Neo Modular Pty Ltd v Enderby Apartments Investment Pty Ltd
[2022] WASC 55
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: NEO MODULAR PTY LTD -v- ENDERBY APARTMENTS INVESTMENT PTY LTD [2022] WASC 55
CORAM: ALLANSON J
HEARD: ON THE PAPERS
DELIVERED : 21 FEBRUARY 2022
FILE NO/S: CIV 1238 of 2020
BETWEEN: NEO MODULAR PTY LTD
Plaintiff
AND
ENDERBY APARTMENTS INVESTMENT PTY LTD
Defendant
ENDERBY APARTMENTS INVESTMENT PTY LTD
Plaintiff by counterclaim
NEO MODULAR PTY LTD
Defendant by counterclaim
Catchwords:
Costs - Special costs order in interlocutory proceedings - Where plaintiff sought to add parties and plead causes of action in conspiracy and deceit - Whether threshold test for special costs order met - Turns on facts
Legislation:
Legal Profession Act 2008 (WA)
Supreme Court Act 1935 (WA)
Result:
Application granted
Special costs order made
Category: B
Representation:
Counsel:
| Plaintiff | : | No appearance |
| Defendant | : | No appearance |
| Plaintiff by counterclaim | : | No appearance |
| Defendant by counterclaim | : | No appearance |
Solicitors:
| Plaintiff | : | Bennett + Co |
| Defendant | : | Murfett Legal |
| Plaintiff by counterclaim | : | Murfett Legal |
| Defendant by counterclaim | : | Bennett + Co |
Case(s) referred to in decision(s):
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 (S)
ALLANSON J:
Introduction
On 12 November 2021, by consent, I dismissed the plaintiff's application to join parties and to add new causes of action. The plaintiff was ordered to pay the defendant's costs, including reserved costs, to be taxed if not agreed.
On 6 December 2021, the defendant applied for special costs orders, pursuant to s 280(2) of the Legal Profession Act 2008 (WA) and s 37 of the Supreme Court Act 1935 (WA). The application was dealt with on the papers.
History of the action
On 18 February 2020, the plaintiff, Neo Modular Pty Ltd, commenced the action by writ of summons with statement of claim. Enderby Apartments Investment Pty Ltd was named as the sole defendant.
On 13 March 2020, the plaintiff filed an amended statement of claim.
On 3 April 2020, the plaintiff applied for summary judgment. The plaintiff did not press the application and, on 15 June 2020, it was dismissed with costs in the cause.
On 29 September 2020, the defendant filed a defence and counterclaim.
On 14 October 2020, the plaintiff filed a reply and defence to counterclaim. The plaintiff also filed a re‑amended statement of claim on 14 October 2020.
After further interlocutory steps, on 29 April 2021 the plaintiff applied for orders that:
(1)Pilbara Metro Developments Pty Ltd be joined as second plaintiff to the action;
(2)nine further defendants be joined as parties; and
(3)the plaintiffs have leave to file a further re-amended statement of claim.
The application was supported by an affidavit of Demi Ellen Swain, sworn 21 April 2021, which attached a minute of a proposed further re‑amended statement of claim, dated 12 April 2021. As well as joining additional parties, the plaintiff now proposed to plead causes of action in misleading and deceptive conduct, conspiracy and deceit.
The defendant opposed the application.
On 16 July 2021, I admitted the action to the Commercial and Managed Cases List.
On 11 August 2021, the plaintiff filed and served an amended application with a revised minute of the proposed statement of claim.
On 13 August 2021, after a short hearing, the plaintiff's application was adjourned to enable conferral with regard to the revised minute. The costs of the day were reserved.
On 17 August 2021, I made orders for the plaintiff to provide a minute of proposed further re‑amended statement of claim to the defendant and for the parties to confer in respect of the minute. The plaintiff was then to file a minute of proposed further re‑amended statement of claim and the joinder application would be listed for a special appointment.
On 28 September 2021, the plaintiff filed an Amended Minute of Proposed Further Re‑Amended Statement of Claim. The plaintiff required leave to amend in terms of that minute because of the addition of parties. The plaintiff still pleaded causes of action in misleading and deceptive conduct, conspiracy and deceit.
On 1 October 2021, the plaintiff filed supplementary submissions.
On 15 October 2021, the defendant filed supplementary submissions.
The plaintiff, without leave, filed a further re‑amended statement of claim on 15 October 2021. The amended pleading no longer sought to join additional defendants. The plaintiff sent the statement of claim to the defendant's solicitors, by email, after close of business on 15 October, a Friday.
While the plaintiff did not seek to join the additional defendants, it did plead conduct by those persons whom it had previously sought to join. The plaintiff maintained the plea of misleading and deceptive conduct. The causes of action for deceit and conspiracy were not included.
In correspondence to my chambers, the solicitors for the plaintiff advised that the plaintiff no longer pressed its application 'insofar as it relates to deceit and conspiracy at this time'. Counsel for the plaintiff confirmed at the hearing on 19 October 2021, that deceit and conspiracy would potentially be raised at a later stage.
In effect, the plaintiff was proceeding in stages: first, amend the statement of claim, without leave, to introduce a cause of action which is an apportionable claim; second, on the basis of the apportionable claim, join the additional parties; third, potentially, amend to raise deceit and conspiracy against all defendants.
The matter was not resolved on 19 October 2021, and was adjourned for hearing on a date to be fixed, with the defendant to file a minute of proposed orders identifying those parts of the statement of claim which it contended should be struck out and the grounds of that application.
The costs of the day were reserved.
Following additional conferral, the parties filed a memorandum of consent orders. On 12 November 2021, by consent, I ordered that the application be dismissed, with costs.
Since then, the action has proceeded with the plaintiff filing a Further Further Re‑Amended Statement of Claim on 8 December 2021, to which the defendant has pleaded an Amended Defence and Counterclaim.
The costs application
By s 280(2) of the Legal Profession Act:
… if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following —
…
(c)remove limits on costs fixed in the determination;
The principles applicable to making a special costs order pursuant to s 280(2) are now well established.[1] The threshold question is whether, in the court's opinion, the amount of costs allowable under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter.
[1] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 (S) [11] ‑ [16].
A special costs order does not replace the process of taxation or assessment, but modifies the limits within which that process takes place: 'Even where orders are made under s 280(2) of the Act, it nevertheless remains the task of the taxing officer to consider the reasonableness of and necessity for the work undertaken, and to make a judgment about the remuneration reasonably required'.[2]
[2] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] (S) [11].
The defendant's submissions
The defendant submitted that the joinder application was made over the course of seven months, involving four separate minutes of proposed further re‑amended statement of claim involving the proposed joinder of an additional plaintiff and nine additional defendants. Three special appointments were adjourned part heard. The plaintiff filed a further re-amended statement of claim against the defendant one clear working day prior to the special appointment on 19 October 2021, which was subsequently struck out by consent.
The defendant submitted that, due to the number of minutes of proposed amended pleading advanced by the plaintiff, the joinder application effectively comprised more than one application. Each minute required extra work to identify the documents pleaded in it, and how each differed from its predecessor.
The defendant supported its application by a draft bill of costs. The time spent dealing with application, and the costs actually incurred, clearly exceed those which might be recovered under the scale in the determination.
The defendant sought orders that the plaintiff pay the defendant's costs of the application without regard to the limit under item 10(a) of the Legal Practitioners (Supreme and District Courts) (Contentious Business) Determination 2020. The defendant did not argue for an increase in the hourly rates of the practitioners who carried out the relevant work
The plaintiff's submissions
The plaintiff submitted that the significance of the issues at stake is relevant to the degree of work properly and reasonably done in preparing for and presenting the case at trial, and it accepted that it may be relevant that a party has applied significantly more resources for the various steps in the litigation than those contemplated under the relevant costs determination.
The plaintiff also accepted that the claims of deceit and conspiracy against the proposed additional parties may be considered complex, and are important given the seriousness of the allegations. It submitted, however, that those considerations do not apply to the defendant, as those claims were against the proposed additional defendants. The defendant was a party to the additional causes of action only by reason of the conduct of the proposed eighth defendant ‑ a director of the defendant (and of the proposed fourth defendant).
The proposed additional parties to the proceeding did not appear to oppose their joinder.
The plaintiff further submitted that the defendant had not adduced evidence to show that the joinder of the additional parties would have significantly delayed the trial of the action or increased its scope and length.
Defendant's reply
The defendant, by leave, filed a short responsive submission. It submitted that, contrary to the plaintiff's submissions, the joinder application did seek leave for the joinder of claims against the defendant for deceit[3] and conspiracy,[4] as well as the claim for misleading or deceptive conduct.[5] The defendant submitted that the allegations against its director (the proposed eighth defendant) did not require that the defendant company be joined in claims against him.
[3] Plaintiff's amended minute of proposed further re-amended statement of claim filed 28 September 2021, [84] and [85].
[4] Plaintiff's amended minute of proposed further re-amended statement of claim filed 28 September 2021, [86] and [87].
[5] Plaintiff’s amended minute of proposed further re-amended statement of claim filed 28 September 2021, [81] and [83].
Consideration
First, it is well established that the managing judge may, from their own experience in the management of the action, form a view of the difficulty, complexity or importance of a matter.
I have no doubt that the present matter was both complex and important: the allegations that it was a party to deceit and conspiracy are serious allegations and important to the defendant. The complexity of the proposed pleading ‑ quite apart from the multiple iterations – is demonstrated by a plea that went from 23 pages to 68 pages. The number of parties required careful attention to what was being alleged and against whom.
To take one example, the plaintiff pleaded, in detail and at length, a 'primary strategy' and a 'varied primary strategy', which then found expression in the conspiracy plea:
By reason of the matters pleaded in paragraphs 45 and 48 above, on a date between on or about 12 August 2016 (see paragraph 48.1 above) and on or about 10 February 2020 (see paragraph 73 above), the Defendants agreed to implement the Primary Strategy, and subsequently the Varied Primary Strategy, in full knowledge of the matters pleaded in paragraph 63 above and, specifically, the First Plaintiff's entitlement to hold a first ranking mortgage over the Property until Senior Finance had been procured, with the intention of causing harm to the Second Plaintiff (between on or about 12 August 2016 and 1 December 2016) and the Second Plaintiff and the First Plaintiff (from on or about 1 December 2016) by implementing the Varied Primary Strategy as described in paragraph 48 above …[6]
[6] Plaintiff's amended minute of proposed further re-amended statement of claim filed 28 September 2021, [86].
Second, I accept the submission of the defendant that allegations of deceit and conspiracy were made against it, and not only against the other proposed defendants.
The material facts pleaded in relation to the 'primary strategy' and the 'varied primary strategy' included allegations of conduct by the proposed eighth defendant, 'in his personal capacity and in his capacity as a director of the First Defendant'.[7] The plea of deceit alleged knowing false representations by 'each of the First to Fourth Defendants and the Sixth to Eighth Defendants in their personal capacities and in their capacity as directors of those Defendants'.[8] The allegation that the torts were committed by the conduct of a director, in that capacity, does not lessen the complexity of the plea or the need for the defendant to fully respond to it.
[7] Plaintiff's amended minute of proposed further re-amended statement of claim filed 28 September 2021, [45.1], [45.3], [48].
[8] Plaintiff's amended minute of proposed further re-amended statement of claim filed 28 September 2021, [84].
It was, in my opinion, not only reasonable but necessary for the defendant to address the complexity of the whole of the proposed claim. The defendant has a sufficiently arguable case that the amount of costs allowable is inadequate because of the time required to do so.
Finally, it is not necessary for the defendant to adduce evidence that adding 10 additional parties would have significantly delayed the trial of the action or increased its scope and length. That is something I can assess from my own knowledge of the action.
I am satisfied that the defendant has established the threshold for a special costs order removing the limits with regard to time in the applicable item of the costs determination. I make no order as to the rates of the practitioners involved.
Finally, the plaintiff made specific submissions on the costs relating to locating documents pleaded in the minutes of amended claim, and submitted that the defendant's draft bill of costs should be reduced by at least the sum of $4,667. The plaintiff submitted that I may make a ruling on specific items for the taxing officer's benefit. I would only do so if satisfied that, on the information before me, I could fairly exercise that power and that the particular item is not better dealt with in the context of the whole taxation. I am not satisfied I should make any ruling. The plaintiff's argument should be made to the taxing officer.
There will be orders in terms of pars 1 and 2 of the defendant's memorandum of proposed orders filed 6 December 2021.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
TB
Associate to the Honourable Justice Allanson
21 FEBRUARY 2022
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