Hitchcock v Goldspan Investments Pty Ltd [No 2] - [2014] WASC 465

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: HITCHCOCK -v- GOLDSPAN INVESTMENTS PTY LTD [No 2] [2014] WASC 465

CORAM: ALLANSON J

HEARD: 2 DECEMBER 2014

DELIVERED : 12 DECEMBER 2014

FILE NO/S: CIV 1597 of 2014

BETWEEN: ROBERT HASTINGS HITCHCOCK
Plaintiff
AND
GOLDSPAN INVESTMENTS PTY LTD
First Defendant
KEVIN ROBINSON
Second Defendant
NEIL ROBINSON
Third Defendant
PETER ROBERT HALLAM
Fourth Defendant

Catchwords:

Costs - Freezing orders - Costs when there has been no hearing on the merits - Costs unnecessarily incurred

Legislation:

Rules of the Supreme Court 1971 (WA), O 52A r 8

Result:

Plaintiff to pay the defendants' costs

Category: B

Representation:

Counsel:

Plaintiff:     Mr D H Solomon
First Defendant            :     No appearance
Second Defendant        :     No appearance
Third Defendant           :     Mr M C Goldblatt
Fourth Defendant         :     No appearance
Non-party:     Mr M C Goldblatt

Solicitors:

Plaintiff:     Solomon Brothers
First Defendant            :     No appearance
Second Defendant        :     No appearance
Third Defendant           :     Murcia Pestell Hillard
Fourth Defendant         :     No appearance
Non-party:     Murcia Pestell Hillard

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

Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622

ALLANSON J: The plaintiff, Robert Hitchcock, was a shareholder in a company which, at various times, was named Capital Turbines Australia Pty Ltd, Ctec Pty Ltd, and then Forge Power Pty Ltd.
Neil Robinson was a director of the company and held 20% of the issued shares. Jillian Robinson is his wife. I will refer to them collectively as the respondents.
The plaintiff has begun proceedings against Mr Robinson and three other defendants under various causes of action. He seeks damages or equitable compensation in a sum of about $6 million.
On 23 October 2014, Mr Hitchcock applied to the court for freezing orders restraining Mr Robinson in relation to dealing with his assets generally, and Mrs Robinson in relation to dealing with a piece of land at 56 Maldives Drive, Hillarys. The application was prompted by the sale by Mr Robinson of his interest in 56 Maldives Drive to his wife.
The evidence on the application included that the respondents were the registered proprietors of two other properties: their home at 50 Maldives Drive, Hillarys, and a property at Dunsborough.
On 4 November 2014, the court made the freezing orders sought. The orders were made ex parte, pending the matter returning to the court on notice to the respondents. This interim period was longer than first anticipated: on 10 November, the parties agreed to an adjournment to 21 November. On 20 November, they agreed to a further adjournment to 2 December 2014.
On 17 November 2014, the solicitors for the respondents, by a letter to the solicitors for the plaintiff, put the following proposal:
We are instructed that our clients have no intention of selling the Dunsborough property and Jillian Robinson does not intend to sell 56 Maldives. Your client does not suggest otherwise.
When construction of 56 Maldives is complete (which presently is anticipated to be in or around July 2015), our clients intend to move into 56 Maldives, sell 50 Maldives and use the proceeds of such sale to fund their living expenses, or invest them, or a combination of both.
Accordingly, we are instructed to propose to your client the following in lieu of the freezing orders against our clients:
1.The present freezing order against Jillian Robinson in respect of 56 Maldives remains in place.
2.The freezing order against Neil Robinson is discharged.
3.Jillian and Neil Robinson give an undertaking to the Court to the effect that, until further order, they will not dispose of or encumber their interests in the Dunsborough property.
4.Neil and Jillian Robinson are at liberty to apply, on 7 days' notice, to seek the variation or discharge of the freezing order and undertakings referred to in paragraphs 1 and 3 above.
5.The costs of the application for the freezing orders are reserved.
We consider that the above proposal is eminently reasonable and will avoid the incurrence of further unnecessary costs in respect of the application for freezing orders.
Would you please take instructions in relation to the above proposal and reply to us as soon as possible.
On 18 November 2014, the plaintiff's solicitors responded with a request for 'all documents or additional information' in relation to three matters: to establish or support the value of the Dunsborough property, and that it is unencumbered; the current value of the property at 56 Maldives Drive and its estimated value once construction has been completed, and the extent to which it would be unencumbered on completion; the value of the property at 50 Maldives Drive, and the extent to which that property is encumbered.
The plaintiff's solicitors also asked whether Mrs Robinson would give a guarantee to meet any damages awarded against her husband, limited to the value of her interest in the Dunsborough property. This was proposed 'to provide a legal foundation for the Court accepting her undertaking'.
On 19 November 2014, the plaintiff's solicitors wrote again, saying, 'If your clients wish to make a further proposal, with proposed undertakings in a form which the court is empowered to accept, our client will of course carefully and urgently consider the proposal'.
The respondents' solicitors replied the same day. They confirmed that Mrs Robinson would not give a guarantee. They put forward, as an alternative to the proposal made on 17 November 2014, that their clients would consent to the following orders being made in lieu of the freezing orders:
1.The present freezing order against Jillian Robinson in respect of 56 Maldives Drive remains in place.
2.The freezing order against Neil Robinson is discharged.
3.Neil Robinson gives an undertaking to the Court to the effect that, until further order, he will not dispose of or encumber his interest in the Dunsborough property.
4.Neil and Jillian Robinson are at liberty to apply, on 7 days' notice, to seek the variation or discharge of the freezing order and undertaking referred to in paragraphs 1 and 3 above.
5.The costs of the application for the freezing orders are reserved.
The letter concluded:
Can you please take instructions from your client and advise whether he is prepared to deal with matters on this basis.
Our clients continue to reserve their position on costs.
We look forward to receiving your urgent response.
I interpolate that, in the overall chronology, this letter immediately preceded the consent to the adjournment of the return of the freezing orders to 2 December 2014. I should also note that the parties did not claim privilege for without prejudice communications. It is, accordingly, not necessary for me to decide whether any of those communications would have been privileged, or the extent to which they would have been admissible to prove a concluded agreement.
Late on 1 December 2014, the plaintiff wrote:
We are instructed that our client is willing to accept the proposal as set out in [your letter of 19 November 2014]. Accordingly, we enclose a minute of proposed consent orders. If your client is willing to consent to the proposed orders, can you please sign the minute on the defendant's behalf and send us the minute signed, together with a signed undertaking to the Court by Neil Robinson, whereupon we will countersign it on the plaintiff's behalf
The minute contained five proposed orders, the last of which was:
The costs of the application to be heard on 2 December 2014 be reserved.
The respondents did not sign the consent minute. When the matter came before the court on 2 December 2014 they remained prepared, without any admission, to agree to the orders they had earlier proposed, but for order 5. The area of dispute was the question of costs.
The solicitors for the plaintiff maintained there was an agreement which the plaintiff was entitled to enforce in these proceedings. Under that agreement, the costs of the application were to be reserved. The respondents' position was that the plaintiff had not accepted the proposal they had made on 19 November 2014. The purported acceptance in the letter of 1 December 2014 was not an acceptance of the proposal.
The respondents further submitted that the purported acceptance came only after they had prepared and filed submissions and affidavits in response to the application. They had filed two affidavits: a substantial affidavit of Mr Robinson, sworn on 27 November 2014, and an affidavit of Bryan Michael France, sworn on 28 November 2014. They had filed detailed submissions on 28 November. The respondents say they had incurred considerable costs since making the proposal because the plaintiff had not responded urgently, as requested, or in a timely fashion at all.

Was there an agreement as to costs

If the matter were to be determined as a question of contract, the respondents' position must, in my opinion, prevail. The minute of proposed consent orders differed from the proposal in the respondents' letter. The other changes between the proposal and the minute did not alter the substance of the orders. The costs order did, and was a counter offer.
The proposal made on 19 November 2014, before preparation for the hearing on 2 December, was that 'the costs of the application for the freezing orders are reserved'. That reflects the effect of the costs order made when the freezing orders were granted. The respondents' proposal, read in the context of the letter in which it appeared, did not extend to costs to be incurred in the future should the matter not be resolved as proposed. Specifically, it did not extend to 'the costs of the application to be heard on 2 December'. The purported acceptance on the day before the hearing was, in my opinion, materially different from what had been proposed. I do not accept that there was an enforceable agreement constituted by the exchange of correspondence.

Costs where there has been no hearing on the merits

Under O 52A, r 8 of the Rules of the Supreme Court 1971 (WA), 'The Court may make any order as to costs as it considers appropriate in relation to an order made under this Order'. The discretion as to costs which the rule confers is to be exercised according to the requirements of justice. Normally, when a freezing order is made, costs will depend on the outcome of the underlying dispute. That is not invariable, and this is not a normal case.
The issue whether the restraining orders should be continued or set aside was not determined on the merits. The parties agreed that the other orders could be made by consent, and I should determine the question of costs.
Guidance for the exercise of the discretion as to costs, when there has been no contested hearing, is found in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, 624 ‑ 625. In such circumstances, the appropriate order may be to make no order as to costs. Alternatively, the costs could, as urged by the plaintiff in this case, be in the cause. But there are circumstances where, despite the compromise, an order for costs against one party should still be made.
The orders made reflect a compromise rather than total capitulation by either party. The freezing order affecting Mr Robinson was discharged. The extent to which Mr Robinson is limited by his undertaking is confined to one property only. No ancillary orders for provision of financial information were made. On the other hand, Mr Robinson has undertaken not to encumber the Dunsborough property, and the order affecting 56 Maldives Drive remains in place.
The respondents' position, save to the extent that it wished to argue the merits of the application, was that costs had been incurred unnecessarily and they could have been avoided by a timely acceptance of its offer. Because the plaintiff chose to wait until the day before the hearing, the respondents had been required to prepare for the hearing, including by preparing written submissions and affidavits.
The plaintiff's position was that its request for information on 17 November 2014 had not been responded to, and it was only the affidavits filed by the defendants which gave it the information it required to be in a position to accept the proposal.
If that was the reason for the delay, I would have expected some earlier response to the defendants' letter of 19 November 2014. Acceptance of such a proposal only the day before the hearing defeats the purpose of the proposed compromise. I also take into account that the plaintiffs invited a further proposal in the letter of 19 November, and said 'our client will of course carefully and urgently consider the proposal'. The respondents' solicitors replied on the same day with the concluding words, 'We look forward to receiving your urgent response'. The need for an urgent response was also necessarily implicit in the nature of the matter.
The respondents were required to file evidence and prepare for the hearing on 2 December 2014 because the plaintiff did not respond, even if only to say that he still needed further information. This was despite the request for urgent consideration. The conduct of the plaintiff was unreasonable, and led to costs being unnecessarily incurred.
In my opinion, the just course is that the plaintiff should pay the costs of the respondents on the application. I will hear the parties as to the order that should be made to reflect these reasons.