Manton Enterprises Pty Ltd as trustee for GPK No. 2 Trust v Lt. Market St Pty Ltd - [2021] WASC 4

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   MANTON ENTERPRISES PTY LTD as trustee for GPK NO. 2 TRUST -v- LT. MARKET ST PTY LTD [2021] WASC 4
CORAM:   ACTING MASTER STRK
HEARD:   23, 30 JULY 2020, SUPPLEMENTARY SUBMISSIONS FILED ON 12 AUGUST 2020 & 17 AUGUST 2020
DELIVERED          :   7 JANUARY 2021
PUBLISHED           :   7 JANUARY 2021
FILE NO/S:   CIV 1499 of 2020
BETWEEN:   MANTON ENTERPRISES PTY LTD as trustee for GPK NO. 2 TRUST
First Plaintiff
VIOLET INVESTMENTS PTY LTD as trustee for EK TRUST
Second Plaintiff
AND
LT. MARKET ST PTY LTD
First Defendant
GIANCARLO DANIELE
Second Defendant

Catchwords:

Practice and procedure - Application for summary judgment - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

Judgment for the plaintiffs

Category: B

Representation:

Counsel:

First Plaintiff	:	J Robertson
Second Plaintiff	:	J Robertson
First Defendant	:	Not Represented
Second Defendant	:	In Person

Solicitors:

First Plaintiff	:	Williams & Hughes
Second Plaintiff	:	Williams & Hughes
First Defendant	:	No Appearance
Second Defendant	:	In Person

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

Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552
Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184
Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332
Bankwest (a Division of Commonwealth Bank of Australia) v Mann [2015] WASC 187
Bastitstatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256
Deputy Commissioner of Taxation v Lafferty [2017] WASC 257
Eng Mee Yong v Letchumanan [1980] AC 331
Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87
Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [No 2] [2012] WASCA 27
GEL Custodians Pty Ltd v Dewar [2014] WASC 177
HSBC Bank Australia Ltd v Mavaddat [2015] WASC 153
Mavaddat v HSBC Bank Australia Ltd [No 2] [2016] WASCA 94
Morgan v Pallister [2004] WASC 188
Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109
Perpetual Trustees Victoria Ltd v Burns [2015] WASC 234
RGH Mortgage Corporation Ltd v Schafer [2014] WASC 297
Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118
Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14
Tobin v Dodd [2004] WASCA 288
Wallingford v Mutual Society (1880) 5 App Cas 685
Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598
Wright v Wright [2002] WASC 30

ACTING MASTER STRK:

By an amended chamber summons, the plaintiffs seek summary judgment against the defendants on the plaintiffs' claim.
It is appropriate that judgment be entered in favour of the plaintiffs. In these reasons, I address the following matters:
(a)the background and applicable principles;
(b)the plaintiffs' claim;
(c)whether the plaintiffs have a prima facie case for judgment against the defendants;
(d)whether there is a question which ought to be tried; and
(e)conclusion.

Background and applicable principles

This proceeding concerns the failure by the first defendant, as tenant, to pay to the plaintiffs amounts demanded and alleged to be payable under three separate lease agreements; and the failure by the second defendant, as guarantor of the first defendant's obligations under the lease agreements, to pay to the plaintiffs amounts demanded and alleged to be payable under the guarantee provisions of the lease agreements.
The proceeding was commenced by writ of summons filed on 17 April 2020. By the proceeding, the plaintiffs seek as against each of the defendants judgment for a debt due in the amount of $438,838.38 (inclusive of GST); interest pursuant to the terms of the lease agreements at the rate of 16% per annum from and including the date that each payment of rent and variable outgoings fell due; costs; and such further or other relief as the court sees fit.
A memorandum of appearance was filed on behalf of the defendants by a solicitor on 7 May 2020.
A chamber summons for summary judgment made pursuant to the Rules of the Supreme Court 1971 (WA) (RSC) O 14 r 1 was filed on behalf of the plaintiffs on 19 May 2020. The application was accompanied by a memorandum of conferral made pursuant to the RSC O 59 r 9, and an affidavit sworn by George Peter Kailis, a director of the first and second plaintiffs, in support of the application (the first Kailis affidavit). A supplementary affidavit sworn by Mr Kailis in support of the application was filed on 15 June 2020 (the second Kailis affidavit).
On 10 July 2020, an affidavit sworn by Giancarlo Daniele was filed on his own behalf and on behalf of the first defendant in opposition to the plaintiffs' application (the first Daniele affidavit). Mr Daniele is the sole director and shareholder of the first defendant.
On 16 July 2020, a third affidavit sworn by Mr Kailis (the third Kailis affidavit), was filed in response to the first Daniele affidavit and further in support of the plaintiffs' application. The plaintiffs' written outline of submissions in support of the application was filed on the same day.
On 17 July 2020, a minute of amended chamber summons for summary judgment was filed on behalf of the plaintiffs. By the amended application, the plaintiffs seek orders in the following terms.
First, that judgment be entered for the first and second plaintiffs, jointly and severally, against the defendants, for the liquidated debt in the sum of $438,838.38 together with interest of $52,091.64 at the rate of 16% per annum calculated to, and including 20 July 2020, in terms of Annexure A to the minute, plus a daily accrual of interest of $122.46 from and including 21 July 2020 until judgment. Secondly, that the defendants to pay the plaintiffs' costs of the application on a full indemnity basis.
The plaintiffs' application for summary judgment was listed for hearing at a special appointment on 20 July 2020. The substantive hearing did not proceed as the solicitors for the defendants applied to cease to act. The court was informed that the second defendant, Mr Daniele, had applied for temporary debt protection under the Bankruptcy Act 1966 (Cth), and had informed the solicitors acting for the defendants that he wished them to cease to act for both defendants. The court was also informed that neither defendant consented judgment being entered in favour of the plaintiffs.
By an order made on 20 July 2020, and by operation of the RSC O 8 r 7(1)(a) and (b), the solicitors for the defendants ceased to act in this proceeding. The hearing of the application for summary judgment was adjourned to 23 July 2020.
The first defendant, a corporation, was not represented at the hearing of the plaintiffs' application. The second defendant appeared in person and, on his own behalf, opposed the plaintiffs' application for summary judgment.
During the course of the hearing and while making submissions in opposition to the plaintiffs' application, the second defendant sought to correct his evidence and raise matters beyond the affidavit evidence before the court.
The plaintiffs' application was adjourned part heard on 23 July 2020. At the conclusion of the hearing, noting the difference between evidence and submissions, an order was made allowing the second defendant additional time to file and serve any further affidavit material and a short outline of written submissions in opposition to the application. The application was adjourned to 30 July 2020.
On 28 July 2020, a second affidavit sworn by Mr Daniele was filed in opposition to the plaintiffs' application (the second Daniele affidavit).
On 30 July 2020, further orders were made programming the filing of additional materials and the determination of the plaintiffs' application. It was ordered that the plaintiffs be given an opportunity to file and serve any responsive affidavit by 4 August 2020. Further, the parties were to file and serve further written submissions and any supplementary list of authorities by 12 August 2020 and the plaintiffs' application of summary judgment would be otherwise determined on the papers, with costs reserved.
The plaintiffs filed further written submissions in support of the application on 12 August 2020. The second defendant filed written submissions in opposition to the plaintiffs' application on 17 August 2020.

Applicable principles

The principles with respect to the court's power to order summary judgment are well established and may be summarised as follows.
An application for summary judgment pursuant to the RSC O 14 r 1 must be supported by an affidavit verifying the facts on which the claim is based and stating that there is no defence to the claim.[1] A defendant may show cause against an application for summary judgment by affidavit or otherwise to the satisfaction of the court.[2]
[1] RSC O 14 r 2(1).
[2] RSC O 14 r 4(1).
Ordinarily, a party is not to be denied the opportunity to place their case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes.[3] Accordingly, summary judgment must be granted only in the clearest of cases, where there is a high degree of certainty about the ultimate outcome of the proceeding if it went to trial.[4] Put another way, the power to order summary judgment will not be exercised unless it is clear that there is no question to be tried.[5]
[3] Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57].
[4] Mavaddat v HSBC Bank Australia Ltd [No 2] [2016] WASCA 94 [59]; Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118 [24], [53] – [55]; Bastitstatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46] Agar v Hyde [57]; see also Sutton Investments Pty Ltd v Realistic Investments Pty Ltd [2017] WASCA 14 [24] cited in Deputy Commissioner of Taxation v Lafferty [2017] WASC 257 [53].
[5] Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87, 99.
The plaintiff, in bringing the summary judgment application, bears the legal onus of establishing that there is no real question to be tried. But, once the plaintiff has satisfied the requirements of the RSC O 14, the plaintiff has a prima facie right to an order for summary judgment, and the evidentiary burden falls on the defendant to satisfy the court that there is a triable issue or an arguable defence.[6] To do so, it is necessary for the defendant, whether by affidavit or otherwise, to 'condescend upon particulars' and provide sufficient details of their defence.[7]
[6] Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109, 110; see also Bankwest (a Division of Commonwealth Bank of Australia) v Mann [2015] WASC 187 [46]; HSBC Bank Australia Ltd v Mavaddat [2015] WASC 153 [26]; GEL Custodians Pty Ltd v Dewar [2014] WASC 177 [25]; Wright v Wright [2002] WASC 30 [19]; Morgan v Pallister [2004] WASC 188 [4] cited in Deputy Commissioner of Taxation v Lafferty [54].
[7] Moscow v Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd (113), citing Wallingford v Mutual Society (1880) 5 App Cas 685, 704 cited in Deputy Commissioner of Taxation v Lafferty [54].
An application for summary judgment is to be determined on the basis that the version of facts put forward by the respondent to the application, assuming that it is not inherently incredible, would ultimately be accepted at the trial of the action.[8] The court is not bound to accept uncritically as raising a dispute of fact calling for further investigation every statement in an affidavit, however equivocal, lacking in precision or inconsistent with contemporary documents or other statements by the deponent.[9] If after argument there remains real uncertainty as to the applicant's right to judgment without further investigation of the facts, summary judgment must be refused.[10]
[8] Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598, 608; RGH Mortgage Corporation Ltd v Schafer [2014] WASC 297.
[9] Ansearch Ltd v Wavtech Pty Ltd [2006] WASC 184 [28]; Eng Mee Yong v Letchumanan [1980] AC 331, 341.
[10] Ansearch Ltd v Wavtech Pty Ltd [28]; Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VLR 332, 335.

The plaintiffs' claim

A statement of claim was indorsed on the writ filed on behalf of the plaintiffs on 17 April 2020. The plaintiffs plead that they are the registered proprietors of three premises located at Market Street, Fremantle, referred to in the statement of claim collectively as the Tenancies. In the pleading, the plaintiffs are referred to collectively as the Landlords, and the first defendant is referred to as the Tenant.
The plaintiffs plead that on 23 December 2019, the plaintiffs (as Landlord) and the first defendant (as Tenant) entered into three separate lease agreements in respect of each of the three Tenancies for a period of five years commencing on 1 May 2019 and expiring on 30 April 2024. In the pleading, the lease agreements are referred to collectively as the Leases.

The Lease terms

The plaintiffs plead that the Leases contained terms which included the following.
The Tenant must pay the rent during the term without any deduction or set-off (cl 4.1 of each of the Leases).
The rent payable by the Tenant was $100,000.00 per annum (plus GST), payable in monthly instalments in advance on the first day of each month in the amount of $8,333.33 (plus GST) (cl 1.1, cl 4.1 and sch 1(4) of each of the Leases).
The obligation of the Tenant to pay money under the Leases was an essential term of each of the Leases (cl 15.1 of each of the Leases).
In addition to any other remedy or entitlement of Landlords, including the right to end each of the Leases, each of the following applied:
(a)the Tenant must compensate the Landlords in respect of any breach of an essential term (cl 15.4(a)(i) of each of the Leases);
(b)the Landlords are entitled to recover damages from the Tenant in respect of each breach (cl 15.4(a)(ii) of each of the Leases);
(c)the Tenant agreed with the Landlords that if the Leases ended for:
(i)breach of an essential term by the Tenant and the acceptance by the Landlords of a repudiation of the Leases by the Tenant; or
(ii)following the failure by the Tenant to comply with a notice given to it to remedy any default then the Tenant must pay to the Landlords the total of:
a.the rent then payable under the Leases for the unexpired balance of the terms;
b.the rates and taxes and variable outgoings payable under the Leases for the unexpired balance of the terms; and
c.any loss, damage and expense incurred or reasonably expected to be incurred by the Landlords as a result of the ending of the Leases including all costs of reletting or attempting to relet the Tenancies,
less the rent and other money which the Landlords reasonably expect to obtain by reletting the Tenancies between the date the Leases ended and the date on which the Leases would have ended if the Leases had not been terminated by the Landlords pursuant to cl 16.3 of each of the Leases (cl 15.4(a)(iii) of each of the Leases).
If the Tenant is late in paying any amount due by it to the Landlords under any of the Leases, it must pay interest on that amount at the rate of 16% per annum calculated from the date on which it is payable until the date it is paid - and the interest accrues daily and is payable on written demand by the Landlords (cl 16.1 of each of the Leases).
If the Tenant does not pay any payment of rent or any other money as required under the Leases within seven days of the due date, whether or not any formal or legal demand for payment has been made (cl 16.3(a) of each of the Leases); or the Tenant breaches an obligation under the Leases and that breach or non-observance continues for 14 days after written notice is given to the Tenant by the Landlords requiring the Tenant to remedy the breach, then without prejudice to any other rights the Landlords may have in respect of that default or occurrence, the Landlords or any person authorised by them may immediately:
(a)terminate the Leases without notice (or if required by law, with notice) by entering the Tenancies or re-taking possession of the Tenancies in any other way to the exclusion of the Tenant; or
(b) terminate the Leases by written notice to the Tenant with or without re-entering the Tenancies (cl 16.3 of each of the Leases).
The plaintiffs plead that the Leases also provide that the second defendant guarantees payment to the Landlords, on demand, of the whole of all rent and other money which from time to time may become payable by the Tenant to the Landlords under the Leases (the Secured Money) and the performance and observance by the Tenant of all of its obligations under the Leases (the Secured Obligations); and as an independent liability, indemnifies, and agrees to keep indemnified, the Landlords against any loss, damage, action, demand, expense, claim or obligation which the Landlords have or may suffer or incur by reason of or in any way consequent on, arising out of or incidental to the non‑payment of the Secured Money or the non-performance or non‑observance of the Secured Obligations (cl 27.1 of each of the Leases).
The plaintiff pleads that on 24 March 2020, the Landlords issued default notices to the Tenant demanding payment of moneys due and owing under each of the Leases, and contends that the Tenant has failed to make payment of the arrears as demanded in the default notices by the due dates in the default notices or at all. The plaintiffs plead that the Tenant has paid no rent or variable outgoings to the Landlords since taking possession of the Tenancies, and the Landlords claim for payment of the arrears from the Tenant is a debt due under the terms of the Leases.
The plaintiffs plead that by reason of the guarantee, the second defendant is indebted to the Landlords for the total amount of the arrears owed by the Tenant under the Leases, and that despite demand, the second defendant has failed to pay the arrears to the Landlords.

Do the plaintiffs have a prima facie case for judgment against the defendants on the plaintiffs' claim?

The application is for summary judgment of a liquidated claim against the first defendant and the second defendant. By the first Kailis affidavit, the plaintiffs have verified the facts on which the plaintiffs' claim is based.[11] I accept that for the purposes of the plaintiffs' application for summary judgment, on the plaintiffs' claim against the defendants, there is prima facie evidence that, among other things:
(a)on 23 December 2019, the parties to the proceeding executed the Leases, each of which provided for a five year term commencing on 1 May 2019 (the Commencement Date);
(b)under the terms of the Leases, it was agreed that the rent payable by the Tenant under each Lease was $100,000.00 per annum (plus GST), payable in monthly instalments in advance on the first day of each month in the amount of $8,333.33 (plus GST). Further, the Leases provided that the first instalment was to be paid on the Commencement Date of 1 May 2019 (cl 1.1, cl 4.1 and sch 1(4) of each of the Leases);
(c)as at 24 March 2020, in relation to the Leases, the amount due and owing under the Leases was $438,838.38 (inclusive of GST), together with interest of $52,091.64 at a rate of 16% per annum calculated to, and including 20 July 2020, and the amount outstanding increases at a daily rate of $122.46 from and including 21 July 2020; and
(d)there is a debt due and payable by the first and the second defendants to the plaintiffs under the terms of the Leases, and that interest and costs continue to accrue.
[11] First Kailis affidavit, in particular, par 24 and par 25.
The plaintiffs have satisfied the preconditions for exercise of the power to order summary judgment on the plaintiffs' claim against the defendants, and have established a prima facie entitlement to judgment on the claim. The affidavits relied upon by the plaintiffs do verify the essential elements of the cause of action on which the application for summary judgment is based.

Once the plaintiffs have established a prima facie case, the evidentiary onus shifts to the defendants to demonstrate that there is an arguable defence or other reason for trial. To do so, it is necessary for the defendants, whether by affidavit or otherwise, to 'condescend upon particulars' and provide sufficient details of their defence.[12] They need not show a defence on the balance of probabilities, but must at least show cause why there is an arguable defence.[13] This is an evidentiary burden, the overall legal burden of persuasion remaining on the plaintiffs as the applicants.[14]

Is there a question which ought to be tried?

[12] Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd, 113.

[13] Field Camp Services Pty Ltd v Site Accommodation Pty Ltd [No 2] [2012] WASCA 27 [4].

[14] Morgan v Pallister [4].

An evidential burden was cast on the defendants to show why judgment ought not be given for the plaintiffs on the plaintiffs' claim.
As noted above, immediately prior to the hearing of the plaintiffs' application for summary judgment, the solicitors for the defendants ceased to act, while noting that neither defendant consented to judgment being entered against them. No practitioner was appointed to act on behalf of the first defendant in the proceeding, and Mr Daniele, the sole director and shareholder of the first defendant, was not at liberty to act on behalf of the first defendant.[15] Mr Daniele expressed his intention to represent himself in the proceeding and to appear on his own behalf to oppose the plaintiffs' application. Accommodations were made to allow Mr Daniele the opportunity to prepare to be heard in opposition to the application, through adjournments and the making of additional programming directions.
[15] RSC O 12 r 1(2) and O 4 r 3(2).
Mr Daniele had the benefit of legal assistance in the preparation of his first affidavit. In that affidavit, Mr Daniele raises three issues in opposition to the plaintiffs' application for summary judgment. In his second affidavit, Mr Daniele seeks to augment his evidence in relation to two of the three issues and appears to raise a further issue.
Mr Daniele was not represented at the time in which he prepared and filed his second affidavit and his outline of written submissions. Given Mr Daniele's lack of legal knowledge, some flexibility and allowance was made when considering the documents filed after 20 July 2020, in order to identify the true substance of the case which Mr Daniele sought to present.[16]
[16] Tobin v Dodd [2004] WASCA 288 [14] - [18], cited in Perpetual Trustees Victoria Ltd v Burns [2015] WASC 234 [7].
I have given careful consideration to the four issues raised by the second defendant, and I address each in turn below.

Issue 1: The Rent Discount Promise

Overview

In summary, Mr Daniele says that there was a Rent Discount Promise, on which he relied when signing the Leases as director of the first defendant and as guarantor. Mr Daniele says that it had been agreed with Mr Kailis that rent would not be payable under the Leases until the following dates:
(a)93 Market Street - 1 July 2019;
(b) 95 Market Street - 1 December 2019; and
(c)97 - 99 Market Street - 1 December 2019.[17]
[17] First Daniele affidavit par 9.
Mr Daniele describes the making of the Rent Discount Promise by Mr Kailis, and his reliance on the same, in the first Daniele affidavit. Further, Mr Daniele deposes to his belief that the first defendant, as Tenant, and he as guarantor in respect of the Leases, are not liable for unpaid rent up to the dates set out in the Rent Discount Promise. That is, the Rent Discount Promise is raised as a defence to the moneys claimed by the plaintiffs as unpaid rent under the Leases up to 1 July 2019 and 1 December 2019, respectively.

The second defendant's evidence

It is appropriate to set out in further detail the evidence of Mr Daniele in relation to the Rent Discount Promise.
In the first Daniele affidavit, Mr Daniele deposes to having had a number of discussions with Mr Kailis, the director of the first and second plaintiffs, in July and August 2018 about the potential leasing of the Premises.[18]
[18] First Daniele affidavit par 6.
Mr Daniele deposes that on 6 August 2018, Mr Kailis emailed him, advising him '… that he was offering to lease each of the Premises to [Mr Daniele] for $100,000 net rent on each of the premises.' He deposes that Mr Kailis also offered that 'to make this win/win, on top of this reduced rent I believe I need to give 50% discount Net Rent for the 1^st 12 months, so there is greater comfort in the 1^st year.' [19] A copy of the email from Mr Kailis to Mr Daniele of 6 August 2018 is annexed to the first Daniele affidavit as 'GD05', and is reproduced at sch A to these reasons.
[19] First Daniele affidavit par 7, 'GD05'.
In 'GD05', Mr Kailis notes as follows:
We still need to agree the Purchase Option $ amount and we need to agree the rent period, and I still need some rent review each year, …
Mr Daniele deposes that, in response to the 6 August 2018 email from Mr Kailis, Mr Daniele had a number of further conversations with Mr Kailis about the rent payable in the first 12 months of each of the leases for the Premises.[20]
[20] First Daniele affidavit par 8.
Mr Daniele's evidence is that as a result of these further discussions, Mr Kailis agreed that rent would not be payable until the following dates:
(a)93 Market Street - 1 July 2019;
(b)95 Market Street - 1 December 2019; and
(c)97 - 99 Market Street - 1 December 2019.
This is described by Mr Daniele in his first affidavit as the 'Rent Discount Promise'.[21]
[21] First Daniele affidavit par 8 and par 9.
Mr Daniele further deposes that on 16 August 2018, Mr Kailis emailed him confirming the Rent Discount Promise. Mr Daniele annexed to his affidavit as 'GD06' a copy of the email communication of 16 August 2018 from Mr Kailis. 'GD06' is reproduced at sch B to these reasons.
The email communication has the following subject:
FREO - 9 --- Hi GC, please can you confirm by email your agreement to the Terms and Conditions below so we can start the HOA --- cheers George --- 16.8.18.
The email communication refers to the preparation of a non‑binding heads of agreement upon receipt of Mr Daniele's confirmation that the terms and conditions set out in the email are acceptable. No responsive email communication was put into evidence.
I note that 'GD06' does not record the Rent Discount Promise in the terms that Mr Daniele says were agreed in his further discussions with Mr Kailis. By that email, a commencement date for the Leases of 1 September 2018 was expressed. Further, the rent start dates were described as follows:
(a)93 Market Street - 1 July 2019;
(b)95 Market Street - 1 December 2018 (and not 1 December 2019, as described by Mr Daniele as being a term of the Rent Discount Promise); and
(c)97 - 99 Market Street - 1 December 2019.
Mr Daniele deposes that as a result of the Rent Discount Promise, he consequently anticipated that he would only be liable for the rent in each of the Leases from the dates agreed in the Rent Discount Promise.[22] Further, Mr Daniele deposes that in reliance on the Rent Discount Promise, as sole director of the first defendant, he signed written leases for the occupation of the Premises,[23] and that although the Leases were backdated to 1 March 2019, because of the Rent Discount Promise, Mr Daniele understood that he would only be liable for rent from the dates specified in the Rent Discount Promise.[24]
[22] First Daniele affidavit par 11.
[23] First Daniele affidavit par 12.
[24] First Daniele affidavit par 13.
Mr Daniele's reference to 1 March 2019 at par 13 of his first affidavit cannot be reconciled with the terms of the Leases, which were signed on 23 December 2019 and which record a Commencement Date of 1 May 2019, and not 1 March 2019.
Mr Daniele deposes to his belief that the first defendant as Tenant under the Leases and he as guarantor in respect of the Leases are not liable for unpaid rent up to the dates set out in the Rent Discount Promise.[25]
[25] First Daniele affidavit par 29(a).
It is uncontroversial that no payments were made by the first defendant as Tenant or the second defendant as Guarantor for unpaid rent (or other outgoings) from the dates described in the Rent Discount Promise, or at all.

The plaintiffs' position

In the third Kailis affidavit, Mr Kailis addresses the alleged Rent Discount Promise and deposes that he had not reached a concluded agreement with Mr Daniele about the rent or other material terms of the Leases as at 16 August 2018.[26] Mr Kailis expressly denies that there was a Rent Discount Promise in the terms claimed by Mr Daniele or at all and says further that all of the terms of the Leases were agreed, perfected in the Leases and exchanged, with the assistance of the parties' lawyers in December 2019.[27]

Disposition

[26] Third Kailis affidavit par 7.

[27] Third Kailis affidavit par 11.

In the determination of an application for summary judgment, it has never been intended that when the facts are in dispute, actions should be disposed of summarily. The court does not dispose of the factual merits on a conflict of affidavits. If a version of the facts is put forward by the defendant which is not inherently incredible, then in the absence of any opportunity of cross‑examination it is incumbent on the court to proceed on the basis that it will ultimately be accepted at the trial of the action.[28]
[28] Lexis Nexis, Civil Procedure Western Australia, Vol 1, (loose leaf as at 25 July 2019) 'Orders 14 - 28' at [14.3.3].
While I have referred to the third Kailis affidavit, Mr Kailis' denial of the Rent Discount Promise is not determinative of the issue. I have carefully weighed in the balance the evidence of Mr Daniele in relation to the Rent Discount Promise, and the oral and written submissions made by Mr Daniele in opposition to the plaintiffs' application for summary judgment. In the end, I find that the second defendant has failed to show cause why there is an arguable defence on the basis of the alleged Rent Discount Promise. When considered as a whole, I view Mr Daniele's evidence in relation to the Rent Discount Promise as being inherently incredible. In coming to this conclusion, I have had regard to the following.
First, the evidence of Mr Daniele is inconsistent with contemporaneous documents.
Not only is Mr Daniele's evidence inconsistent with the executed Leases (which Mr Daniele submits were inaccurately documented),[29] but also with the contents of the email communication of 16 August 2018 ('GD06').
[29] Second defendant's written submissions par 3.
Mr Kailis' email communication of 16 August 2018 is characterised by Mr Daniele as being a document in which Mr Kailis confirmed to him the Rent Discount Promise.[30] 'GD06' does not however record the Rent Discount Promise in the terms that Mr Daniele says were agreed in his further discussions with Mr Kailis. In the course of making his submissions, Mr Daniele conceded that he had made an error in his evidence as to the rent start date for 95 Market Street under the Rent Discount Promise.[31] However, in his supplementary affidavit filed in opposition to the application, no attempt was made by Mr Daniele to explain the difference between the terms of the Rent Discount Promise (as alleged), and the terms of the 16 August 2018 email.
[30] First Daniele affidavit par 10.
[31] ts 18 (23 July 2020).
I have also had regard to the fact that the email communication of 16 August 2018 was framed as a request for confirmation of agreement, and not a record of agreement. In this regard, I note that subject of the email communication is as follows:
FREO - 9 --- Hi GC, please can you confirm by email your agreement to the Terms and Conditions below so we can start the HOA --- cheers George --- 16.8.18.
In the email communication of 16 August 2018, relied upon by Mr Daniele as evidence of confirmation of the Rent Discount Promise, Mr Kailis expressly contemplates the preparation and execution of other documents, first a non-binding document (a non-binding heads of agreement), and then binding documents (leases and option agreements). The additional documentation was not relied upon by Mr Daniele, nor annexed to his affidavit. In the affidavit evidence of Mr Daniele, no attempt was made to explain the proposed preparation of a non-binding heads of agreement.
Leases were subsequently prepared with the assistance of legal representatives for all parties. The Leases documented terms inconsistent with the alleged Rent Discount Promise, and all of the Leases included 'entire agreement' clauses.[32] In the affidavit evidence of Mr Daniele, no attempt was made to explain the execution of Leases prepared with the assistance of legal representatives which were inconsistent in their terms to the Rent Discount Promise. The only explanation proffered by Mr Daniele was in his written submission, in which he states that:
The Date and Amounts that were included in the final Lease were inaccurate and the total Amount of the Claim also inaccurate as it refers to dates that were not agreed to.[33]
[32] First Kailis affidavit, 'GPK3' pages 71, 146 (cl 31.5), and page 222 (cl 30.5).
[33] Second defendant's written submissions par 3.
It is uncontroversial that work was undertaken on the Premises prior to the Commencement Date under the Leases (being 1 May 2019). The evidence also suggests that a restaurant business trading as 'Soma Kitchen' commenced trading from at least one of the Tenancies on or about 23 May 2019, before the execution of the Leases.
Mr Kailis deposes to having sent monthly and variable outgoings invoices under the Leases, copies of which were annexed to his affidavit.[34] The earliest invoices for the Tenancies are dated 23 May 2019.
[34] First Kailis affidavit par 17, 'GPK9'.
In the first Kailis affidavit, Mr Kailis deposes to having made numerous requests and approaches to the Tenant for payment of the rent and variable outgoings due under the Leases. Attached to the first Kailis affidavit and marked 'GPK8' are copies of email communications from Mr Kailis sent to Mr Daniele about the arrears in rent and variable outgoings.
The first document in the bundle is an email communication dated 28 August 2019 with the subject:
SOMA --- $166,029.17 --- Hi GC, please can you attend to this? --- cheers G --- 28.8.19.
The email communication appears to have been resent by Mr Kailis to Mr Daniele on 8 September 2019 (this email is the second document in the bundle). A document titled 'OUTSTANDING DEBTORS Date Updated 27.08.19' is attached to both email communications. The document describes itemised amounts invoiced to the Tenant, which include amounts for rent for each of the Tenancies from May to August 2019.
The third document in the bundle is an email communication dated 2 October 2019 with the subject:
$221,029 outstanding --- 2.10.19.
Attached to the email communication is a document titled 'OUTSTANDING DEBTORS Date Updated 2.10.19', which describes itemised amounts invoiced to the Tenant, which include amounts for rent for each of the Tenancies from May to October 2019.
The fourth document in the bundle is an email communication dated 9 January 2019 with the subject:
GIANCARLO - $356K --- Hi GC, can you please pay to MV today $355,797.85 per attached statement --- cheers G --- 9.1.20.
Attached to the email communication is a document titled 'OUTSTANDING DEBTORS Date Updated 9.1.20', which describes itemised amounts invoiced to the Tenant, which include amounts for rent for each of the Tenancies from May 2019 to January 2020.
The fifth document in the bundle is an email communication dated 7 February 2020 with the subject:
MV $383,297 debt --- Hi GC, Eleonora hand delivered a copy of debt statement below with my request that you EFT Monday --- I cannot hold this credit any longer --- cheers G --- 7.2.20.
The defendants executed the Leases in December 2019 which did not record the alleged Rent Discount Promise, after Mr Daniele received from Mr Kailis a number of requests for payment of amounts of rent and outgoings in arrears, which were inconsistent with the terms of the alleged Rent Discount Promise. The defendants were legally represented in relation to the documentation of the Leases.
The affidavits sworn by Mr Daniele do not refer to the invoices for rent and outgoings issued by the plaintiffs from May 2019, nor to the various communications from Mr Kailis pressing for payment of moneys which were characterised by Mr Kailis at the time as being due, owing and in arrears.
To the extent that there are inconsistencies between the second defendant's account and the documentary evidence, the second defendant does not address the same.
Secondly, the evidence of Mr Daniele concerning his conversations with Mr Kailis upon which Mr Daniele seeks to defend the application for summary judgment is at a very high level of generality and lacks precision.
Mr Daniele deposes that, in response to the 6 August 2018 email from Mr Kailis, he had a number of further conversations with Mr Kailis about the rent payable in the first 12 months of the Leases. No particulars of the 'further discussions' with Mr Kailis are provided. The evidence of Mr Daniele, prepared when Mr Daniele was legally represented, is not precise.
Thirdly, I have had regard to the fact that the Tenant has paid no rent nor any outgoings under the Leases, from the dates rent and outgoings would have been payable by the Tenant to the Landlords in accordance with the Rent Discount Promise, or otherwise. The Tenant did not act in a manner consistent with it being bound to the agreement described as the Rent Discount Promise. No explanation for the Tenant's failure to pay is proffered in the evidence filed in opposition to the application.
As noted above, the court is not bound to accept uncritically as raising a dispute of fact calling for further investigation every statement in an affidavit, however equivocal, lacking in precision or inconsistent with contemporary documents or other statements by the deponent.[35] The inconsistencies between Mr Daniele's account and the documentary evidence are not addressed by Mr Daniele.
[35] Ansearch Ltd v Wavtech Pty Ltd [28]; Eng Mee Yong v Letchumanan, 341.
The evidence and submission of Mr Daniele that it was his understanding that he would only be liable for rent from the dates specified in the Rent Discount Promise is inherently incredible in all of the circumstances, particularly where the parties were represented in documenting the Leases by solicitors and Mr Kailis was writing to Mr Daniele in relation to arrears in rent and outgoings in unequivocal terms over several months prior to the execution of the Leases.

Issue 2: The Make Good Promise

In the first Daniele affidavit, Mr Daniele deposes to his belief that Soma Kitchen Pty Ltd and Daniele Nominees Pty Ltd ATF the N & E Daniele Family Trust are entitled to significant claims against the plaintiffs for the plaintiffs' failure to fulfil what is described by the second defendant as the plaintiffs' Make Good Promise.[36]
[36] First Daniele affidavit par 29(b).
For the reasons set out below, I find that the alleged Make Good Promise does not ground an issue or question in dispute which ought to be tried in this proceeding, nor any proper reason for there to be a trial. The facts deposed to by Mr Daniele are insufficient to ground an arguable defence by either defendant to the plaintiffs' claim, or an arguable counterclaim by either defendant capable of being a legal or equitable set off.

Disposition

In his first affidavit, Mr Daniele deposes that:
(a)he is the sole director and shareholder of Soma Kitchen Pty Ltd and Daniele Nominees Pty Ltd, and that Daniele Nominees Pty Ltd is the trustee for the N & E Daniele Family Trust;[37]
(b)he was provided with draft correspondence by Mr Kailis that Mr Kailis intended to send to the prior tenants, which correspondence set out the work that the prior tenants had to undertake to make good the Premises following their occupation;[38]
(c)he was provided with email correspondence as between Mr Kailis and the prior tenants, marked up by the prior tenants 'with work that they were undertaking to make good the Premises',[39] and annexes to his affidavit at 'GD08' a bundle of email communications he described as the 'Make Good Correspondence';
(d)between about October 2018 and May 2019, as director of Soma Kitchen Pty Ltd and Daniele Nominees Pty Ltd, Mr Daniele moved some plant and equipment into the Premises and started undertaking a fitout so that a restaurant business could operate from the Premises. The plant and equipment moved into the Premises was owned by Soma Kitchen Pty Ltd and the fit out work was paid for by Daniele Nominees Pty Ltd as trustee for the N & E Daniele Family Trust;[40]
(e)soon after commencing the fitout work on the Premises, both Soma Kitchen Pty Ltd and Daniele Nominees Pty Ltd as trustee for the N & E Daniele Family Trust had to undertake the 'Make Good Works' described at par 18 of the first Daniele affidavit due to the plaintiffs' failure to ensure that the Premises were adequately made good;
(f)when Mr Kailis provided him with the Make Good Correspondence, Mr Daniele believed that Mr Kailis was representing to him that all of the Make Good Works had or would be undertaken by the prior tenants of the Premises;[41] and
(g)the cost of the Make Good Works was $235,451, and Mr Daniele attaches to his affidavit photos taken between January and February 2019 showing the extent of some of the Make Good Works, and a bundle of financial statements showing some of the payments made in relation to the Make Good Works.[42]
[37] First Daniele affidavit par 3 and par 4.
[38] First Daniele affidavit par 14, 'GD07'.
[39] Frist Daniele affidavit par 15 and par 16, 'GD08'.
[40] First Daniele affidavit par 17.
[41] First Daniele affidavit par 19.
[42] First Daniele affidavit par 20 and 21, 'GD09' and 'GD10'.

The nature and extent of the involvement of Soma Kitchen Pty Ltd is not clearly explained and cannot be discerned with any certainty from the evidence.
At par 18 of the third Kailis affidavit, Mr Kailis states that 'Soma is a company controlled by Mr Daniele and it was at one time in negotiations to lease the Premises before Mr Daniele elected to use the First Defendant as the lessee of the Premises.'
Documents annexed to Mr Daniele’s second affidavit reveal that in March 2019, Soma Kitchen was registered as a business name by Soma Kitchen Pty Ltd, to operate from the premises at 99 Market Street, Fremantle.[43]
[43] Second Daniele affidavit 'GD20'.
Further, Mr Daniele deposes at par 28 of his second affidavit that:
At all material times I believed that Mr Kailis was aware of the relevant legal entities including Lt. Market St Pty Ltd and Soma Kitchen Pty Ltd, and the roles these entities had in respect of the leases and the restaurant business.
It appears that Soma Kitchen Pty Ltd conducted a restaurant business from at least part of the Premises, and traded as Soma Kitchen. No evidence of an agreement to sublease or otherwise as between the first defendant and Soma Kitchen Pty Ltd was put before the court.
In considering all of the materials filed by and on behalf of Mr Daniele together with his oral submissions, it appears that Mr Daniele does not draw a strict distinction between the various entities he controls as director, and the costs those entities have incurred. For the purposes of showing cause why there is an arguable defence to the plaintiffs' claim or reason for trial, Mr Daniele raises claims of entities controlled by him, on the apparent assumption that moneys expended or losses incurred by one entity might ground the counterclaim or a right of set-off of another.
Mr Daniele does not explain in either of his affidavits the roles the various entities assumed. He does not explain the basis for the involvement of Daniele Nominees Pty Ltd as trustee for the N & E Daniele Family Trust in the provision of equipment to the premises or in the undertaking of the alleged Make Good Work, nor does he provide any explanation as to the relationship between the first defendant, as Tenant under the Leases, and that entity.
Neither Soma Kitchen Pty Ltd nor Daniele Nominees Pty Ltd are parties to the Leases, nor are they parties to this proceeding. There is no discernible basis for Mr Daniele to contend that the costs incurred by these third parties gives rise to an arguable counterclaim and set-off actionable by the first defendant as Tenant or the second defendant as guarantor under the Leases. The evidence that Mr Kailis was aware of these additional entities does not take the matter further.
I note that in the second Daniele affidavit, Mr Daniele also raises 'delay in the renovation work' as an issue.[44] He complains that there was delay experienced in taking possession of the Premises, by reason in the delay in the Make Good Work being completed, and as a consequence it was not possible for fit out work on the premises to commence until January 2019. Mr Daniele states that it was the first defendant's intention to have the Premises ready by December 2018, and that they were under pressure to open.[45]
[44] Second Daniele affidavit par 3 - 7.
[45] Second Daniele affidavit par 7.
The affidavit evidence filed in opposition to the plaintiffs' application concerning the delay experienced discloses no arguable defence to the plaintiffs' claim, or arguable counterclaim capable of being a legal or equitable set off.

Issue 3: Liquor Licence Promise

In his first affidavit, Mr Daniele deposes to his belief that the first defendant is entitled to a significant counterclaim due to the plaintiffs' failure to fulfil what is described by Mr Daniele as the plaintiffs' Liquor Licence Promise.[46]
[46] First Daniele affidavit par 29(c).
For the reasons set out below, I find that the alleged Liquor Licence Promise does not ground an issue or question which ought to be tried in this proceeding, nor any proper reason for there to be a trial. The evidence is simply insufficient to ground an arguable defence to the plaintiffs' claim, or an arguable counterclaim capable of being a legal or equitable set off.

Disposition

In the first Daniele affidavit, Mr Daniele says that in about December 2018, he had a number of conversations with Mr Kailis about the liquor license(s) at the Premises; and that Mr Kailis advised him that the prior tenants to the Premises were operating an extended trading permit attached to their liquor licence (referred to in the second Daniele affidavit as an 'ETP').[47] Mr Daniele deposes that he understood that an ETP allowed a business to provide alcohol to patrons without the need for them to order food and this has a significant potential to increase the revenue from alcohol sales at a restaurant.[48]
[47] First Daniele affidavit par 22 - 23.
[48] First Daniele affidavit par 24.
Mr Daniele deposes that Mr Kailis also advised him that when the first defendant took over the Premises, the liquor licence with an ETP would transfer over into the new business. This was described in the first Daniele affidavit as the 'Liquor Licence Representation'.[49]
[49] First Daniele affidavit par 25.
Mr Daniele deposes that in about September 2018, Mr Kailis emailed him on a number of occasions attaching correspondence indicating that an ETP was on the liquor license for the Premises. Mr Daniele annexes to his affidavit as 'GD11' a bundle of emails and attachments Mr Daniele says he received from Mr Kailis.
Mr Daniele deposes to having spoken to a representative from liquor licensing in about April 2019, and to having discovered that there was no ETP on the liquor licence for the Premises as the prior tenants had not paid the renewal fee. Mr Daniele says at par 28 of his first affidavit:
Since I have been unable to sell alcohol at the Soma restaurant under an ETP, I estimate that the additional revenue I have lost to be about $5,000 to $10,000 per week.
In his second affidavit, Mr Daniele further expands upon his communications with Mr Kailis in 2018 in relation to the liquor licence.[50]
[50] Second Daniele affidavit par 8 - 14, 'GD 14', 'GD15' and 'GD16'.
I accept the plaintiffs' submission that the counterclaim asserted by Mr Daniele is misconceived.
In the third Kailis affidavit, Mr Kailis describes the liquor licence held by Soma Kitchen Pty Ltd and annexes to his affidavit particulars of the liquor licence sourced from the Department of Racing, Gaming and Liquor portal.[51] Mr Kailis deposes to having conducted a search which revealed that the one licence granted in respect of the Premises was held by Soma Kitchen Pty Ltd.
[51] Third Kailis affidavit par 19, 'GPK 3'.
Soma Kitchen Pty Ltd, the entity which traded as Soma Kitchen, is not a party to the Leases nor to this proceeding. It would appear that while the first defendant was Tenant under the Leases, Soma Kitchen Pty Ltd held the liquor licence for the Premises and traded from the Premises as Soma Kitchen.
From the evidence filed, I understand that Mr Daniele complains that Mr Kailis had represented that an ETP would be transferred 'over into the new business'; an ETP was not transferred; and Soma Kitchen Pty Ltd, while trading from the Premises, did not earn the revenue it would have earned had it held an ETP.
The evidence and matters complained do not ground an arguable counterclaim and set‑off actionable by the first defendant as Tenant or the second defendant as Guarantor under the Leases.

Issue 4: Safety Works

Mr Daniele deposes that there were electrical issues with the Premises.
Annexed to Mr Daniele's second affidavit is an email communication marked 'GD17' dated 25 October 2018, by which Mr Kailis asked Mr Daniele to secure a quote from Mr Daniele's electrician for certain works. The effect of Mr Daniele's evidence is that Mr Kailis refused to undertake certain electrical work on the Premises. However, there is no evidence of any further communication as between Mr Kailis and Mr Daniele in relation to the same.
The effect of Mr Daniele's affidavit evidence is that Mr Daniele undertook certain electrical work himself at a cost of approximately $30,000, which work ought to have been performed by or at the cost of the Landlords, and which was performed over approximately two weeks, further delaying completion of the fit out of the Premises.[52] The scope of electrical work undertaken was summarised by Mr Daniele at par 22 of his second affidavit.
[52] Second Daniele affidavit par 21.
The claim concerning safety issues is expressed in very imprecise terms. The evidence filed does not make clear whether the safety work, estimated to have been performed at a cost of approximately $30,000, formed part of the Make Good Works, or fell outside of the scope of the works described as the Make Good Works. In this regard, I note that electrical repairs is a type of work described by Mr Daniele as having formed part of the Make Good Works at par 18 of his first affidavit, paid for by Daniele Nominees Pty Ltd.[53]
[53] See also the discussion of costs incurred at ts 25 (23 July 2020).
There is no evidence that any safety work was performed by or on behalf of the first defendant. Nor is there any evidence that the first defendant ultimately bore the cost of any make good or safety work, invoiced by an electrician, a sub‑lessee or otherwise.
The evidentiary burden falls on the defendants to satisfy the court that there is a triable issue or an arguable defence. The affidavits sworn by Mr Daniele and filed in the proceeding in opposition to the application fail to meet that evidentiary burden. In raising the safety works issue, Mr Daniele has not condescended to sufficient particulars, nor provided sufficient evidence to show cause to resist judgment in this proceeding.

Conclusion

In determining the application, I have carefully considered the affidavit evidence of Mr Daniele and his submissions. As to the Rent Discount Promise, I find Mr Daniele's version of the facts to be inherently incredible. As to the remaining issues, while I have proceeded on the basis that Mr Daniele's evidence would be accepted at trial, I find that the evidence discloses no arguable defence to the plaintiffs' claim against the first and second defendants, nor arguable counterclaim capable of being a legal or equitable set off.
It is appropriate that judgment be entered for the plaintiffs and I will hear from the parties as to the appropriate form of order and costs.

SCHEDULE A

SCHEDULE B

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

ZD
Associate

7 JANUARY 2021

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: MANTON ENTERPRISES PTY LTD as trustee for GPK NO. 2 TRUST -v- LT. MARKET ST PTY LTD [2021] WASC 4 (S)
CORAM:   ACTING MASTER STRK
HEARD:   7 JANUARY 2021 AND ON SUBMISSIONS FILED SUBSEQUENTLY
DELIVERED          :   10 FEBRUARY 2021
PUBLISHED           :   10 FEBRUARY 2021
FILE NO/S:   CIV 1499 of 2020
BETWEEN:   MANTON ENTERPRISES PTY LTD as trustee for GPK NO. 2 TRUST
First Plaintiff
VIOLET INVESTMENTS PTY LTD as trustee for EK TRUST
Second Plaintiff
AND
LT. MARKET ST PTY LTD
First Defendant
GIANCARLO DANIELE
Second Defendant

Catchwords:

Practice and procedure – Appropriate costs order following a successful application made by the plaintiffs for summary judgment – Indemnity costs sought – Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA)
Supreme Court Act 1935 (WA)

Result:

The defendants pay the plaintiffs' costs of the action and the application on an indemnity basis

Category: B

Representation:

Counsel:

First Plaintiff	:	J Robertson
Second Plaintiff	:	J Robertson
First Defendant	:	Not represented
Second Defendant	:	In person

Solicitors:

First Plaintiff	:	Williams & Hughes
Second Plaintiff	:	Williams & Hughes
First Defendant	:	No appearance
Second Defendant	:	In person

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

Bank of Western Australia Ltd v Marsh [2000] WASC 208
Bank of Western Australia Ltd v Ponga (WASC, Master Sanderson, Lib No 980697, unreported)
Brown v Barber [2020] WASC 84(S)
Calderbank v Calberbank [1975] 2 All ER 333
Duncan & Weller Pty Ltd v Mendelson [1989] VR 386
Eccles v Koolan Iron Ore Pty Ltd [No 3] [2013] WASC 418(S)
Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1
Gomba Holdings UK Ltd v Minories Finance Ltd [1993] Ch 171; [1992] 4 All ER 588; [1992] 3 WLR 723; [1993] BCLC 7
Grbavac v Hart [1997] 1 VR 154
Latoudis v Casey (1990) 170 CLR 534
Manton Enterprises Pty Ltd as trustee for GPK No. 2 Trust v Lt. Market St Pty Ltd [2021] WASC 4
Mount Lawley Pty Ltd v Western Australian Planning Commission [2006] WASC 82(S); (2006) 157 LGERA 1
Naidoo v Williamson (2008) 37 WAR 516; [2008] WASCA 179
Northern Territory v Sangare [2019] HCA 25
Ohn v Walton (1995) 36 NSWLR 77
Ouwens Casserly Real Estate Pty Ltd v Harcourt South Australia Pty Ltd [2017] SASC FC 69
Rapuano (T/as RAPS Electrical) v Karydis‑Frisan [2013] SASCFC 93
Rumball v Mortimore [2000] WASC 126
Shaw v MAB Corp Pty Ltd (No 2) [2014] FCA 227
Stewart v Atco Controls Pty Ltd (In liq) [No 2] [2014] HCA 31; (2014) 252 CLR 331
Strzelecki Holdings v Jorgensen [2019] WASCA 96
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129(S)
Tey v Optima Financial Group Pty Ltd [2012] WASCA 192
Westworth v Attorney-General (NSW) (1984) 154 CLR 518
Wheatley v Bower [2001] WASCA 293

ACTING MASTER STRK:

On 7 January 2021 I delivered my reasons concerning the application made by the plaintiffs for summary judgment against the defendants on the plaintiffs' claim: Manton Enterprises Pty Ltd as trustee for GPK No. 2 Trust v Lt. Market St Pty Ltd [2021] WASC 4. I recorded there my finding that it is appropriate that judgment be entered for the plaintiffs and that I would hear from the parties as to the appropriate form of order and costs.
After hearing from counsel for the plaintiffs and from the second defendant, the form of order by which judgment was entered for the plaintiffs was settled and the order extracted on 7 January 2021. As to costs, by the amended chamber summons filed on 17 July 2020, the plaintiffs had sought an order that the defendants pay the plaintiffs' costs of the application on a full indemnity basis. At the hearing on 7 January 2021, having filed an affidavit in support of such orders, counsel for the plaintiffs moved that the defendants pay the plaintiffs' costs on an indemnity basis. I made directions for the filing of responsive materials in relation to the question of costs. I also invited counsel for the plaintiffs to file a draft bill of costs and indicated that I would give consideration to fixing the costs payable.
The plaintiffs rely upon the submissions made at the hearing on 7 January 2021; the affidavit of John Andrew Robertson, solicitor for the plaintiffs, filed on 7 January 2021; and the plaintiffs' draft bill of costs for taxation filed later on the same date.
The second defendant relies on a written submission accepted for filing on 15 January 2021.
It remains the case that the first defendant, a corporation, is not represented, and that the second defendant appears in person. The second defendant opposes the making of an indemnity costs order.
These reasons, in which I address costs, should be read in the context of what I have recorded in my reasons for decision on the substantive application.

Applicable principles

Where costs should fall is at the discretion of the court.[54] The discretion to order costs under the Supreme Court Act 1935 (WA) s 37 and the Rules of the Supreme Court 1971 (WA) (RSC) O 66 r 1 is very wide.[55] The only restrictions are those provided elsewhere in the Supreme Court Act and the RSC, or in any other Act; and the fact that the discretion must be exercised judicially, in accordance with established principles and factors directly connected with the litigation.[56] The discretion must be exercised so as to achieve what is fair and just between the parties according to the circumstances of the particular case.[57]
[54] Supreme Court Act 1935 (WA) s 37.
[55] Lexis Nexis, Civil Procedure Western Australia, Vol 1, (loose leaf as at 25 July 2019) 'Orders 56 ‑ 69' at [66.1.2] citing Westworth v Attorney-General (NSW) (1984) 154 CLR 518, 528; Naidoo v Williamson (2008) 37 WAR 516; [2008] WASCA 179 [39].
[56] Lexis Nexis, Civil Procedure Western Australia, Vol 1, (loose leaf as at 25 July 2019) 'Orders 56 ‑ 69' at [66.1.2] citing Naidoo v Williamson [39], [42]; Strzelecki Holdings v Jorgensen [2019] WASCA 96 [48] ‑ [50].
[57] Lexis Nexis, Civil Procedure Western Australia, Vol 1, (loose leaf as at 25 July 2019) 'Orders 56 ‑ 69' at [66.1.2] citing Latoudis v Casey (1990) 170 CLR 534, 558.
An order for the payment of costs by one party is compensatory in nature; it is not for the purpose of punishment. Costs generally follow the event because such an order is intended, at least to the extent that the costs incurred were not unreasonable or unreasonably incurred, as compensation (and vindication) for the successful action or application.[58]
[58] Lexis Nexis, Civil Procedure Western Australia, Vol 1, (loose leaf as at 25 July 2019) 'Orders 56 ‑ 69' at [66.1.2] citing Latoudis v Casey; Northern Territory v Sangare [2019] HCA 25 [30] ‑ [31]; and Ohn v Walton (1995) 36 NSWLR 77.
If summary judgment is given for a plaintiff, the general rule is that the defendant will pay the costs of the action and the costs of the application.

Indemnity costs orders

A court may order that costs be payable on an indemnity basis by a party. An indemnity costs order would make the paying party liable to pay all costs that the other party has incurred except insofar as the costs are of an unreasonable amount or have been unreasonably incurred.[59] The principles applicable to the making of indemnity costs orders were set out by the Court of Appeal in Swansdale Pty Ltd v Whitcrest Pty Ltd,[60] and those are the principles that I apply.
[59] Lexis Nexis, Civil Procedure Western Australia, Vol 1, (loose leaf as at 25 July 2019) 'Orders 56 ‑ 69' at [66.1.14] citing Wheatley v Bower[2001] WASCA 293 [106].
[60] Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129(S) [10].
I also note that as a general rule, a court will be more reluctant to make an order for indemnity costs against a self‑represented litigant than against a represented litigant.[61] The rationale for the reluctance to make an indemnity costs order against self‑represented litigants is by reference to expectations which otherwise fall on legal representatives. As such, norms of behaviour and litigation may be expected from parties who are legally advised and represented which otherwise do not apply to self‑represented litigants.[62] However, in appropriate cases an indemnity costs order may still be made against a self‑represented litigant, especially in circumstances where unnecessary expense and hardship on other parties has been caused and the censure is properly called for.[63]

Calderbank offers – principles

[61] Lexis Nexis, Civil Procedure Western Australia, Vol 1, (loose leaf as at 25 July 2019) 'Orders 56 ‑ 69' at [66.1.17L] citing Tey v Optima Financial Group Pty Ltd [2012] WASCA 192 [16].

[62] Lexis Nexis, Civil Procedure Western Australia, Vol 1, (loose leaf as at 25 July 2019) 'Orders 56 ‑ 69' at [66.1.17L] citing Shaw v MAB Corp Pty Ltd (No 2) [2014] FCA 227 [10].

[63] Lexis Nexis, Civil Procedure Western Australia, Vol 1, (loose leaf as at 25 July 2019) 'Orders 56 ‑ 69' at [66.1.17L] citing Tey v Optima Financial Group Pty Ltd [16].

Further, it is well established that an order for indemnity costs may be justified by the rejection of an offer of compromise made in accordance with the principles articulated in Calderbank v Calberbank.[64]
[64] Calderbank v Calberbank [1975] 2 All ER 333.

The relevant principles which govern the exercise of the court's discretion to make an award for indemnity costs in the context of a Calderbank offer are settled, and were set by Buss JA in Ford Motor Company of Australia Ltd v Lo Presti.[65] In Eccles v Koolan Iron Ore Pty Ltd, Le Miere J summarised the principles explained by Buss JA in the following way:[66]
[65] Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1 [16] ‑ [32] (Wheeler JA agreeing).
[66] Eccles v Koolan Iron Ore Pty Ltd [No 3] [2013] WASC 418(S) [9].
(1) a Calderbank offer will not justify an award of indemnity costs unless its rejection was unreasonable;
(2) all of the relevant facts and circumstances must be considered in determining whether a party's rejection of a Calderbank offer was unreasonable;
(3) the mere fact that the recipient of a Calderbank offer is ultimately worse off than he or she would have been had the offer been accepted, does not mean that its rejection was unreasonable;
(4) whether conduct is reasonable or unreasonable always involves matters of judgment and impression;
(5) it is not possible nor desirable to enumerate exhaustively all circumstances which must be taken into account, in a particular case, in deciding whether the rejection of a Calderbank offer was unreasonable, but, ordinarily, regard should be had to, at least, the following:
(a) the stage of the proceeding in which the offer was received;
(b)the time allowed to the offeree to consider the offer;
(c)the extent of the compromise offered;
(d)the offeree's prospects of success, assessed as at the date of the offer;
(e)the clarity with which the terms of the offer were expressed; and
(f)whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it;
(6) the party who makes a Calderbank offer that is rejected bears the onus of satisfying the court that it should make an award of indemnity costs in his or her favour; and
(7) the standard to be applied in awarding indemnity costs should not be allowed to diminish to the extent that an unsuccessful party will be at risk of an order for costs assessed on an indemnity basis absent some blameworthy conduct on its part ‑ a test of unreasonableness should not be upheld on other than clear grounds.
Where an unsuccessful party submits that the rejection of the Calderbank offer was not unreasonable, the unsuccessful party is to point to a reason for not accepting the offer beyond the usual prospects of being successful in litigation.[67]
[67] Stewart v Atco Controls Pty Ltd (In liq) [No 2] [2014] HCA 31; (2014) 252 CLR 331 [4], as observed in Brown v Barber [2020] WASC 84(S) [8].
The Court of Appeal reiterated in Strzelecki Holdings Pty Ltd v Jorgensen that Calderbank offers must be assessed without the benefit of hindsight, and having regard to the strength of the parties' cases as they then stood.[68] The Court also relevantly pointed out that it is well‑established that a party's erroneous prediction about the prospects of litigation, on the basis of which he, she or it rejects a Calderbank offer, may not be regarded as unreasonable if that party was not, at the time, and for good reason, in possession of sufficient information to make a proper assessment of its prospects, or if the circumstances upon which the assessment was based later changed.[69]
[68] Strzelecki Holdings Pty Ltd v Jorgensen [87].
[69] Strzelecki Holdings Pty Ltd v Jorgensen [87] - [88]; as noted in Brown v Barber [23] ‑ [24].
It is also established that the terms of a Calderbank offer must be unambiguous, that is, the terms must be certain. Consequently, it will not be unreasonable to reject a Calderbank offer if there is some reasonable doubt about the nature and extent of what was being offered, that is, its value.[70]

Contractual terms

[70] Mount Lawley Pty Ltd v Western Australian Planning Commission [2006] WASC 82(S); (2006) 157 LGERA 1 [92] (Templeman J) applying Duncan & Weller Pty Ltd v Mendelson [1989] VR 386, 401; Grbavac v Hart [1997] 1 VR 154, 155 (Winneke P); see also Rapuano (T/as RAPS Electrical) v Karydis‑Frisan [2013] SASCFC 93.

Where the parties to an action are also parties to a contract which contains plain and unambiguous provisions allowing for costs to be paid on a certain basis, the court should ordinarily exercise its discretion in a manner consistent with the contractual provisions.[71] The rationale for this approach is to avoid satellite litigation over the contractual provision.[72]
[71] Lexis Nexis, Civil Procedure Western Australia, Vol 1, (loose leaf as at 25 July 2019) 'Orders 56 ‑ 69' at [66.1.17M] citing Rumball v Mortimore [2000] WASC 126 [15]; Bank of Western Australia Ltd v Ponga (WASC, Master Sanderson, Lib No 980697, unreported); Gomba Holdings UK Ltd v Minories Finance Ltd [1993] Ch 171, 194; [1992] 4 All ER 588; [1992] 3 WLR 723; [1993] BCLC 7; Bank of Western Australia Ltd v Marsh [2000] WASC 208 [5] ‑ [7].
[72] Lexis Nexis, Civil Procedure Western Australia, Vol 1, (loose leaf as at 25 July 2019) 'Orders 56 ‑ 69' at [66.1.17M] citing Ouwens Casserly Real Estate Pty Ltd v Harcourt South Australia Pty Ltd [2017] SASC FC 69 [3].
Notwithstanding the provisions of the agreement, the court still retains a discretion such that the contractual provisions will not be binding. Circumstances may exist which render an indemnity costs order inappropriate, even where there is an agreement between the parties.

Competing positions of the parties

The parties' respective positions may be summarised as follows.

The plaintiffs' position

The plaintiffs seek an order that the defendants pay the plaintiffs' costs on a full indemnity basis on two grounds. First, that the defendants rejected a Calderbank offer to compromise prior to the hearing of the summary judgment application. Secondly, by contractual entitlement pursuant to the terms of the Leases.[73]
[73] Being a reference to the lease agreements described at Manton Enterprises Pty Ltd as trustee for GPK No. 2 Trust v Lt. Market St Pty Ltd [25].
As to the first ground, annexed to the affidavit of Mr Robertson is a letter dated 14 July 2020, which Mr Robertson deposes he was instructed to send to HHG Legal, the then representatives of the defendants.[74] Mr Robertson deposes that he did not receive a response to the offer from HHG Legal before the firm was removed as solicitors on the record for the defendants.[75]
[74] Affidavit of JA Robertson filed 7 January 2021 'JAR1'.
[75] Affidavit of JA Robertson filed 7 January 2021 par 3.
The letter was issued after the affidavit of the second defendant sworn in opposition to the plaintiffs' application for summary judgment had been filed and served. The letter contained observations as to the strength of the issues raised in opposition to the summary judgment application, and the basis for the plaintiffs' view that the defendants' resistance to the application was hopeless and doomed to fail.
At par 4 of the letter of 14 July 2020, a 'Judgment Offer' is expressed in the following terms:
We are of the view that the Plaintiffs will obtain summary judgment against your clients following the hearing of the special appointment and that, properly advised, your clients should withdraw their resistance and consent to judgment. Accordingly, we invite your clients to agree to judgement in the amount claimed, plus interest and costs to be taxed on a 'party party' basis to the date of the agreement to enter judgment. This offer is open for acceptance to the date and time immediately before the special appointment on 20.7.20 (Judgment Offer).
As to the consequences for the defendants, the plaintiffs' position was articulated at par 5 of the letter of 14 July 2020 in the following terms:
5. If the Judgment Offer is not accepted by your clients our clients will:
(i)rely on the Judgment Offer on the question of their costs incurred to date – on a full indemnity basis – based on the principles enunciated in the English High Court case of Calderbank v Calderbank [1975] 3 All ER 333;
(ii)amend their chamber summons, on the date of the hearing of the summary judgment application, to seek indemnity costs from your clients; and
(iii)rely on this letter to confirm your clients were given the opportunity to avoid a contested summary judgment hearing – and an order for indemnity costs.
As to the second ground, the Lease provisions relied upon by the plaintiffs as grounding entitlement to an indemnity costs order are as follows.[76]
[76] Each of the Leases contain cl 11 and cl 16.1 in identical terms.
11. INDEMNITY
The Tenant is responsible for, and indemnifies the Landlord against, any liability, loss, claim, damage, cost or expense arising out of its use or occupation of the Premises. This does not apply to the extent caused or contributed to by the Landlord or anyone for whom the Landlord is responsible.
16. DEFAULT
…
16.2 Landlord's right to remedy default and cover costs
(a)The Landlord may recover any default by the Tenant under this lease, including the payment of any money payable by the Tenant.
(b)The Tenant must pay all costs and expenses (including solicitors' costs on a full indemnity basis) incurred by the Landlord:
(i)in remedying any default under clause 16.2(a);
(ii)arising from any breach of this Lease by the Tenant; and
(iii)for the preparation and service of any notice required to be served under the provisions of the Property Law Act 1969,
immediately on written demand by the Landlord.
…

The second defendant's position

The second defendant does not address the first ground in his submissions in relation to costs.
As to the second ground, the substance of the second defendant's submission is that the Leases do not contain plain and unambiguous provisions allowing for the plaintiffs' costs to be recovered on an indemnity basis.
The second defendant says that cl 11 is not intended to form the basis of an indemnity costs order in proceedings for the recovery of unpaid rent under the Leases. That is, that costs associated with recovery proceedings in respect of that unpaid rent cannot be classified as losses 'arising out of' the first defendant's 'use or occupation of the premises.'
As to cl 16.2, the second defendant says that it does not specify that the court is empowered to make an indemnity costs order in debt recovery proceedings. Rather, any costs that are recoverable under cl 16.2 become due and owing 'on written demand by the Landlord', and not in accordance with a particular costs order made by the court. The second defendant says that the right to recover legal costs on an indemnity basis under this clause arises either as a recoverable debt, or a head of damage recoverable under the Lease, and accordingly, if the plaintiffs wish to recover costs incurred in these proceedings on an indemnity basis, then they should have sought those costs as a separate head of damage. It is not appropriate to seek that the court exercise discretion to make an order under cl 16.2.
As to the fixing of costs, the second defendant says that the usual form of an indemnity costs order allows for costs to be taxed if not agreed, to allow for the examination of the reasonableness of the costs being claimed. If the court is inclined to exercise its discretion to award indemnity costs, it should do so on the basis that those costs are taxed if not agreed.
Finally, as to the plaintiffs' draft bill of costs, the second defendant says that amount sought by the plaintiffs for the preparation of a writ of summons with a statement of claim is unreasonably high. The plaintiffs seek to recover $9,000 on an indemnity basis for the preparation of the writ of summons and statement of claim, being 15 hours at the claimed practitioner rate of $600 per hour. The Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2020 allows for a maximum of 1.5 hours at the senior practitioner rate for the drafting of a writ of summons, and a maximum of 10 hours for the drafting of a statement of claim. The second defendant says that this matter was a straightforward claim for the recovery of unpaid rent, and the statement of claim was consequently very brief. The second defendant says that the plaintiffs should not be entitled to claim the maximum amount recoverable for this item of the scale, and even if they are entitled to such an amount, this amount is significantly less than the amount being sought by the plaintiffs.

Disposition concerning costs

The plaintiffs were successful in their application for summary judgment. Costs should follow the event and the plaintiffs are entitled to an order that the defendants pay the costs of the action and the costs of the application. The question to be determined whether discretion ought to be exercised to depart from the usual party/party costs order in favour of an indemnity costs order. For the following reasons, I find that it is appropriate to make an indemnity costs order.

Discretion to be exercised in a manner consistent with the contractual bargain struck between the parties

The plaintiffs (as Landlord), have a contractual right to recover legal costs from the first defendant (as Tenant) and the second defendant (as Guarantor), on an indemnity basis.
By cl 16.2(b)(ii), the first defendant has covenanted to pay all costs and expenses (including solicitors' costs on a full indemnity basis) incurred by the plaintiffs arising from any breach of the Lease by the first defendant. Cl 16.2(b) clearly and unambiguously provides for the plaintiffs' costs to be recovered on an indemnity basis, and not any other basis, such as a party/party or a solicitor/client basis. The second defendant has guaranteed payment to the plaintiffs of moneys payable by the first defendant to the plaintiffs under each Lease.
The second defendant does not contend that the basis for cost recovery provided for under the contract is something other than indemnity. His submission confuses the exercise of a contractual right to recover costs (which he says has not yet arisen), and the exercise of discretion to make a costs order in a manner which is consistent with and reflects the bargain made between the plaintiffs and the defendants.
In making an indemnity costs order, I do so pursuant to the Supreme Court Act 1935 (WA) s 37, exercising discretion to award costs in a manner which is consistent with the bargain struck between the plaintiffs and the defendants and documented in the Leases.
As noted above, notwithstanding the provisions of the Leases, the court still retains a discretion such that the contractual provisions will not be binding. Having regard to all of the circumstances (some of which are discussed in more detail below), I find that there is no good reason in this case to award costs on a basis that is contrary to the plaintiffs' contractual bargain.
I do so having weighed in the balance the fact that the defendants were not represented throughout this proceeding. They were represented until immediately prior to the hearing of the application, and in the negotiation and documentation of the Lease agreements.

Whether rejection of the offer to compromise was unreasonable

In addition to the bargain reached as between the parties, the plaintiffs rely on the rejection by the defendants of a Calderbank offer in support of an indemnity costs order.
But for the parties' contractual bargain, the question of whether discretion ought to be exercised to depart from the usual party/party costs order in favour of an indemnity costs order would have been finely balanced. I make the following observations in this regard.
As to the timing of the Calderbank offer, it was made on 14 July 2020, promptly and without delay, the second defendant having filed his affidavit in opposition to the application on 10 July 2020.
The offer was left open for acceptance for a period that was reasonable in light of the programming directions, that is, from issue on 14 July 2020 to immediately prior to the hearing of the special appointment on 20 July 2020.
Understood as an offer sent by one firm of solicitors to another, the terms of the offer were clearly expressed and clearly foreshadowed an application for indemnity costs if rejected. The extent of the compromise proffered was the difference between party/party costs and indemnity costs. The extent of the compromise was relatively modest and does not weigh heavily in the determination of whether the rejection of the offer was unreasonable.
As to the plaintiffs' prospects of success as at 14 July 2020, I note that by the letter of 14 July 2020 which conveyed the Judgment Offer, various difficulties with the defendants' case were identified and brought to the attention of the defendants' representatives. Counsel for the plaintiffs says that most of the difficulties in the defendants' position, as ultimately found by the court, were identified in the letter.[77] It appears that the plaintiffs contend that the defendants' resistance to judgment was 'hopeless' and doomed to fail, and the rejection of the Judgment Offer was therefore unreasonable.
[77] ts 4 (7 January 2021).
While the second defendant was unsuccessful in opposing the summary judgment application, this does not compel the conclusion that rejection of the Judgment Offer was unreasonable.
The second defendant raised four issues in opposition to the application for summary judgment. The second defendant had the benefit of legal assistance in the preparation of his first affidavit, by which he raised three issues. By his second affidavit, the second defendant sought to augment his evidence in relation to two of the three issues and appeared to raise a further issue (the Safety Works issue). The second defendant was not represented when he prepared and filed his second affidavit and outline of written submissions for the hearing of the application. The second defendant appeared in person at the hearing of the application.
As to the first issue, the Rent Discount Promise, I found that the second defendant's version of the facts to be inherently incredible. Such a finding now weighs in favour of a finding that the defendants' rejection of the Calderbank offer was unreasonable in all of the circumstances, and a basis for censure by the making of an indemnity costs order.
However, the Rent Discount Promise was not the only issue raised. As to the Make Good Promise, the Liquor Licence Promise and the Safety Works issue, I determined the application on the basis that the second defendant's evidence would be accepted at trial but found that his evidence disclosed no arguable defence to the plaintiffs' claim, nor arguable counterclaim capable of being a legal or equitable set off.[78] While they lacked merit, I find that they were not hopeless so as to merit the sanction of an indemnity costs order.
[78] Manton Enterprises Pty Ltd as trustee for GPK No. 2 Trust v Lt. Market St Pty Ltd [118].
Some of the issues raised by the second defendant in opposition to summary judgment were not without difficulty, particularly as he was unrepresented.
As observed at [95] of the reasons for decision, it appeared that the second defendant did not draw a strict distinction between the various entities he controlled as director, and the costs those entities had incurred. For the purposes of showing cause for why there is an arguable defence to the plaintiffs' claim or reason for trial, the second defendant raised claims of entities controlled by him, on the apparent assumption that moneys expended or losses incurred by one entity might ground the counterclaim or a right of set‑off of another.[79]
[79] Manton Enterprises Pty Ltd as trustee for GPK No. 2 Trust v Lt. Market St Pty Ltd [95].
Further, although explanation was provided to the second defendant and additional time was given through adjournment for the second defendant to put on additional evidence, the distinction between submission and evidence was not consistently observed, nor it would appear completely understood. Ultimately, it was found that the evidence proffered was insufficient to ground an arguable defence to the plaintiffs claim, or an arguable counterclaim capable of being a legal or equitable set‑off.

In considering whether the rejection of the Judgment Offer was unreasonable, I have regard to the nature of the issues raised and also to what else was happening in the period 14 to 21 July 2020.
The Judgment Offer was presented to the defendants' legal representatives on Tuesday, 14 July 2020. On Thursday, 16 July 2020, the court was informed by the defendants' representatives that on 15 July 2020, the second defendant had lodged a declaration of intention to present a debtor's petition and statement of affairs in accordance with the Bankruptcy Act 1966 (Cth) s 54A, and as a result, the solicitors for the defendants were instructed not to present any submissions on behalf of the defendants at the special appointment listed for hearing on Monday, 20 July 2020 and to cease acting in the proceeding. On 21 July 2020, by operation of orders made on 20 July 2020 and upon compliance with the requirements of the RSC O 8 r 7(1)(a) and (b), the solicitors for the defendants ceased to act for the defendants in this proceeding.
This is not a case where it is appropriate to characterise the defendants' conduct in the proceeding as otherwise unreasonable or improper. While ultimately unmeritorious, the defence of the application (of itself) would not warrant the court's mark of disapproval through an indemnity costs order.
On balance, I would not have exercised discretion to make an indemnity costs order on the sole ground that a Calderbank offer had been made and it had been unreasonably rejected. However, having regard to all of the circumstances, the contractual bargain weighs heavily and I find that there is no good reason in this case to award costs on a basis that is contrary to the plaintiffs' contractual bargain.

Fixing of costs

I requested that the plaintiffs file a draft bill of costs indicating that I would give consideration to fixing the costs payable, to save the parties any further expense and delay by the need to proceed to a taxation. On the basis of an indemnity costs order, the plaintiffs seek to fix costs in the amount of $32,772.83.
Regrettably, upon review of the draft bill of costs, I form the view that I do not have the information necessary to examine the reasonableness of the costs claimed, nor to make an assessment of the costs payable on an indemnity basis which is appropriate and just.

Conclusion and order

In all of the circumstances, I find that it is fair and just between the parties to make an order in the following terms.
The defendants pay the plaintiffs' costs of the application and the costs of the action on an indemnity basis, to be taxed if not agreed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

ZD
Associate

10 FEBRUARY 2021