Lawford Robinson Pty Ltd v Boston Hill Limited - [2009] WADC 122

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: LAWFORD ROBINSON PTY LTD -v- BOSTON HILL LIMITED & ANOR [2009] WADC 122

CORAM: O'NEAL DCJ

HEARD: 27 JULY 2009

DELIVERED : 21 AUGUST 2009

FILE NO/S: CIV 2835 of 2004

BETWEEN: LAWFORD ROBINSON PTY LTD
Plaintiff
AND
BOSTON HILL LIMITED
First Defendant
ANTHONY WILLIAM ROBINSON
Second Defendant

Catchwords:

Costs – Application by successful first defendant against second defendant

Legislation:

District Court of Western Australia Act 1969
Rules of the Supreme Court 1971,O 66 r 1

Result:

Costs of action ordered to be paid by second defendant to first defendant

Representation:

Counsel:

Plaintiff:     Mr B P Wheatley
First Defendant              :     Mr A Hershowitz
Second Defendant         :     Mr B P Wheatley

Solicitors:

Plaintiff:     Mossensons
First Defendant              :     Kott Gunning
Second Defendant         :     Mossensons

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

Nil

O'NEAL DCJ: This is an application for costs by the first defendant who was the successful party at trial. Its application is that its costs be paid by the second defendant, Anthony William Robinson.
On 4 July 2008 the plaintiff applied by chamber summons to, among other things, add the second defendant as a party to this action. The plaintiff sought to add Mr Robinson not as second plaintiff but as the second defendant. Mr Robinson filed an affidavit in support, sworn 10 July 2008. In that affidavit, like many other affidavits filed in these proceedings, Mr Robinson deposed that he was a director of the plaintiff until the end of 2000 and that he was authorised to swear the affidavit on behalf of the plaintiff. As he said with respect to the facts underlying this action, at par 4 of his affidavit:
"In my mind, I was one and the same as the plaintiff, which received payments for work performed by me."
The plaintiff's case at trial was that Mr Robinson had made an agreement with the defendant that certain payments would be made by the defendant to the plaintiff for work performed by Mr Robinson. In his affidavit at par 19, Mr Robinson said:
"I do not wish to be joined as a plaintiff to the action but if I am joined as a defendant, I will abide by the decision of the court in relation to the claim by the plaintiff against the defendant."
Of course, pursuant to O 18 r 6 no party can be joined to an action as a plaintiff without his consent. Given Mr Robinson's position as one of the parties to the contract that was the subject matter of the dispute it was obviously in the interests of justice that he be joined in the action so as to be bound by the outcome.
Mr Robinson's reluctance to be joined as a party plaintiff however seems rather odd. As the Court record of this action shows, quite apart from Mr Robinson's role as one of the makers of the contract in issue, he appears to have been the driving force behind the litigation conducted by the plaintiff from the commencement of the action. Despite the fact that he ceased to be a director of the plaintiff in 2000, no doubt because of his bankruptcy, it is apparent that he provided the instructions necessary for the ongoing conduct of this action. As the evidence at trial disclosed, he is a beneficiary of the trust of which the plaintiff is the trustee. And yet notwithstanding all of those factors and his obvious enthusiasm for seeing the contract alleged in the statement of claim enforced against the first defendant, he was not prepared to join the action as a plaintiff.
His reason for taking that position was based, I conclude, on his understanding of the effect of O 66 r 1(4). Rule 1(4) provides:
"Where a plaintiff obtains a judgment or order against a defendant who has been joined in order that all parties interested in the lis shall be bound by the judgment or order no order for costs shall be made against such defendant if he is not in default, or if he does not contest the plaintiff's claim and has not made any claim or asserted any right in the lis, but in such case the court may grant that defendant such sum for costs as will compensate him for expenses necessarily incurred by him and may in doing so exercise the powers here and after conferred on it in order to order costs out of any property or fund with or without a right of recourse against any other party to the action or matter."
I suspect Mr Robinson's willingness to be joined as a defendant but not as a plaintiff arose out of the view that O 66 r 1(4) provided some sort of immunity against an order for costs in the event that the plaintiff was unsuccessful. That argument was advanced in the course of the initial submissions received by me in dealing with this application.
In the absence of any substantial answer to that proposition on behalf of the second defendant, I too was initially concerned that the effect of O 66 r 1 was that an order for costs against the second defendant could not be made where he had been joined only to ensure that all parties interested in the dispute were bound by the judgment or order. For that reason I sought further submissions with respect to the ability of a Judge of this Court to make cost orders against persons who have taken part in the conduct of litigation but were not named parties in the action. I have received the parties helpful submissions on that point.
However, a close reading of O 66 r 1(4) makes clear that it does not, in my view, bar the making of any order for costs against a defendant joined for the purpose described in O 66 r 1(4). Order 66 r 1(4) only effectively bars an order in favour of a plaintiff who obtains an order against that defendant.
Section 64 of the District Court of Western Australia Act 1969 provides as follows:
"(1)Except as hereinafter provided in this Act, the costs of any action or proceeding shall be in accordance with any costs determination … and shall be paid by or apportioned between the parties in such manner as the District Court Judge directs and in default of such a direction shall abide the event.
…
(3)Subject to this Act, a District Court Judge has the same power in relation to the payment of costs by any party as a Judge of the Supreme Court has."
Mr Robinson is a party in this proceeding. While it is of course the case that it is the plaintiff's claim that has been dismissed and the plaintiff that has failed, Mr Robinson, as a party in this action is nonetheless amenable to an order for costs, if it otherwise be appropriate. I have previously described in oral reasons why in my view it is appropriate, if this Court has the power, that an order for costs be made against Mr Robinson, despite the fact that his formal role in the litigation was that of a defendant. I do not propose to repeat those reasons at length but I will summarise them here:
1.Despite the fact that he ceased to be its director in 2000, all of the material before me demonstrates that Mr Robinson not only played an active part in the conduct of the litigation on behalf of the plaintiff, he effectively managed it.
2.As the beneficiary of the trust, he stood to benefit from a successful outcome for the plaintiff. I have no doubt that if the plaintiff had been successful, Mr Robinson would have determined how any proceeds of the litigation were ultimately distributed.
3.The manner in which Mr Robinson conducted the affairs of the plaintiff was a substantial underlying cause of the action. I have no doubt that Mr Robinson is in fact the alter ego of the plaintiff and just as he sought to use the plaintiff to substantially avoid the taxation of income derived by his personal efforts he has also used the plaintiff to seek to avoid a personal cost order.
It may be fortuitous in a sense that he was joined as a party in that it provides a clear statutory basis for the making of a costs order against him. There is in my view no need to distinguish between costs incurred before he was joined as opposed to after. The fact is he has been a named party since July 2008, and in my view was a party in all but name prior to that in the sense that he was and always has been the alter ego of the plaintiff and the substantial driving force behind this action since its commencement. The evidence has demonstrated that he uses the corporate veil of the plaintiff at his convenience and asserts claims as either his own or the plaintiff's as it suits him. In these circumstances it would be artificial to use his formal joinder as a party as a dividing line for the award of costs.
In all of the circumstances I am satisfied that it is appropriate that there be an order that the second defendant pay the first defendant's costs of the action.