Insurance Commission of Western Australia v Antony Leslie John Woodings as Liquidator of the Bell Group Ltd (in Liq) [No 3]
[2018] WASC 44
•9 FEBRUARY 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: INSURANCE COMMISSION OF WESTERN AUSTRALIA -v- ANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF THE BELL GROUP LTD (IN LIQ) [No 3] [2018] WASC 44
CORAM: PRITCHARD J
HEARD: 1 FEBRUARY 2018
DELIVERED : 9 FEBRUARY 2018
FILE NO/S: CIV 2666 of 2016
BETWEEN: INSURANCE COMMISSION OF WESTERN AUSTRALIA
Plaintiff
AND
ANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF THE BELL GROUP LTD (IN LIQ)
First DefendantTHE BELL GROUP LTD (IN LIQ)
Second DefendantANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF BELL GROUP FINANCE PTY LTD (IN LIQ)
Third DefendantBELL GROUP FINANCE PTY LTD (IN LIQ)
Fourth DefendantANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF BELL BROS PTY LTD (IN LIQ)
Fifth DefendantBELL BROS PTY LTD (IN LIQ)
Sixth DefendantANTONY LESLIE JOHN WOODINGS AS PROVISIONAL LIQUIDATOR FOR WESTERN INTERSTATE PTY LTD (IN PROV LIQ)
Seventh DefendantWESTERN INTERSTATE PTY LTD (IN PROV LIQ)
Eighth DefendantGARRY JOHN TREVOR AS LIQUIDATOR OF BELL GROUP NV (IN LIQ)
Ninth DefendantBELL GROUP NV (IN LIQ)
Tenth DefendantLAW DEBENTURE TRUST CORPORATION PLC
Eleventh DefendantCOMMONWEALTH OF AUSTRALIA
Twelfth DefendantWA GLENDINNING & ASSOCIATES PTY LTD
Thirteenth Defendant
Catchwords:
Practice and procedure - Pleadings - Rules of the Supreme Court 1971 (WA) O 20 r 19 - Rules of the Supreme Court 1971 (WA) O 21 - Application for leave to further amend writ and statement of issues, facts and contentions - Whether pleading discloses no reasonable cause of action, is prejudicial, embarrassing or may delay the fair trial of the action - Where cause of action pleaded was not complete at the date the writ was issued - Eshelby principle
Legislation:
Fair Trading Act 1987 (WA)
Rules of the Supreme Court 1971 (WA)
Trade Practices Act 1974 (Cth)
Result:
Application allowed in part
Category: B
Representation:
Counsel:
Plaintiff: Mr N Hutley SC & Mr D Sulan
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Eighth Defendant : No appearance
Ninth Defendant : Mr A D'Arcy
Tenth Defendant : Mr A D'Arcy
Eleventh Defendant : No appearance
Twelfth Defendant : No appearance
Thirteenth Defendant : No appearance
Solicitors:
Plaintiff: Jones Day
First Defendant : No appearance
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Fifth Defendant : No appearance
Sixth Defendant : No appearance
Seventh Defendant : No appearance
Eighth Defendant : No appearance
Ninth Defendant : Lipman Karas
Tenth Defendant : Lipman Karas
Eleventh Defendant : No appearance
Twelfth Defendant : No appearance
Thirteenth Defendant : No appearance
Cases referred to in judgment:
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Eshelby v Federated European Bank Ltd [1932] 1 KB 423
Fluor Australia Pty Ltd v Sherritt International Corporation [2002] VSC 203
Great Southern Finance Pty Ltd (In Liq) v Rhodes [2014] WASC 431
Inspector‑General in Bankruptcy v Bradshaw [2006] FCA 22
Insurance Commission of Western Australia v Woodings as Liquidator of Bell Group Ltd (In Liq) [No 2] [2017] WASC 372
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16] [2017] WASC 340
Re Barrow [2017] HCA 47; (2017) 349 ALR 574
Wardley Australia Ltd v The State of Western Australia [1992] HCA 55; (1992) 175 CLR 514
Wigan v Edwards (1973) 1 ALR 497
PRITCHARD J: I recently delivered judgment in an application by the Ninth and Tenth Defendants (BGNV) to strike out certain prayers for relief (PFR) in the Writ and various corresponding paragraphs of the Statement of Issues Facts and Contentions (SIFC) filed by ICWA, as they stood at February 2017 (Judgment).[1] These reasons should be read in conjunction with the Judgment. I will not repeat any of the factual background or the overview of the issues raised and I have used the same abbreviations as are used in the Judgment.
[1] Insurance Commission of Western Australia v Woodings as Liquidator of Bell Group Ltd (In Liq) [No 2] [2017] WASC 372.
As I foreshadowed in the Judgment,[2] ICWA now seeks to further amend the Writ and the SIFC. It applied to do so by an Amended Interlocutory Application dated 18 May 2017 (Amendment Application), but, in light of orders I made on 22 December 2017, the Amendment Application has been understood as an application for leave to amend in the terms set out in Minutes dated 19 January 2018.[3]
[2] Insurance Commission of Western Australia v Woodings as Liquidator of Bell Group Ltd (In Liq) [No 2] [2017] WASC 372 [26], [29].
[3] References in these reasons to the Writ and the SIFC should, unless specified to the contrary, be understood as references to those documents in the terms proposed in the Minutes dated 19 January 2018.
Apart from the grounds of its opposition which repeat those already been addressed in the Judgment, BGNV opposes the grant of leave to amend in relation to additional, specified proposed PFRs and paragraphs of the SIFC (the challenged amendments), namely:
(a)Paragraphs [978A], [1097A], [1097B] and [1108A] of the SIFC;
(b)PFRs 4, 21 and 22;
(c)PFR 19(a); and
(d)PFRs 9 and 11.
Counsel for BGNV also continued to oppose the amendment of the Writ to include PFRs 5, 9, 11, 19, 21, 22 and 29 on the basis that those PFRs, and the corresponding paragraphs of the SIFC, were predicated on hypothetical, future acts which may never arise. In support of that submission, he sought to draw the Court's attention to the decision of Edelman J in Re Barrow.[4]In the Judgment, I dealt with BGNV's contention that those PFRs in the Writ and corresponding paragraphs of the SIFC (in the terms of those documents as at February 2017) were hypothetical. I rejected BGNV's contention. In doing so, I also took into account the decision in Re Barrow.[5] In those circumstances, it is neither necessary nor appropriate to revisit the question whether those parts of the pleadings raise hypothetical questions.
[4] Re Barrow [2017] HCA 47; (2017) 349 ALR 574.
[5] Insurance Commission of Western Australia v Woodings as Liquidator of Bell Group Ltd (In Liq) [No 2] [2017] WASC 372 [109].
For the reasons which follow, to the extent that leave to amend the Writ and SIFC is required, it will be granted, save for:
(a)Those PFRs and paragraphs of the SIFC which I have already determined should be struck out (for the reasons already set out in the Judgment, and in respect of which no formal order of the Court has yet been made to give effect to the Judgment); and
(b)PFR 19(a), together with par [977(aa)] and [977(b)] of the SIFC, which plead a cause of action which has not yet accrued.
These reasons deal with the following matters:
(a)Some additional background ‑ the basis for BGNV's opposition to amendment of the Writ and SIFC;
(b)Principles concerning whether leave to amend is required, and the grant of leave;
(c)Whether leave to amend should be granted in respect of [978A], [1097A], [1097B] and [1108A] of the SIFC;
(d)Whether leave to amend should be granted in respect of PFRs 4, 21 and 22;
(e)Whether leave to amend should be granted in respect of PFR 19(a); and
(f)Whether leave to amend should be granted in respect of PFRs 9 and 11.
(a) Some additional background ‑ the basis for BGNV's opposition to amendment of the Writ and SIFC
In the Judgment, I set out the background to the Amendment Application. The Amendment Application has had a rather unconventional history, by virtue of the numerous amendments to the Writ and the SIFC which have been proposed since those documents were first filed. The amendments to the Writ and SIFC which are now the subject of the Amendment Application encompass amendments which were the subject of the Judgment (that is, amendments proposed up to, and including, February 2017) and additional amendments proposed in May 2017, and in January 2018.
As I explained in the Judgment, the parties accepted that for the purposes of the strike out application, the Court should rely on the proposed amended Writ and SIFC filed in February 2017. However, as I went on to explain,[6] counsel for BGNV sought to reserve his clients' position in respect of certain proposed amendments, namely PFRs 30 and 31 and the corresponding paragraphs of the SIFC (the disputed amendments). I did not understand BGNV to seek a general liberty to advance additional arguments in opposition to the amendment of the Writ and SIFC, other than the disputed amendments. As events have turned out, the disputed amendments are no longer pursued.
[6] Insurance Commission of Western Australia v Woodings as Liquidator of Bell Group Ltd (In Liq) [No 2] [2017] WASC 372 [4].
(b) Principles concerning whether leave to amend is required, and the grant of leave
As I noted in the Judgment,[7] the present action was commenced in the High Court, and remitted to this Court. Apart from that slightly unusual history, and the fact that the action is not proceeding by conventional formal pleadings but by SIFCs, it stands in no different position from any other action commenced by writ. The provisions of O 21 of the Rules of the Supreme Court 1971 (WA) (RSC) concerning amendment apply.
[7] Insurance Commission of Western Australia v Woodings as Liquidator of Bell Group Ltd (In Liq) [No 2] [2017] WASC 372 [10].
With some exceptions, a plaintiff may, without the leave of the Court, amend the writ once at any time before the pleadings are deemed to be closed.[8] A plaintiff may amend any of its pleadings, without the leave of the Court, up to seven weeks before trial, by filing an amended pleading.[9] The Court may, also, at any stage, allow a plaintiff to amend a writ, or pleading, on such terms as to costs or otherwise as may be just.[10]
[8] Rules of the Supreme Court 1971 (WA) O 21 r 1(1).
[9] Rules of the Supreme Court 1971 (WA) O 21 r 3(1); see also Consolidated Practice Directions ‑ CMC List Usual Orders [8].
[10] Rules of the Supreme Court 1971 (WA) O 21 r 5(1).
A party served with an amended pleading (which was not the subject of a grant of leave) may apply for any amendment to be struck out. In such a case, if the Court is satisfied that, had an application for leave to amend under O 21 r 5 RSC been made, leave to amend would have been refused, the Court must order the amendment to be struck out.[11]
[11] Rules of the Supreme Court 1971 (WA) O 21 r 3(5).
Case management considerations of the kind identified by the High Court in Aon Risk Services Australia v Australian National University[12] will be relevant to the exercise of discretion whether to permit an amendment.[13] One of the considerations relevant to the grant of leave (or to the exercise of discretion to disallow amendments made without leave) will be whether the amendment would be liable to be struck out on the bases set out in O 20 r 19(1) RSC.
[12] Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175.
[13] Great Southern Finance Pty Ltd (In Liq) v Rhodes [2014] WASC 431 [31] (Beech J).
As the writ was amended in December 2016, any subsequent amendments to it require the leave of the Court. As the action is proceeding by way of SIFCs rather than formal pleadings, there might, perhaps, be an argument that leave to amend the SIFC at any stage is required. It is unnecessary to decide that question. ICWA has applied for leave to amend, BGNV has opposed the challenged amendments, and, in any event, as counsel for BGNV acknowledged[14] in this case, the same considerations are relevant to the discretion to grant leave, or to disallow an amendment. That is because the challenged amendments are proposed at an early stage, BGNV has not yet filed its SIFC in response to ICWA's SIFC, and there is no claim of consequential delay in the trial, or prejudice to BGNV, if the challenged amendments are made at this stage. Instead, BGNV's opposition to the grant of leave was based solely on its submission that the challenged amendments did not disclose a reasonable cause of action, would prejudice, embarrass or delay the fair trial of the action, or would give rise to an abuse of the process of the Court.
[14] ts 689.
I turn to consider the challenged amendments.
(c) Whether leave to amend should be granted in respect of [978A], [1097A], [1097B] and [1108A] of the SIFC
For convenience, I will refer to these paragraphs as the WI challenged amendments.
The WI challenged amendments are located in part 6 of the SIFC, which deals with the relief ICWA seeks relating to the operation of the WI Agreements. ICWA's case is that the WI Agreements were entered into as part of the funding arrangements between the various Indemnifying Creditors and the liquidator in the Bell litigation. ICWA's claim is that those funding arrangements reflected in the WI Agreements encompassed the assignment by Bell Bros to BGF, of 57,000 ordinary shares Bell Bros held in Western Interstate, on the basis that BGF would then hold those shares on trust for the Commonwealth, ICWA and BGNV.[15] ICWA seeks declarations that the effect of the WI Agreements is that upon becoming a 'Terminating Indemnifier' for the purpose of those Agreements, BGNV ceased to have any interest in the ordinary shares in Western Interstate, and that ICWA and the Commonwealth are the sole beneficial owners of those shares.[16]
[15] SIFC [993], [998], [1023].
[16] PFR 24, PFR 28.
ICWA's argument depends, at least in part, on the meaning of the term 'Pooled Funds' in the WIICA. That definition includes 'any moneys in the nature of a return of capital in respect of the shares in Western Interstate ... held in trust by BGF' for the Commonwealth, ICWA and BGNV.[17] The 'Pooled Funds' are the funds that the Indemnifying Creditors are to share in, pursuant to ratios specified in the WIICA, in return for their contribution to indemnifying the liquidator.
[17] PFR [1047].
ICWA says that the construction and operation of the WI Agreements ‑ and particularly the proper construction of the term 'Pooled Funds' in the WIICA ‑ has to be understood within the broader factual context. It says that that broader factual context includes a loan made by BGUK to other companies in the Bell Group ‑ first, a loan from BGUK to Western Interstate, and then a loan from Western Interstate to BGF ‑ of $478,039,695.[18] It also says that at around the same time, Western Interstate issued 43,405 redeemable preference shares to BGUK (preference shares).[19] As I understand ICWA's case, it will be that the parties to the WI Agreements contemplated that in the winding up of Western Interstate, and having regard to the terms on which the preference shares were issued, the preference shareholders would be entitled to a return of their contribution of the share capital, in preference to ordinary shareholders, but would not be entitled to participate in surplus assets or profit, or to repayment of the premium otherwise payable with respect to a subscription for a preference share[20] with the result that there would potentially be a greater return to ordinary shareholders in the winding up of Western Interstate.
[18] SFIC [1090] ‑ [1094].
[19] SIFC [1095] ‑ [1096].
[20] SIFC [1102].
As I noted in the Judgment,[21] I understand that ICWA's case is that the loan from BGUK to Western Interstate, and the implications of the terms on which the preference shares were issued, are relevant to the construction of the WI Agreements because that factual background forms part of the objective facts known by the parties to the WI Agreements, at the time those Agreements were entered into, and is relevant to what funds the parties contemplated would ultimately be returned to the Indemnifying Creditors by the operation of those agreements, especially the WIICA.
[21] Insurance Commission of Western Australia v Woodings as Liquidator of Bell Group Ltd (In Liq) [No 2] [2017] WASC 372 [215].
Turning more specifically to the WI challenged amendments, these paragraphs plead, in summary, that Western Interstate claims to be a creditor of BGF and has lodged a proof of debt in the winding up of BGF for over $758,386,538,[22] that from September 1989 Western Interstate's books have recorded a sum of over $478,039,695 plus interest as being due from BGF to Western Interstate, and BGF's books likewise record that Western Interstate is a creditor in a corresponding amount,[23] that at all times since the commencement of the Bell litigation, all interested parties (including BGF, BGUK, BGNV and Western Interstate) contended that BGF was indebted to Western Interstate in the amount of $758,386,538 and that in August 2014, the liquidator lodged a proof of debt in the liquidation of BGF claiming the sum of $758,386,538 as payable by BGF to Western Interstate on account of that debt.[24]
[22] SIFC [978A].
[23] SIFC [1097A].
[24] SIFC [1108A].
Paragraph [978A] of the SIFC was included in the SIFC in the amendments proposed by ICWA in February 2017. BGNV sought to strike out that paragraph of the SIFC at that stage. However, in the Judgment I indicated that in view of the further proposed amendments ICWA sought to make (including that PFRs 30 and 31 were no longer pursued), I would hear from the parties on the question of how [978A] related to the other PFRs.[25] It is, therefore, appropriate to consider the parties' further submissions in respect of [978A], in conjunction with their submissions in respect of the balance of the WI challenged amendments, which have not previously been considered.
[25] Insurance Commission of Western Australia v Woodings as Liquidator of Bell Group Ltd (In Liq) [No 2] [2017] WASC 372 [217].
BGNV contends that leave to amend to insert the WI challenged amendments should be refused on five grounds. Those grounds are without merit, for the following reasons.
First, counsel for BGNV says that the WI challenged amendments were inserted to support proposed PFRs 30 and 31, that ICWA has now abandoned those claims, that the WI challenged amendments do not relate to any of ICWA's other claims, and consequently that the WI challenged amendments do not disclose a reasonable cause of action or allege a material fact in support of a pleaded cause of action, and are entirely irrelevant to any of ICWA's claims for relief.[26] I do not accept those submissions. For the reasons outlined above at [19], I accept that the facts pleaded in the WI challenged amendments may be relevant to ICWA's arguments concerning the proper construction of the WI Agreements. The extent to which they are relevant will be a matter for submissions at the trial.
[26] BGNV submissions dated 29 January 2018 [3] ‑ [11].
Secondly, counsel for BGNV submitted that the WI challenged amendments impermissibly exceeded the indorsement on the Writ.[27] That argument proceeded on the premise that the WI challenged amendments were irrelevant to any of the PFRs other than the now abandoned PFRs 30 and 31. The argument fails for the reasons outlined above.
[27] BGNV submissions dated 29 January 2018 [12] ‑ [16].
In addition, however, counsel for BGNV submitted that [1097B] 'appears to be a plea in support of a conventional estoppel claim or claim that BGNV is engaged in an abuse of process in pursuing [the Federal Court proceedings]. No such claim is mentioned in the indorsement to the writ.'[28] This was, in effect, a variation on the argument advanced by BGNV in its strike out application in relation to [978A] of the SIFC, namely that that proposed amendment was an abuse of process, and designed to support an application to transfer the Federal Court proceedings to this Court. I dealt with that argument in the Judgment.[29] The argument fails here for the same reasons.
[28] BGNV Submissions dated 29 January 2018 [16].
[29] Insurance Commission of Western Australia v Woodings as Liquidator of Bell Group Ltd (In Liq) [No 2] [2017] WASC 372 [218].
Next, counsel for BGNV submitted that the inclusion of [1097B] in the SIFC will 'require the Court to embark on an investigation into the conduct of the Bell trial over 20 years from 1995'.[30] I do not accept that submission. With respect, it overlooks the practical realities of this litigation. BGNV's position in the Federal Court litigation is that the issue of the Western Interstate preference shares to BGUK was a fraud. That issue will be determined either by the Federal Court, in the Federal Court proceedings, or alternatively it will be determined in this Court (if the Federal Court determines that the Federal Court proceedings should be transferred to this Court). If transferred to this Court, the question will arise as to whether the issues in that action should be tried separately, and in advance of this action, or whether it should be tried at the same time as this action. Whatever the outcome of these possible permutations, there is, at present, no prospect that the present action will be tried in advance of the Federal Court proceedings. I should add that the position is likely to become clearer in the next few months, once the foreshadowed application to transfer the Federal Court proceedings to this Court is determined.
[30] BGNV Submissions dated 29 January 2018 [18].
Consequently, in so far as the WI challenged amendments, and especially [1097B], refer to the issue of the preference shares, as part of the context in which the WI Agreements were entered into, it is not at all clear why, in this action, it will be necessary for the parties' subsequent conduct in relation to the preference shares to be examined in the same detailed way in which it will be examined in order to resolve BGNV's claims in the Federal Court proceedings (wherever those proceedings are ultimately determined). Accordingly, I do not accept that the amendment of the SIFC to include the WI challenged amendments, including [1097B], is likely to delay the fair trial of this action.
Finally, counsel for BGNV submitted that the WI challenged amendments were an abuse of process, because they raise issues which are already the subject of the Federal Court proceedings.[31] I do not accept that submission. For the reasons outlined above at [26], if and to the extent, that there is any overlap between the WI challenged amendments and the issues raised in the Federal Court proceedings, there is no prospect of those issues being tried twice, so as to raise the prospect of inconsistent outcomes, nor do I see any other basis on which it might be said that the inclusion of the WI challenged amendments would be liable to bring the administration of justice into disrepute.
[31] BGNV Submissions dated 29 January 2018 [19] ‑ [20].
(d) Whether leave to amend should be granted in respect of PFRs 4, 21 and 22
In the course of the strategic conference held on 1 February 2018, and, again, in the hearing of the Amendment Application, counsel for ICWA made clear that ICWA would review a number of the PRFs which, as presently framed, contemplate their being determined in advance of other issues raised in this action and in the Liquidator's Application.[32]
[32] ts 687.
In view of that indication, counsel for BGNV agreed that he would not, at least for the moment,[33] pursue his opposition to PFRs 21 and 22 (and, I infer also, PFR 4, which was the subject of similar written submissions[34]) and the corresponding paragraphs of the SIFC. It is therefore unnecessary to say more about these amendments to the Writ and SIFC.
[33] ts 702 ‑ 703.
[34] BGNV Submissions dated 29 January 2018 [21] ‑ [25].
(e) Whether leave to amend should be granted in respect of PFR 19(a)
The relief in PFR 19(a) is sought in addition, or in the alternative, to the relief ICWA seeks concerning the construction of the PTICA, including its claim for an order for rectification of the PTICA in the event that the Court rejects ICWA's argument as to the proper construction of the PTICA.
ICWA's claim in relation to PFR 19(a) is, in summary, as follows. ICWA says that if the PTICA, on its proper construction, operates to require ICWA to pay BGNV the whole or part of any advances ICWA made to the liquidator (Advances), or the whole or part of any monies which might be paid to the LDTC or ICWA by virtue of the operation of the subordination and turnover trust clauses in the Trust Deeds (Funds), and if its claim for rectification of the PTICA fails, then the result will be that ICWA will have been misled by BGNV's representations in the course of the negotiation of the PTICA. ICWA says that in that case BGNV must have had the intention of seeking to pool the Advances and Funds for distribution under the PTICA, or to reserve to itself the possibility of later seeking to contend for that (or a similar) construction of the PTICA.[35] ICWA says that in the circumstances, BGNV was obliged to disclose that intention or reservation to ICWA, that it did not do so, and that that conduct was conduct in trade or commerce which was misleading or deceptive or likely to mislead or deceive, contrary to s 52 of the Trade Practices Act 1974 (Cth) (TPA) or, alternatively, s 10 of the Fair Trading Act 1987 (WA) (FTA).
[35] SIFC [975].
ICWA claims that in that event, it is entitled to orders under s 82 of the TPA or s 79 of the FTA. That is the relief sought in PFR 19(a).
In the alternative, in PFR 19(b), ICWA claims it is entitled to orders under s 87(1) and (2) of the TPA or s 77 of the FTA, to vary the PTICA (in the same terms as ICWA's rectification claim).
PFR 19(a) has been part of the SIFC since it was filed. It has been in the Writ in its current form since before BGNV's strike out application was heard in February 2017. Initially, in its strike out application, BGNV sought to strike out PFR 19, although before the hearing of that application, BGNV expressly abandoned that part of its strike out application. However, its argument at that stage was apparently directed to PFRs 19(c) and (d), and its abandonment of that part of its strike out application followed ICWA's decision to delete those PFRs.[36]
[36] BGNV Submissions dated 29 January 2018 [26] ‑ [27].
Consequently, this is not a case where BGNV seeks to re-litigate a point it has already pursued, and which the Court has determined. It is true that BGNV's opposition to PFR 19(a) is, in substance, another attempt to argue a strike out point. As its strike out application has been determined, its opposition to PFR 19(a) is at odds with the principle of finality which applies to judicial decisions.[37] It is not an absolute principle. That principle has less force in this instance, in view of the somewhat unusual bifurcation in the hearing and determination of the Amendment Application(s) and BGNV's strike out application. Furthermore, there is no suggestion of prejudice to ICWA in having to deal with the argument at this stage. In my view, it is therefore appropriate to deal with BGNV's arguments now, rather than to defer them to the trial.
[37] Cf Inspector‑General in Bankruptcy v Bradshaw [2006] FCA 22 [24] ‑ [26].
Counsel for BGNV submitted that the cause of action underlying PFR 19(a) was not complete when the Writ was issued (and is still not complete). He submitted that the cause of action underlying PFR 19(a) is the claim, made under s 82 of the TPA, alternatively s 79 of the FTA, for loss and damage suffered as a result of misleading and deceptive conduct contrary to the provisions of the TPA and FTA, that loss or damage is the gist of that cause of action, that that cause of action does not accrue until actual loss or damage is sustained, and that ICWA does not claim to have suffered loss and damage. Counsel for BGNV submitted that ICWA therefore cannot pursue the relief in PFR 19(a) because it relies on a cause of action which was not complete at the date of the writ.
I accept that submission. The High Court in Wardley Australia v Western Australia confirmed that the cause of action under s 82 of the TPA does not accrue until actual loss or damage is sustained, and that the risk of loss was not sufficient to found a claim for loss and damage.[38] In the Writ, ICWA contends (at [15]) that it 'has suffered loss and damage' by virtue of BGNV's conduct. However, in the paragraphs of the SIFC which relate to PFR 19(a), ICWA does not advance any claim that it has suffered loss and damage. Moreover, the paragraphs of the SIFC concerning the construction of the PTICA, its rectification claim, and its claim that BGNV engaged in misleading and deceptive conduct, leave no doubt that ICWA's claim in PFR 19(a) is that it will suffer loss and damage if its construction of the PTICA is not accepted and if its claim for rectification of the PTICA does not succeed. Any loss it claims is a potential loss only, contingent on those developments occurring.[39] Its causes of action under s 82 of the TPA, and under s 79 of the FTA, have therefore not yet accrued.
[38] Wardley Australia Ltd v The State of Western Australia [1992] HCA 55; (1992) 175 CLR 514, 525 ‑ 527 (Mason CJ, Dawson, Gaudron & McHugh JJ).
[39] Cf Fluor Australia Pty Ltd v Sherritt International Corporation [2002] VSC 203.
In order to succeed in an action, a plaintiff must establish the cause of action as at the date the writ was issued. It was established in Eshelby v Federated European Bank Ltd[40] that it is not open to a plaintiff, in the absence of statutory authority, to amend proceedings without the consent of a defendant by adding a cause of action which has accrued since the commencement of the action. That principle continues to apply in actions pursued in courts in this State because there has been no statutory reform to alter that position.[41]
[40] Eshelby v Federated European Bank Ltd [1932] 1 KB 423, 260 (Swift J); Wigan v Edwards (1973) 1 ALR 497, 508 (Menzies J), 515 (Mason J).
[41] See the detailed discussion of the position in this State, and amendments elsewhere, in Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 16] [2017] WASC 340 [121] ‑ [131].
As ICWA's cause of action has not yet accrued, PFR 19(a) should be struck out. So, too, should [977(aa)] and [977(b)] of the SIFC, which reflect that claim for relief.
I should add that no similar issue arises, nor was any objection made, in relation to PFR 19(b), or to the balance of part 5.2.3.2 of the SIFC. PFR 19(b) and part 5.2.3.2 of the SIFC pertain to ICWA's cause of action for relief of the kind set out in s 87 of the TPA and s 77 of the FTA, which specifically permit remedial orders to be made in response to conduct in contravention of relevant provisions of the legislation. A cause of action under s 87 of the TPA, and, similarly, a cause of action under s 77 of the FTA, will arise so long as loss or damage is likely to be suffered.[42]
[42] Wardley Australia Ltd v The State of Western Australia [1992] HCA 55; (1992) 175 CLR 514, 527 (Mason CJ, Dawson, Gaudron & McHugh JJ); Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31.
(f) Whether leave to amend should be granted in respect of PFRs 9 and 11
In its strike out application, BGNV unsuccessfully contended that these PFRs and the corresponding paragraphs of the SIFC should be struck out on the basis that they raised issues which were merely hypothetical. It now seeks to argue that these paragraphs should be struck out on the basis that they infringe the principle established in Eshelby because the facts on which ICWA's claim for relief depends have not yet occurred.In substance, BGNV seeks to re‑ventilate the same objection as it previously advanced, but in a different guise. I have determined that objection against BGNV.[43] No basis has been demonstrated to warrant the grant to BGNV of another opportunity to advance the same argument.
[43] Insurance Commission of Western Australia v Woodings as Liquidator of Bell Group Ltd (In Liq) [No 2] [2017] WASC 372 [111], [126] ‑ [132].
Orders
The parties should confer with a view to submitting a minute of consent orders to reflect these reasons, and to deal with costs. In the absence of consent, I will list the matter for Tuesday 13 February 2018 at 9.30am.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: INSURANCE COMMISSION OF WESTERN AUSTRALIA -v- ANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF THE BELL GROUP LTD (IN LIQ) [No 3] [2018] WASC 44 (S)
CORAM: PRITCHARD J
HEARD: ON THE PAPERS
DELIVERED : 21 DECEMBER 2018
FILE NO/S: CIV 2666 of 2016
BETWEEN: INSURANCE COMMISSION OF WESTERN AUSTRALIA
Plaintiff
AND
ANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF THE BELL GROUP LTD (IN LIQ)
First Defendant
THE BELL GROUP LTD (IN LIQ)
Second Defendant
ANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF BELL GROUP FINANCE PTY LTD (IN LIQ)
Third Defendant
BELL GROUP FINANCE PTY LTD (IN LIQ)
Fourth Defendant
ANTONY LESLIE JOHN WOODINGS AS LIQUIDATOR OF BELL BROS PTY LTD (IN LIQ)
Fifth Defendant
BELL BROS PTY LTD (IN LIQ)
Sixth Defendant
ANTONY LESLIE JOHN WOODINGS AS PROVISIONAL LIQUIDATOR FOR WESTERN INTERSTATE PTY LTD (IN PROV LIQ)
Seventh Defendant
WESTERN INTERSTATE PTY LTD (IN PROV LIQ)
Eighth Defendant
GARRY JOHN TREVOR AS LIQUIDATOR OF BELL GROUP NV (IN LIQ)
Ninth Defendant
BELL GROUP NV (IN LIQ)
Tenth Defendant
LAW DEBENTURE TRUST CORPORATION PLC (including in the capacities identified in Annexure A to the Writ of Summons)
Eleventh Defendant
COMMONWEALTH OF AUSTRALIA
Twelfth Defendant
WA GLENDINNING & ASSOCIATES PTY LTD
Thirteenth Defendant
Catchwords:
Practice and procedure - Costs - Where the costs should fall - Whether a party successful in an application - Where multiple issues before the Court - Amendment of pleadings
Practice and procedure - Costs - Special costs application - Whether limit imposed on an item by the applicable scale inadequate - Whether maximum hourly rates inadequate - Whether inadequacy arises due to the unusual difficulty, complexity or importance of the matter - Interlocutory applications to strike out and amend
Legislation:
Legal Profession Act 2008 (WA), s 280(2)
Result:
Application granted in part
Category: B
Representation:
Counsel:
| Plaintiff | : | No appearance |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
| Third Defendant | : | No appearance |
| Fourth Defendant | : | No appearance |
| Fifth Defendant | : | No appearance |
| Sixth Defendant | : | No appearance |
| Seventh Defendant | : | No appearance |
| Eighth Defendant | : | No appearance |
| Ninth Defendant | : | No appearance |
| Tenth Defendant | : | No appearance |
| Eleventh Defendant | : | No appearance |
| Twelfth Defendant | : | No appearance |
| Thirteenth Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Jones Day |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
| Third Defendant | : | No appearance |
| Fourth Defendant | : | No appearance |
| Fifth Defendant | : | No appearance |
| Sixth Defendant | : | No appearance |
| Seventh Defendant | : | No appearance |
| Eighth Defendant | : | No appearance |
| Ninth Defendant | : | Lipman Karas |
| Tenth Defendant | : | Lipman Karas |
| Eleventh Defendant | : | No appearance |
| Twelfth Defendant | : | No appearance |
| Thirteenth Defendant | : | No appearance |
Case(s) referred to in decision(s):
Atwell v Roberts [2013] WASCA 37
Bell Group NV (In Liq) v Insurance Commission of Western Australia [2018] WASCA 179
Bell Group NV v Insurance Commission of Western Australia [2017] WASCA 229
Crawley Investments Pty Ltd v Elman [2014] WASC 233 (S)
EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S)
Frigger v Lean [2012] WASCA 66
Frigger v Professional Services of Australia Pty Ltd [No 2] [2011] WASCA 103 (S)
Insurance Commission of Western Australia v Woodings [No 2] [2017] WASC 372
Insurance Commission of Western Australia v Woodings [No 3] [2018] WASC 44
Mentha as Receiver and Manager of Westgem Investments Pty Ltd (In Liq) v Hughes as liquidator of Westgem Investments Pty Ltd (In Liq) [2014] WASC 478 (S)
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Pourzand v Telstra Corporation Ltd [2012] WASC 210 (S2)
Red Hill Iron Pty Ltd v API Management Pty Ltd [2012] WASC 323 (S)
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 (S)
Stanley v Layne Christensen Co [2006] WASCA 56
Wainwright v Barrick Gold of Australia Ltd [2014] WASCA 15 (S)
PRITCHARD J:
These reasons deal with an application made by the plaintiff (ICWA) for costs orders (Costs Application) following judgments I delivered earlier this year in two applications. The first concerned an application (strike out application) by the ninth and tenth defendants (BGNV) to strike out certain prayers for relief (PFRs) in the Writ and corresponding paragraphs of the Statement of Issues Facts and Contentions (SIFC) filed by ICWA, as they stood at February 2017 (strike out judgment).[44] The second judgment concerned an application (amendment application) made by ICWA for leave to amend its Writ and SIFC (amendment judgment).[45] (These reasons should be read in conjunction with those judgments. I have continued to use the same abbreviations as I used in those judgments.)
[44] Insurance Commission of Western Australia v Woodings [No 2] [2017] WASC 372.
[45] Insurance Commission of Western Australia v Woodings [No 3] [2018] WASC 44.
The factual background to both the strike out application and the amendment application (collectively, the Applications) is set out in those judgments and other than as is necessary to explain the present reasons, it is unnecessary to repeat any of that background.
Following the delivery of the strike out judgment and the amendment application judgment, I made orders with a view to dealing with the Costs Application on the papers.
For the reasons which follow, I will make the orders set out later in these reasons. They are to the following effect:
(i)BGNV is to pay 80% of ICWA's costs of the strike out application;
(ii)BGNV is to pay ICWA's costs of the amendment application, other than those of ICWA's costs which were directly referrable to the proposed amendment of the Writ to include PFRs 3, 19(c), 19(d), 21, 22, 30 and 31, together with the corresponding paragraphs of the SIFC (abandoned claims);
(iii)Pursuant to s 280(2) of the Legal Profession Act 2008 (WA) (LP Act), the costs payable to ICWA in respect of the Applications are to be taxed without regard to certain limits under the scale in the applicable costs determination;
(iv)ICWA is to pay BGNV's costs of preparing such of its written submissions in respect of the amendment application as concerned the abandoned claims, on a party and party basis;
(v)BGNV is to pay ICWA's costs of the Costs Application.
In these reasons for decision, I deal with the following matters:
1.The orders sought by ICWA, and those proposed by BGNV, on the Costs Application;
2.A preliminary issue: waiver of the requirements of O 59 r 9 of the Rules of the Supreme Court 1971 (WA) (RSC);
3.Costs of the strike out application;
4.Costs of the amendment application;
5.The extent to which special costs orders should be made;
6.The costs of the Costs Application; and
7.The orders which should be made.
The orders sought by ICWA, and those proposed by BGNV, on the Costs Application
In the Costs Application, ICWA seeks the following orders:[46]
[46] Minute of Proposed Orders dated 4 April 2018.
1.[BGNV] pay [ICWA's] costs, including reserved costs (if any), of the [strike out application].
2.Pursuant to section 280(2) of the Legal Profession Act 2008 (WA) the costs payable to ICWA pursuant to order 1 above be taxed without regard to:
(a)the limit upon the maximum hourly rates imposed by Table A of clause 11;
(b)the limit imposed by item 10(a) of Table B,
of the Legal Profession (Supreme Court) (Contentious Business) Determination 2016.
3.BGNV pay ICWA's costs, including reserved costs (if any), of ICWA's [amendment application].
4.Pursuant to section 280(2) of the Legal Profession Act 2008 (WA) the costs payable to ICWA pursuant to order [3] above be taxed without regard to:
(a)the limit upon the maximum hourly rates imposed by Table A of clause 11;
(b)the limit imposed by item 10(a) of Table B,
of the Legal Profession (Supreme Court) (Contentious Business) Determination 2016.
5.BGNV pay ICWA's costs of ICWA's [Costs Application].
6.Pursuant to Order 59 rule 9(2) of the Rules of the Supreme Court 1971 (WA), Order 59 rule 9(1) of those rules be waived.
In support of the Costs Application, ICWA relies upon the affidavit of David Jonathan Hargreaves sworn 23 February 2018.
BGNV opposes the Costs Application. It seeks costs orders in its favour, and submits that the following costs orders should be made:[47]
[47] Minute of Proposed Orders dated 13 March 2018.
Costs of [BGNV's] strike out application
1.[ICWA] pay the costs of [BGNV] of and incidental to [the strike out application], including any reserved costs.
The costs of ICWA's abandoned claims
1.ICWA pay BGNV's costs of and incidental to:
1.1BGNV responding to [PFRs] 3, 19(a), 19(c), 20 and 21 in ICWA's writ of summons dated 9 June 2016 and the corresponding paragraphs of ICWA's [SIFC] dated 18 October 2016 …; and
1.2BGNV responding to ICWA's [amendment application] to include the claims contained in proposed [PFRs] 30 and 31, including any reserved costs.
The costs of ICWA's amendment application
2.ICWA pay BGNV's costs of and incidental to ICWA's [amendment application], including any reserved costs.
3.ICWA pay BGNV's costs incurred, including the costs thrown away, by the amendment to its writ of summons and SIFC made by the amended writ of summons and amended SIFC dated 28 February 2018.
The costs of ICWA's [Costs Application]
4.ICWA pay BGNV's costs of and incidental to ICWA's [Costs Application].
Special costs order
5.Pursuant to s 280(2)(c) of the Legal Profession Act 2008 (WA) the following limits on BGNV's costs allowable in respect of the strike out application and the amendment application be removed:
5.1the 2 days' preparation limit for junior counsel; and
5.2the overall monetary limit for the fees of junior counsel.
Waiver of the requirements of Order 59 r 9 of the Rules of the Supreme Court 1971 (WA) (RSC)
ICWA seeks an order that the requirements of Order 59 rule 9(1) of the RSC be waived, because the Court made orders, to which 'the parties agreed', programming the filing of ICWA's application for special costs orders, and for the filing of submissions by the parties.[48]
[48] Memorandum supporting waiver of conferral dated 22 February 2018.
BGNV opposes the waiver. Counsel for BGNV submitted that the requirement to confer in O 59 r 9 can only be waived in a case of urgency or for other good reason. He submitted that neither was the case. He also submitted that ICWA's failure to confer is a relevant factor in determining who should pay the costs of the Costs Application.
The requirement in the RSC for conferral before any application in chambers is filed recognises that conferral between parties can avoid unnecessary applications or minimise the scope of any disputes, and thus can avoid unnecessary costs being incurred by the parties, and minimise the use of the Court's resources in hearings which could have been avoided. The requirement to confer is a fundamental component of the principles of modern case management which now underlie the RSC. A failure to confer may warrant complaint in some cases. If it appears to the Court that compliance with the requirement to confer may result in a narrowing of the issues in dispute, the Court may decline to deal with an application until such time as conferral has occurred. Further, where a failure to confer results in costs being incurred by a party where they otherwise could have been avoided, some complaint about the failure to confer, and an application that that failure be reflected in a costs order, may be justified. This is not such a case, for three reasons.
First, the orders I made to programme the filing of any application by ICWA for special costs, and for the filing of evidence and submissions, and for such application to be dealt with on the papers, were made following the publication of the strike out judgment. Counsel for BGNV submitted that ICWA told the Court of its intention to make a special costs application and sought such programming orders 'without prior notice'.[49] Yet during the hearing in which the programming orders were made, counsel for BGNV did not raise any objection to those orders on the basis that there had not been conferral about the intended Costs Application.[50] Those programming orders were later varied by consent to extend the timetable, and to apply to any application for special costs orders in relation to the costs of both Applications.
[49] BGNV’s submissions [5].
[50] ts 681 - 683 (1 February 2018).
Secondly, conferral is a two way process. Even after the Costs Application was filed, it was open to BGNV's solicitors to confer with ICWA's solicitors with a view to narrowing the scope of the issues in dispute in respect of the Costs Application.
Finally, it appears unlikely that any conferral would have made any significant difference to the issues in dispute in respect of the Costs Application. BGNV opposed the Costs Application, and sought its own costs orders, which ICWA opposes. While the parties agreed in principle in respect of one issue (namely BGNV's costs which were wasted by virtue of ICWA's abandonment of parts of its amendment application), they do not agree about the nature or terms of the costs order which should be made to deal with that issue.
In these circumstances, the failure to confer is not a basis for the Court to refuse to deal with the Costs Application, nor should the failure to confer sound in the costs order which should be made with respect to the Costs Application itself. There is no need for a formal order waiving the requirement to confer.
Costs of the strike out application
The Court has a broad discretion[51] to award the costs of and incidental to a proceeding. However, that discretion must be exercised judicially.[52] The general rule - recognised expressly in the RSC[53] - is that costs follow the event. The Court will generally order that a successful party recover its costs,[54] unless there is good reason to depart from that approach.
[51] Supreme Court Act 1935 (WA), s 37; RSC O 66 r 1.
[52] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [65].
[53] RSC O66 r1(1).
[54] Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [66].
ICWA and BGNV disagree as to who was the successful party on the strike out application.
ICWA says that it was 'almost wholly successful' on the strike out application, because that application succeeded only in respect of one of the 18 PFRs (and the corresponding paragraphs in the SIFC) which were challenged.[55] ICWA therefore submits that a costs order should be made in its favour in respect of the strike out application.
[55] ICWA submissions [19].
BGNV submits that a costs order should be made in its favour on the strike out application, on the basis that that application 'was partly successful and partly unsuccessful'[56] and that 'on any view, BGNV has had a substantial measure of success on its strike out application'.[57] Counsel for BGNV submitted that 'BGNV's success cannot simply be measured by reference to the [strike out judgment and the amendment application judgment]. '[58] Counsel for BGNV also pointed to what he described as 'the practical reality that ICWA responded to that application by abandoning various claims … and making substantial amendments to its SFIC to address BGNV's complaints'.[59]
[56] BGNV submissions [14].
[57] BGNV submissions [22].
[58] BGNV submissions [15].
[59] BGNV submissions [16].
I am unable to accept the tenor of BGNV's submissions, for the following reasons.
First, although BGNV succeeded in persuading the Court to strike out one of the PFRs in the Writ (PFR 12) and the corresponding paragraphs of the SFIC ([513] - [592], save to the extent that they were relevant to any PFR apart from PFR 12), the dimensions of its 'success' need to viewed in perspective. After all, whether a party succeeds in proceedings must be determined by the reality of the circumstances involved.[60] The reality of the outcome of the strike out application is that while BGNV was not completely unsuccessful, it was very largely unsuccessful. BGNV sought to strike out a very significant proportion of the relief sought by ICWA (18 out of the 29 PFRs in the Writ), together with the corresponding paragraphs of the SIFC (over 700 paragraphs) which were said to support the grant of that relief. It advanced numerous arguments in support of its challenge to the PFRs and paragraphs of the SIFC, filed detailed submissions and cited numerous cases. Dealing with its contentions resulted in a lengthy judgment. It succeeded in striking out only one PFR, and the corresponding paragraphs of the SIFC. Furthermore, BGNV's case for striking out PFR 12 cannot be regarded as the primary or dominant issue on the strike out application.
[60] Frigger v Professional Services of Australia Pty Ltd [No 2] [2011] WASCA 103 (S) [12].
Secondly, while BGNV succeeded in having PFR 12 and the related paragraphs of the SIFC struck out, it did not succeed on all of the bases for its challenge to that part of ICWA's pleading. BGNV advanced a number of arguments to strike out PFR 12, but succeeded only in its contention that that PFR raised a hypothetical question.[61]
[61] Strike out judgment [139], [179].
Thirdly, BGNV's challenge to PFR 12 cannot be regarded as a discrete or separate part of its strike out application. Its contention that that PFR was hypothetical was echoed in its challenge to a number of other PFRs, and the corresponding paragraphs of the SIFC.
Fourthly, counsel for BGNV sought to support his claim that BGNV was successful on the strike out application by relying on the fact that ICWA sought to amend the Writ by abandoning various claims, and by making amendments to the SIFC to address criticisms BGNV had made. Even if it is assumed that all of those amendments were made in response to BGNV's contentions on the strike out application, in my view that does not render inapt the characterisation of the outcome of the strike out application as largely unsuccessful for BGNV.
Having said all of that, in my view, it is appropriate to make some allowance for the fact that ICWA was not entirely successful in resisting the strike out application, and for the fact that ICWA amended its Writ and SIFC to respond to some of the criticisms made by BGNV. In those circumstances, in my view, the just outcome is to require that BGNV pay 80% of ICWA's costs of the strike out application.
Costs of the amendment application
As I noted in the amendment judgment, ICWA required leave to amend its Writ, because it had already amended the Writ once before. It therefore required the indulgence of the Court to amend the Writ again. I did not consider it necessary to determine whether ICWA required leave to amend its SIFC also.
BGNV opposed the grant of leave to amend in relation to additional proposed PFRs and corresponding amendments to the SIFC on the ground that they did not disclose a reasonable cause of action, or would prejudice, embarrass or delay the fair trial of the action, or would give rise to an abuse of the process of the Court. In addition, BGNV sought to advance, again, its opposition to ICWA's pursuit of some of the PFRs, and corresponding paragraphs of ICWA's SIFC, which had been the subject of BGNV's unsuccessful challenge in the strike out application. In other words, BGNV's opposition to the amendment application was based on the contention that leave to amend should not be granted because the PFRs and paragraphs of the SIFC would be liable to be struck out.
ICWA was granted leave to amend, save in respect of one paragraph of one proposed PFR, and two corresponding proposed paragraphs of the SIFC, which I concluded pleaded a cause of action that had not yet accrued.
ICWA submits that in accordance with the general rule that costs follow the event, it is entitled to recover its costs.[62] Counsel for BGNV submitted that if ICWA did not need leave to amend, then the rule in O 66 r 3(1) RSC should be applied.[63]
[62] ICWA submissions [20].
[63] BGNV submissions [25].
O 66 r 3(1) RSC sets out the general position as to the costs of and occasioned by any amendment made without leave. It provides that:
The costs of and occasioned by any amendment made without leave in the writ or any pleading shall be borne by the party making the amendment, unless the Court otherwise orders.
That rule recognises that when a party amends its pleadings, there may be flow on costs to other parties who may need to make corresponding amendments to their responsive pleadings. However, the application of that rule is clearly subject to the Court's discretion to make a different costs order.
While ICWA does not dispute the principle that the costs of and occasioned by amendments to pleadings made without leave are ordinarily costs payable by the amending party, it says that BGNV has not sustained any such costs.[64] That submission reflected the fact that at the time of the amendment application, BGNV had not filed a responsive SIFC. BGNV acknowledged that it would not incur costs in making consequential amendments arising from the grant of leave to amend.[65]
[64] ICWA reply submissions [26].
[65] BGNV submissions [32].
Further, BGNV submitted that if ICWA was required to seek leave to amend, 'then the ordinary rule should apply, namely that a party seeking the indulgence of the Court should pay the other party's costs of the application even if the application is successful'.[66] I am unable to accept that submission in the circumstances of this case.
[66] BGNV submissions [25].
The general position where a party has successfully obtained leave to amend is that as that party is seeking an indulgence of the Court, it will be required to pay the costs of the application, including costs thrown away, and will not normally receive the costs of the application.[67] However, the application of that general rule is subject to the Court's discretion.[68]
[67] Stanley v Layne Christensen Co [2006] WASCA 56 [52] (Wheeler JA).
[68] Stanley v Layne Christensen Co [2006] WASCA 56 [52] (Wheeler JA, Steytler P agreeing).
In this case, while ICWA's application for leave to amend sought the indulgence of the Court to permit that amendment, the issues in dispute on the amendment application were such that it was more akin to a strike out application brought by BGNV. Had the amendments been able to be made without leave, then it would have been necessary for BGNV to make an application to strike out the amendments.
In my view, the appropriate order is that BGNV pay ICWA's costs of the amendment application. The proposed paragraph of the PFR and proposed paragraphs of the SIFC in respect of which leave was refused occupied only a small part of the overall time and effort involved in dealing with the amendment application. That being the case, I am not persuaded that it is appropriate to reduce the costs payable by BGNV to take account of the fact that ICWA was not entirely successful on the amendment application.
However, ICWA did not pursue some parts of the amendment application, namely proposed PFRs 3, 19(c), 19(d), 21, 22, 30 and 31, together with the corresponding paragraphs of the SIFC (abandoned claims). The abandoned claims were (in the case of PFRs 30 and 31) not pressed in light of the decision of the Court of Appeal in Bell Group NV v Insurance Commission of Western Australia[69] or (in respect of the balance of the abandoned claims) were not pressed on the amendment application, pending further consideration by ICWA. ICWA did not dispute that 'to the extent that any costs can be identified as directly referable to those parts of the application not pressed, they should be excluded from the general costs order' that BGNV pay ICWA's costs of the amendment application.[70] I agree that BGNV should not be required to pay any part of ICWA's costs of the amendment application which concerned the abandoned claims. No doubt ICWA would not seek such costs from BGNV in any event, but for the avoidance of any doubt, I will make that clear in the order which I will make.
[69] Bell Group NV v Insurance Commission of Western Australia [2017] WASCA 229.
[70] ICWA's submissions [20] and ICWA's submissions in reply [14].
However, BGNV goes further. It says that there should be an order that ICWA pay such costs as BGNV incurred in responding to ICWA's application to amend its Writ and SIFC to include the abandoned claims, because ICWA's failure to pursue the abandoned claims meant that BGNV's costs were wholly wasted. The amount of such costs which were wholly wasted appears likely to be very modest indeed. The pursuit of claims for comparatively small amounts of wasted costs is somewhat surprising, in a case where what is at stake is the parties' share in the distribution of the monies of the Bell Group of companies, which currently exceeds $1.7 billion. However, as Mazza JA has observed, the parties 'could be said to have a litigious disposition and appear to have deep pockets, such that legal costs, including the possibility of costs orders, constitute no real restraint'.[71]
[71] Bell Group NV (In Liq) v Insurance Commission of Western Australia [2018] WASCA 179 [3] (Mazza JA).
Nevertheless, the claim by BGNV that ICWA should pay costs in respect of such of BGNV's costs in relation to the abandoned claims as were wasted, has some merit. The question is how those costs should be determined. I am wary about burdening the taxing officer with the difficult task of identifying which of BGNV's costs were, in fact, wasted. However, BGNV's submissions suggest that it can identify those of its costs which it says were wasted by ICWA's decision not to pursue the abandoned claims. Counsel for BGNV submitted that BGNV 'prepared extensive written submissions' in relation to the abandoned claims. It seems very likely that the primary costs incurred by BGNV in respect of the abandoned claims which were wasted were the costs of the preparation of its written submissions, on those claims alone. (Even then, there may well have been some overlap in the content of the submissions BGNV intended to advance in respect of the abandoned claims, and the submissions it advanced in respect of the balance of the amendment application. However, any such overlap should be ignored, for the sake of minimising further argument about the quantum of the costs.) I will make an order that ICWA pay BGNV's costs of preparing such of its written submissions on the amendment application which concerned the amendment of the Writ to include PFRs 3, 19(c), 19(d), 21, 22, 30 and 31, together with the corresponding paragraphs of the SIFC, on a party and party basis.
The extent to which special costs orders should be made
ICWA's application for a special costs order
ICWA seeks an order that in respect of its costs of the applications, the limits under item 10(a) in the scale of costs set out in Table B (applicable scale) and the maximum hourly rates under the Legal Profession (Supreme Court) (Contentious Business) Determination 2016 (Determination) be removed, pursuant to s 280(2)(c) of the Legal Profession Act 2008 (WA) (LP Act).
Item 10(a) of the applicable scale is the item for matters argued in chambers (other than motions and originating process). The maximum allowed under the scale is 2 days' preparation and 1 day of hearing for senior counsel and junior counsel, with costs of $20,460 (or in other words, $6820 per day) and $11,880 (or $3960 per day) respectively. ICWA also seeks to lift the limits on the maximum hourly rates under the Determination, by which I have assumed it seeks to lift the maximum hourly rates for all fee earners and counsel as they applied in respect of the Applications. Those rates are set out in Table A in the Determination.
Principles in relation to special costs orders
Ordinarily, the taxation of bills of costs charged by a legal practice is regulated by costs determinations made by the Legal Costs Committee established under the LP Act.[72] However, the applicable limits under the scale of costs set out in such costs determinations are able to be raised or removed by the Court pursuant to the power in s 280(2) of the LP Act, which provides:
... if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -
(a)order the payment of costs above those fixed by the determination;
(b)fix higher limits of costs than those fixed in the determination;
(c)remove limits on costs fixed in the determination;
(d)make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.
[72] Legal Profession Act 2008 (WA) s 280(1).
The principles concerning special costs orders under s 280(2) of the LP Act are well‑established. They were set out by the Court of Appeal in Wainwright v Barrick Gold of Australia Ltd.[73] I gratefully adopt the summary of those principles which was set out in Crawley Investments Pty Ltd v Elman[74] by Edelman J, which was as follows:
[73] Wainwright v Barrick Gold of Australia Ltd [2014] WASCA 15 (S) [7] - [9] (the Court).
[74] Crawley Investments Pty Ltd v Elman [2014] WASC 233 (S) [5].
(i)The court must form an opinion which has two components. First, the court must determine that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate. Second, the court must conclude that the inadequacy arises because of the 'unusual difficulty, complexity or importance of the matter'.
(ii)Having heard the matter and being familiar with the way in which the case was conducted and the issues which were litigated, the court is in a position to form the opinions required under the section as matters of impression rather than 'detailed evaluation', 'precision', 'science' or 'mathematics'.
(iii)As to the first question (inadequacy) the court must form the view that the maximum amount allowable under the relevant scale item is inadequate in the sense that there is a fairly arguable case that the bill to be presented to the taxing officer may properly tax at an amount which is greater than the limit which would be imposed by the relevant costs determination. Until that threshold is crossed, the power will not ordinarily be exercised.
(iv)A conclusion that it is fairly arguable that the taxing officer might properly allow costs at an amount greater than the amount allowable under the Scale does not always require evidence of the costs actually incurred.[75]
(v)As to the second question (the cause of the inadequacy being unusual difficulty, complexity or importance), the word 'unusual' qualifies only the 'difficulty' of the matter and not its complexity or importance. The word 'unusual' in this context means unusual having regard to what one might describe as the usual run of civil cases determined in the Supreme and District Courts. That essentially involves the making of a value judgment by the court, having regard to the court's experience of the particular case when compared with the usual run of cases. And the word 'importance' in s 280(2) encompasses importance to the parties; it does not require broader importance to the public or a sector of the public.[76]
(vi)Although replacing the amount of the Scale item with a different ceiling may be appropriate where sufficient information exists to make that assessment, it is not uncommon for an order to be made removing the limit for the Scale item without replacing that limit with a different ceiling.[77]
(vii)One of the principles that should guide a court in addressing an issue under s 280(2) is that the court should not usurp the role of the taxing officer.[78]
Whether the special costs orders sought should be made
Item 10(a)
[75] Frigger v Lean [2012] WASCA 66 [81] (Allanson J, Newnes & Murphy JJA agreeing).
[76] Red Hill Iron Pty Ltd v API Management Pty Ltd [2012] WASC 323 (S) [7] (Beech J).
[77] EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S) [8] - [9], [13] (Martin CJ); Red Hill Iron Pty Ltd v API Management Pty Ltd [2012] WASC 323 (S) [5] (Beech J).
[78] Red Hill Iron Pty Ltd v API Management Pty Ltd [2012] WASC 323 (S) [6] (Beech J).
In so far as ICWA seeks an order that its costs be taxed without regard to the limits imposed by item 10(a) of the applicable scale, it says that it is fairly arguable that its bill of costs would be taxed at a higher amount than the maximum allowed under that item of the scale, in view of 'the volume of material which required reading, assimilation and preparation … by [ICWA] and its counsel, and the materials required to respond to written submissions'.[79]
[79] ICWA submissions [24].
Although ICWA filed an affidavit in support of the Costs Application, that affidavit did not include a draft bill of costs in respect of either of the Applications, nor did it contain any information about the fees which ICWA may be paying to its solicitors and counsel. While it will ordinarily be the case that an applicant for a special costs order will provide the Court with a draft bill of costs, the failure to do so is not fatal to an application for a special costs order.[80] That is because the determination that the bill of costs will tax at an amount greater than the maximum under the scale is not a conclusion reached as a matter of mathematical precision, but rather will be determined as a matter of impression.[81]
[80] Atwell v Roberts [2013] WASCA 37 (S).
[81] Mentha as Receiver and Manager of Westgem Investments Pty Ltd (In Liq) v Hughes as liquidator of Westgem Investments Pty Ltd (In Liq) [2014] WASC 478 (S) [5] (Martin CJ).
In so far as the application for a special costs order in respect of item 10(a) of the applicable scale is concerned, I am satisfied that it is fairly arguable that the bill which ICWA would present to the taxing officer may properly tax at an amount greater than the limit in item 10(a). I have reached that view as a matter of impression, having regard to the total time likely to have been required in the preparation of each of the Applications. The pleadings, constituted by the Writ and the SIFC, were lengthy and complex. A number of arguments were advanced in each of the challenges to the PFRs and the corresponding paragraphs in the SIFC which were the subject of both Applications. In order to deal with those arguments, counsel inevitably would have to have gained an understanding of the complicated factual background to the action. Furthermore, while the same junior counsel appeared in respect of each application, ICWA briefed different senior counsel for each of the Applications. Very lengthy written submissions were filed. Although each Application was heard in under a day, that hearing time does not adequately reflect the volume of preparatory work which would have been required in order for counsel to adequately deal with the Applications.
I note that counsel for BGNV accepts that it would be appropriate to lift the 2 days' preparation limit, and, therefore, the monetary cap for junior counsel, under item 10(a). That reflects an acceptance that the amount of preparatory work which was required would undoubtedly exceed the 2 days permitted under the scale.
However, ICWA has not established that the limit for the number of days of hearing for each Application (one day for each Application) under item 10(a) should be lifted. The hearing of each Application took less than a full day.
Counsel for BGNV did not dispute that the matter was complex and of importance to the parties, although he did not concede that the matter was unusually difficult.[82]
[82] BGNV submissions [35].
The Applications were far from the typical strike out or amendment applications argued in this Court. The action itself involves a very lengthy and complicated factual matrix, and many novel questions of statutory and contractual construction. The Applications were made more difficult and complex than usual simply by virtue of that context. However, quite apart from that, the proportion of the pleadings challenged, and the arguments advanced in support of both the strike out application, and of BGNV's objection to the amendment application, meant that those Applications were undoubtedly unusually difficult and complex. There is also no doubt that each of those Applications was of very considerable importance to ICWA. The issues raised by ICWA in this action are directed to supporting orders it seeks to ensure are made for its benefit, pursuant to s 564 of the Corporations Act 2001 (Cth) (or the Corporations Law), in related proceedings (distribution proceedings). Had the strike out application been wholly or largely successful, or had ICWA's amendment application been largely unsuccessful, that could have had a significant impact on its prospects of success in the arguments it wishes to advance in these proceedings and in the distribution proceedings, and on whether an order under s 564 will ultimately be made in its favour. Hundreds of millions of dollars are at stake. I am satisfied that the inadequacy of the maximum amount allowed under item 10(a) of the applicable scale for each of the Applications arises because of the unusual difficulty, or the complexity, or the importance of those Applications, in the context of the action as a whole.
In so far as ICWA's application in relation to item 10(a) might be understood as an application to lift the limits on the hourly and daily rates for counsel, by reference to which the maximum amounts in item 10(a) are calculated, that issue can conveniently be dealt with as part of ICWA's application to lift the limits on the fees in Table A of the Determination. I turn next to that part of ICWA's application for special costs orders.
Maximum hourly rates
In so far as ICWA seeks an order that the maximum hourly rates under Table A should be lifted, counsel for ICWA contended that that order is warranted due to the 'significance of the issues involved in this litigation, and the level of legal representation employed on these applications (particularly as to Senior Counsel and junior counsel)'.[83]
[83] ICWA reply submissions [37].
BGNV submits that the hourly rates should not be lifted because 'ICWA has not put its costs agreement before the Court … and has not adduced any evidence either of the hourly rate which it wants to apply on a taxation [and] has adduced no evidence that appropriate senior counsel could not have been obtained at the maximum daily rate implicit in the scale'.[84]
[84] BGNV submissions [41.3] - [41.4].
Other than in relation to the maximum hourly rate applicable to senior counsel, I am not persuaded that it is necessary to make an order that the maximum hourly rates applicable under Table A of the Determination should not apply in respect of the Applications.
To establish why the maximum hourly rate should be lifted, a party must show that 'it was fairly arguable that it would have been inadequate for the work to be performed by any counsel working at [the rates as limited by the applicable scale]'.[85]As the Court of Appeal has noted,[86]
[t]he fact that a party's counsel or instructing solicitor has charged at a rate higher, or even significantly higher, than the scale does not of itself justify the lifting of the scale … the scale rates [can be], in all the circumstances, reasonable, particularly in a context where … it was appropriate to remove the scale limits.
[85] Pourzand v Telstra Corporation Ltd [2012] WASC 210 (S2), [34] (Edelman J).
[86] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 (S) [22].
ICWA has briefed senior counsel and junior counsel from the interstate bar. Given the amount of money at stake in the distribution proceedings, it is safe to assume that ICWA has briefed senior counsel from among those who are considered to be the very best in the field. I do not think there is any room for doubt that senior counsel of that expertise and eminence will ordinarily charge in excess of $6820 per day. That being the case, I am satisfied, as a matter of impression, that the amount of costs allowable under item 10(a) will also be inadequate as a result of the unusual difficulty, complexity or importance of the strike out application and the amendment application, which warranted ICWA instructing senior counsel of considerable expertise in complex applications such as these.
However, absent some evidence, I am not persuaded that the same conclusion is justified in respect of junior counsel, or in respect of the legal practitioners acting for ICWA who performed legal work in connection with the Applications. There is simply no basis on which the Court could be satisfied that it is inevitable, or at least very likely, that junior counsel, and legal practitioners, with the experience and expertise sufficient to deal with unusually difficult or complex applications of this kind could not be engaged for rates less than the maximum rates in Table A, which underpin item 10(a) of the applicable scale. In short, I am not satisfied that it is fairly arguable that the amount of costs allowed under Table A as they apply in respect of the Applications would be inadequate.
An order removing the limit on item 10(a) of the applicable scale should be made, limited to lifting the limit referable to the time taken in preparation for the hearing of each of the Applications.
In addition, ICWA's costs on each of the Applications should be taxed without regard to the limit on the hourly or daily rates for senior counsel under Table A of the Determination, which underpin item 10(a) of the applicable scale.
The removal of those limits does not carry with it the necessary conclusion that the taxing officer would be persuaded to allow an amount greater than those limits, in respect of the costs of the Applications. It remains for the taxing officer to determine what is reasonable.
BGNV's application for a special costs order
BGNV also sought a special costs order in respect of its costs on the Applications, to the extent that the Court made costs orders in its favour.[87] Given the limited orders I will make for costs in favour of BGNV, the particular special costs orders sought by BGNV are not apt. In any event, no basis has been shown for special costs orders, having regard to the limited costs orders I will make in BGNV's favour.
[87] BGNV Minute of Proposed Orders [6].
The costs of the Costs Application
ICWA has been very largely successful in respect of this Costs Application. I am not persuaded that there should be a departure from the usual rule that costs follow the event.
BGNV should pay ICWA's costs of the Costs Application.
The orders which should be made
The terms of the orders which should be made to give effect to these reasons appear to be as follows:
1.The tenth defendant, Bell Group NV (BGNV) is to pay 80% of the plaintiff's (ICWA's) costs, including reserved costs, of the Ninth and Tenth Defendants' application by chamber summons dated 4 October 2016, as amended on 21 February 2017, to strike out certain prayers for relief (PFRs) in the Writ and various corresponding paragraphs of the Statement of Issues, Facts and Contentions (SIFC) filed by ICWA, as they stood at February 2017 (strike out application).
2.BGNV is to pay ICWA's costs, including reserved costs (if any) of ICWA's application by chamber summons dated 9 December 2016, as amended on 18 May 2017, and further amended on 19 January 2018, to incorporate the minutes of further amendments to those documents filed by ICWA (amendment application), other than those of ICWA's costs which were directly referrable to the proposed amendment of the Writ to include PFRs 3, 19(c), 19(d), 21, 22, 30 and 31, together with the corresponding paragraphs of the SIFC (abandoned claims).
3.Pursuant to section 280(2) of the Legal Profession Act 2008 (WA), the costs payable to ICWA pursuant to orders 1 and 2 herein are to be taxed without regard to:
(a)The limit upon the maximum hourly rates for senior counsel imposed under Table A; and
(b)The limit of 2 days' preparation imposed by item 10(a) of Table B;
of the Legal Profession (Supreme Court) (Contentious Business) Determination 2016.
4.ICWA is to pay BGNV's costs of preparing such of its written submissions in respect of the amendment application as concerned the abandoned claims, on a party and party basis.
5.BGNV is to pay ICWA's costs of its application by chamber summons dated 22 February 2018 for certain costs orders in respect of the strike out application and the amendment application.
I will give the parties the opportunity to confirm that orders in these terms accurately give effect to the reasons for decision set out above.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
LF
Associate to the Honourable Justice Pritchard21 DECEMBER 2018
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