Huntingdale Village Pty Ltd v Korda
[2015] WASCA 101 (S)
•15 SEPTEMBER 2015
HUNTINGDALE VILLAGE PTY LTD (RECEIVERS AND MANAGERS APPOINTED) -v- KORDA [2015] WASCA 101 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASCA 101 (S) | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:79/2014 | 27 MAY 2015 AND ON THE PAPERS | |
| Coram: | MARTIN CJ NEWNES JA MURPHY JA | 15/09/15 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | The applicants and Mr Norman Phillip Carey jointly and severally pay the first respondents' costs of the application for leave to appeal and of the appeal, and all reserved costs, on an indemnity basis, to be taxed if not agreed. | ||
| B | |||
| PDF Version |
| Parties: | HUNTINGDALE VILLAGE PTY LTD (RECEIVERS AND MANAGERS APPOINTED) SILKCHIME PTY LTD (RECEIVERS AND MANAGERS APPOINTED) VANNIN PTY LTD (RECEIVERS AND MANAGERS APPOINTED) WARWICK ENTERTAINMENT CENTRE PTY LTD (RECEIVERS AND MANAGERS APPOINTED) PARAGON APARTMENTS LTD (RECEIVERS AND MANAGERS APPOINTED) MARK ANTHONY KORDA DAVID JOHN WINTERBOTTOM OREN ZOHAR PERPETUAL NOMINEES LTD |
Catchwords: | Costs Application for special costs order Whether order for costs should be made against a third party Applicants insolvent Third party was the effective litigant Costs Application for special costs order Whether costs should be awarded on an indemnity basis Applicants persisted in hopeless case |
Legislation: | Nil |
Case References: | Civil Properties Pty Ltd v Miluc Pty Ltd [2011] WASCA 195 House v The King [1936] HCA 40; (1936) 55 CLR 499 Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Korda [2015] WASCA 101 Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Perpetual Nominees Ltd [2013] WASC 352 (S) Knight v FP Special Assets Ltd (1992) 174 CLR 178 Naidoo v Williamson [2008] WASCA 179; (2008) 37 WAR 516 Owston Nominees [No 2] Pty Ltd v Clambake Pty Ltd [2011] WASCA 76 (S) Quancorp Pty Ltd v McDonald [1999] WASCA 101 Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) Yara Australia Pty Ltd v Oswal [2012] WASCA 264 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : HUNTINGDALE VILLAGE PTY LTD (RECEIVERS AND MANAGERS APPOINTED) -v- KORDA [2015] WASCA 101 (S) CORAM : MARTIN CJ
- NEWNES JA
MURPHY JA
- SILKCHIME PTY LTD (RECEIVERS AND MANAGERS APPOINTED)
VANNIN PTY LTD (RECEIVERS AND MANAGERS APPOINTED)
WARWICK ENTERTAINMENT CENTRE PTY LTD (RECEIVERS AND MANAGERS APPOINTED)
PARAGON APARTMENTS LTD (RECEIVERS AND MANAGERS APPOINTED)
Appellants
AND
MARK ANTHONY KORDA
DAVID JOHN WINTERBOTTOM
OREN ZOHAR
First Respondents
PERPETUAL NOMINEES LTD
Second Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : LE MIERE J
Citation : HUNTINGDALE VILLAGE PTY LTD (RECEIVERS AND MANAGERS APPOINTED) ATF HUNTINGDALE VILLAGE UNIT TRUST -v- PERPETUAL NOMINEES LTD [No 2] [2014] WASC 217
File No : COR 223 of 2009
Catchwords:
Costs - Application for special costs order - Whether order for costs should be made against a third party - Applicants insolvent - Third party was the effective litigant
Costs - Application for special costs order - Whether costs should be awarded on an indemnity basis - Applicants persisted in hopeless case
Legislation:
Nil
Result:
The applicants and Mr Norman Phillip Carey jointly and severally pay the first respondents' costs of the application for leave to appeal and of the appeal, and all reserved costs, on an indemnity basis, to be taxed if not agreed.
Category: B
Representation:
Counsel:
Appellants : Mr A Metaxas
First Respondents : Mr M Feutrill
Second Respondent : No appearance
Solicitors:
Appellants : Metaxas & Hager
First Respondents : King & Wood Mallesons
Second Respondent : Minter Ellison Lawyers
Case(s) referred to in judgment(s):
Civil Properties Pty Ltd v Miluc Pty Ltd [2011] WASCA 195
House v The King [1936] HCA 40; (1936) 55 CLR 499
Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Korda [2015] WASCA 101
Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Perpetual Nominees Ltd [2013] WASC 352 (S)
Knight v FP Special Assets Ltd (1992) 174 CLR 178
Naidoo v Williamson [2008] WASCA 179; (2008) 37 WAR 516
Owston Nominees [No 2] Pty Ltd v Clambake Pty Ltd [2011] WASCA 76 (S)
Quancorp Pty Ltd v McDonald [1999] WASCA 101
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S)
Yara Australia Pty Ltd v Oswal [2012] WASCA 264
- JUDGMENT OF THE COURT:
Introduction
1 On 27 May 2015 we published our reasons for concluding that the application for leave to appeal from the decision of the primary judge ordering the applicants to provide $150,000 by way of security for the receivers' costs of defending the substantive proceedings should be dismissed.1 Orders were then pronounced dismissing the application for leave to appeal and the appeal itself.
2 Counsel for the receivers (who are the first respondents in the appeal) moved for orders that the applicants and Mr Norman Phillip Carey (who is not a party to the appeal or the substantive proceedings) pay the receivers' costs of the application for leave to appeal on an indemnity basis, such costs to be taxed if not agreed. Counsel appearing on behalf of the applicants advised the court that he no instructions to appear on behalf of Mr Carey, and that therefore the application for an order against Mr Carey would have to be adjourned in order that he could be served with the application and engage separate legal representation. That advice was provided to the court notwithstanding that:
(a) Mr Carey has already been ordered to pay the receivers' costs of an interlocutory application in the substantive proceedings;2
(b) Mr Carey is the person from whom counsel for the applicants receives all his instructions;3
(c) shortly after the application for leave to appeal was brought, the solicitors for the receivers wrote to the solicitors for the applicants and to the solicitors who had previously represented Mr Carey in relation to costs matters advising that an order for costs would be sought against Mr Carey if the appeal was unsuccessful.
3 The court proceeded to hear oral argument on the topic of whether the receivers should be awarded their costs on an indemnity basis. However, because Mr Carey was not represented, it was necessary to make programming orders for the service of documents relating to the receivers' application upon him, and for the exchange of written submissions in relation to that application. Orders were made programming that part of the receivers' application for costs toward a further hearing, but in the event, solicitors engaged by Mr Carey advised the court that he did not seek the opportunity to present oral argument at the time they filed and served written submissions on his behalf. Accordingly, the costs issues relating to Mr Carey are being resolved on the papers.
4 There are two issues which must be resolved. They are:
(a) should an order for costs be made against Mr Carey; and
(b) should the receivers be awarded their costs on an indemnity basis?
Should an order for costs be made against Mr Carey?
5 In the written submissions filed on Mr Carey's behalf, Mr Carey agrees to an order for costs being made against him, but does not agree to the order being made on an indemnity basis. Notwithstanding that concession, the submissions go on to present argument in apparent opposition to the award of costs against a person other than a party to the proceedings, ostensibly for the purpose of providing context for the argument relating to the question of whether costs should be awarded on an indemnity basis.
6 Assuming that the portion of the written submissions to which we have referred should not be taken as withdrawing the concession made earlier in the submissions, the concession is properly made. When ordering Mr Carey to pay the receivers' costs of another interlocutory application in the substantive proceedings, the primary judge found that the corporate plaintiffs (who are the applicants for leave to appeal in these proceedings) were insolvent, and would have no capacity to pay any costs ordered against them in those proceedings if they were unsuccessful. That finding has not been challenged.
7 The primary judge also found:4
It is common ground that Mr Carey caused the plaintiffs to bring this proceeding and is the person instructing the plaintiffs' solicitors to continue this proceeding. The plaintiffs' solicitors are acting on the instructions of Mr Carey …
Mr Carey is the person who stands behind the plaintiffs and for whose benefit, as a shareholder, these proceedings have been brought and are being maintained …
The plaintiff companies are insolvent. Mr Carey is the effective litigant conducting the litigation by the plaintiff companies. He stands to benefit if the plaintiff companies are successful in the proceeding. Those are circumstances which justify ordering Mr Carey to pay the Receivers' costs personally.
8 No appeal was brought from that decision. There is no evidence to suggest that the circumstances which prevailed at the time of that decision have changed in any way. To the contrary, the evidence before this court is to the effect that the material circumstances have not altered in any way.5
9 Further, as we have already noted, the evidence establishes that shortly after the application for leave to appeal was lodged, the solicitors for the receivers wrote to the solicitors for the applicants and to the legal practitioner who had previously represented Mr Carey in relation to costs matters advising that an order for costs would be sought against Mr Carey in the event that the appeal failed.
10 These circumstances entirely justify an order that Mr Carey pay the receivers' costs of the unsuccessful application for leave to appeal.6
Should costs be awarded on an indemnity basis?
11 The receivers submit that they should be awarded their costs on an indemnity basis because the application for leave to appeal was brought and continued in circumstances in which the applicants, properly advised, should have known that they had no chance of success or, put another way, persisted in what should have been seen, on a proper consideration, to be a hopeless case. There is ample authority to support the award of indemnity costs on this basis.7
12 The written submissions filed on behalf of Mr Carey do not contest that proposition. However, on his behalf it is submitted that a party should not be discouraged by the prospect of an unusual costs order from persisting in an action where success of the action is not certain, given that uncertainty is inherent in many areas of the law, and it is further submitted that a case should not be too readily characterised as 'hopeless'.8 Further, it is submitted that a different approach ought to be taken to a non-party in the light of the legal advice which Mr Carey received and to which he deposes in an affidavit filed in opposition to the application.
13 The written submissions filed and served by the receivers succinctly and accurately characterise our earlier decision in these terms:9
[T]he application for leave to appeal was doomed from the outset because there was no ground for contending that the appellants would suffer substantial injustice if the decision of the primary court were not reversed …
…
(a) ground 1 served no point or purpose and should not have been included;
(b) the factual premise upon which ground 2 was based was false and it was entirely without substance;
(c) there was no substance in any of proposed grounds 3, 4, 5 or 7 of the appeal;
(d) proposed ground 6 was misconceived;
(e) proposed ground 8 … was based upon submissions that were incomprehensible and nonsensical … Otherwise, the proposed ground was misconceived;
(f) no error of the character required by House v The King10 was identified in argument in support of the proposed ground 9…
14 It should be clear from our reasons that this is one of those cases in which the applicants and Mr Carey, properly advised, should have known that they had no chance of succeeding either in obtaining the grant of leave to appeal or in succeeding upon the appeal if leave was granted.
15 This is not a case in which either the facts or the applicable principles of law were uncertain in any respect. Nor is this a case in which characterisation of the application for leave to appeal as hopeless and inevitably doomed to failure could be described as unduly harsh or improperly influenced by hindsight.
16 As we have mentioned, Mr Carey has sworn an affidavit in opposition to the application made against him. In that affidavit, Mr Carey deposes that the appeal was instituted and prosecuted by the applicants on the basis that their lawyer, Mr Metaxas, had advised him that the appeal had merit. He further deposes that Mr Metaxas advised him, 'in a robust manner, words to the following effect: "You have to appeal, otherwise you are giving them a blank cheque"'. Mr Carey deposes that as a consequence of those words being spoken he 'considered the decision to institute the appeal to be beyond question'.
17 There are two reasons why this evidence provides no answer to the application for costs against Mr Carey. First, the assessment of whether costs should be awarded on an indemnity basis because the proceedings had no prospect of success is undertaken on an objective basis by reference to an assumption that proper legal advice had been given in relation to the proceedings. The actual legal advice given is irrelevant. Were it otherwise, difficult questions would arise with respect to the waiver of legal professional privilege and in relation to possible conflicts of interest between the lawyer providing the advice and the client. Further, it would be wrong in principle for liability for indemnity costs to depend upon the competence or otherwise of the legal advisors engaged.
18 Second and in any event, it appears from Mr Carey's affidavit that the advice which he received from Mr Metaxas was given in the most general of terms, and appears to have been based more upon the consequences of failure rather than the merits of the appeal itself. If Mr Carey received more detailed or considered advice prior to instructing the commencement of the application for leave to appeal, he does not depose to it. The commencement of appellate proceedings on the basis of such general and non-specific advice can only be characterised as rash and foolhardy.
19 In this case, Mr Carey is the controlling mind of the applicants. He is the person who stands to benefit from the litigation which he is causing them to conduct. There is no reason to distinguish between Mr Carey and the applicants in relation to the basis upon which the receivers' costs are to be ordered, and every reason why both he and the applicants should be ordered to pay the receivers' costs on an indemnity basis.
Conclusion
20 For these reasons there should be an order that the applicants and Mr Norman Phillip Carey jointly and severally do pay the first respondents' costs of the application for leave to appeal and of the appeal, including the application for security for costs of the appeal, the application to rely on the affidavit of Ms Stephanie Alexandra Puris sworn 8 September 2014, and all reserved costs, including the costs of the argument with respect to the costs of the application, such costs to include all costs incurred except insofar as they are unreasonable in amount or have been unreasonably incurred so that, subject to those exceptions, the first respondents will be completely indemnified by the applicants and Mr Carey for their costs, such costs to be taxed in default of agreement.
1Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Korda [2015] WASCA 101.
2Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Perpetual Nominees Ltd [2013] WASC 352 (S).
3 Ts 27 May 2015, 65.
4Huntingdale Village Pty Ltd (Receivers and Managers Appointed) v Perpetual Nominees Ltd [21] - [23].
5 Affidavit of Stephanie Alexandra Puris sworn 27 May 2015.
6Knight v FP Special Assets Ltd (1992) 174 CLR 178, 192 - 193; Owston Nominees [No 2] Pty Ltd v Clambake Pty Ltd [2011] WASCA 76 (S) [29]; Naidoo v Williamson [2008] WASCA 179; (2008) 37 WAR 516 [37] - [42].
7Yara Australia Pty Ltd v Oswal [2012] WASCA 264; Civil Properties Pty Ltd v Miluc Pty Ltd [2011] WASCA 195; Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S).
8 Relying on Quancorp Pty Ltd v McDonald [1999] WASCA 101 [7].
9 Receivers' written submissions [16] - [17].
10House v The King [1936] HCA 40; (1936) 55 CLR 499.
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