Netglory Pty Ltd v Caratti
[2013] WASC 364 (S)
•30 OCTOBER 2013
NETGLORY PTY LTD -v- CARATTI [2013] WASC 364 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2013] WASC 364 (S) | |
| Case No: | CIV:2917/2010 | ON THE PAPERS | |
| Coram: | EDELMAN J | 30/10/13 | |
| 6 | Judgment Part: | 1 of 1 | |
| Result: | Orders made | ||
| B | |||
| PDF Version |
| Parties: | NETGLORY PTY LTD ALLEN BRUCE CARATTI HOCKING LAND COMPANY PTY LTD JOANNE DE HOLLANDER |
Catchwords: | Practice and procedure Costs Whether appropriate to adjust costs orders Whether reserved costs should be included in cost orders without identification |
Legislation: | Rules of the Supreme Court 1971 (WA) |
Case References: | Netglory Pty Ltd v Caratti [2013] WASC 364 O'Rourke v P & B Corp Pty Ltd [2008] WASC 36 (S) Soia v Bennett [No 5] [2012] WASC 289 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
ALLEN BRUCE CARATTI
First Defendant
HOCKING LAND COMPANY PTY LTD
Second Defendant
JOANNE DE HOLLANDER
Third Party
Catchwords:
Practice and procedure - Costs - Whether appropriate to adjust costs orders - Whether reserved costs should be included in cost orders without identification
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Orders made
Category: B
Representation:
Counsel:
Plaintiff : No appearance
First Defendant : No appearance
Second Defendant : No appearance
Third Party : No appearance
Solicitors:
Plaintiff : Chris Stokes & Associates
First Defendant : Torrens Legal
Second Defendant : Torrens Legal
Third Party : No appearance
Cases referred to in judgment:
Netglory Pty Ltd v Caratti [2013] WASC 364
O'Rourke v P & B Corp Pty Ltd [2008] WASC 36 (S)
Soia v Bennett [No 5] [2012] WASC 289 (S)
1 EDELMAN J: When I delivered my reasons for decision in this matter the parties sought the opportunity to make submissions on costs. Brief submissions were e-mailed. The parties agreed that the issue would be dealt with on the papers.
2 The defendants sought the following orders (with minor amendments for clarity):
(1) The plaintiff's claims be dismissed.
(2) The counterclaims by the first and second defendants be upheld and it be declared that
(i) the Loan Agreement sued upon by the plaintiff between the plaintiff and the second defendant, and
(ii) the Guarantee between the plaintiff and first defendant,
are null and void.
(3) The plaintiff pay the costs of the first and second defendants including any reserved costs to be taxed if not agreed. These costs include the costs of obtaining the transcript of the trial.
(4) The Third Party Notice of the first defendant against the third party be dismissed with no order as to costs.
3 Only order (3) was opposed. Netglory said that the order should be that Netglorypay 50% of the costs of Mr Caratti and the Hocking Land Company to be taxed if not agreed. This submission must be rejected.
4 It is trite that the general rule is that costs follow the event.1 However, the event is not always the final outcome of litigation. The Rules of the Supreme Court O 66 r 1(3)contemplates the possibility of a successful party being deprived of costs in relation to an issue upon which the successful party failed where the issue increased the costs of the proceeding.2
5 Netglory points to two reasons which are said to support an order that Mr Caratti and the Hocking Land Company should obtain only 50% of their costs:
(i) A significant portion of the action, including the pleadings, discovery, preparation of witness statements, expert forensic evidence, and evidence at trial, was devoted to the issue of whether Mr Caratti signed each of the loan agreement and the guarantee agreement. Netglory was successful in establishing that Mr Caratti and the Hocking Land Company executed each of those documents.
(ii) A number of other defences were pleaded by the defendants and remained as defences until after the lodgement of closing submissions. They included the claims of misleading and deceptive conduct, mistake, and unconscionable conduct. Those defences were, in fact, maintained even in closing written submissions. It was only by a note to the Court after filing of closing submissions that these defences were withdrawn.
6 I do not accept that these two reasons justify any reduction in the costs which should be awarded to the successful defendants. This is so for four reasons.
7 First,although it is true that part of the action was devoted to the issue of whether Mr Caratti signed each of the loan agreement and the guarantee agreement, this issue was inextricably linked with Netglory's claim that Mr Caratti signed each document to give effect to an antecedent oral agreement. For many reasons, that claim was rejected.
8 It has been said that this Court should only adjust a cost order by reference to particular issues if 'it is clear that those issues were significantly discrete, raised costs that can be separately and specifically determined, and were issues upon which the unsuccessful party has demonstrably failed.'3 Whether or not O 66 r 1(3) should be interpreted as requiring that costs must always be separately and specifically determined before an adjustment of costs is made, the lack of a clear separation of the issue is a significant factor which must militate against adjusting a costs order.
9 Secondly, the signature of Mr Caratti on the documents was also inextricably associated with evidence concerning the circumstances in which Mr Caratti signed those documents. Netglory was unsuccessful on the issue arising from evidence about the circumstances of signature. Once again, the lack of clear separation of the issue of whether Mr Caratti signed the documents, and the issues concerning the circumstances of his signature, militate against any apportionment of costs.
10 One of the central issues at trial was whether Mr Caratti's signature had been witnessed by Mr Pollock and properly attested. This issue was relevant to the question of whether the Loan Agreement and Guarantee were enforceable as deeds in circumstances in which the Hocking Land Company received no consideration for, and took no benefit in exchange for, its undertakings under the Loan Agreement.
11 In relation to the circumstances in which Mr Caratti signed the documents, Mr Pollock's evidence, although shifting on this and other points, was that he witnessed Mr Caratti's signature on an occasion at which Ms de Hollander was possibly also present.4
12 I rejected Mr Pollock's evidence.5 It is also relevant that it was never Netglory's case that Mr Caratti had signed the documents on an occasion when Mr Pollock, or any person associated with Netglory, was not present so that Netglory could not have known whether Mr Caratti's signature was witnessed.6
13 Thirdly, the time and expense associated with the litigation of the issue concerning whether Mr Caratti signed the documents was a small part of the whole of the proceedings. Ultimately, as I have explained, its greatest significance was the possible support provided by the conclusion that Mr Caratti signed the documents for the proposition that there was an antecedent oral agreement to which those documents were said to be referable. But the oral agreements were inherently incredible.
14 Fourthly,even if the failure of a defence were to be treated as a matter which could be the subject of an adjustment of costs in the same way as the failure of a separate cause of action,7 the withdrawal of the defences of mistake, unconscionable conduct, and misleading or deceptive conduct, had no real effect on the trial. None of these matters assumed any prominence in the trial. Counsel for Netglory rightly observed that some of these matters were dealt with 'perfunctorily' in cross-examination.8 They were also closely associated with the issues concerning the circumstances of Mr Caratti's signature.
15 For these four reasons, the orders at [2] above should be made, but with one exception. That exception is that reserved costs should not be included in the order. I do not accept the written submission by counsel for the defendants that automatic inclusion of reserved costs in an order for costs is a 'normal practice'.9 In some circumstances it may be disproportionate to the overriding principles of case management to conduct an audit of past arguments in order to determine whether, on every occasion in which costs were reserved, those costs should follow the event. But this does not mean that it is appropriate for the Court simply to order that all reserved costs should be treated instantly as if they were orders for costs in the cause without even identification of the occasions of the reservations of costs. This is particularly the case in a matter such as this which was commenced in 2010, but only admitted into my list in 2012.
1Rules of the Supreme Court 1971 (WA) O 66 r 1.
2Rules of the Supreme Court 1971 (WA) O 66 r 1(3).
3O'Rourke v P & B Corp Pty Ltd [2008] WASC 36 (S) [13] (Martin CJ).
4 ts 225 (Mr Pollock).
5Netglory Pty Ltd v Caratti [2013] WASC 364 [84], [473].
6Netglory Pty Ltd v Caratti [2013] WASC 364 [191].
7Rules of the Supreme Court 1971 (WA) O 66 r 2.
8 ts 644.
9Soia v Bennett [No 5][2012] WASC 289 (S) [71](Commissioner Sleight).
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