Nicvira Nominees Pty Ltd v Subramaniam

[2006] WADC 136 (S)

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION	: PERTH
CITATION	:  NICVIRA NOMINEES PTY LTD -v- SUBRAMANIAM [2006] WADC 136 (S)
CORAM	: MAZZA DCJ
HEARD	: 14-16 AUGUST 2006
DELIVERED	: 1 SEPTEMBER 2006
SUPPLEMENTARY
DECISION	: 27 SEPTEMBER 2006
FILE NO/S	:  CIV 2730 of 2004
BETWEEN	:  NICVIRA NOMINEES PTY LTD (ACN 008 782 401) Plaintiff

AND

SINNATHURAI SUBRAMANIAM

Defendant

Catchwords:

Costs - Discretion to order indemnity costs - Effect of contractual term - Failure to specifically plead prayer for indemnity costs

Legislation:

District Court of Western Australia Act s 64
Rules of the Supreme Court O 20 r 1(b), O 66 r 1
Supreme Court Act 1935 (WA) s 37

[2006] WADC 136 (S)

Result:

Costs order in favour of plaintiff on party/party basis

Representation:

Counsel:

Plaintiff	:	Mr P A Kyle
Defendant	:	Mr H Kremer

Solicitors:

Plaintiff	:	Kyle & Company
Defendant	:	H Kremer & Co

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

Gomba Holdings (Vic) Ltd v Minories Finance Ltd (No 2) [1993] Ch 171
Kyabram Property Investments Pty Ltd v Murray [2005] NSWCA 87

Rumball & Ors v Mortimore [2000] WASC 126

Case(s) also cited:

Nil

[2006] WADC 136 (S)

MAZZA DCJ

1. MAZZA DCJ: On 1 September 2006 I delivered my judgment as to the substantive dispute between the parties. This decision concerns the issue of costs following upon my judgment.

2              Upon judgment being entered in favour of the plaintiff, the plaintiff

sought an order that the defendant pay the plaintiff's costs on an indemnity basis. The plaintiff's submission is that such an order is justified because it succeeded in its claim and it had an entitlement to indemnity costs based on cl 3.10(a)(iii) of the lease which is in the following terms:

"(a)	The Lessee must pay or reimburse the Lessor on demand for:
(iii) the costs, charges and expenses of the Lessor in connection with the contemplated or actual enforcement or preservation or exercise of rights under this Lease, including, without limitation, all costs, charges and expenses of a notice under section 81 of the Property Law Act 1969;
including in each case, without limitation, legal costs and expenses on a full indemnity basis or solicitor and own client basis, whichever is the higher."

3              The defendant opposed the cost orders sought by the plaintiff and

submitted that the plaintiff should be ordered to pay the defendant's costs up to the making of the order remitting the original Local Court proceedings to the District Court and thereafter, the defendant should pay the plaintiff's costs but on the appropriate Local Court scale. As the defendant was unsuccessful in his litigation with the plaintiff the costs orders sought by him are unusual. Mr Kremer, counsel for the defendant, sought to justify the making of the orders sought by him by reference to the history of the litigation.

4              As I observed in my earlier judgment this matter originated in two

actions filed in what was then the Local Court of Western Australia at Perth. The first, Plaint 11139 of 2001 was filed on 23 May 2001 and was a claim by the plaintiff for $3,386.42 for arrears of rent and Merchants Association fees. The second summons, Plaint 16728 of 2003 was filed on 10 September 2003 by the plaintiff and sought damages in the sum of $13,103.16 by reason of the defendant's abandonment of the premises. In both matters the defendant filed a notice of intention to defend and, ultimately, a defence and counterclaim. I note that the defendant's counterclaim was particularised on 18 January 2002 in the sum of $59,525

[2006] WADC 136 (S)

MAZZA DCJ

and that amount was, in effect confirmed, in the defendant's counterclaim in Plaint 16728 of 2003 filed 13 August 2004. Various other interlocutory steps were taken and at one point the plaintiff sought summary judgment against the defendant on Plaint 16728 of 2003. That application was dismissed and the plaintiff was ordered to pay the defendant's costs.

5              Shortly after the defendant filed its defence and counterclaim in

Summons No 16728 of 2003 the plaintiff filed an application to remit both Local Court plaints to the District Court. According to Deane DCJ's fiat, on 1 October 2004 orders in terms of the plaintiff's application were made by consent. As a result, both Local Court plaints were consolidated and remitted to this Court. The affidavit filed in support of the application to remit the plaints to this Court was sworn by Mr Perrin on behalf of the plaintiff. He deposed at par 20 "that the amounts in issue in these actions are in excess of the jurisdiction of the Local Court". At the time the jurisdiction of the Local Court was $50,000. Mr Perrin went on to depose in par 21 of the affidavit that it was in the interests of reducing costs and making the most efficient use of court time for the order to be made.

6              The defendant's counsel submitted before me that in effect the order

made by Deane DCJ was of the plaintiff's making and was unnecessary. He submitted that the actions (including the defendant's counterclaim) could have and should have stayed in the Local Court. He further submitted that as a result of the plaintiff obtaining the order from Deane DCJ the plaintiff had wasted the costs expended by the defendant in the Local Court proceedings. Accordingly, he urged me to order the plaintiff to pay the defendant's costs in the Local Court and that the plaintiff's costs in this Court should be taxed on the Local Court scale.

7              The order to remit the Local Court proceedings to this Court was

made, according to Deane DCJ's fiat, by consent. Even if it was not made by consent it was made without opposition from the defendant. In these circumstances the defendant cannot protest that the order was not of his making or unnecessary. I am not prepared to order the plaintiff to pay the defendant's costs in the Local Court.

8              It cannot be overlooked that the plaintiff has very substantially

succeeded in its action against the defendant and that the defendant abandoned his counterclaim on the first day of trial. In accordance with the general principles relating to costs, the plaintiff, as the successful party, is entitled to a costs order in its favour. I can see no reason why a costs order should not be made in favour of the plaintiff in the proceedings before the Local Court and this Court. Further, as the

[2006] WADC 136 (S)

MAZZA DCJ

defendant was content for the case to be heard in this Court, he cannot now, in my opinion, assert that costs should be assessed on the Local Court scale.

9              I am aware that costs orders against the plaintiff were made during

the course of the proceedings in the Local Court. Out of an abundance of caution I wish to make it clear that those orders stand and the amounts due to the defendant should be set off against the amounts due to the plaintiff.

10             With respect to the plaintiff's claim for indemnity costs, that prayer is

based wholly on the provisions of the lease to which I have already referred. The defendant opposes the making of an order for indemnity costs. The defendant's counsel submitted that where a successful party seeks costs on an indemnity basis pursuant to a contractual term that contractual term should be specifically pleaded. If it is not, and absent any other reason for ordering indemnity costs, the costs should be awarded on a party/party basis.

11             At no time in the Local Court and indeed in this Court has the

plaintiff specifically pleaded that it was entitled to costs pursuant to cl 3.10(a)(iii) of the lease. The closest one gets to such a plea is in the plaintiff's amended statement of claim filed in this Court on 8 July 2005 which contains the concluding words, "and the plaintiff claims the sum of $32,330.57 and further legal costs and expenses plus interest thereon pursuant to the terms of the lease" (emphasis added). The plaintiff's counsel submitted that the words "pursuant to the terms of the lease" refer indirectly to cl 3.10(a)(iii).

1. The making of an order for costs is in the discretion of the court; Supreme Court Act s 37(1), District Court of Western Australia Act s 64 and O 66 r 1 of the Rules of the Supreme Court. In exercising this discretion I recognise that where there is a contractual right to costs the discretion should ordinarily be exercised so as to reflect that contractual right: Gomba Holdings (UK) Ltd v Minories Finance Ltd (No 2) [1993] Ch 171, Scott J at 194, followed by Owen J in Rumball & Ors v Mortimore [2000] WASC 126 at [15].

13             In support of his submission opposing the making of an indemnity

costs order, the defendant's counsel referred me to Kyabram Property Investments Pty Ltd v Murray [2005] NSWCA 87. That case involved a mortgagee action but nothing turns on this distinction. The appellant maintained that it was entitled to its costs on an indemnity basis because of a provision in the mortgage between it and the respondent. Beazley JA,

[2006] WADC 136 (S)

MAZZA DCJ

with whom Hodgson and Ipp JJA agreed, was of the view that where the pleadings do not indicate that the claim for costs was other than a conventional claim for costs that claim should be specifically pleaded in order to comply with the requirement of the Rules of the Supreme Court that the plaintiff shall plead any matter which, if not pleaded specifically, may take the defendant by surprise: see Beazley JA at [16]. I note that the Rules of the Supreme Court of this State, specifically O 20 r 1(b) contain a very similar provision. In my opinion, the plaintiff was required to put the defendant on notice that it would seek an indemnity costs order pursuant to the lease by specifically pleading such an intention. The plaintiff failed to do so at least up until the filing of the amended statement of claim. Accordingly, costs up to this point should be paid by the defendant on a party/party basis.

14             What of the costs incurred by the plaintiff after the filing of the

amended statement of claim? Were the words "further legal costs and expenses … pursuant to the terms of the lease" sufficient to notify the defendant of a claim for indemnity costs. In my view, the wording is insufficient to properly put the defendant on notice of the intention to claim indemnity costs. In my opinion, a party in the position of the plaintiff in this case is obliged to state unambiguously that it claims indemnity costs from the defendants and state with precision the term or terms of the lease or other contract pursuant to which the order is sought.

1. In summary I propose to make the following order:

   The defendant pay the plaintiff's costs of the proceedings on a party/party basis, up to 1 October 2004 on the relevant Local Court scale or scales for Division 2 non-routine matters and thereafter on the scale applicable to District Court proceedings.