Norilya Minerals Pty Ltd v Easterday
[2009] WASC 191
•28 JULY 2009
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: NORILYA MINERALS PTY LTD -v- EASTERDAY [2009] WASC 191
CORAM: LE MIERE J
HEARD: 16 JANUARY 2009
DELIVERED : 28 JULY 2009
FILE NO/S: CIV 2364 of 2007
BETWEEN: NORILYA MINERALS PTY LTD
Plaintiff
AND
CLARK ERVIN EASTERDAY
LEONARD LANCELOT IRELAND
First DefendantsKAYLENE HOLDINGS PTY LTD (ACN 009 462 195)
Second DefendantBRENDA ANNE EASTERDAY
Third DefendantWEBGO PTY LTD (ACN 009 022 057)
Fourth DefendantFIM PTY LTD (ACN 008 964 609)
Fifth DefendantPAUL CHRISTOPHER IRELAND
Sixth Defendant
FILE NO/S :CIV 2232 of 1990
BETWEEN :NORILYA MINERALS PTY LTD
Plaintiff
AND
DEAN EDWARD IRELAND
CLARK ERVIN EASTERDAY
LEONARD LANCELOT IRELAND
Defendants
Catchwords:
Practice and procedure - Application for consolidation of actions - Whether convenient to consolidate the actions - Whether a party would be prejudiced by consolidation - Turns on own facts
Practice and procedure - Application to amend statement of claim - Whether amendments to statement of claim challenge orders made by the Court of Criminal Appeal - Whether court has power to make declaration - Whether court should exercise its discretion to grant declaration - Turns on own facts
Practice and procedure - Application to join executor as a defendant - Turns on own facts
Practice and procedure - Application for further security for costs - Whether consent orders may be varied by the court - Turns on own facts
Practice and procedure - Application for stay of the proceedings pending compliance with the orders of the Court of Criminal Appeal - Turns on own facts
Practice and procedure - Application that the plaintiff not be heard pending compliance with the orders of the Court of Criminal Appeal - Turns on own facts
Practice and procedure - Application for action to be struck out - Whether an abuse of process - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 18 r 4, O 83 r 1
Result:
Defendants' applications that the plaintiff not be heard or actions be stayed or struck out are dismissed
Plaintiff's application to join executor as a defendant in CIV 2232 of 1990 granted
Plaintiff's application to amend statement of claim in CIV 2232 of 1990 granted
Plaintiff's application to consolidate CIV 2232 of 1990 and CIV 2364 of 2007 granted
Defendants' application for further security for costs in CIV 2232 of 1990 dismissed
Defendants' application for further security for costs in CIV 2364 of 2007 granted
Category: B
Representation:
CIV 2364 of 2007
Counsel:
Plaintiff: Mr S M Davies
First Defendants : Mr M Ryan
Second Defendant : Mr M Ryan
Third Defendant : Mr M Ryan
Fourth Defendant : Mr M Ryan
Fifth Defendant : Mr M Ryan
Sixth Defendant : Mr M Ryan
Solicitors:
Plaintiff: Deacons
First Defendants : Bostock & Ryan
Second Defendant : Bostock & Ryan
Third Defendant : Bostock & Ryan
Fourth Defendant : Bostock & Ryan
Fifth Defendant : Bostock & Ryan
Sixth Defendant : Bostock & Ryan
CIV 2232 of 1990
Counsel:
Plaintiff: Mr S M Davies
Defendants: Mr M Ryan
Solicitors:
Plaintiff: Deacons
Defendants: Bostock & Ryan
Case(s) referred to in judgment(s):
Ainsworth v Criminal Justice Commission (1992) 175 CLR 564
Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334
Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256
C E Heath Casualty & General Insurance Ltd v Pyramid Building Society (in liq) [1997] 2 VR 256
Cliffs Robe River Iron Associates v Dravo Pty Ltd [1988] WAR 322
Easterday v State of Western Australia [2005] WASCA 202
Easterday v The Queen [2003] WASCA 69
Easterday v The State of Western Australia [2005] WASCA 105
Leaway v Newcastle City Council (No 2) [2005] NSWSC 826; (2005) 220 ALR 747
Morgan v 45 Flers Avenue Pty Ltd (1987) 11 NSWLR 573
Paino v Hofbauer (1988) 13 NSWLR 193
Rogers v The Queen (1994) 181 CLR 251
Siebe Gorman & Co Ltd v Pneupac Ltd [1982] 1 WLR 185
LE MIERE J: The court heard a number of applications in CIV 2232 of 1990 and CIV 2364 of 2007. The applications heard in CIV 2232 of 1990 were:
1.The plaintiff's application to consolidate CIV 2232 of 1990 and CIV 2364 of 2007;
2.The plaintiff's application to amend the statement of claim;
3.The defendants' application for further security for costs; and
4.The defendants' application that the plaintiff not be heard until it has complied with orders made in the Court of Criminal Appeal in appeal CCA 111 ‑ 113 of 1999 made on 28 October 2005, 8 February 2006 and 14 November 2008 respectively (the CCA orders) or alternatively that the action be stayed until the plaintiff complies with those orders;
The applications heard in CIV 2364 of 2007 were:
1.The plaintiff's application to consolidate CIV 2232 of 1990 and CIV 2364 of 2007;
2.The plaintiff's application to join Adam Jonathon Ireland (as executor of the estate of Dean Ireland) as a defendant;
3.The defendants' application for security for costs;
4.The defendants' application that CIV 2364 of 2007 be struck out as a collateral attack on the CCA orders or so much of the pleading be struck out that is a collateral attack on the CCA orders;
5.The defendants' application that the plaintiff not be heard until it has complied with the CCA orders or in the alterative that the action be stayed until the plaintiff complies with the CCA orders.
Before referring further to those applications it is convenient to set out the circumstances of, and giving rise to, the two actions.
Background
Noranda Inc, a company incorporated in Canada, owned a group of companies which were incorporated, and carried on business, in Australia including Noranda Group Pty Ltd and Noranda Pty Ltd. Noranda Inc owned all of the issued share capital in Noranda Group Pty Ltd and Noranda Group Pty Ltd owned all of the issued share capital in Noranda Pty Ltd. From 8 June 1990 all of the issued share capital in the plaintiff was owned by Noranda Group Pty Ltd and Perilya Mines NL (Perilya).
Clark Easterday, Dean Ireland and Leonard Ireland (the Prospectors) were the registered proprietors of prospecting licences 59/830 and 59/831 and exploration licence 89/639 (which replaced exploration licence 59/357) at Karpa Spring located near Mount Gibson (tenements). At various dates they arranged for drilling programmes to be conducted on the tenements:
1.In September 1988 ‑ phase one drilling. The results of the phase one drilling showed little gold of interest on the tenements.
2.In March 1990 ‑ phase two drilling. The results of the phase two drilling were very good generally and the assays showed high levels of gold.
In about March 1990 the Prospectors began to negotiate with Acarus Pty Ltd (Acarus) in relation to the sale of the tenements from the Prospectors to Acarus. Also, in March 1990 Perilya became interested in acquiring the tenements. Mr Cranney, the exploration manager of Perilya, contacted Mr Easterday and expressed interest in the tenements. He told Mr Easterday that Perilya was associated with the Noranda Group and that the two companies jointly owned the plaintiff. Dean Ireland informed Mr Clifton, the Managing Director of Perilya, that the Prospectors proposed to enter into an agreement with another interested party, Acarus.
On 8 June 1990 the plaintiff entered into an agreement with Acarus whereby the plaintiff would acquire a 30% share interest in Acarus in exchange for providing the $6 million purchase price to the Prospectors for the tenements. The agreement also gave to the plaintiff the right to acquire a further 20% interest in Acarus in consideration of the payment of an additional $4 million upon completion of an additional exploration programme.
On 11 June 1990 the Prospectors commenced a confirmatory drilling programme, known as the phase three drilling, and the phase three assay report showed a fairly good correlation between the phase two and phase three drilling results.
On 9 July 1990 Acarus exercised its option to purchase the tenements. On that day, and in accordance with the agreement between the plaintiff and Acarus, the plaintiff paid the purchase price of $6 million to the Prospectors. The plaintiff obtained the $6 million by way of a loan from Noranda Pty Ltd. The $6 million was paid as follows:
1.$2.4 million to Dean Ireland;
2.$2.4 million to Clark Easterday;
3.$1.2 million to Leonard Ireland.
Subsequently the Prospectors made the following payments to, or on behalf of, other parties who, together with the Prospectors, are the defendants in CIV 2364 of 2007:
1.Dean Ireland made payments totalling $323,000 to purchase a property in the name of Kaylene Holdings Pty Ltd (Kaylene), the shares in which were beneficially owned by him;
2.Clark Easterday made a payment of $227,795 to purchase a property in the name of his wife, Brenda Easterday;
3.Clark Easterday paid the sum of $2.4 million into a Commonwealth Bank bank account in the name or names of Webgo Pty Ltd (Webgo), of which he was a director, and/or Brenda Easterday;
4.Leonard Ireland paid $755,000 into an R & I Bank bank account in the name of FIM Pty Ltd (FIM), of which he was a director; and
5.Leonard Ireland gave Paul Christopher Ireland, his brother, $60,000.
Between 22 July 1990 and 6 August 1990, Acarus and the plaintiff conducted a further confirmatory drilling programme, known as the phase four drilling, and the result of this was that there was no gold mineralisation of any significance in the tenements. Officers of Acarus and its owners suspected that the drilling samples from phases 2 and 3 had been 'salted' with gold by the Prospectors. On 31 July 1990 they made a formal complaint to the Western Australia Police. Between 12 and 21 August 1990 the Department of Minerals and Energy arranged and controlled a further drilling programme, known as the phase five drilling. No gold mineralisation of any significance was found.
Plaintiff commences CIV 2232 of 1990
On 15 August 1990 the plaintiff commenced CIV 2232 of 1990 against the Prospectors. The plaintiff claimed damages for fraudulent misrepresentation, alternatively damages for misleading or deceptive conduct, arising out of representations made by the Prospectors concerning the tenements. On the same day the plaintiff obtained an injunction restraining the defendants from dealing with their assets to preserve the monies that had been paid.
On 10 October 1990 the injunction was extended to Kaylene, Brenda Easterday, Webgo, FIM and Paul Ireland (the additional defendants) in respect of monies that had been paid to them by the Prospectors and assets acquired with those monies. In respect of the additional defendants in CIV 2364 of 2007, the plaintiff says that each of these parties received the payments set out above as volunteers. That is, they were not purchasers for value. Further, the plaintiff says that Webgo and FIM, at least, received the funds with the knowledge, through their respective directors, that the money had been procured from the plaintiff by means of fraudulent representations by the Prospectors and therefore with notice of the plaintiff's interest.
Prospectors convicted and the restitution orders made
On about 27 February 1991 the Prospectors were arrested and charged. On 28 July 1993 each of the Prospectors was found guilty of one count of conspiracy to defraud pursuant to s 411 of the Criminal Code 1913 (WA) (Criminal Code) and 10 counts of false pretences pursuant to s 409 of the Criminal Code in relation to the sale of the tenements.
On 30 July 1993 the trial judge, Hammond DCJ, ordered the Prospectors and the additional defendants to make restitution to the plaintiff of specified assets (primarily money) obtained by them as a result of the commission of the offences by the Prospectors. The restitution orders, which were later amended on 20 August 1993, were made pursuant to s 717 of the Criminal Code as that section then stood.
The Prospectors each appealed their convictions and enforcement of the restitution orders did not take place pending the outcome of those appeals. On 6 May 1994 the appeals were dismissed. After the appeals were dismissed the plaintiff enforced the restitution orders and recovered approximately $5.8 million from the Prospectors and the additional defendants. Upon restitution being made the plaintiff repaid its loan to Noranda Pty Ltd. The plaintiff has engaged in no other business.
On 18 August 1994, in reliance on the convictions, the plaintiff obtained summary judgment for damages to be assessed in CIV 2232 of 1990.
Convictions and restitution orders set aside
The matter was subsequently referred by the Prospectors to the Attorney General of Western Australia, who granted leave for the Prospectors to again appeal their convictions to the Court of Criminal Appeal under s 140 of the Sentencing Act 1995 (WA). On 28 March 2003 the Court of Criminal Appeal overturned the convictions of the Prospectors: see Easterday v The Queen [2003] WASCA 69.
On 4 March 2005 the Court of Criminal Appeal declared that the restitution orders made on 30 July 1993 against the Prospectors and the additional defendants were null and void, that the court has power to order repayment with interest to the Prospectors and the additional defendants of what was paid by them pursuant to those restitution orders and that the power is discretionary: see Easterday v The State of Western Australia [2005] WASCA 105. The Prospectors and the additional defendants then applied for orders against the plaintiff for repayment of what was paid by them to the plaintiff, with interest. They also sought an order that the judgment entered against them in favour of the plaintiff in CIV 2232 of 1990 be set aside. The plaintiff acknowledged the entitlement of the Prospectors and the additional defendants to repayment of what was paid by them pursuant to the restitution orders, together with interest, but contended that the execution of the orders for repayment should be stayed pending determination of its claims in CIV 2232 of 1990. The Court of Criminal Appeal refused the plaintiff's application for a stay: see Easterday v The State of Western Australia [2005] WASCA 202.
On 28 October 2005 the Court of Criminal Appeal ordered the plaintiff to repay to each of the defendants the amount received by the plaintiff from him, her or it on enforcement of the restitution orders. Steytler J, with whom the other members of the court agreed, said that both parties accepted that the judgment in CIV 2232 of 1990 should be set aside but that is something which ought be done by a civil court and not by the Court of Criminal Appeal: see Easterday v The State of Western Australia [2005] WASCA 202, [21].
Subsequently, the plaintiff consented to the summary judgment it had obtained in CIV 2232 of 1990 being set aside and the summary judgment was set aside.
Dean Ireland died on 26 December 2005. Following the death of Dean Ireland, his executor, Adam Jonathon Ireland, was added as a defendant in his place in CIV 2232 of 1990.
Plaintiff commences CIV 2364 of 2007
On 21 December 2007 the plaintiff commenced CIV 2364 of 2007. The defendants in CIV 2364 of 2007 are Clark Easterday, Leonard Ireland, Kaylene, Brenda Easterday, Webgo, FIM and Paul Ireland. By its indorsement of claim the plaintiff said that its claim arises from representations made by the Prospectors concerning the tenements, payments made by the plaintiff to the Prospectors in reliance on the representations, a total failure of consideration in respect of the payments made by the plaintiff, certain further payments of the funds received by the Prospectors from the plaintiff to the additional defendants, the orders for restitution made by Hammond DCJ against the defendants in favour of the plaintiff, the order of the Court of Criminal Appeal made 28 October 2005 pursuant to which the court ordered the plaintiff to repay certain sums to Clark Easterday and Leonard Ireland and the order of the Court of Criminal Appeal made 8 February 2006 pursuant to which the court ordered the plaintiff to repay certain sums to the additional defendants. The relief claimed by the plaintiff is:
1.declarations that for the period of time those parties held funds, or property derived from the funds, of the plaintiff that were paid to the defendants, those funds or property were held on trust for the plaintiff;
2.declarations that any sums repaid by the plaintiff to any of these parties pursuant to the repayment order made on 8 February 2006 are to be held on trust for the plaintiff;
3.declarations that the plaintiff is entitled to retain the monies it received pursuant to the restitution orders made by the District Court by way of restitution for the total failure of consideration in respect of the payment of the purchase price for the tenements.
4.declarations that the plaintiff is entitled to an equitable set‑off in respect of its liabilities to the parties who have issued the statutory demands to such an extent that it has no liability to make any payments to them.
The plaintiff also says that the defendants, in the event that any sums are repaid to them by the plaintiff, would be receiving those funds with knowledge that the funds were procured from the plaintiff by means of fraudulent representations by the Prospectors and with knowledge that the plaintiff is and will remain the beneficial owner of the funds.
The plaintiff says that CIV 2364 of 2007 became necessary because the original constructive trust that arose as the result of the transfer of funds from the Prospectors to the additional defendants was extinguished when the funds were repaid to the plaintiff in accordance with the orders made on 30 July 1993 and amended on 20 August 1993. The plaintiff's case is that a new constructive trust will arise on repayment of the funds by the plaintiff.
On 16 October 2007 the plaintiff was served with various creditor statutory demands for payment issued by each of the additional defendants. The plaintiff filed an application to set aside the statutory demands. On 17 April 2008 Master Sanderson set aside each of the statutory demands.
I will now consider each of the interlocutory applications. I will first consider the defendants' applications in CIV 2232 of 1990 and CIV 2364 of 2007 that the plaintiff not be heard or the action be stayed until the plaintiff complies with the CCA orders.
The defendants' application that the plaintiff not be heard or action be stayed
On 28 October 2005 the Court of Criminal Appeal ordered that the plaintiff make the following repayments of the sums received by it pursuant to the restitution orders of Hammond DCJ made on 30 July 1993:
1.$1,866,818.62 to Clark Easterday;
2.$1,898,703.33 to Dean Ireland;
3.$197,033.09 to Leonard Ireland.
On 8 February 2006 the Court of Criminal Appeal ordered that the plaintiff make the following payments, in repayment of the amounts paid to the plaintiff pursuant to the restitution orders made by Hammond DCJ:
1.$65,000 to Paul Ireland;
2.$294,340.42 to Brenda Easterday;
3.$344,430.48 to Webgo;
4.$340.42 to Colleen Ireland;
5.$206,000 to Kaylene;
6.$1,012,247.74 to FIM.
On 14 November 2008 the Court of Appeal ordered the plaintiff to pay interest and costs to the parties named in the orders made on 28 October 2005 and 8 February 2006.
Clark Easterday has sworn that the total amount outstanding and due to be paid by the plaintiff to the defendants in both proceedings as at 14 November 2008, inclusive of principal and interest, is $11,361,117. The plaintiff has made no payment of any of the sums ordered to be paid to the defendants.
The defendants say that the plaintiff has shown the capacity to make payments as ordered in these and other court proceedings against the defendants as follows:
(1)In CIV 2232 of 1990:
(a)initial payment of security for costs of $25,500 in 1990;
(b)the further order for security of costs complied with in 2008 for $30,000; and
(c)costs awarded against it on the setting aside of the summary judgment order of $900.
(2)In the Federal Court matter no (P) WAD 158 of 2006 concerning the late Dean Edward Ireland, $5,000 by way of security for costs.
Robert Henry Neil Symons, a director of the plaintiff, has sworn that the plaintiff has no assets or liabilities other than:
1.the choses in action constituted by proceedings CIV 2232 of 1990 and CIV 2364 of 2007; and
2.the orders of the Court of Criminal Appeal in favour of the defendants.
Mr Symons has sworn that the plaintiff does not have the capacity to pay $11 million, or any amount, to the defendants in compliance with the orders of the Court of Criminal Appeal but has a chose in action of at least the same amount.
Mr Symons has sworn that the plaintiff does not carry on any business and has not carried on any business at any time other than the transaction with Acarus giving rise to these proceedings. The ultimate holding company of the plaintiff is Xstrata Plc, an international mining company based in the United Kingdom (Xstrata). To date, the Xstrata group of companies has provided funds from time to time to the plaintiff to enable it to prosecute these proceedings, including the provision of funds to meet orders for security for costs made in these proceedings. However, there is no agreement between Xstrata and the plaintiff which requires Xstrata to fund the litigation or to provide the plaintiff with sufficient funds to comply with any order of the court to provide security for costs or to make any other payment. The plaintiff's capacity to make a payment for security for costs or any other payment is dependent upon whether Xstrata is willing to advance the necessary funds to the plaintiff.
The defendants' grounds for orders that the plaintiff not be heard until it complies with the orders of the Court of Criminal Appeal are as follows:
(1)When the orders were made by the Court of Criminal Appeal, the plaintiff sought a stay of the orders. The stay was not granted.
(2)The plaintiff has continued to incur costs, both on its own account and to cause the defendants to incur costs, and has not complied with the CCA orders.
(3)The way in which the plaintiff has carried on its action is not only prejudicial to the defendants but is an abuse of the court processes by putting the defendants to further costs when the plaintiff is refusing to comply with the CCA orders.
Power to refuse to hear a party
It is sometimes loosely said that a person in contempt of court must not be heard. The law in this area was examined by Campbell J in Leaway v Newcastle City Council (No 2) [2005] NSWSC 826; (2005) 220 ALR 747. The Land and Environment Court of New South Wales had ordered that the plaintiff be restrained from using premises otherwise than in accordance with the development consent and later when the plaintiff did not obey this order, the court made an order that the plaintiff and its directors pay a fine. No part of the fine was paid. The solicitor for the council sent a letter to persons who would normally deposit waste materials at the plaintiff's waste depot informing them that the plaintiff's business was being operated illegally and that the customers might be prosecuted for offences. The plaintiff sought an injunction to prevent further distribution of such material and damages for injurious falsehood. The defendant council objected to the plaintiff being heard on the application because of its contempt of the Land and Environment Court.
Campbell J examined and analysed the cases on the subject. His Honour found that the proposition that the court could not entertain the application of a litigant in contempt, is not a clearly established principle. The authorities suggest two possible approaches to determining whether a litigant in contempt should be heard. The first approach is to accept that, as a general rule subject to certain exceptions, a litigant in contempt should not be heard. The second approach is to treat the question of whether a litigant in contempt should be heard as a matter for the court's discretion. Because neither approach was clearly established as the authoritative means for determining the issue it was appropriate for the court to determine the issue in accordance with both approaches. An exception to the general principle that a litigant in contempt should not be heard is that the general rule should not apply if the contempt was committed in proceedings other than those in which the litigant in contempt sought to proceed. Because the plaintiff's contempt occurred in the course of separate and earlier proceedings before the Land and Environment Court, the general rule should not be applied to prevent the plaintiff from being heard in its application before the Supreme Court. The exercise of the court's discretion to hear a litigant in contempt is not open‑ended or unguided, but should rather be focussed on the objective of protecting the proper administration of justice. Given that the company's contempt arose from its refusal to pay a fine imposed in separate proceedings, and that numerous mechanisms existed in order to enforce that fine, the objective of protecting the proper administration of justice would not be furthered by refusing to hear the company in its present application.
The principle that a person in contempt of court should not be heard does not apply in this case. First, the evidence does not establish that the plaintiff is in contempt of the CCA orders. In Leaway v Newcastle Council Campbell J said at [50] non‑payment of an order for the payment of money could in some circumstances be contempt, but it is not always contempt. One circumstance where non‑payment of an order for payment of money would be unlikely to amount to contempt would be if the judgment debtor, through no action or decision of his own, simply did not have the means to pay. In this case the plaintiff paid the funds it received from the defendants pursuant to the restitution orders to Norilya Pty Ltd in repayment of the funds it had borrowed to pay the $6 million to the Prospectors. At that time the plaintiff did not know, and had no reason to know, that the Court of Criminal Appeal would in the future order those amounts to be repaid to the persons who had paid them to the plaintiff. In short, the defendants have not established, and have not attempted to establish, that the plaintiff is in contempt of the CCA orders.
Second, whichever approach to the principle that a party in contempt should not be heard, if there is such a principle, is adopted it should not be applied to prevent the plaintiff being heard in this case. The first approach is that there is a general rule that a party in contempt is not to be heard but the rule is subject to a number of exceptions. In Leaway Campbell J said at [61] that one exception to that general principle is that it does not apply when the contempt has been committed in different proceedings to the one in which it is contended that a litigant should not be heard. It does not matter that the two suits are closely related [70]. In this case the CCA orders were made in proceedings separate from the two actions in the course of which the present applications are brought.
The second approach is that the matter is in the discretion of the court. The court's discretion should be focussed on the objective of protecting the proper administration of justice. A general objective of protecting the administration of justice by taking steps so that court orders are not flouted does not require the court, in these actions, to refuse to hear the plaintiff. The plaintiff has failed to comply with the CCA orders because it is unable to do so not because it wilfully refuses to do so. The plaintiff has a legal liability to make the repayments in accordance with the CCA orders but says it has, in effect, a legal right to be discharged of that liability or, at least, an entitlement to receive from the defendants similar amounts. The plaintiff should not be deprived of the opportunity to pursue that right because of its inability to comply with the CCA orders.
Stay for abuse of process
The court has inherent power to stay proceedings that are an abuse of its process. What 'amounts to abuse of court process is insusceptible of a formulation comprising closed categories': Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 per Gleeson CJ, Gummow, Hayne and Crennan JJ at [9]. In Rogers v The Queen (1994) 181 CLR 251, (286) McHugh J observed that although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories:
(1)the court's procedures are invoked for an illegitimate purpose;
(2)the use of the court's procedures is unjustifiably oppressive to one of the parties; or
(3)the use of the court's procedures would bring the administration of justice into disrepute.
The defendants say that the actions are an abuse of process issued and maintained to avoid the consequences of the CCA orders. The defendants submit that if the plaintiff cannot or will not comply with the CCA orders it should not be permitted to continue these proceedings because to permit otherwise is to allow the court process to be abused.
The plaintiff is not using the actions for an improper purpose. The plaintiff is using the actions to establish and pursue the legal rights which it asserts in the actions. The effect of the plaintiff prosecuting the actions is not unjustifiably oppressive to the defendants. The plaintiff asserts it has certain rights. The defendants deny that is so. The plaintiff is using the actions to pursue those claimed rights. The actions will not bring the administration of justice into disrepute. The CCA ordered the plaintiff to repay the amounts it received under the restitution orders. The court has not determined the rights sought to be litigated in the actions. It does not bring the court into disrepute to allow the plaintiff to do so. The plaintiff has not paid the amounts it has been ordered to pay under the CCA orders because it cannot do so. It does not bring the court into disrepute for the court's procedures to be used to determine the legal rights of the parties in circumstances where one party has not complied with an order of the Court of Appeal in other proceedings because it is unable to do so.
The collateral attack ground
The defendants submit that the plaintiff's action in CIV 2364 of 2007 should be struck out as a collateral attack on the CCA orders or so much of the pleading should be struck out that is a collateral attack on the CCA orders. In their chamber summons the defendants submit that the grounds for the application include:
(a)The plaintiff sought a stay of the CCA orders and the stay was refused; and
(b)The plaintiff's claim specifically refers to the CCA orders and the relief sought by the plaintiff seeks to give the plaintiff grounds for it not to pay the restitution ordered and/or to effect a stay on such payment.
In their written submissions in support of the argument that action CIV 2364 of 2007 is a collateral attack on the CCA orders the defendants submitted that the action has been commenced for an improper purpose, that it is oppressive and it brings the administration of justice into disrepute. For the reasons I have already stated I find that action CIV 2364 of 2007 has not been commenced or maintained for an improper purpose, is not unduly oppressive so as to constitute an abuse of process and does not bring the administration of justice into disrepute. The plaintiff does not use CIV 2364 of 2007 for a purpose other than that for which the legal process was designed. The plaintiff is not seeking a collateral advantage beyond what the law offers.
The plaintiff is not in CIV 2364 of 2007 setting up the same case that was rejected by the Court of Criminal Appeal. The Court of Criminal Appeal found that the restitution orders made on 30 July 1993 were null and void and ordered repayment to the defendants of what was paid by them by way of restitution. The court did not consider whether the plaintiff was entitled to the relief it claims in CIV 2232 of 1990.
Defendants' applications that the plaintiff not be heard or actions be stayed or struck out are dismissed
For the reasons stated the following applications by the defendants will be dismissed:
1.the defendants' application in CIV 2232 of 1990 that the plaintiff not be heard until it has complied with orders made in the Court of Criminal Appeal or alternatively that the action be stayed until the plaintiff complies with those orders;
2.the defendants' application that CIV 2364 of 2007 be struck out as a collateral attack on the CCA orders; and
3.the defendants' application in CIV 2364 of 2007 that the plaintiff not be heard until it has complied with the CCA orders or in the alternative that the action be stayed until the plaintiff complies with the CCA orders.
Application to join executor of Dean Ireland's estate
The plaintiff applies in CIV 2364 of 2007 for an order that Adam Jonathon Ireland (as executor of the estate of Dean Edward Ireland) be joined as a defendant pursuant to O 18 r 4 of the Rules of the Supreme Court 1971 (WA).
The grounds for the application to join are set out in the affidavit of Kim Rosemary Lendich sworn 8 August 2008. Ms Lendich is a solicitor who, subject to the supervision of her partners, has the care and conduct of the matter on behalf of the plaintiff. Ms Lendich swears that on 13 March 1995 Dean Ireland lodged a debtor's petition pursuant to s 55 of the Bankruptcy Act 1966 (Cth). On 26 December 2005 Dean Ireland died. At the time the plaintiff commenced CIV 2364 of 2007 Ms Lendich was uncertain as to whether the deceased estate of Dean Ireland had been discharged from bankruptcy and, if it had, whether leave to commence the action against the estate was required. Accordingly, she recommended to the plaintiff that it not include the estate of Dean Ireland as a party while she carried out further investigations into the bankruptcy issues. Ms Lendich's subsequent investigations disclosed that Dean Ireland was discharged from bankruptcy on 14 March 1998. Ms Lendich says that in CIV 2364 of 2007 the plaintiff claims as against Dean Ireland a constructive trust, which trust arises after the date on which Dean Ireland was discharged from bankruptcy. For that reason she is of the view that leave to proceed against the deceased's estate is not required in CIV 2364 of 2007.
The defendants do not consent and do not object to the joinder of the estate of Dean Ireland. In their written submissions the defendants say that it may be necessary to obtain leave in the Federal Court to proceed in CIV 2364 of 2007 but do not elaborate upon that observation. I am not satisfied that the bankruptcy of the estate of Dean Ireland is a sufficient reason to refuse leave to join his executor. That is because the estate has been discharged from bankruptcy and the plaintiff alleges that its claim arises subsequent to the discharge from bankruptcy. It is otherwise proper to join the executor of the estate of Dean Ireland as a defendant.
Plaintiff's application to amend statement of claim in CIV 2232 of 1990
The plaintiff seeks leave to amend its statement of claim in accordance with its minute of proposed re‑amended statement of claim dated 14 January 2009. The plaintiff submits that in essence it seeks to amend its statement of claim to reflect the events which have occurred since the plaintiff filed its statement of claim in 1990. Those matters include the convictions of the Prospectors, the making and enforcing of the restitution orders, the setting aside of the Prospectors' convictions and the setting aside of the restitution orders and the making of the orders for repayment by the plaintiff to the defendants of the amounts paid by them to the plaintiff pursuant to the restitution orders.
The parties have conferred in relation to proposed amendments to the statement of claim. As a result of that conferral, and concessions made, the defendants pressed objections to only [40(d)] and [40(e)] of the proposed amended statement of claim. The plaintiff did not press the amendment to [40(e)] and hence the only amendment in issue is the amendment to introduce [40(d)].
Paragraph 40 is the prayer for relief. In subparagraphs (a), (b) and (c) the plaintiff claims damages for deceit, alternatively damages pursuant to s 77 of the Fair Trading Act 1987 (WA), alternatively equitable compensation and interest. By proposed subparagraph (d) the plaintiff claims the following relief:
[A] declaration that the property described in the Schedule of Payments was held by each of [the Prospectors] respectively on trust for the plaintiff between the dates set out in that Schedule.
The attached Schedule of Payments list, with one exception, amounts of money invested or deposited by, or on behalf of, the Prospectors with various financial institutions between various dates between 9 July 1990 and 17 October 1994. The exception is the 'value of the 1988 Range Rover purchased from Alf Barbagello on 27 July 1990' which appears under the heading 'Leonard Lancelot Ireland ‑ L Ireland payments'. Paragraphs 30 - 35 of the proposed amended statement of claim identify the payments listed in the Schedule of Payments to be amounts paid pursuant to the restitution orders by the Prospectors to the plaintiff and to have been payments received by them from the plaintiff on 9 July 1990 in satisfaction of the obligations of the plaintiff to Acarus upon Acarus exercising the option to purchase the tenements from the Prospectors.
The defendants object to the amendment of the statement of claim to introduce [40(d)] on two grounds. First, the defendants say that the proposed amendment challenges the CCA orders. Second, the defendants submit that the proposed declaration is beyond the jurisdiction or power of the court, or the court is bound not to make the declaration sought, because the declaration is an alleged right of the plaintiff that previously existed but no longer exists.
I do not accept that the proposed amendment challenges the CCA orders. As I have said, the CCA orders were made as a result of the determination of the Court of Criminal Appeal that the restitution orders made on 30 July 1993 were null and void. The court did not consider whether or not the matters alleged by the plaintiff in this action gave rise at the relevant time to a constructive trust.
The argument that the court does not have jurisdiction or power to make the declaration sought, or if it does that it would be bound to refuse to make such a declaration, requires some consideration of the jurisdiction and power of the court to make a declaration.
In Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 Mason CJ, Dawson, Toohey and Gaudron JJ said:
It is now accepted that superior courts have inherent power to grant declaratory relief. It is a discretionary power which '[i]t is neither possible nor desirable to fetter … by laying down rules as to the manner of its exercise' (Forster v Jododex Aust Pty Ltd (1972) 127 CLR 421 at 437 per Gibbs J). However, it is confined by the considerations which mark out the boundaries of judicial power. Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions … The person seeking relief must have 'a real interest' (Forster v Jododex at 437 per Gibbs J; Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438, at 448 per Lord Dunedin) and relief will not be granted if the question 'is purely hypothetical', if relief is 'claimed in relation to circumstances that [have] not occurred and might never happen' … or if 'the court's declaration will produce no foreseeable consequences for the parties' (581) ‑ (582).
In C E Heath Casualty & General Insurance Ltd v Pyramid Building Society (in liq) [1997] 2 VR 256 Ormiston JA, with whom Tadgell JA agreed, rejected a contention that the jurisdiction to grant declarations is unlimited except by statute. His Honour said that the 'boundaries of judicial power' place a sensible limit on what the courts may be asked to declare. His Honour then stated:
It is perhaps of no great consequence whether certain aspects of the tests as to what is theoretical or hypothetical may lead to a denial of jurisdiction or whether they go only to a discretionary ground to refuse relief. If there is no real 'legal controversy' then the courts will not embark upon a hearing which will certainly lead to the refusal of declaratory or any other relief. If it is a controversy which is not 'fit for determination by judicial declaration' then I see no reason why the litigation should not be immediately resolved (262).
In my view the court has jurisdiction to grant the declaration sought by the plaintiff in its proposed amended statement of claim. The matters raised by the defendant go to the exercise of the court's discretion to grant the declaration rather than its existence.
In Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ said that it is central to the notion of judicial determination that it 'includes a conclusive or final decision based on a concrete and established or agreed situation which aims to quell a controversy' [45]. In Young P W, Declaratory Orders (2nd ed, 1984) the author said that if, 'when litigation commenced, there was a live dispute before the court, then the court may well decide it even though at the time of hearing there was no dispute on the matter between the parties' [709].
It is not a necessary condition for the exercise of the court's discretion to grant a declaration that the plaintiff has an existing cause of action against the defendant nor that the right which the court is asked to declare is a presently existing right at the time the declaration is made.
The declaration which the plaintiff seeks is not hypothetical or theoretical in the relevant sense. It is based on facts which are alleged to have existed at the relevant times. It is based upon a real controversy between the parties concerning the rights and obligations of the parties at the relevant times.
The 'court may exercise its discretion to refuse relief if the result of the proceedings will be of little practical value': Young op cit [703]. It is sufficient that the declaration is of some value or benefit to the plaintiff. The court may make a declaration when it will serve a useful purpose in settling the legal question at issue and when it will terminate any controversy between the parties.
The court should not grant leave to make the amendment if it is satisfied that a hearing will certainly lead to the refusal of declaratory relief. In this case it is at least arguable that if the plaintiff establishes its allegations in the statement of claim the court might grant the declaratory relief sought. The declaration sought by the plaintiff might, in a practical sense, put an end to the controversy whether the defendants are entitled to retain any amounts paid to them by the plaintiff pursuant to the CCA orders or are obliged to pay to the plaintiff an equivalent amount. That is not to say that the making of the declaration would absolve the plaintiff of the obligation to pay to the defendants the amounts ordered under the CCA orders.
I conclude that the plaintiff's claim is sufficiently arguable to warrant the plaintiff being given leave to amend its statement of claim as sought.
For the reasons stated, I will give the plaintiff leave to amend its statement of claim in accordance with the minute of proposed re‑amended statement of claim dated 14 January 2009.
Consolidation of the two actions
Order 83 r 1 provides:
Whenever any issues between the same parties can be conveniently tried together, or whenever it appears desirable notwithstanding that the parties are not identical and that the evidence necessary to prove the issues is not identical, the court may consolidate any number of causes or matters in order to quiet all claims relating to one subject matter, transaction or event, or to substantially similar subject matters, transactions or events.
Broadly, the question on an application to 'consolidate is whether in all the circumstances it is convenient, regard being had to avoiding multiplicity of actions and to saving time and expense, to make the order': Civil Procedure Western Australia, [83.1.5]. In this case the two actions raise common questions of fact and law. At the heart of both actions is the plaintiff's claim that it paid $6 million to the Prospectors as the result of fraudulent misrepresentations made by them. Consolidation of the two actions would avoid two sets of litigation on issues which could lead to mutually inconsistent results.
There may be cases in which consolidation is refused but an order is made that the two actions be tried together. It might further be ordered that the evidence in each of the proceedings be treated as evidence in the other. However, it would be more convenient, and would save time and cost, for the actions to be consolidated rather than for the two actions to proceed separately to trial. Accordingly, the two actions should be consolidated unless the consolidation is likely to result in unfairness to any party, prejudice a party's ability to conduct its case, or there is some other good reason why the actions should not be consolidated.
In their written submissions the defendants submitted that a difficulty for the plaintiff is to satisfy the court that consolidation is unlikely to result in unfairness or prejudice to a party's ability to conduct its case. The defendants submitted that the basis of CIV 2364 of 2007 is restitution orders not complied with by the plaintiff. In his oral submissions counsel for the defendants made submissions to the effect that consolidation of the two actions is another step by which the plaintiff seeks to resist complying with the CCA orders. I am not persuaded that consolidating the two actions rather than trying the two actions separately or together has the effect contended for by the defendants.
In my opinion the two actions can be most conveniently and efficiently managed by consolidating them. The consolidation is unlikely to result in unfairness to any defendant or to prejudice any defendant's ability to conduct its case. The two actions should be consolidated.
Security for costs - CIV 2232 of 1990
The plaintiff commenced CIV 2232 of 1990 on 15 August 1990. On 3 October 1990 it was ordered by consent that the plaintiff pay into an interest bearing trust account in the joint names of the solicitors for the defendants and the solicitors for the plaintiff the sum of $25,500 as security for the defendant's costs in those proceedings. On 18 August 1994 summary judgment was ordered in favour of the plaintiff and it was ordered that the money paid into court as security for costs be paid out to the plaintiff's solicitors.
On or about 27 April 2007 the parties agreed that the plaintiff would pay $30,000 into an interest bearing account as security for costs. The court subsequently made orders to that effect and the money was paid into an interest bearing account. The defendants now seek further security for costs, in the sum of $125,500, in addition to the $30,000 provided on or about 30 April 2007.
The plaintiff opposes a further order for security for costs. The plaintiff submits in effect as follows. The parties agreed that the amount of $30,000 was to be for security for costs until the close of pleadings. There is no evidence, or at least admissible evidence to which any weight should be given, to the effect that since that time the defendants have carried out any significant work in relation to this matter or the finalisation of the pleadings in the matter.
The defendant's application is supported by an affidavit of Kim Lendich sworn 10 October 2008. Ms Lendich is a solicitor employed by the defendants' solicitors. Ms Lendich swears that on or about 27 April 2007 the defendants accepted the plaintiff's proposal to pay into an interest bearing trust account the amount of $30,000 as security for costs to the close of pleadings [8]. Ms Lendich attaches to her affidavit a copy of a letter from the defendants' solicitors to the plaintiff's solicitors dated 27 April 2007. In that letter the defendants' solicitors said:
Our clients are prepared, for the sake of allowing the matter to move on, to accept your client's proposal that in relation to O 7 of the chamber summons the plaintiff pays into an interest bearing trust account the sum of $30,000 as security for the costs to the close of the amended pleadings.
The order is contained in the consent order filed on 7 May 2009:
The plaintiff do, within 14 days of the date of this order, pay into an interest bearing trust account … the sum of $30,000 as security for the defendants' costs of these proceedings to the close of the amended pleadings [2].
In Cliffs Robe River Iron Associates v Dravo Pty Ltd [1988] WAR 322 the Full Court held that orders made by consent could be varied by the court because consent by a party to an application made by the opposing party did not constitute a binding agreement between the parties. The situation was more accurately described as two solicitors conferring for the purpose of formulating an order which could be made without argument (324). Kennedy J referred to and adopted the following distinction drawn by Lord Denning in Siebe Gorman & Co Ltd v Pneupac Ltd [1982] 1 WLR 185:
There are two meanings to the words 'by consent' … One meaning is this: the words 'by consent' may evidence a real contract between the parties. In such a case the court will only interfere with such an order on the same grounds as it would with any other contract. The other meaning is this: the words 'by consent' may mean 'the parties hereto not objecting'. In such a case there is no real contract between the parties. The order can be altered or varied by the court in the same circumstances as any other order that is made by the court without consent of the parties (328).
There is some difference between English and Australian authorities about whether the court will only interfere with a consent order based on a contract on the grounds that it interferes with any other contract: see Paino v Hofbauer (1988) 13 NSWLR 193, 198; Morgan v 45 Flers Avenue Pty Ltd (1987) 11 NSWLR 573, 579.
In this case, the evidence, sparse as it is, leads me to the conclusion that the order for security for costs was a consent order in the sense that it evidenced a real contract between the parties. Many procedural orders which are made by consent may be accurately described as the result of two solicitors conferring for the purpose of formulating an order which could be made without argument. Orders setting out steps to be taken by each party leading to the trial of the action, and the date by which each step is to be taken, are commonly consent orders of that sort. However, the order for security for costs in this case was not of that sort. There was a difference between the parties as to the security for costs to be provided by the plaintiff. The plaintiff made a proposal about the amount of security to be provided. That proposal was accepted by the defendants. The language employed by the defendants' solicitors in their letter of 27 April 2007 to which I have referred is consistent with an intention to make a binding agreement.
Assuming that the court has jurisdiction to vary such a contract on grounds other than those on which it interferes with contracts other than those relating to the making of consent orders, the defendants must show that there is good reason to do so. In Paino v Hofbauer, McHugh J made the following comment:
Nevertheless, when a party asks that a consent order based on a contract should be set aside or varied and the underlying contract could not be set aside or varied, the case would need to be exceptional before the court would exercise its discretion in favour of an applicant (198).
I am not satisfied that the defendants have established that there are circumstances sufficient to justify the court to vary the consent order. The defendants say that since the consent order was made the plaintiff has produced numerous versions of a proposed amended statement of claim. The defendants also say that the plaintiffs have issued a number of subpoenas and the defendants have inspected the very large volume of documents produced in answer to those subpoenas. However, the defendants have produced no evidence of the amount of work done, or the costs incurred in considering and conferring in relation to the proposed amendments to the statement of claim or in inspecting the subpoenaed documents. Counsel for the defendants referred to the likely burden of discovery. However, the pleadings are not yet closed and it is premature to be seeking further security for costs in relation to steps in the action subsequent to the close of pleadings. The defendants have not led any evidence that satisfies me that it would be unjust to hold them to the agreement made which gave rise to the consent order for security for costs.
It is in the public interest that the court should discourage parties from resiling from agreements by varying consent orders except in circumstances which render it unjust to hold the parties to the agreement. It is not in the public interest to enable a defendant to secure a plaintiff's agreement to an amount of security for costs and having got that to then come back to the court to try and vary it to increase the amount, unless the circumstances demonstrate that there are changed circumstances or other good reason why it would be unjust not to vary the order. The defendants have not established such circumstances. The defendants' application for further security for costs in CIV 2232 of 1990 will be dismissed.
Security for costs - CIV 2364 of 2007
If the plaintiff had commenced this action, without CIV 2232 of 1990 remaining on foot, there would be no proper grounds for the plaintiff to resist an order that it give security for the defendants' costs. The plaintiff says in effect that the order for security for costs in CIV 2232 of 1990 was intended to cover the claims now made in CIV 2364 of 2007. I am not persuaded that that is so or that it is a sufficient reason to deny the defendants security for their costs in CIV 2364 of 2007. Neither the order made in CIV 2232 of 1990 nor the letter of the defendants' solicitors accepting the plaintiff's proposal for security for costs in CIV 2232 of 1990 addresses any further proceedings that might be commenced by the plaintiff in relation to the matters in dispute between them. The defendants are entitled to security for their costs in CIV 2364 of 2007.
The amount of security to be ordered is in the discretion of the court. The appropriate order for security for costs is for an amount which may fairly be an approximation of what the party and party costs of the successful respondent would be if the defendant were successful. It is appropriate to order that the plaintiff provide security for the defendants' costs up to the close of pleadings in CIV 2364 of 2007. The defendants state in their written submissions that they have estimated the likely costs based on the anticipated time likely to be taken in respect of known interlocutory matters presently before the court, that that is a complex matter in which precise calculation of costs cannot presently be made but that a figure of $45,000 in the circumstances is a reasonable estimate. In my view there is no proper basis for the figure of $45,000 proposed by the defendants.
Counsel for the plaintiff submitted that if the court determines that the plaintiff should provide security for the defendant's costs in CIV 2364 of 2007 then the parties should confer in relation to the amount of the security that should be ordered. In my view that is the appropriate step to be taken.
Action CIV 2364 of 2007 is now to be consolidated with CIV 2232 of 1990. That will impact upon the security for costs to be provided by the plaintiff. I will hear the parties in relation to the orders that should be made in relation to the plaintiff providing security for the defendants' costs in CIV 2364 of 2007 or providing further security for the defendants' costs in the consolidated action in so far as the defendants' costs up to the close of pleadings in CIV 2364 of 2007 will be reflected in the costs incurred by the defendants in the consolidated action.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: NORILYA MINERALS PTY LTD -v- EASTERDAY [2009] WASC 191 (S)
CORAM: LE MIERE J
HEARD: 16 JANUARY 2009, ON THE PAPERS
DELIVERED : 28 JULY 2009
SUPPLEMENTARY
DECISION :23 DECEMBER 2009
FILE NO/S: CIV 2364 of 2007
Consolidated by order of Justice Le Miere on 28 July 2009
BETWEEN: NORILYA MINERALS PTY LTD
Plaintiff
AND
CLARK ERVIN EASTERDAY
LEONARD LANCELOT IRELAND
First DefendantsKAYLENE HOLDINGS PTY LTD (ACN 009 462 195)
Second DefendantBRENDA ANNE EASTERDAY
Third DefendantWEBGO PTY LTD (ACN 009 022 057)
Fourth DefendantFIM PTY LTD (ACN 008 964 609)
Fifth DefendantPAUL CHRISTOPHER IRELAND
Sixth Defendant
FILE NO/S :CIV 2232 of 1990
BETWEEN :NORILYA MINERALS PTY LTD
Plaintiff
AND
ADAM JONATHON IRELAND AS NAMED EXECUTOR OF THE ESTATE OF DEAN EDWARD IRELAND
CLARK ERVIN EASTERDAY
LEONARD LANCELOT IRELAND
Defendants
Catchwords:
Practice and procedure - Application for costs - Whether quantum of costs should be fixed - Whether costs should be paid forthwith - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 66
Result:
Application that costs be fixed and paid forthwith refused
Category: B
Representation:
CIV 2364 of 2007
Consolidated by order of Justice Le Miere on 28 July 2009
Counsel:
Plaintiff: Mr S M Davies
First Defendants : Mr M Ryan
Second Defendant : Mr M Ryan
Third Defendant : Mr M Ryan
Fourth Defendant : Mr M Ryan
Fifth Defendant : Mr M Ryan
Sixth Defendant : Mr M Ryan
Solicitors:
Plaintiff: Deacons
First Defendants : Bostock & Ryan
Second Defendant : Bostock & Ryan
Third Defendant : Bostock & Ryan
Fourth Defendant : Bostock & Ryan
Fifth Defendant : Bostock & Ryan
Sixth Defendant : Bostock & Ryan
CIV 2232 of 1990
Counsel:
Plaintiff: Mr S M Davies
Defendants: Mr M Ryan
Solicitors:
Plaintiff: Deacons
Defendants: Bostock & Ryan
Case(s) referred to in judgment(s):
Pringle v Gloag (1879) 10 Ch D 676
LE MIERE J:
Introduction
On 28 July 2009 I delivered reasons for decision in relation to a number of interlocutory applications in CIV 2232 of 1990 and CIV 2364 of 2007 including:
1.in CIV 2232 of 1990 the defendants' application that the plaintiff not be heard until it has complied with orders made in the Court of Criminal Appeal in appeal CCA 111 ‑ 113 of 1999 made on 28 October 2005, 8 February 2006 and 14 November 2008 respectively (the CCA orders) or alternatively that the action be stayed until the plaintiff complies with those orders;
2.in CIV 2364 of 2007 the defendants' application that CIV 2364 of 2007 be struck out as a collateral attack on the CCA orders or so much of the pleading be struck out that is a collateral attack on the CCA orders; and
3.in CIV 2364 of 2007 the defendants' application that the plaintiff not be heard until it has complied with the CCA orders or in the alternative that the action be stayed until the plaintiff complies with the CCA orders.
I will refer to these interlocutory applications collectively as the stay applications. After hearing counsel I made a number of orders including orders in each action to the effect:
1.the defendants' stay applications be dismissed;
2.the defendants pay the plaintiffs' costs of the stay applications including the costs of 20 October 2008 and 25 November 2008; and
3.the parties have leave to file and serve any submissions and affidavits in support of or opposition to the plaintiffs' applications that the costs be fixed and be paid forthwith.
The plaintiff subsequently filed submissions that the defendants should pay the plaintiff's costs of the stay applications fixed in the sum of $7,500 in each action to be paid within 14 days. The plaintiff's submissions were supported by an affidavit sworn on 12 August 2009 by Jennifer Mary Hill, the plaintiff's solicitor. The defendants submit that the costs should be fixed in the sum of $8,000 for both applications and the costs should be payable in any event rather than forthwith or within 14 days.
Security for costs application
In CIV 2364 of 2007 on 28 July 2009 I made orders in relation to the defendants' application for security for costs. I ordered the plaintiff to pay the defendants' costs of the application in any event. On 25 August 2009 the defendants filed written submissions that the plaintiff should pay the defendants' costs fixed in the sum of $1,188 within 14 days. The plaintiff filed written submissions in response submitting that the court should fix the costs of the defendants' application at $405 and order the costs be the defendants in any event.
The costs of the defendants' application for security for costs were dealt with on 28 July 2009. I ordered that the plaintiffs pay the defendants' costs of the application in any event. The defendants did not seek, and I did not grant, leave to the defendants to apply for any further order in relation to those costs or to file any submissions in support of any application that costs be fixed and paid forthwith. I will say nothing further about the submissions of either party that the defendants' costs of its security for costs application be fixed and paid forthwith.
The issues
There are two issues concerning the appropriate order in relation to the costs of the defendants' stay applications. The first is whether the costs should be paid forthwith or in any event. The second is whether the costs should be fixed and if so in what sum should they be fixed?
Should the costs be paid forthwith?
Order 66 r 10(1) of the Rules of the Supreme Court 1971 (WA) provide that costs may be dealt with by the court at any stage of the proceedings and the court may order the costs to be paid forthwith notwithstanding that the proceedings are not concluded.
Consolidated Practice Direction 4.7.1 relates to the costs of interlocutory applications. Paragraph 3 of the practice direction provides that as 'a general rule, where an order for costs is to be made against a party in interlocutory proceedings, the costs will be fixed and ordered to be paid forthwith or by a particular date'. The practice direction states three reasons for that general rule. In my opinion the first and third reasons stated in the practice direction are reasons for fixing the costs rather than reasons for ordering the costs to be paid forthwith. The second reason stated for the general rule is that
the historical practice of ordering costs to be paid 'in any event' does not sufficiently serve the purpose of discouraging ill‑considered or needless interlocutory applications. The overwhelming majority of actions settle and the orders are not enforced. The apparent benefit to parties in whose favour such orders are made is illusory.
The question in this case is whether there are reasons why the court should make an order other than that the costs be paid forthwith. In this case, there are such reasons.
The general rule is that all costs in the same matter or proceeding can be set off against each other: Pringle v Gloag (1879) 10 Ch D 676, 679 (Jessel MR). Order 66 r 59 provides that
where a party who is entitled to be paid costs is also liable to pay costs, the Taxing Officer may, subject to any direction of the court, tax the costs which the party is liable to pay and set off the amount allowed against the amount he is entitled to be paid and direct payment of any balance.
If the defendants are successful at trial and costs are awarded in their favour they may be entitled to set off those costs against the costs of the stay applications for which they are liable. If the costs of the stay applications for which the defendants are liable are ordered to be paid forthwith then they may not be able to recover those costs. That is because the evidence before the court is that the plaintiff has not paid the amounts it has been ordered to pay under the CCA orders because it cannot do so. The plaintiff does not carry on any business and has not carried on any business since 1990. The ultimate holding company of the plaintiff, Xstrata Plc, has provided funds from time to time to the plaintiff to enable it to prosecute this action. However, there is no agreement between Xstrata and the plaintiff which requires Xstrata to fund the litigation or to provide the plaintiff with sufficient funds to comply with any order to make any payment. The plaintiff's capacity to meet any future order for costs is dependent upon Xstrata being willing to advance the necessary funds to the plaintiff.
Unfairness may result if the defendants are required to pay the plaintiff's costs of the stay applications forthwith but are subsequently unable to recover any order for costs which might subsequently be made in their favour. Furthermore, the plaintiff is presently obliged under the CCA orders to pay substantial sums to the defendants but has failed to do so because it does not have the funds. In those circumstances it would be unfair to require the defendants to pay the plaintiff's costs of the stay applications forthwith.
The policy of ordering costs to be fixed and ordered to be paid forthwith, or by a particular date, serves the purpose of discouraging ill‑considered or needless interlocutory applications. That is a consideration in favour of ordering the defendants to pay the costs of the stay applications forthwith or by a particular date. However, that factor must be weighed against the unfairness, or potential unfairness, to which I have referred of requiring the defendants to pay the plaintiff's costs forthwith. On balance, it is not appropriate to order the defendants to pay the costs of the stay applications forthwith or within 14 days.
Should the quantum of costs be fixed?
The practice direction to which I have referred provides that as a general rule where an order for costs is to be made against a party in interlocutory proceedings the costs will be fixed [3]. The practice direction states two reasons why costs should be fixed. First, 'as an action progresses, parties have an interest in knowing the quantum of costs awarded to or against them' [4]. Second, 'where actions do proceed to judgment and an order for costs, the subsequent taxation [will] be simplified if the costs of interlocutory procedures [have] already been dealt with' [6].
There are a number of reasons why the costs should not be fixed in this case. First, I have declined to order that the costs be paid forthwith or by a particular date. Accordingly, the costs will not be paid until judgment or other finalisation of the case.
Second, the practice direction provides that judicial officers can be expected, in the usual run of routine matters, to fix the costs payable by reference to the schedule attached to the practice direction rather than ordering them to be taxed [8]. That provision of the practice direction reflects the general approach that judges should fix costs by reference to the global amounts set out in the schedule rather than assessing the costs as a taxing officer does on a taxation. In general, it is inconsistent with the objective of the practice direction that the costs be fixed after the detailed scrutiny normally reserved for formal taxations. The plaintiff claims $15,000, that is $7,500 for the stay application in each action. The basis of that claim is set out in a schedule contained within Ms Hill's affidavit. The schedule is drawn by reference to each work item. The practice direction schedule allows $1,650 plus $500 per extra hour of hearing time for a special appointment and $320 for a brief appearance in judge's chambers. Where, as here, the plaintiff seeks costs many times in excess of the amount provided for in the schedule and by reference to detailed work items it will often be more appropriate that the assessment of those costs be left to a formal taxation.
Third, the stay applications were heard together with a number of other interlocutory applications. The costs of those applications will be determined, if not agreed, at a formal taxation. The assessment of the costs of the stay applications at the same time as the costs of the other interlocutory applications would be convenient. If the assessments take place separately it will be more difficult for the parties, and the taxing officer, to ensure that there is no duplication of costs or failure to allocate costs to the appropriate application.
For the above reasons I decline to fix the costs of the stay applications.
15
9
1