Hayes v Doran [No 2]
[2012] WASC 486 (S)
•12 NOVEMBER 2014
HAYES -v- DORAN [No 2] [2012] WASC 486 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 486 (S) | |
| Case No: | COR:185/2011 | ON THE PAPERS BY SUBMISSIONS OF 28 JULY 2014 | |
| Coram: | KENNETH MARTIN J | 12/11/14 | |
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Application granted | ||
| B | |||
| PDF Version |
| Parties: | COURTNEY MATTHEW HAYES GARY PETER DORAN DERMOTT JOSEPH MCVEIGH DANNY FAKHRE |
Catchwords: | Costs Defendants' application for indemnity costs Defendants successful at trial Indemnity costs ordered Turns on its own facts |
Legislation: | Nil |
Case References: | Hayes v Doran [No 2] [2012] WASC 486 Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
GARY PETER DORAN
First Defendant
DERMOTT JOSEPH MCVEIGH
Second Defendant
DANNY FAKHRE
Third Defendant
Catchwords:
Costs - Defendants' application for indemnity costs - Defendants successful at trial - Indemnity costs ordered - Turns on its own facts
Legislation:
Nil
Result:
Application granted
Category: B
Representation:
Counsel:
Plaintiff : No appearance
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Solicitors:
Plaintiff : In Person
First Defendant : Gaden Lawyers (WA)
Second Defendant : Gaden Lawyers (WA)
Third Defendant : Gaden Lawyers (WA)
Case(s) referred to in judgment(s):
Hayes v Doran [No 2] [2012] WASC 486
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S)
1 KENNETH MARTIN J: I delivered 117 pages of reasons for decision determining this action (see Hayes v Doran [No 2] [2012] WASC 486) on 14 December 2012. At the time I dismissed the plaintiff's action.
2 At [489] I said:
As successful parties, the first and second defendants and the third defendant have a prima facie right to receive their taxed costs of this trial. But I will hear argument as to appropriate dispositive orders, including as to costs, if they cannot be agreed in due course after the parties' conferral.
3 The action of the plaintiff against all defendants has been dismissed at the end of 2012. But the question of the defendants' entitlement to costs against Mr Hayes still remains unresolved. That issue has lain dormant since December 2012, only to be recently awoken from its slumbers by the application of the third defendant (Mr Danny Fakhre), who finally moves for costs orders in his favour, given the trial outcome of the action favouring himself as well as the other defendants against Mr Hayes.
4 In the interim since the trial was resolved, the first and second defendants have, on 10 June 2013 (see affidavit of Ms Fei Fei Xue, attachment FX3), assigned the benefit of any costs entitlements they hold against the plaintiff, to the third defendant.
5 Accordingly, Mr Fakhre now moves the Court that Mr Hayes, as the unsuccessful plaintiff, meet the costs of all defendants who were successful against him at the trial. Also, in the meantime, Mr Hayes' trial solicitors obtained leave to remove themselves from the court record, on 2 July 2014.
6 Currently, therefore, Mr Hayes does not have any solicitors of record acting for him. Additionally, it would appear that Mr Hayes has entered bankruptcy at some point during 2014. Correspondence has recently been received via my Associate from Mr Hayes' trustee in bankruptcy. The trustee appears to be Mr Graham Lean of G T Lean & Associates. Mr Lean's recent correspondence to the solicitors for the defendants, as copied to my Associate, dated 22 October 2014, indicates Mr Hayes' trustee in bankruptcy will abide by whatever decisions the Court reaches concerning costs orders relating to this trial. Mr Lean effectively, therefore, does not wish to participate beyond that indication.
7 Having defeated Mr Hayes at the trial, all defendants, as I have indicated at [489] of my original reasons, hold a prima facie entitlement to receive their taxed costs against him. However, the defendants seek to obtain an order for costs even beyond that. They move the Court for exceptional costs orders against Mr Hayes, pressing, in effect, for orders granting them indemnity costs, in respect of their solicitor/client trial expenses, in each instance.
8 An indemnity costs order is, generally speaking, an atypical outcome after a contested trial. But nevertheless, the defendants all seek indemnification for their actual legal costs in this instance (if that is worth anything given Mr Hayes' bankruptcy), and essentially on the basis of the Court applying a costs sanction to its mark of displeasure against Mr Hayes by reason of his institution, conduct of, and then behaviour in the litigation. In effect, the defendants seek to invoke principles concerning the award of indemnity costs by way of sanction against a party as explained in the Court of Appeal's reasons in Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) [10].
9 Accordingly, the only substantive issue that really arises on this application, in the absence of any degree of participation by or on behalf of Mr Hayes or his trustee in bankruptcy, is whether, above and beyond usual orders for taxed costs, the defendants should, for this case, receive what would be special costs orders in their favour awarding them, in effect, their solicitor/client costs against Mr Hayes?
10 The defendant applications as regards, in effect, indemnity costs are founded from an evidentiary perspective upon two affidavits of a solicitor employed with the solicitors of record for the third defendant, Ms Fei Fei Xue, being sworn respectively on 6 February, then 24 June 2014. I have considered the content of both affidavits of Ms Xue, which stand, effectively, unanswered.
11 In order to facilitate a determination of costs issues on the papers, I have also received an extensive written submission filed on behalf of the defendants of 28 July 2014. Essentially, the written submissions dissect my reasons for decision of December 2012 highlighting numerous instances of recorded criticisms of Mr Hayes under those reasons, leading to the ultimate rejection of most of his trial evidence and ultimately a dismissal of his action against all defendants, as unmeritorious. Helpfully, the written submissions of the defendants contain a schedule of extracts from the lengthy reasons, collecting across some seven pages numerous extracts from the reasons critical of Mr Hayes, and it is put supporting the basis for a cost sanction to be imposed. I accept those submissions.
12 For convenience, I will simply attach the extract document as a schedule to these reasons.
13 The written submissions of the defendants relate that the first and second defendants ultimately incurred solicitor/client trial costs in defending Mr Hayes' action of $1.2 million and that the third defendant, Mr Fakhre, who was joined to the action at a later point before trial, incurred legal expenses of close to $400,000 (submissions, 28 July 2014, par 22). Those levels of fees, it is clear, substantially exceed the recoverable amounts that would be allowed under the uncapped limits of the scale determinations applicable to a taxation scenario for the defendants' costs.
14 It is appropriate, in the rather unique circumstances of the present litigation, that all the defendants receive an award of their costs against Mr Hayes on the indemnification basis, as sought. As case manager of the action from inception and then as the trial Judge, I remain (notwithstanding the time that has passed since December 2012) well aware of the underlying features of what was urgent, complex and ultimately unsuccessful litigation as initiated by Mr Hayes. However, I agree with the core submission of the defendants, in general terms, that the defendants' solicitor/client legal expenses incurred were needlessly and unreasonably suffered by them, due to Mr Hayes - who effectively put them to the high expense of defending his ultimately meritless action. The attached schedule of instances of criticism of Mr Hayes in my reasons, as collected more than amply demonstrates the unreasonable character of Mr Hayes' conduct. Those remarkable circumstances, in my view, do at the end warrant a costs sanction by an indemnity costs order, notwithstanding its exceptional character.
15 In the end, therefore, there will be orders as to the defendants' costs against Mr Hayes favouring each defendant on an indemnity basis and in the terms as set out below.
16 This now resolves all outstanding issues, at least as regards any requirement for further case management on my part. I will therefore remove the matter from the CMC list.
17 I propose then, upon the publication of these reasons, to issue orders in these terms:
1. The plaintiff pay the first, second and third defendants' costs of the proceedings including the costs of the first and second defendants' cross-claims and any reserved costs to be taxed, if not agreed.
2. Such costs are to include all costs except insofar as they are of an unreasonable amount or have been unreasonably incurred so that, subject to the above exceptions, the first, second and third defendants will be completely indemnified by the plaintiff for their costs.
3. The amount of such costs be taxed on rates agreed by the first, second and third defendants with their respective solicitors and without regard to the limits imposed by scale item 11 of the applicable Legal Practitioners (Supreme Court) (Contentious Business) Determination.
4. The matter be removed from the CMC list.
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