McCourt v Cranston
[2009] WASC 56 (S)
•17 MARCH 2009
MCCOURT -v- CRANSTON [2009] WASC 56 (S)
Pending Appeal
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2009] WASC 56 (S) | |
| Case No: | CIV:1072/2009 | 23-24 FEBRUARY & 26 MARCH 2009 | |
| Coram: | TEMPLEMAN J | 16/03/09 | |
| 8/04/09 | |||
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiffs pay defendant's and third parties' costs to be taxed if not agreed Plaintiffs and defendant each pay half of third parties' costs of this application to be taxed if not agreed | ||
| A | |||
| PDF Version |
| Parties: | DANIEL PATRICK REDDEN MCCOURT RUTH ELLEN MCCOURT SHARNE MARY CRANSTON ACTON REAL ESTATE PTY LTD AMANDA GRAY |
Catchwords: | Costs Third party proceedings Plaintiffs unsuccessful against defendant Inevitable third parties would be joined No evidence plaintiffs impecunious Plaintiffs to pay costs of defendant and third parties Costs Third parties liable to indemnify defendant Nontaxable costs incurred by defendant Whether compensable as damages |
Legislation: | Rules of the Supreme Court 1971 (WA), O 19 r 12, O 66 r 11(2) |
Case References: | Allman v Daly (No 2) [1959] VR 614 Edwards v Stocks [2009] TASSC 11 Hammond & Co v Bussey (1888) 20 QBD 79 Henry & Henry v AGC Ltd [1985] WAR 137 Johnson v Ribbins [1977] 1 All ER 806 McCourt v Cranston [2009] WASC 56 Penn v Bristol & West Building Society [1997] 1 WLR 1356 Queanbeyan Leagues Club Ltd v Poldune Pty Ltd [2000] NSWSC 1100 Swisstex Finance Pty Ltd v Lamb [1993] 2 Qd R 463 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 8 APRIL 2009 FILE NO/S : CIV 1072 of 2009 BETWEEN : DANIEL PATRICK REDDEN MCCOURT
- RUTH ELLEN MCCOURT
Plaintiffs
AND
SHARNE MARY CRANSTON
Defendant
ACTON REAL ESTATE PTY LTD
First Third Party
AMANDA GRAY
Second Third Party
Catchwords:
Costs - Third party proceedings - Plaintiffs unsuccessful against defendant - Inevitable third parties would be joined - No evidence plaintiffs impecunious - Plaintiffs to pay costs of defendant and third parties
(Page 2)
Costs - Third parties liable to indemnify defendant - Nontaxable costs incurred by defendant - Whether compensable as damages
Legislation:
Rules of the Supreme Court 1971 (WA), O 19 r 12, O 66 r 11(2)
Result:
Plaintiffs pay defendant's and third parties' costs to be taxed if not agreed
Plaintiffs and defendant each pay half of third parties' costs of this application to be taxed if not agreed
Category: A
Representation:
Counsel:
Plaintiffs : Mr H R Robinson
Defendant : Mr M M Mony de Kerloy
First Third Party : Mr J L Sher
Second Third Party : Mr J L Sher
Solicitors:
Plaintiffs : Haydn Robinson
Defendant : Mony de Kerloy
First Third Party : DLA Phillips Fox
Second Third Party : DLA Phillips Fox
(Page 3)
Case(s) referred to in judgment(s):
Allman v Daly (No 2) [1959] VR 614
Edwards v Stocks [2009] TASSC 11
Hammond & Co v Bussey (1888) 20 QBD 79
Henry & Henry v AGC Ltd [1985] WAR 137
Johnson v Ribbins [1977] 1 All ER 806
McCourt v Cranston [2009] WASC 56
Penn v Bristol & West Building Society [1997] 1 WLR 1356
Queanbeyan Leagues Club Ltd v Poldune Pty Ltd [2000] NSWSC 1100
Swisstex Finance Pty Ltd v Lamb [1993] 2 Qd R 463
(Page 4)
1 TEMPLEMAN J: I have to deal with the costs of the action McCourt v Cranston [2009] WASC 56. In my reasons for judgment I referred to the parties by name. However, in relation to costs, it will be more convenient to refer to their designations.
2 In the action, the plaintiffs sued the defendant for specific performance of what was said to be an unconditional contract for the sale of a residential property.
3 The defendant contended that on its true construction, the contract was conditional on the sale of her property. The defendant counterclaimed for the return of her deposit of $20,000.
4 The defendant brought proceedings against the third parties. They had acted as selling agents for both the plaintiffs and the defendant.
5 The defendant claimed against the third parties that if, contrary to her contention, the contract was held to be unconditional, the third parties had been negligent in the advice they gave to her; and that they were also in breach of their fiduciary duties, having an irreconcilable conflict between the interests of the plaintiffs and the defendant.
6 The defendant's claim against the third parties was as follows:
(a) A declaration that the First and/or Second Third Party or both are liable to indemnify the Defendant in respect of any liability of the Defendant to the Plaintiffs.
(b) An indemnity against any amount found due to the Plaintiff by the Defendant;
(c) An indemnity against the Plaintiffs costs of the action as may be awarded to the Plaintiffs against the Defendant;
(d) $20,000 in the event the Contract is not terminated;
(e) The Defendant's costs incurred to defend the principal action and/or in these Third Party Proceedings;
(f) Such further or other orders or relief as this Court deems fit.
7 I held that the contract was conditional. Accordingly, the plaintiffs' claim against the defendant failed. The counterclaim succeeded. The plaintiffs were ordered to repay the $20,000 deposit.
(Page 5)
8 The third party proceedings were concerned only with the question of liability. I held that if I was wrong in my conclusion that the contract was conditional, the defendant had made out her case for an indemnity against the third parties.
9 In relation to costs, counsel for the plaintiffs submits that if the third parties had informed the plaintiffs that the defendant would only enter into a conditional contract, and had informed the defendant that the plaintiffs would only enter into an unconditional contract, then the parties would never have entered into a contract.
10 Counsel submits that in those circumstances, the third parties were, essentially, the cause of the litigation. Counsel submits further that, because I have a complete discretion in relation to costs, I should hold the third parties liable for both the plaintiffs' and the defendant's costs.
11 Although I have a wide discretion in relation to costs, that discretion must be exercised judicially. And in the ordinary course, it requires an order that costs follow the event: O 66 r 1(1) of the Rules of the Supreme Court 1971 (WA). In this case, however, the plaintiffs made no complaint about the third parties' conduct. Therefore, as counsel for the third parties submits, and as I accept, there is no 'event' between the plaintiffs and the third parties. It follows, that there is no basis for ordering the third parties to pay the plaintiffs' costs.
12 The usual result when a plaintiff fails against a defendant who has brought third party proceedings, is that the third party proceedings will be dismissed. That is because, if the plaintiff fails, the defendant had no need to proceed against the third party.
13 In those circumstances, the rule that costs follow the event will require the plaintiff to pay the defendant's costs; and the defendant to pay the third party's costs. However, if the plaintiff's claim rendered the third party proceedings inevitable, the defendant will recover from the plaintiff, the costs he is obliged to pay the defendant: Johnson v Ribbins [1977] 1 All ER 806, 811; Henry & Henry v AGC Ltd [1985] WAR 137, 144; Swisstex Finance Pty Ltd v Lamb [1993] 2 Qd R 463, 465; Edwards v Stocks [2009] TASSC 11 [10].
14 As was said in Johnson v Ribbins, if the plaintiff and the defendant are both good for the costs, it makes no significant difference whether the plaintiff pays the third party's costs directly, or by way of an indemnity to the defendant. In this jurisdiction, either course is permitted by O 19 r 12, which provides:
(Page 6)
- The Court may decide all questions of costs as between a third party and other parties to the action, and may order any one or more of them to pay the costs of any other, or others, or give such directions as to costs as the justice of the case may require.
15 The situation is complicated in the present case by the defendant's contention that even though she has been successful as against the plaintiffs, she ought nevertheless be indemnified by the third parties against the legal costs she has incurred which will not be recoverable on a party and party taxation. It is submitted by counsel for the defendant that the amount involved (about which there is no evidence) is in the nature of damages.
16 It was established in Hammond & Co v Bussey (1888) 20 QBD 79, that the costs incurred by an unsuccessful defendant to an action for breach of contract, may be recovered as damages in a subsequent action by the defendant against a third party who was the cause of the defendant's breach.
17 I emphasise that this is permissible in a subsequent and separate action. It is not permissible where the claim against the third party is tried together with the action against the defendant.
18 The English Court of Appeal so held in Penn v Bristol & West Building Society [1997] 1 WLR 1356. There, Mrs Penn brought an action against the building society, which joined a solicitor, a Mr Brill, effectively, as a third party. Mrs Penn succeeded against the building society, which, in turn, succeeded against Mr Brill.
19 Waller LJ, with whom Waite and Staughton LJJ agreed, noted that the trial judge had ordered that the costs as between Mrs Penn and the building society be taxed on an indemnity basis
simply on the ground that [the building society] would have been entitled to recover those costs as damages against Mr Brill if the action against Mr Brill had been a separate action (1364).
20 Waller LJ then cited a passage from Halsbury's Laws of England (4th ed, vol 12, 1975) [1120]:
A party to court proceedings may not recover his costs of those proceedings from any other party to them except by an award of costs by the court. The costs of other proceedings, however, stand on a different footing. Where, as a result of the defendant's wrong, the plaintiff has incurred costs in other proceedings the plaintiff may, subject to the rules of remoteness, recover those costs from the defendant as damages.
(Page 7)
21 His Lordship continued:
Thus a party cannot claim by way of damages for those parts of the costs incurred which he will not recover on taxation against his opponent either in the same action or in a separate action. On the other hand if in a separate action a party is seeking damages which include fighting an action against a third party, the damages for incurring costs will be assessed in the same way as any other damages at common law.
22 A little later in his reasons, Waller LJ referred to the importance of O 62 r 3(2) of the English Rules of the Supreme Court. It provides:
No party to any proceedings shall be entitled to recover any of the costs of those proceedings from any other party to those proceedings except under an order of the court.
23 The equivalent provision in this jurisdiction is O 66 r 11(2), which provides:
Except when otherwise ordered, solicitors are, subject to these Rules, entitled to charge and be allowed the fees set forth in any relevant scale in respect of the matters referred to in that scale and higher fees shall not be allowed in any case, except such as are by this Order otherwise provided for.
24 The point here, is that if the defendant was to recover from the third parties, by way of damages, costs above those recoverable from the plaintiff (or the third parties) on a party and party taxation, there would effectively be an order for indemnity costs (or a special costs order), when that was not justified by the circumstances of the case.
25 Waller LJ accepted that this result could be said to discourage the bringing of third party and other claims in one action. However, that was not a serious risk 'having regard to the many other benefits of proceeding in one action and having all issues tried at the same time' (1366).
26 This aspect of Penn's case was followed by Hamilton J in Queanbeyan Leagues Club Ltd v Poldune Pty Ltd [2000] NSWSC 1100. His Honour said he respectfully agreed with Waller LJ
that the rule should be that all costs of all parties in multi party proceedings should be dealt with by costs orders made in exercise of the Court's discretionary power to make such orders [46].
27 The case is discussed in Quick R and Garnsworthy D, Quick on Costs (2002) [2.179].
(Page 8)
28 In the present case, it may be said that because the defendant succeeded in her defence of the plaintiffs' claim, and in her counterclaim, the third party proceedings were unnecessary. However, in my view the defendant acted reasonably in prosecuting her claim against the third parties. That is because I consider that the plaintiffs' claim made the third party proceedings inevitable.
29 For that reason, and because there is no evidence that the plaintiffs are impecunious, I consider the appropriate orders are for the plaintiffs to pay the defendant's and the third parties' costs, to be taxed, if not agreed.
30 In Seaman P L, Civil Procedure Western Australia [19.7.1] the following note appears:
Where the plaintiff fails against the defendant it is not necessary to enter judgment for the third party against the defendant. All that is required is an order that the defendant pay the costs of the third party: Allman v Daly (No 2) [1959] VR 614 at 624.
31 However, in Allman v Daly (No 2) [1959] VR 614, as Pape J observed, 'the third party proceedings were never litigated'. Further, his Honour said:
Counsel were unable to refer me to any case in which a third party has been ordered to pay the costs of the defendant who has joined him, where that defendant has been successful in the action and has had judgment entered for him against the plaintiff, and I have not myself been able to find any such case (618).
32 However, the authorities to which I have referred above - and in particular, Johnson v Ribbins - which, of course, postdate Allman v Daly, are authority for that proposition.
33 If the third party proceedings are not dismissed, then they must remain on foot. The rationale for this approach appears to be that if the plaintiff appealed, it would not then be necessary for the defendant to appeal against the dismissal of the third party proceedings. Those proceedings would be resumed if the appeal was successful.
34 As I have noted above, one of the heads of relief claimed by the defendant against the third parties was a declaration that one or other or both were liable to indemnify the defendant in respect of any liability of the defendant to the plaintiffs. I held that if I was wrong on the construction issue, the defendant would be entitled to such an indemnity. And in my view, if there was a successful appeal by the plaintiffs against
(Page 9)
- my decision, the defendant would be entitled to rely on that indemnity to protect her against the liability to the plaintiffs which would arise thereby.
35 That being so, it would be inappropriate to dismiss the third party proceedings, even though the result is presently irrelevant, given the defendant's success in defending the plaintiffs' claim.
36 Finally, I have to deal with the costs of the hearing in which counsel for the parties made their submissions in relation to the costs of the proceedings.
37 The result is that the plaintiffs were unsuccessful in their attempt to impose liability for costs on the third parties. And the defendant was unsuccessful in her attempt to claim unrecoverable costs from the third parties.
38 In these circumstances, I consider that the plaintiffs and the defendant should each pay one half of the third parties' costs, to be taxed, if not agreed.
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