Gutta v Ierino
[2010] WASC 402 (S)
•22 DECEMBER 2010
GUTTA -v- IERINO [2010] WASC 402 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2010] WASC 402 (S) | |
| Case No: | CIV:1168/2007 | 10-12 MARCH, 31 MAY & 2 NOVEMBER 2010, 8 FEBRUARY 2011 & ON THE PAPERS | |
| Coram: | MAZZA J | 22/12/10 | |
| 6/05/11 | |||
| 8 | Judgment Part: | 1 of 1 | |
| Result: | Defendant to pay plaintiff's costs of the action to be taxed if not agreed on a party/party basis | ||
| B | |||
| PDF Version |
| Parties: | MARIA TERESA GUTTA ANTONIO GUISEPPE IERINO |
Catchwords: | Practice and procedure Costs Fraud Allegedly forged transfer of land form Whether claim within the jurisdiction of the Magistrates Court Whether indemnity costs should be ordered |
Legislation: | Local Courts Act 1904 (WA) (repealed), s 32 Magistrates Court (Civil Proceedings) Act 2004 (WA), s 4, s 6(1)(b) Rules of the Supreme Court 1971 (WA), O 66 r 17 |
Case References: | Dunlop Olympic Ltd v Ellis (1986) WAR 8 Gutta v Ierino [2010] WASC 402 Rapoff v Doropoulos (1990) 3 WAR 451 Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 6 MAY 2011 FILE NO/S : CIV 1168 of 2007 BETWEEN : MARIA TERESA GUTTA
- Plaintiff
AND
ANTONIO GUISEPPE IERINO
Defendant
Catchwords:
Practice and procedure - Costs - Fraud - Allegedly forged transfer of land form - Whether claim within the jurisdiction of the Magistrates Court - Whether indemnity costs should be ordered
Legislation:
Local Courts Act 1904 (WA) (repealed), s 32
Magistrates Court (Civil Proceedings) Act 2004 (WA), s 4, s 6(1)(b)
Rules of the Supreme Court 1971 (WA), O 66 r 17
(Page 2)
Result:
Defendant to pay plaintiff's costs of the action to be taxed if not agreed on a party/party basis
Category: B
Representation:
Counsel:
Plaintiff : Mr A J N Aristei
Defendant : Dr P R MacMillan
Solicitors:
Plaintiff : Carlo Primerano & Associates
Defendant : Gibson Lyons
Case(s) referred to in judgment(s):
Dunlop Olympic Ltd v Ellis [1986] WAR 8
Gutta v Ierino [2010] WASC 402
Rapoff v Doropoulos (1990) 3 WAR 451
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S)
(Page 3)
- MAZZA J:
Introduction
1 These reasons relate to the question of costs.
2 On 22 December 2010, I published my reasons for decision and ordered judgment for the plaintiff in this action: Gutta v Ierino [2010] WASC 402. I adjourned the proceedings to 8 February 2011 to hear submissions from the parties as to the precise terms of any further orders, including costs orders.
3 On 8 February 2011, I made a declaration in the following terms:
The Defendant held, as a constructive trustee for the Plaintiff, a one-half interest in real property situated at 3 Hartog Road, Dalyellup in the State of Western Australia and being more particularly described as Certificate of Title volume 2519, folio 113 ('the Property') as and from 21 April 2005 until its sale on 26 [sic] December 2005.
4 I also ordered that the defendant pay the plaintiff the sum of $36,487.66 and that the defendant pay interest to the plaintiff on that sum. The plaintiff had sought an account of money paid to the defendant. After delivering my reasons and at my urging, the parties agreed on the sum to be paid without the need for an account.
5 As to costs, the parties made oral submissions and were given liberty to file further written submissions. The plaintiff filed additional written submissions.
The issues
6 There is no issue that the defendant should pay the plaintiff's costs on at least a party/party basis. The issues to be decided are:
a. whether the costs should be awarded as if the matter had been brought in the Magistrates Court; and
b. whether the defendant should pay the plaintiff's costs on an indemnity basis.
Background
7 The facts of the case and my findings are set out in the reasons that I published on 22 December 2010 and do not need repetition.
(Page 4)
8 However, it is necessary to say something about the background of the case.
9 The plaintiff commenced her action against the defendant on 20 February 2007. The statement of claim indorsed on the writ of summons did not expressly allege fraud. The plaintiff claimed equitable remedies, primarily an account, estimated in the sum of $65,955.78.
10 At the time the writ was filed, the jurisdictional limit of the Magistrates Court was $50,000. On 1 January 2009, that limit was increased to $75,000: Magistrates Court (Civil Proceedings) Act 2004 (WA) s 4.
11 The plaintiff's statement of claim was later amended. The amended statement of claim alleged that the transfer of land was forged [2A]. The relief sought by the plaintiff was expanded to include a declaration, tracing and an injunction. The primary relief sought was still an account estimated to be $65,955.78.
12 In due course, brief interrogatories were administered and answered, discovery was given and the defendant filed a re-amended defence and set off. The re-amended reply raised the issue of the equity of exoneration.
13 On 27 November 2009, Le Miere J made what may be described as routine orders for the conduct of the trial, including the filing of witness statements and books of documents. These documents were filed. They are neither particularly lengthy nor complex.
14 As far as I am aware, there was no attempt to mediate the dispute either by this court or otherwise. The only attempt to settle the matter that I was made aware of was that the plaintiff offered to settle her claim by receipt of a payment of $45,000 from the defendant. That offer which was made in a letter dated 27 June 2006 was rejected by the defendant.
The trial
15 The trial took up four sitting days (listed for three sitting days). The parties also appeared before me on 2 November 2010 for the purposes of clarifying certain issues and making further submissions on those issues. That hearing lasted 35 minutes.
16 In his opening address, the plaintiff's counsel, Mr Aristei, informed me that the sum sought by the plaintiff was $36,644.02. I note that this is an amount which is roughly half of what was estimated in the plaintiff's amended statement of claim. The plaintiff did not pursue at trial any
(Page 5)
- tracing remedy or injunctive relief. In the end, a declaration was made and the defendant was ordered to pay $36,487.66.
17 I did not regard the case as one which was overly complex either factually or legally. Much of the time at trial was taken up with the issue of whether the transfer of land form at the centre of the case was forged and whether the defendant knew it had been forged.
The affidavit of Carlo Primerano
18 The plaintiff's solicitor, Mr Carlo Primerano, swore an affidavit on 7 February 2011 in support of the plaintiff's claim for indemnity costs. That affidavit revealed that the total costs incurred by the plaintiff at that date were estimated to be $178,724.33. Of this sum, $75,644.28 related to solicitor's fees and $90,264.25 related to counsel fees. I will say something about the amount of fees later in these reasons.
The parties' submissions
19 The plaintiff submitted that the case was at all times triable only in the Supreme Court. The plaintiff sought an order for indemnity costs on the basis that the defendant knowingly relied on a forged transfer and that his conduct in defending the proceedings were so unreasonable as to warrant the court exercising its discretion in that way.
20 The defendant submitted that the claim could have been dealt with in the Magistrates Court pursuant to s 6(1)(b) of the Magistrates Court (Civil Proceedings) Act and that costs should be assessed on that basis. The defendant opposed the making of any indemnity costs order. In this regard, the defendant noted that the amount actually awarded in favour of the plaintiff was very much less than the amount claimed in the amended statement of claim.
Was the claim within the jurisdiction of the Magistrates Court?
21 The Magistrates Court of Western Australia, unlike this court, has only a limited equitable jurisdiction. The equitable jurisdiction conferred upon it is set out in s 6(1)(b) of the Magistrates Court (Civil Proceedings) Act, which provides:
(1) The Court has jurisdiction to deal with -
…
(b) a claim that involves an equitable claim or demand where the only relief claimed is the recovery of an amount of
- money or of damages, whether liquidated or unliquidated, and the amount claimed is not more than the jurisdictional limit[.]
22 If the claim was within the jurisdiction of the Magistrates Court, then O 66 r 17 of the Rules of the Supreme Court 1971 (WA) (RSC) applies. That rule relevantly provides:
If an action is brought in the Supreme Court which could have been brought in the Magistrates Court without the special consent of the defendant, the plaintiff shall recover no greater sum by way of costs than he could have recovered had the action been brought in the Magistrates Court, unless the Court certifies that by reason of some important principle of law being involved, or of the complexity of the issues or of the facts, the action was properly brought in the Supreme Court.
23 Section 6(1)(b) of the Magistrates Court (Civil Proceedings) Act is the statutory successor of s 32 of the Local Courts Act 1904 (WA) (repealed). While there are some differences in the language used in the two provisions, the differences are, for present purposes, immaterial.
24 Section 32 of the Local Courts Act was examined by the Full Court in Rapoff v Doropoulos (1990) 3 WAR 451, and by Brinsden J in Dunlop Olympic Ltd v Ellis [1986] WAR 8, 14 - 15. There is nothing in those cases which suggests that the words in s 6(1)(b) should be given anything other than their plain meaning.
25 The plaintiff's claim, as pleaded, was an equitable claim. However, while the primary relief claimed was the payment of money, it was not the only relief claimed. Further, when the plaintiff commenced her action, the sum of money she estimated that she was entitled to was in excess of the jurisdictional limit of the Magistrates Court. Of course, after 1 January 2009 the sum sought was within the Magistrates Court's jurisdictional limit, but at that point, the plaintiff was still seeking equitable remedies other than the payment of money. I observe that at no time did the defendant seek to have the action transferred to the Magistrates Court. I infer from this that he was, at all times, content for this court to deal with the case.
26 In these circumstances, I conclude that, having regard to the requirements of s 6(1)(b) of the Magistrates Court (Civil Proceedings) Act, the Magistrates Court did not have jurisdiction to deal with the plaintiff's claim. As the Magistrates Court did not have jurisdiction, O 66 r 17 of the RSC does not apply.
(Page 7)
27 I conclude that the plaintiff's claim, as framed, was not within the jurisdiction of the Magistrates Court. Costs must be paid according to the relevant determination or determinations applicable to this court
Should indemnity costs be ordered?
28 The principles applicable to the making of indemnity costs orders were recently summarised by Pullin JA and Kenneth Martin J in Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) [10]. I accept that an indemnity costs order is a departure from the usual costs order where costs are awarded on a party/party basis, and is appropriate only where there is some special or unusual feature of a case which justifies the making of such an order. An indemnity costs order may be appropriate to mark the disapproval of improper or unreasonable conduct on the part of an unsuccessful litigant. I further accept that fraudulent behaviour on the part of an unsuccessful litigant may be a strong reason for ordering indemnity costs. However, all relevant factors must be considered and balanced.
29 The amount of legal costs incurred by the plaintiff for a claim ultimately worth $36,487.66 is truly staggering. The trial was not long and the issues which had to be resolved were not particularly complex or difficult. The costs claimed (almost five times greater than the amount awarded) is out of all proportion to the amount recovered. The litigation was completely uneconomic. I assume that the plaintiff was well aware of this fact.
30 This kind of litigation, where the costs grossly exceed the amount recovered, must be discouraged. It is difficult to see what real benefit it brings to the parties and expends valuable public resources which could be better utilised. Parties and their legal advisors must take a realistic and pragmatic approach to litigation for small claims. The issues to be litigated should be pared so that only those which are really necessary are raised. In this case, until trial, the plaintiff pursued tracing and injunctive remedies which were superfluous. It behoves parties and their legal advisers to look for ways of resolving such disputes other than by the expensive route of a trial, such as by mediation.
31 I do not overlook that the plaintiff was successful and she established her allegation that the defendant behaved fraudulently. On the other hand, the plaintiffrecovered at trial substantially less than she had sought and did not pursue some remedies which she claimed. Further, it seems to me that to award indemnity costs in this case would be to encourage litigation of this type and would not be in the interests of justice.
(Page 8)
32 In balancing all of the factors in the case that I have mentioned, I have decided that the appropriate costs order in this case should be that the defendant pay the plaintiff's costs on a party/party basis.
Order
1. The defendant should pay the plaintiff's costs of the action (including any reserved costs), to be taxed if not agreed, on a party/party basis according to the relevant determination or determinations applicable to the Supreme Court.
0
2
3