| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : HERBERTSON -v- MORTON [2013] WADC 7 (S) CORAM : EATON DCJ HEARD : 26 NOVEMBER 2011 DELIVERED : 18 JANUARY 2013 SUPPLEMENTARY
DECISION : 31 JANUARY 2013 FILE NO/S : CIV 2383 of 2010 BETWEEN : DONALD ARTHUR HERBERTSON WENDY MARGARET HERBERTSON
Plaintiffs (Respondents)
AND
BETH SUZANNE MORTON
PHILLIP FRANCIS MORTON
Defendants (Appellants)
Catchwords: Costs - Discretion to order that costs be paid forthwith - Exercise of discretion Legislation: Nil
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Result: Costs orders made
Representation: Counsel:
Plaintiffs (Respondents) : Mr C S Williams
Defendants (Appellants) : Mr J T London
Solicitors:
Plaintiffs (Respondents) : Solomon Brothers
Defendants (Appellants) : Macdonald Rudder
Case(s) referred to in judgment(s):
Mango Boulevard Pty Ltd v Whitton; Re Spencer (Bankrupt) (No 2) [2011] FCA 845
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1 EATON DCJ: On 22 August 2012 Deputy Registrar Hewitt adjourned a two day taking of account sine die, granted leave to the plaintiffs to amend their statement of claim, adjourned the action to a directions hearing and ordered that the plaintiffs pay the defendants' costs thrown away by the adjournment in any event.
2 By notice of appeal filed on 3 September 2012 the defendants sought to set aside leave to amend the statement of claim. On 18 January 2013 I dismissed that appeal and gave leave to the plaintiffs to amend their statement of claim in terms of the re-amended statement of claim filed 13 November 2012. By way of further order I gave leave to the defendants to amend their defence within 14 days. 3 The issue of costs was contentious such that I reserved my decision and made directions as to the filing of written submissions by the parties. Both are now to hand. 4 It is the case, that at the time of the judgment on appeal, I confirmed that the order made by Deputy Registrar Hewitt on 22 August 2012 to the effect that the plaintiffs pay the defendants' costs thrown away by reason of the adjournment of the taking of accounts should not be disturbed. I further ordered that the plaintiffs pay the costs of amending their defence, if any. 5 The defendants seek, in their written submissions, an order that the plaintiffs pay the defendants' costs of and incidental to the adjournment of the taking of accounts to be taxed and paid forthwith and that the plaintiffs pay the defendants' costs of and incidental to the appeal to be taxed and paid forthwith. 6 In their notice of appeal the defendants sought that the appeal be allowed, that paragraphs 2 and 4 of the Deputy Registrar's order be set aside, that the action be relisted for the taking of accounts and that the plaintiffs pay the defendants' costs thrown away by the adjournment and the defendants' costs of the appeal, forthwith. The appeal failed for the reasons published on 18 January 2013. The plaintiffs submit that costs should follow the event and that the defendants should pay the plaintiffs' costs of the appeal, including reserved costs, and the costs of 'the application' to be taxed and paid. I take the latter reference to relate to the costs of the application for costs. 7 The normal rule is that costs should follow the event. It is based upon the proposition that a party who turns out to have unjustifiably either brought another party before the court, or given another party cause to (Page 4)
have recourse to the court to obtain his or her rights, is required to recompense that other party in costs. I do have an unlimited discretion to make a costs order as the justice of the case requires. 8 It is true that when the plaintiffs made their application for an adjournment of the taking of accounts, they were seeking an indulgence from the court. They were doing so on the first morning of a two day hearing by way of oral application from the bar table, unsupported by any affidavit or other evidence. In the exercise of the Deputy Registrar's discretion, the adjournment was granted in those circumstances. It is correct to say that the evidence as to the need for the adjournment, in the form of affidavits filed, was only presented in the context of the appeal. 9 The central plank of the defendants' submissions on appeal was that it was not, as a matter of law, open to the Deputy Registrar to allow the plaintiffs to amend their statement of claim because the earlier consent order represented a binding agreement between the parties from which the plaintiffs could not then resile. The defendants further submitted that the granting of the adjournment and leave to amend the statement of claim was, having regard to all the circumstances and to case management principles, not a proper exercise of the Deputy Registrar's discretion. 10 In my judgment handed down on 18 January 2013 I considered and rejected both of the forgoing submissions. I agreed with the defendants' submission that there was no element of unreasonableness in resisting the plaintiffs' attempt to make belated amendments to their statement of claim, including by way of bringing an appeal. The grounds of the appeal were arguable but ultimately it failed. Just as the defendants were entitled to be awarded the costs thrown away by reason of the granting of the adjournment and leave to amend, the plaintiffs are entitled to be awarded their costs of the appeal. 11 In submissions in reply the defendants assert that they were obliged, in effect, to mount their appeal because doing so would afford the 'only occasion for fulsome argument' as to the plaintiffs' application for leave to amend. The question of whether to appeal is one that involves balancing the likelihood and the consequences of success against the likelihood and the consequences of failure. The consequences of failure must include the likelihood of an adverse order as to costs. In all of the circumstances, I am drawn again to the conclusion that, so far as the appeal is concerned, the defendants should pay the plaintiffs' costs, including those reserved in the context of the appeal, if any, to be taxed. (Page 5)
12 On the written submissions there is an argument as to whether the scope of my directions on 18 January 2013 encompassed a reconsideration of the terms of the costs order made on 22 August 2012. Having made orders as to amendment of pleadings, I said: And that leaves – I'd like to give some thought to the question of costs, the ultimate costs order so far as the appeal is concerned … So I'll reserve that and perhaps let you know in the next few days. 13 I then gave directions as to the filing of submissions by the parties on that issue, including, so far as the plaintiffs are concerned, the question of the burden of any costs order adverse to them. The issue of whether the costs ordered to be paid by the Deputy Registrar should be taxed and paid forthwith was not, strictly speaking, in my contemplation when I reserved the question of costs on 18 January 2013. It was, however, enlivened in the defendants' notice of appeal and, as such, should be dealt with now. 14 The action was commenced by the plaintiffs on 5 August 2010. On 14 January 2011, Deputy Registrar Kingsley made orders substantially in terms of the minute tendered under O 43 r 16 for, inter alia, a taking of accounts and the filing of affidavit material by the parties. In the months that followed a good deal of material was prepared and filed by the parties, including affidavits by the plaintiffs. The taking of accounts was twice listed, the first time vacated by consent and the second time, on 22 August 2012, adjourned on the application of the plaintiffs. Had there been no application to adjourn, the taking of accounts would have, one assumes, been completed within the two days allocated to it and the action might, by now, have either been concluded or be near to conclusion. 15 Order 66 r 10 provides: Costs may be dealt with by the Court 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. 16 In Mango Boulevard Pty Ltd v Whitton; Re Spencer (Bankrupt) (No 2) [2011] FCA 845, Logan J surveyed the authorities relating to the discretion to order payment of costs forthwith. He concluded that the question of whether or not to utilise the discretion, that clearly exists, must necessarily depend on the circumstances of each particular case and the existence of a reason to depart from the usual position. One factor which might be considered is the reasonableness of a party's conduct. As expressed in my already published judgment, my view is that (Page 6)
the failure to appreciate a vital aspect of the plaintiffs' claim leading to the need to amend and to adjourn the taking of accounts was unreasonable conduct of the plaintiffs' case. In such circumstances, I am of the view that the defendants should not be delayed in recovery of their costs thrown away. Accordingly, I propose to order that the plaintiffs pay the defendants' costs thrown away by reason of the adjournment of the taking of accounts, as ordered by the Deputy Registrar, to be taxed and paid forthwith. 17 In written submissions the plaintiffs seek an order that: The defendants do pay the plaintiffs' costs of the appeal including reserved costs and the costs of this application to be taxed and paid. Having regard to the forgoing, my view is that there is no case for requiring that the defendants pay the plaintiffs' costs forthwith. There can be no suggestion that the bringing of the appeal was without merit or unreasonable. 18 So far as the remaining discrete issue of costs is concerned, the costs of and incidental to this hearing will be in the cause. 19 Finally, as to the question of the burden of costs orders adverse to the plaintiffs are concerned, I note the repeated warning in the authorities to the effect that the discretion to order costs against a practitioner is one to be exercised with great caution. Order 66 r 5 provides, relevantly, that where in any proceedings costs are incurred by a party as a result of any improper, unreasonable, or negligent act or omission, the court may order any practitioner whom it considers to be responsible to pay those costs personally or to indemnify any party who has been ordered to pay those costs, not to claim any relevant costs or fees or to refund any relevant costs or fees which may have been paid already. 20 As mentioned, I take the view that the conduct of the plaintiffs' case giving rise to the need to adjourn the taking of accounts and amend the statement of claim was, in all the circumstances, unreasonable. While I harbour some disquiet about the reasons advanced by way of explanation of the belated need for an adjournment and amendment of the pleadings, I do not propose to vary or add to the orders made or now proposed to be made. That is because, on the material before me, I am not able to determine with any degree of precision, whether the events of 22 August 2012 were precipitated by an improper, unreasonable or negligent act or omission on the part of a practitioner. (Page 7)
21 There will, therefore, be orders as follows: 1. The plaintiffs pay the defendants' costs thrown away by reason of the adjournment of the taking of accounts, as ordered by Deputy Registrar Hewitt on 22 August 2012, to be taxed and paid forthwith. 2. The defendants pay the plaintiffs' costs of the appeal including those reserved in the context of the appeal, if any, to be taxed. 3. The costs of and incidental to this hearing as to the discrete issue of costs be in the cause.
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