HPM Pty Ltd v Fear
[2002] WASCA 249 (S)
•9 SEPTEMBER 2002
HPM PTY LTD -v- FEAR & ORS [2002] WASCA 249 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASCA 249 (S) | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:83/2001 | 2 AUGUST & 9 SEPTEMBER 2002 | |
| Coram: | MALCOLM CJ MURRAY J STEYTLER J | 9/09/02 | |
| 20/11/02 | |||
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Mr Blakeley ordered to bear respondents' costs of appeal personally | ||
| B | |||
| PDF Version |
| Parties: | HPM PTY LTD CHARLES ANTHONY CANDLIN FEAR RESI-STATEWIDE MORTGAGE CORPORATION LTD ROBERT CLAUDE COOK TERENCE CORNELIUS McMANUS ROBERT HENRI DE BUF PATRICIA ANNE DE BUF REGINALD SARSFIELD FINN ELIZABETH ROSE FINN DONALD GEORGE LYSTER LEONE BEATRICE LYSTER JOHN SELSMARK ROGER LLOYD GEORGE RICHARD-COOMBES IDA ELEANOR RICHARD-COOMBES GRAEME CAMPBELL REYNOLDS LESLEY HANNAH REYNOLDS JOSEPH COCI HELEN JOY COCI ERNEST RAMPELLINI JENNIFER ANNE RAMPELLINI PETER JOE CHITTENDEN MICHAEL SKUBA MICHAEL CYRIL HALPIN GEORGE HUGH MARGETTS GWENDOLINE MARY MARGETTS TOLEEN NOMINEES PTY LTD LAVIN NOMINEES PTY LTD TUDOR COURT INVESTMENTS PTY LTD MacDOUGALL PTY LTD OREGON NOMINEES PTY LTD |
Catchwords: | Costs Award of costs against non-party Circumstances in which an order of that kind might be made Where non-party managing the litigation has an interest in the subject of the litigation Relevance of failure to apply for security for costs or to give timely warning of proposed application Whether costs should be awarded on indemnity basis Turns on own facts |
Legislation: | Corporations Act, s 242 Corporations Law, s 237 Rules of the Supreme Court 1971 (WA), O 4 r 3(2) Supreme Court Act 1935 (WA), s 37(1) |
Case References: | Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965 Carborundum Abrasives Pty Ltd v Bank of New Zealand (No 2) [1992] 3 NZLR 757 Duskwood Pty Ltd v Bellara Willows Pty Ltd [2001] WASC 281 Flinn v Flinn [1999] 3 VR 712 In re Land and Property Trust Co Plc [1991] 1 WLR 601 Knight v FP Special Assets Ltd (1992) 174 CLR 178 National Justice Compania Naviera SA v Prudential Assurance Co Ltd (No 2) [2000] 1 WLR 603 Symphony Group Plc v Hodgson [1994] QB 179 Vestris v Cashman (1998) 72 SASR 449 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 Re Crittendon; Ex parte Law Institute of Victoria [1958] VR 101 Re Malley SM; Ex parte Gardner [2001] WASCA 83 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : HPM PTY LTD -v- FEAR & ORS [2002] WASCA 249 (S) CORAM : MALCOLM CJ
- MURRAY J
STEYTLER J
- 9 SEPTEMBER 2002
DECISION : 20 NOVEMBER 2002 FILE NO/S : FUL 83 of 2001 BETWEEN : HPM PTY LTD
- Appellant
AND
CHARLES ANTHONY CANDLIN FEAR
First Respondent
RESI-STATEWIDE MORTGAGE CORPORATION LTD
Second Respondent
ROBERT CLAUDE COOK
TERENCE CORNELIUS McMANUS
ROBERT HENRI DE BUF
PATRICIA ANNE DE BUF
REGINALD SARSFIELD FINN
ELIZABETH ROSE FINN
DONALD GEORGE LYSTER
LEONE BEATRICE LYSTER
(Page 2)
- JOHN SELSMARK
ROGER LLOYD GEORGE RICHARD-COOMBES
IDA ELEANOR RICHARD-COOMBES
GRAEME CAMPBELL REYNOLDS
LESLEY HANNAH REYNOLDS
JOSEPH COCI
HELEN JOY COCI
ERNEST RAMPELLINI
JENNIFER ANNE RAMPELLINI
PETER JOE CHITTENDEN
MICHAEL SKUBA
MICHAEL CYRIL HALPIN
GEORGE HUGH MARGETTS
GWENDOLINE MARY MARGETTS
TOLEEN NOMINEES PTY LTD
LAVIN NOMINEES PTY LTD
TUDOR COURT INVESTMENTS PTY LTD
MacDOUGALL PTY LTD
OREGON NOMINEES PTY LTD
Third Respondents
Catchwords:
Costs - Award of costs against non-party - Circumstances in which an order of that kind might be made - Where non-party managing the litigation has an interest in the subject of the litigation - Relevance of failure to apply for security for costs or to give timely warning of proposed application - Whether costs should be awarded on indemnity basis - Turns on own facts
Legislation:
Corporations Act, s 242
Corporations Law, s 237
Rules of the Supreme Court 1971 (WA), O 4 r 3(2)
Supreme Court Act 1935 (WA), s 37(1)
Result:
Mr Blakeley ordered to bear respondents' costs of appeal personally
(Page 3)
Category: B
Representation:
Counsel:
Appellant : Mr H T J Blakeley
First Respondent : Mr S K Shepherd
Second Respondent : Mr S K Shepherd
Third Respondents : Mr A C McIntosh
Solicitors:
Appellant : In person
First Respondent : Mallesons Stephen Jaques
Second Respondent : Mallesons Stephen Jaques
Third Respondents : Craig McIntosh
Case(s) referred to in judgment(s):
Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965
Carborundum Abrasives Pty Ltd v Bank of New Zealand (No 2) [1992] 3 NZLR 757
Duskwood Pty Ltd v Bellara Willows Pty Ltd [2001] WASC 281
Flinn v Flinn [1999] 3 VR 712
In re Land and Property Trust Co Plc [1991] 1 WLR 601
Knight v FP Special Assets Ltd (1992) 174 CLR 178
National Justice Compania Naviera SA v Prudential Assurance Co Ltd (No 2) [2000] 1 WLR 603
Symphony Group Plc v Hodgson [1994] QB 179
Vestris v Cashman (1998) 72 SASR 449
Case(s) also cited:
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397
Re Crittendon; Ex parte Law Institute of Victoria [1958] VR 101
Re Malley SM; Ex parte Gardner [2001] WASCA 83
(Page 4)
1 JUDGMENT OF THE COURT: On 9 September 2002, this Court dismissed an appeal against the decision of a single Judge of the Court, Wheeler J, whereby her Honour dismissed an action brought by the appellant against the respondents upon the ground that it was an abuse of the process of the Court. The action so dismissed by her Honour is one which had been brought on behalf of the appellant (which is now in liquidation) by Mr Harold Blakeley, who had been its managing director and principal shareholder. He had sought and obtained, from a Master of this Court, leave to do so under s 237 of the Corporations Law (now the Corporations Act 2001). While we doubted that Mr Blakeley could, or should, have been granted leave under that section, the Master's decision has not been challenged.
2 The appeal against Wheeler J's decision to dismiss the action as an abuse was, in the end, dismissed upon the ground that it was incompetent because the proceedings had been commenced and carried on otherwise than by a solicitor in breach of O 4 r 3(2) of the Rules of the Supreme Court 1971 (WA). The successful respondents thereupon sought an order for costs, on a solicitor and client basis, against Mr Blakeley personally. Because Mr Blakeley had had no opportunity to consider that application, orders were made, by consent, reserving the question of costs and giving to the respondents leave to file and serve, within a period of seven days, written submissions in respect of costs and giving to Mr Blakeley a further period of seven days after receipt of those submissions to file submissions in response. We have since received the respondents' submissions, but Mr Blakeley has informed the Court that he does not propose to produce any submissions in response to them.
An Award of Costs Against Mr Blakeley Personally
3 The Court is empowered to make an order for costs against a person who is not a party to the proceedings. Section 37(1) of the Supreme Court Act 1935 provides, relevantly, that, subject to the provisions of that Act and to the Rules of Court, "the costs of and incidental to all proceedings in the Supreme Court … shall be in the discretion of the Court or Judge, and the Court or Judge shall have full power to determine by whom or out of what estate, fund, or property, and to what extent such costs are to be paid". There is nothing in the Act, or in the Rules of Court, which would preclude the making of an order for the payment of costs by a non-party (cf Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 185, discussing the statutory scheme in Queensland, which is not dissimilar in effect, and see "Seaman: Civil Procedure in Western Australia",
(Page 5)
- par 66.1.3). Furthermore, under s 242 of the Corporations Act the Court is given a wide discretion in respect of costs in an action of this kind. That section provides that:
"242 The Court may at any time make any orders it considers appropriate about the costs of the following persons in relation to proceedings brought or intervened in with leave under section 237 or an application for leave under that section:
(a) the person who applied for or was granted leave;
(b) the company;
(c) any other party to the proceedings or application.
An order under this section may require indemnification for costs."
5 Recently, in National Justice Compania Naviera SA v Prudential Assurance Co Ltd (No 2) [2000] 1 WLR 603, Waller LJ (with whom Tuckey and Simon Brown LJJ were in agreement) said, at 611:
"The exercise of the power to order costs to be paid by a party not named is an order made in those proceedings and it will only be exercised on the basis of a substantial connection with those proceedings by a non-party. It is worth reminding oneself of the summary of the decisions relating to the award of costs against a non-party in the judgment of Balcombe LJ in Symphony Group Plc v Hodgson [1994] QB 179, 191 - 192:
'These decisions may be conveniently summarised under the following heads. (1) Where a person has some management
(Page 6)
- of the action, eg. a director of an insolvent company who causes the company improperly to prosecute or defend proceedings: see In re Land and Property Trust Co Plc [1991] 1 WLR 601; In re Land and Property Trust Co Plc (No 3) [1991] BCLC 856; In re Land and Property Trust Co Plc (No 2) The Times, 16 February 1993; Court of Appeal (Civil Division) Transcript No 160 of 1993; Taylor v Pace Developments Ltd [1991] BCC 406; In re A Company (No004055 of 1991) [1991] 1 WLR 1003 and Framework Exhibitions Ltd v Matchroom Boxing Ltd (unreported), 23 September 1992; Court of Appeal (Civil Division) Transcript No 873 of 1992. It is of interest to note that, while it was not suggested in any of these cases that it would never be a proper exercise of the jurisdiction to order the director to pay the costs, in none of them was it the ultimate result that the director was so ordered. (2) Where a personhas maintained or financed the action. This was undoubtedly considered to be a proper case for the exercise of the discretion by Macpherson of Cluny J in Singh v Observer Ltd [1989] 2 All ER 751, where it was alleged that a non-party was maintaining the plaintiff's libel action. However, on appeal the evidence showed that the non-party had not been maintaining the action and the appeal was allowed without going into the legal issues raised by the judge's decision: see Singh v Observer Ltd [1989] 3 All ER 777n. (3) In Gupta v Comer [1991] 1 QB 629 this court approached the power of the court to order a solicitor to pay costs under Ord 62, r 11 as an example of the exercise of the jurisdiction under section 51 of the Act of 1981. (4) Where a person has caused the action. In Pritchard v J H Cobden Ltd [1988] Fam 22 the plaintiff had suffered brain damage through the defendant's negligence. That resulted in a personality change which precipitated a divorce. This court held that the defendant's agreement to pay the costs of the divorce proceedings could be justified as an application of the Aiden Shipping Co Ltd v Interbulk Ltd [1986] AC 965 principle: see [1988] Fam 22, 51. (5) Where the person is a party to a closely related action which has been heard at the same time but not consolidated - as was the case in Aiden Shipping itself. (6) Group litigation where one or two actions are selected as test actions: see Joseph Owen Davies v Eli Lilly & Co [1987] 1 WLR 1136. I accept that these
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- categories are neither rigid nor closed. They indicate the sorts of connection which have so far led the courts to entertain a claim for costs against a non-party.'"
6 While we have been hampered by the fact that Mr Blakeley has declined to make any submissions on his own behalf in respect of the application for costs against him personally, it seems to us, after a consideration of any points which might have been raised by him, that good grounds have been shown for making an order of the kind sought.
7 There is no doubt that Mr Blakeley has had the management of these proceedings and that it was him who caused them to be irregularly commenced and continued. That he has been the driving force in the pursuit of the company's claim is quite apparent from its history, which is set out in our reasons given in the appeal, which we shall not repeat. He consequently falls squarely within the first of the categories identified by Balcombe LJ in Symphony Group Plc v Hodgson, above.
8 Also, in Knight v FP Special Assets Ltd, above, at 192, Mason CJ and Deane J, while acknowledging that the prima facie general principle is that an order for costs is only made against a party to the litigation, accepted that there is "a variety of circumstances in which considerations of justice may, in accordance with general principles relating to awards of costs, support an order for costs against a non-party". Their Honours there thought it appropriate to recognise a general category of case in which an order for costs should be made against a non-party if the interests of justice should require that, being one which "consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation" (pages 192 - 193). In this case, as has been mentioned in Steytler J's judgment given in the appeal, Mr Blakeley was the major shareholder in the company. He consequently has an interest in the subject of the litigation in the sense that, if the litigation should be successful, it may ultimately result in a return to him.
9 We have given some thought to the question whether the respondents should earlier have given notice of their intention to claim costs against Mr Blakeley personally, should he be unsuccessful in the appeal. It is, we think, established in the cases that one of the more important considerations, in dealing with an application of this kind, is that of whether an application for security for costs has been made against the
(Page 8)
- non-party or whether some other timely warning of an intention to claim costs against the non-party has been given. (See Duskwood Pty Ltd v Bellara Willows Pty Ltd, above, at [18]; Vestris v Cashman, above, at 457 and Knight v FP Special Assets Ltd, above, at 191.) However, as Mason CJ and Deane J pointed out in Knight, at 191, there are limitations attaching to the availability of security for costs, particularly when it is sought against an individual who resides in the jurisdiction. Also, it seems most unlikely that Mr Blakeley would have been deterred by any warning as he intimated to us, on the hearing of the appeal, that he was willing, if required to do so, to provide security for the costs of the action itself. That being so, we do not consider that the respondents' failure to give prior notice of their intention to bring an application of this kind should disqualify them from obtaining the orders sought by them.
10 Taking all of the circumstances of this case into account, it seems to us that, when regard is had for Mr Blakeley's interest in and management of the litigation, the interests of justice require that he should be ordered to bear the costs of the appeal. As was pointed out by Olsson J (with whom Doyle CJ was in agreement) in Vestris v Cashman, above, at 457, where proceedings are initiated and controlled by a person who, although not a party to the proceedings, has a direct personal financial interest in the result, it would rarely be just for such a person, pursuing his own interests, to be able to do so with no risk to himself should the proceedings fail. (See also Carborundum Abrasives Pty Ltd v Bank of New Zealand (No 2) [1992] 3 NZLR 757.)
Should the Costs Be Awarded on an Indemnity Basis?
11 There remains the question whether or not the costs should be awarded on an indemnity basis.
12 The respondents contend that an order of that kind is justified because Mr Blakeley should have known that he had no chance of success in the appeal. They say that the solicitors for the first and second respondents wrote to him on 2 April 2001, telling him that a body corporate may only begin, or take steps in, proceedings by a solicitor.
13 We do not think that it can fairly be said that Mr Blakeley should have known that his appeal had no chance of success. As will be apparent, he was successful in obtaining leave from the Master to bring the action on the company's behalf. Notwithstanding that he had been told that he should bring the action through the agency of a solicitor, Mr Blakeley took the view that, because he had been given leave under
(Page 9)
- s 237 to bring the proceedings on behalf of the company, they were "his" proceedings and were therefore not required to be brought by a solicitor. While we have found him to have been mistaken in that respect, we doubt that it can reasonably be said that he should have known, on the strength of the unsolicited advice offered to him by the solicitors for the first and second respondents, that his argument that he was entitled to bring the proceedings without the aid of a solicitor had no chance of success. It is worth mentioning in this respect that, when this issue was raised before Wheeler J, her Honour appeared to regard it as raising a serious question as to the interaction between s 237 of the Corporations Law and O 4 r 3(2) of the Rules of the Supreme Court, which she found it unnecessary to answer. We are consequently not persuaded that there is any justification for an order for the payment of costs on a solicitor and client basis.
Conclusion
14 It follows from what we have said that Mr Blakeley should be ordered to bear the respondents' costs of the appeal personally, but that they should not be paid by him on a solicitor and client basis.
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