Lumsden v Hutton - [2020] WASC 172

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   LUMSDEN -v- HUTTON [2020] WASC 172
CORAM:   ARCHER J
HEARD:   14 MAY 2020
DELIVERED          :   14 MAY 2020
FILE NO/S:   CIV 1681 of 2018
BETWEEN:   CAMERON ERIC LUMSDEN
First Plaintiff
ROBERT NORTH
Second Plaintiff
AND
DAVID JOHN HUTTON
First Defendant
JENNIFER KAYE HUTTON
Second Defendant
DAVID JOHN HUTTON
JENNIFER KAYE HUTTON
Plaintiff by counterclaim
CAMERON ERIC LUMSDEN
ROBERT NORTH
Defendant by counterclaim

Catchwords:

Strike out - Costs - Springing order - Refusal to confer - Indemnity costs

Legislation:

Nil

Result:

Defendants ordered to re-plead and pay indemnity costs
Defendants' application for springing orders dismissed

Category: B

Representation:

Counsel:

First Plaintiff	:	H H Jackson SC
Second Plaintiff	:	H H Jackson SC
First Defendant	:	K J Jones
Second Defendant	:	K J Jones
Plaintiff by counterclaim	:	K J Jones
Defendant by counterclaim	:	H H Jackson SC

Solicitors:

First Plaintiff	:	Hager Grubb & Partners Lawyers
Second Plaintiff	:	Hager Grubb & Partners Lawyers
First Defendant	:	Bailiwick Legal
Second Defendant	:	Bailiwick Legal
Plaintiff by counterclaim	:	Bailiwick Legal
Defendant by counterclaim	:	Hager Grubb & Partners Lawyers

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

Durolek v Pier (WA) Pty Ltd [No 2] [2019] WASCA 138
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S)
Frigger v Professional Services of Australia Pty Ltd [No No 2] [2016] WASCA 68

ARCHER J:

(This judgment was delivered extemporaneously and has been edited from the transcript and references added.)

Background

This matter was admitted to my CMC list in September 2019. Since that time, the parties have devoted a great deal of attention to the defendants' pleading.
It is unnecessary to set out what has occurred in detail. It is enough for present purposes to observe that there has been fault on both sides, at least in the beginning. Some illustrations can be found in the transcript of 16 October 2019.[1]
[1] In relation to the plaintiffs, see ts 29.6 ‑ 30.5, 30.5 ‑ 30.10, 33.9 ‑ 34.4, 35.3 ‑ 36.7, 40.3 ‑ 41.2. In relation to the defendants, see ts 32.5 ‑ 33.9, 37.3 ‑ 39.9.
The low point for the plaintiffs was their complaint about the defendants' pleaded reliance on s 49A of the Environmental Protection Act 1986 (WA) on the basis that there was no such section. There is, and has been since 2010.
The low point for the defendants was seeking an order for default judgment without having conferred with the plaintiffs about it, and then attending court without being ready to argue it.
I also made the point during the hearing that it appeared to me that there had not been proper conferral more generally. Counsel for the defendants said she completely agreed.[2]
[2] ts 39.
During the hearing, I raised with the parties various issues relating to the pleading. I made orders requiring, among other things, the lawyers to confer face‑to‑face as to any remaining objections to the defendants' pleading. I was advised that each party had engaged counsel. I encouraged the parties to instruct their counsel to conduct the conferral.
The defendants filed an amended pleading on 18 November 2019.

December Orders

The plaintiffs were not content with the amended pleading, and the matter came back before me for directions on 18 December 2019. By this time, the plaintiffs had clearly fully briefed their counsel, Mr Jackson SC, who appeared.
The plaintiffs wanted the defendants to provide particulars, among other things, of the acts and omissions that were relied on by the defendants, including where and how they occurred.
The defendants asserted that their existing pleading was sufficient, but said that they were quite content to provide those particulars.[3]
[3] ts 60 ‑ 61. See also the Defendants' and Plaintiffs' by Counterclaim Minute of Proposed Orders filed 17 December 2019.
Accordingly, I made an order, by consent, that the defendants file a further re‑amended defence and counterclaim which 'particularises the relevant provisions of the lease which are alleged to have been breached, the geographic location/s, and any other relevant details as to when, where and how the breaches occurred'. I will refer to this order as the 'First December Order'.
I also made an order requiring the re‑amended defence and counterclaim to identify the alleged breaches relied upon to found the defendants' claim to possession. I will refer to this order as the 'Second December Order'.
I will refer to these orders collectively as the 'December Orders'.

The February Defence

The defendants filed an amended pleading on 9 February 2020 (February Defence).
The plaintiffs were still not content with the amended pleading, and wrote to the defendants on 25 February 2020 setting out their complaints in detail (February Letter).
At the end of the February Letter, the plaintiffs' solicitor wrote:
I am instructed to apply to strike out the Defence if the matters raised in this letter cannot sensibly be resolved. Order 20 rule 19(3) of the RSC requires that application, should it be necessary, to be filed by Tuesday, 3 March 2020.
To allow conferral to properly take place, I seek your written commitment by 4pm 27 February 2020 that your clients consent to an extension of the time to file any strike out application to a date that is 7 days after we have your substantive response to this letter.
The plaintiffs' solicitor telephoned the defendants' solicitors at midday on Friday 28 February 2020 and left a telephone message. The call was not returned.
At 3.31 pm, the plaintiffs' solicitor emailed the defendants' solicitors noting that if time could not be extended by agreement, to allow conferral, the plaintiffs would need to file the strike out application on Tuesday. Monday was a public holiday.
At 8.25 am on Tuesday 3 March 2020, the defendants' solicitors replied (Reply). The Reply did not refer to the plaintiffs' request for an extension of time to allow conferral. It did not engage with the merits of the February Letter. It did not seek to confer. It simply said that the defendants considered they had complied with the court's orders and would oppose any strike out application. This was an unacceptable response.
Accordingly, the plaintiffs filed an application on 3 March 2020 seeking that the December Orders be complied with or that the schedule to the February Defence be struck out (March application).
In my view, the failure of the defendants to confer with the plaintiffs and indeed to even respond until it was too late to meaningfully confer, warrants an order that the defendants pay the plaintiffs' costs of the March application, and on an indemnity basis. Conferral is such a fundamental and important obligation to ensure the efficient administration of justice. In the context of the defendants' previous failure to confer, which led to the default judgment application,[4] the failure of the defendants to confer again is egregious. In my view, it is appropriate to mark my disapproval of that conduct with an order for indemnity costs.[5]
[4] See ts 37-39.
[5] See Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S) and Frigger v Professional Services of Australia Pty Ltd [No 2] [2016] WASCA 68.
On 17 March 2020, the defendants wrote to the plaintiffs denying any deficiency in the February Defence, but offering to consent to orders that they file a substituted pleading, for reasons of commerciality. The parties advised the court that they agreed to an order that the defendants file and serve a substituted defence and counterclaim.
In my view, the only reasonable inference to be drawn from the defendants' letter is that the defendants were willing to provide the particulars sought by the plaintiffs, without admitting that they would have been required to. The defendants, however, submitted that they were not agreeing to provide the particulars, and that it was 'simply a matter of cleaning the pleadings up so they became more apparent'.[6] In my view, it does not make sense to interpret the defendants' letter in that way. If that had been the defendants' position, that would not have satisfied the plaintiffs. It would not have advanced the resolution of the issues in any way. It simply would have delayed the defendants' obligation to engage with the plaintiffs' complaints and delayed the resolution of the issues, if necessary, by the court.

The costs issue

[6] ts 60.

Although the parties agreed to an order that the defendants file and serve a substituted defence and counterclaim, the parties disagreed as to the appropriate costs order.
The plaintiffs sought an order that costs be reserved. The defendants said the costs should be in the cause. I raised with the parties the proportionality of having a hearing to fight about this issue. I indicated I would either order that costs be in the cause or there would be a hearing as to what costs order should be made (as distinct from an order that costs be reserved). The plaintiffs chose the latter, and the matter was listed for hearing on 14 May 2020.
Given my indication that costs would not be reserved, the plaintiffs sought costs of the application filed 3 March 2020 and the February Defence fixed in the sum of $5,000. That sum was said to represent a 'contribution' to the plaintiffs' solicitor‑client costs of $7,500. That sum included $6,600 for the costs of reviewing Schedule 1 of the February Defence and preparing the February Letter. I was told that these costs were primarily the costs of counsel.[7]
[7] Affidavit of Luke Hager sworn 27 March 2020 [10] – [11].
The defendants filed brief submissions. The defendants submitted that there was nothing before the court to warrant an order other than that the costs of the application be in the cause because of the following:
(a)The defendants did not concede the application;
(b)The court had not had to hear and/or determine the application; and
(c)No grounds for a claim to costs were identified by the plaintiffs in the affidavit, express or implied.

The April Defence

On 7 April 2020, before the hearing date, the defendants filed their substituted pleading (April Defence).

The failure to confer and the springing order threat

The memorandum of conferral filed by the plaintiffs set out the events that followed. An affidavit filed by Mr Brunner on behalf of the defendants annexed a lot of the emails and correspondence that were referred to in the memorandum of conferral. There was no suggestion that there were any inaccuracies in the memorandum of conferral. The memo said:
1.1 At 8.58am on Friday 24 April 2020 Bailiwick Legal (the defendants' lawyers) emailed Luke Hager of the Plaintiff's lawyers, noting that the Plaintiff's Reply and Defence to Counterclaim was due and had not been served and foreshadowed an application for 'springing orders' if a Reply and Defence to Counterclaim was not served by the end of that day.
1.2 Following conferral with Senior Counsel, Mr Hager replied by email at 9.45am on the same day advising that he considered that the 'consolidated defence remains inadequate' for reasons that he would describe in a letter shortly to be provided.
1.3 By letter dated 28 April 2020 (27 April 2020 being a public holiday), Mr Hager wrote to [Mr] Brunner of the defendants' lawyers [and]:
1.3.1 set out the reasons for the Plaintiffs' contention that the Substituted Consolidated Defence And Counterclaim filed 7 April 2020 (SCDC) did not comply with the Orders;
1.3.2 suggested conferral take place between counsel and sought confirmation that the defendant's lawyers would instruct counsel to do so.
I interpose here to say that I will refer to this letter as the April Letter. I would also add that the April Letter said it was not possible for a defence to the counterclaim to be filed as the April Defence did not comply with the December Orders. It also said that the purpose of the April Letter was to pursue conferral with a view to avoiding unnecessary interlocutory skirmishes.
The memorandum of conferral continued:
1.4 On 6 May 2020, Mr Hager telephoned the defendants' lawyers (who had not responded to the [April Letter]) and was told that Mr Brunner was in a meeting. Mr Hager left a telephone message for Mr Brunner to discuss the [April Letter].
1.5 On 7 May 2020 at 9:32am, Mr Hager sent an email to Mr Brunner (who had not returned the previous telephone call) to the effect that: Mr Hager had telephoned the previous day regarding the [April Letter] and sought Mr Brunner's proposal regarding conferral.
I interpose here to add that the email also said 'I would be grateful to hear what you propose as absent meaningful conferral then I am instructed to seek the orders in the attached minute'. Those were orders striking out the schedules to the April Defence and costs.
The memorandum of conferral continued:
1.6 On the morning of 8 May 2020 Mr Jackson SC (counsel for the Plaintiffs) spoke with Mr Healy (counsel for the Defendants) and, having briefly outlined the situation, asked Mr Healy to seek instructions to allow conferral between counsel to occur.
1.7 On Friday 8 May 2020 at 4.21pm, [another employee, not counsel who appeared] of Bailiwick Legal sent Mr Hager an email to the effect that, if the Plaintiffs' reply and defence to counterclaim was not filed and served by 13 May 2020 then the Defendants would apply for a springing order at the hearing on 14 May 2020.
I have reached the view that the conduct of the defendants' solicitors fails to meet even the most minimal standards for the proper conduct of litigation.
First, the defendants' solicitors continue to refuse to confer with the plaintiffs. The April Letter was a 10‑page letter, which carefully, clearly and sensibly set out the plaintiffs' concerns. Mr Brunner did not return Mr Hager's telephone call or respond to Mr Hager's email. The defendants' solicitors did not give Mr Jackson SC the courtesy of a response to his proposal to Mr Healy. The defendants' solicitors steadfastly refused to engage with the merits of the plaintiffs' concerns.
I will not tolerate this. If there is any failure to confer in the future, I will consider whether it should be reported to the Legal Practitioners Complaints Committee.
Second, there is no proper basis upon which an application for a springing order could be sought. Either this was a deliberately misleading threat or the defendants' solicitors had not taken the time to become familiar with the circumstances in which such orders may be made. Having heard from counsel for the defendants today, I would not draw the inference that it was a deliberately misleading threat. Rather, I think it more likely to have simply been misguided.
In Durolek v Pier (WA) Pty Ltd (No 2),[8] the Court of Appeal discussed the principles that apply to the making of springing orders. In particular:[9]
Where the basis for the springing order is non‑compliance with an order of the court consideration should be given to whether the delay has been inordinate. A springing order should ordinarily only be made where a party has, by its conduct, shown a contumelious disregard to compliance with orders of the court.
A springing order should only be made where there is no other available sanction which is appropriate and sufficient to enable the court to determine the matter consistently with the goal and objects in O 1 r 4A and r 4B of the Rules of the Supreme Court 1971 (WA) - in particular the fair and just determination of the litigation. …
Springing orders should ordinarily only be made as a last resort when necessary to enable the court to fairly and justly determine the substantive matter in dispute.
[8] Durolek v Pier (WA) Pty Ltd [No 2] [2019] WASCA 138.
[9] Durolek [113].
The conduct of the plaintiffs does not warrant any sanction. So we are not even in the realm of considering whether a springing order is the only available sanction which is appropriate and sufficient.
The defendants submit that the plaintiffs failed to bring the strike out application in time, by 29 April 2020. This is true. However, before that date, the plaintiffs had sent the defendants a 10‑page letter setting out why they said that the April Defence did not comply with the December Orders. It also said that the purpose of the April Letter was to pursue conferral with a view to avoiding unnecessary interlocutory skirmishes.
I also note that the last time the plaintiffs sought an extension of time to bring the strike out application, to enable conferral, the defendants simply refused to confer.
Next, the defendants submit that the plaintiffs should have raised these problems earlier. Again, this is true. However, as I have said, it was apparent to me when I first took hold of this matter that there was fault on both sides and the matter was not being progressed well by either side. Clearly, the involvement of Mr Jackson SC has had a significant and positive impact on the manner in which the plaintiffs are proceeding. I would anticipate that, if Mr Healy, counsel for the defendants, was given full instructions, a similar improvement would be seen from the side of the defendants.
Once Mr Jackson SC became involved, the December Orders were sought and the defendants consented to the First December Order. Having done so, there is little to be gained from suggesting the plaintiffs should have asked for this clarity earlier. The fact is that they did ask for it in December and the defendants agreed to an order requiring them to provide it.
With an apparent lack of insight as to their own failure to confer, the defendants next criticise the plaintiffs for failing to confer.
The April Letter set out the plaintiffs' concerns in detail. It asks the defendants to engage in conferral as to those concerns. It recommends that the conferral be between counsel.
The defendants did not engage at all with the concerns. The defendants did not return a telephone message following up the letter. The defendants did not respond to a request that their counsel be instructed to confer. All the defendants did was say that, if the plaintiffs did not file a reply and defence to the counterclaim, the defendants would seek a springing order.
Next, the defendants submit the parties did not and have not exchanged views for the purpose of trying to resolve the matters alleged to be in issue by the plaintiffs. It is true that the defendants do not appear to have provided their views or sought to resolve the plaintiffs' issues. The plaintiffs, however, have.
The defendants further submit that the parties did not and have not orally conferred, either by telephone or by meeting face‑to‑face. This is also true. I surmise it was because the defendants' solicitors failed to return Mr Hager's telephone call, failed to respond to his email seeking a proposal for conferral, and failed to respond to Mr Jackson SC's request that the defendants' counsel be instructed to confer. I would ask seriously, but at this point rhetorically, what more could the plaintiffs have done?
Next, the defendants submit that the first time a strike out application was referred to in relation to the April Defence was in an email from Mr Hager to Mr Brunner on 7 May 2020. This is also true. But the context was that Mr Brunner had not responded to the April Letter, and had not responded to Mr Hager's call. In addition, Mr Hager's email raised a strike out in these terms: having sought Mr Brunner's proposal regarding conferral, Mr Hager wrote 'I would be grateful to hear what you propose as absent meaningful conferral then I am instructed to seek the orders in the attached minute', being orders striking out the schedules and costs. It is plain that the plaintiffs were still trying to confer before bringing such a drastic, potentially unnecessary and costly interlocutory application. They are to be congratulated for this, not condemned.

The lack of conferral was entirely one‑sided. It is entirely the fault of the defendants.

The merits of the plaintiffs' complaints

Turning to the merits of the plaintiffs' complaints, the defendants submit that 'the application is significantly similar to the plaintiffs' application dated 3 March 2020, which has already been dealt with'.
The March application was not, however, dealt with on the merits. The defendants agreed to re‑plead, without admitting any deficiencies, for reasons of commerciality. I have already referred to the inference I drew from that. Indeed, the submissions filed by the defendants on 3 April 2020 specifically pointed out that the March application had not been determined.
The defendants next submit that 'the plaintiffs are unable to submit that the pleading is so deficient that they are unable to plead to it when a reply pleading has been previously filed in the respective actions prior to the consolidation'.
I have already referred to the imperfect way in which the matter was being progressed by both sides when I first got involved. In any event, the fact that the plaintiffs previously pleaded to the allegations is not relevant to the current issue. The current issue is not whether or not the plaintiffs can plead to the defence and counterclaim. The current issue is whether the April Defence complies with the December Orders.
The defendants further submit that 'striking out Schedules 1 and 2 of the Substituted Defence and Counterclaim would effectively render the defence and counterclaim non‑compliant with the Orders'. This submission conceals an assumption that the April Defence currently complies with the December Orders. I do not think that it does comply.

February Letter

The February Letter is seven pages long. I have read it carefully. It clearly identifies the matters the plaintiffs seek to understand or have clarified. Some of those matters are matters of detail, for example paragraph 19. Others, however, are more fundamental. Paragraph 4 is an example of that.

April Letter

The April Letter is 10 pages long. I have read it carefully. Like the February Letter, it clearly identifies the matters the plaintiffs seek to understand or have clarified. Again, some of those matters are matters of detail.
For example, the defendants allege in the Fifteenth Default Notice that the paddock was bare on 11 October 2019. The defendants will eventually have to tell the plaintiffs why that is said to be a breach of the lease. However, this is likely to be based on expert evidence. In the meantime, the plaintiffs now have enough detail to permit them to understand the material factual allegation.
Another example is the Sixteenth Default Notice. It is not obvious to me why the plaintiffs say they do not know which trees were alleged to have been ringbarked. The defendants say that they have photos of the ones they say were ringbarked. I agree, however, that the defendants need to tell the plaintiffs how the ringbarking of trees would breach the clauses.
There were, however, other complaints that appeared to be more fundamental.
Counsel for the defendants advised that she was instructed not to deal with the merits of the plaintiffs' application.[10] She was accordingly unable to engage in the merits of the plaintiffs' complaints. Nevertheless, to facilitate future conferral between the parties, I identified two examples from the April Letter that appeared to me to demonstrate that the April Defence did not comply with the December Orders. These were the submissions made in the April Letter in relation to the Twelfth Default Notice and Seventeenth Default Notice.
[10] ts 70.
Having regard to those matters, I am satisfied that the April Defence does not comply with the December Orders. Given the complete lack of conferral from the defendants' side, it would be inefficient for me to attempt to identify all of the deficiencies. Rather, it is appropriate that I grant an extension of time to allow the defendants to comply with the December Orders, and that I also make orders requiring the involvement of the defendants' counsel in the amended pleading and in the ongoing conferral.

Costs

Turning to the costs of the matter, my view is that the costs of the applications themselves should be on an indemnity basis, because it is appropriate that I mark the court's disapproval of the defendants' failure to confer.
In terms of the time the plaintiffs spent in reviewing the two defences to assess their compliance with the December Orders, I would make orders in relation to those costs on a normal party/party basis. The amount proposed of $10,000 fixed is a conservative estimate of what those costs would be, and to avoid future arguments and future costs being expended in trying to agree something, I do think that it is appropriate to fix costs in that amount and make an order that the costs be paid forthwith.

Orders

The time within which the defendants must comply with the December Orders be extended to 28 May 2020.
The defendants are to instruct their counsel to prepare the proposed amended pleading.
The defendants are to instruct their counsel to personally confer with counsel for the plaintiffs as required, including before, during and after the preparation of the amended pleading.
The conferral is to be face‑to‑face or by telephone if social distancing obligations (or health issues) require the latter.
The defendants are to pay the plaintiffs' costs of the applications on an indemnity basis to be taxed if not agreed.
The defendants are to pay the plaintiffs' costs of reviewing the defences with the December Orders in mind in the sum of $10,000 to be paid forthwith.
The matter will be listed for directions in the CMC list at 9.30 am on 10 June 2020.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SW
Associate to the Honourable Justice Archer
20 MAY 2020