a significant period of time in which to consider and prepare an amended pleading.
As to the costs sought by John in relation to the December 2021 Application, the particulars sought were of an earlier iteration of the pleading which was subsequently amended, removing the need to press the application for the particulars that had been sought and not provided, and which were overtaken by the further amendments. John was not aware Simon would seek to make further amendments at the time the December 2021 Application was made. John was put to the cost of the application and should have his costs in relation to it. The extent of those costs and accounting for any overlap between applications, is a matter for taxation.
Turning to John's proposed orders that Simon pay John's costs thrown away by reason of the amendments to the further re-amended defence made on 25 July 2022. I accept the submission made on behalf of John, to the effect that to say no costs thrown away have been identified overlooks costs wasted in conferral about and dealing with the previous iteration of Simon's defence, and that the identification of such costs is a matter for taxation. Nor does the fact that RSC O 66 r 3(1) makes provision for costs thrown away by reason of any amendment preclude the making of an order, or make such an order redundant.
John's counsel sought that any orders made in John's favour in relation to the August 2022 Application and the December 2021 Application include 'any reserved costs'. In addition to the costs reserved by Master Sanderson on 17 February 2022 in respect of the December 2021 Application, the costs of the directions hearing on 9 August 2022 concerning the FFRAD were also reserved. It follows those costs should also be John's costs.
Conclusion and orders as between John and Simon
For these reasons, I will make the following orders as between John and Simon:
1.Paragraphs 19(e), 23, and 35 - 84 of the first and second defendants' further further re-amended defence filed on 25 July 2022 are struck out.
2.The first and second defendants are to pay the plaintiff's costs of the chamber summons filed on 19 August 2022, including the costs reserved on 9 August 2022 and costs of conferral, to be taxed if not agreed and paid forthwith.
3.The first and second defendants are to pay the plaintiff's costs of the chamber summons filed on 8 December 2021 as against the first and second defendants, including costs of conferral, to be taxed if not agreed and paid forthwith.
4.The first and second defendants are to pay any costs of the plaintiff thrown away by reason of the amendments to the further re-amended defence made on 25 July 2022, to be taxed if not agreed.
John's and Simon's lawyers are to confer in relation to the appropriate form of orders to deal with filing and service of a substituted defence, and provision of a marked‑up copy of the amendments, including as to the time by which that is to be done.
Further directions
All of the parties should confer as to further directions to progress the proceeding as expeditiously as possible and, if agreement is reached, file a memorandum of consent orders by 14 May 2024. If the parties are unable to agree, they should each file competing minutes of proposed orders by that date, and the matter will be listed for directions.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AM
Associate to Master Russell
7 MAY 2024
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