Lance v QAV Pty Ltd
[2013] WASC 13
•18 JANUARY 2013
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: LANCE -v- QAV PTY LTD [2013] WASC 13
CORAM: McKECHNIE J
HEARD: 17 JANUARY 2013
DELIVERED : 18 JANUARY 2013
FILE NO/S: CIV 3063 of 2012
BETWEEN: WARREN MATHESON LANCE
Plaintiff
AND
QAV PTY LTD
Respondent
Catchwords:
Costs - Indemnity costs - Whether plaintiff's continuation of action unreasonable - Offer to plaintiff to discontinue without claim for costs
Legislation:
Nil
Result:
Action dismissed
Order for indemnity costs
Category: B
Representation:
Counsel:
Plaintiff: In person
Respondent: Dr R O'Hair
Solicitors:
Plaintiff: In person
Respondent: M J B Legal, Qld
Case(s) referred to in judgment(s):
Swansdale Pty Ltd v Whitcrest [2010] WASCA 129(S)
McKECHNIE J:
How the costs issue arises
The plaintiff filed an originating summons seeking six mandatory injunctions in relation to alleged breaches of a Letting and Services Agreement between the owners of Ascot Village Strata Plan 46542 (a corporation under the Strata Titles Act 1985 (WA)) and Quest Ascot Village, now QAV Pty Ltd, dated 1 February 2008.
Although the plaintiff has an interest in a company, Netline Pty Ltd, which owns one of the units, Netline Pty Ltd is not a party to the action.
I dismissed the plaintiff's application on the grounds that he, not being a party to the contract, had no standing to sue on his own behalf or on behalf of other lot owners. I applied general principles on privity of contract.
The defendant applied for indemnity costs. I heard submissions and indicated I would reserve my decision and notify the parties in due course by way of Order. The defendant is entitled to an order for indemnity costs. This is why.
Indemnity costs - Nature and principles
The principles applicable to the making of indemnity costs are set out in Swansdale Pty Ltd v Whitcrest [2010] WASCA 129(S):
The principles applicable to the making of indemnity costs orders in litigation may be briefly summarised, as follows:
1.A superior court, in its inherent jurisdiction, may make an indemnity costs order (see also Supreme Court Act 1935 s 37, and Legal Profession Act 2008 s 280).
2.An indemnity costs order departs from the usual costs disposition order, whereby costs are awarded on a party/party basis: EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59.
3.The court's discretion as to the making of an indemnity costs order is a discretion that must be exercised judicially. In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397, 400 Woodward J said:
Courts in both the United Kingdom and Australia have long accepted that solicitor and client costs can properly be awarded in appropriate cases, where 'there is some special or unusual feature in the case to justify the court exercising its discretion in that way'. (emphasis added)
4.To obtain an indemnity costs order, it is not the case that the successful party needs to show a collateral purpose, or establish some species of fraud against the unsuccessful party. In J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 303 French J by reference to the observations of Woodward J in Fountain Selected Meats, said:
It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case.
5.Furthermore, in Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Unreported, FCA, 3 May 1991) (referred to by Ipp J in Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190, 191) French J observed:
The categories in which the discretion may be exercised are not closed.
6.Competing principles need to be balanced in assessing the making of a potential award of indemnity costs. In Quancorp Pty Ltd v MacDonald [1999] WASCA 101 [7], Wheeler J observed:
On the one hand, a party should not be discouraged, by the prospect of an unusual costs order, from persisting in an action where its success is not certain. Uncertainty is inherent in many areas of law, and the law changes with changing circumstances. It is inappropriate that a case be too readily characterised as 'hopeless' so as to justify an award of indemnity costs to the successful party. However, where a party has by its conduct unnecessarily increased the cost of litigation, it is appropriate that the party so acting should bear that increased cost. Persisting in a case which can only be characterised as 'hopeless' is an example of the type of conduct which may lead the court to a view that the party whose conduct gave rise to the costs should bear them in full.
7.An indemnity costs order may be appropriate in situations which are shown to involve some element of improper, or at least unreasonable, conduct by a party or the party's legal advisers: see Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225, 233 (Sheppard J), referred to by Pullin J in Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [9].
8.A properly crafted special costs order may obviate the need for an indemnity costs order, where components of cost scale items are allowed above the applicable scale ceiling: see Flotilla [20] - [24].
9.An indemnity costs order may not be appropriate if the claimed costs would be likely to be recovered under the standard order for party and party costs, or under a special order raising or removing a scale ceiling allowance: Flotilla [11]. In Unioil (No. 2) (193), Ipp J observed:
However, counsel for the plaintiffs was unable to identify any costs so incurred that would not be covered by an order for party and party costs. An order for indemnity costs on this ground is therefore not warranted.
10.Nonetheless, an indemnity costs order will constitute an appropriate sanction marking the disapproval of improper or unreasonable conduct: see Brookvista Pty Ltd v Meloni [2009] WASCA 180 [32], Flotilla [25]. In Flotilla Pullin J said [26]:
A solicitor should not, in my view, resort to an application for an indemnity costs order merely to secure the recovery which could be achieved by a properly formulated special costs order, unless the unsuccessful party's conduct is genuinely to be impugned by the successful party [10].
The factual circumstances
The application was filed on 21 December 2012, supported by the plaintiff's affidavit.
The affidavit deposed that the registered proprietors of Unit 19 Ascot Village are a company, Netline Pty Ltd and another person. Netline is the trustee of the Lance Family Trust. Netline is not a party to the action.
The Letting and Services Agreement annexed to the affidavit, and referred to by the plaintiff at par 7, is a contract between QAV, the Owners and the Corporation.
The undisputed evidence of the plaintiff therefore established conclusively that he had no legal interest in the Letting Agreement and as a consequence is unable to enforce it.
The service certificate indicates the registered office of the defendant was served on 7 January 2013.
On 10 January 2013, the solicitors wrote to the plaintiff pointing out:
[W]e note the proper plaintiff for these proceedings is the body corporate, The Owners of Ascot Village Strata Plan 28358. You do not have privity of contract.
After mentioning other things the letter continued:
In the above circumstances, your proceedings are liable to be struck out, as they are wholly misconceived and bound to fail.
By way of an open offer which we intend ultimately to rely upon before the learned judicial officer, we are prepared for you forthwith to discontinue the proceedings and if you do so forthwith, we will not seek any costs or seek to recover any costs notwithstanding the service of these proceedings.
If you fail to accept this offer and discontinue forthwith, you intend to seek indemnity costs from you, ...
We intend to brief counsel in short order, if you do not forthwith discontinue.
The plaintiff did not discontinue and the defendant appeared by counsel this morning.
Without objection from the bar table, the plaintiff told me that he had been receiving legal advice from his solicitor but that his solicitor had gone on leave at the end of December and was not due back until the end of January. If his solicitor had been present he would have sought legal advice and might have discontinued the action.
Counsel for the defendant from the bar table, again without objection, responded that had the plaintiff sought an adjournment to obtain legal advice his client would have looked on the request favourably.
It is difficult to reconcile the plaintiff's submission that he would have obtained legal advice with the contents of a further affidavit filed by him on 14 January 2013 which commences by referring to the letter and an email from Mr Sid Knell on behalf of the defendant apparently instructing his solicitors:
Please have the court place this letter on the file - so there is no doubt that we are seeking costs to cover attendance and preparation. I have a couple of quotes - best one around 15K.
The plaintiff's affidavit continues:
2.There are claims contained in that letter that are without any supporting evidence which, I submit are an attempt to bully and intimidate.
The plaintiff then detailed certain personal matters before continuing:
4.As a result of my health, I am not easily intimidated and have a propensity to assist others when there is a wrong to be righted - involving myself.
In submissions subsequently filed by the plaintiff in support of his application for an injunction, he addressed specifically the issue of privity of contract. In other words he joined issue on the point.
Conclusion
Allowances should be made for a litigant in person and indemnity costs orders, which are sparingly given in the normal case, should be subjected to particular scrutiny when there is a litigant in person whose arguments are not irrational.
Here, the plaintiff was put on notice as to the fundamental defect in his case that he no standing to bring the action. He was offered the opportunity to withdraw without costs and warned that a costs application would be made. He did not accept the offer but instead counter‑attacked with venom in the subsequent affidavit.
I accept that the plaintiff holds strong views about what he contends are the actions of the defendant in breach of contract but the consequence of the action he brought in his own name was dismissal. The plaintiff persisted in a way which I find to be unreasonable resulting in the defendant having to incur significant costs to appear through counsel. He was given a fair opportunity to withdraw honourably, without penalty, but instead joined issue and pressed on to inevitable loss. In all the circumstances, an indemnity costs order is appropriate.
Orders
The plaintiff's claim is dismissed. The plaintiff to pay the defendant's costs to be taxed on an indemnity basis so that all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred.
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