Norwest Crane Hire Pty Ltd v Geraldton Motor Body Builders and Fabricators Pty Ltd
[2018] WASC 408
•21 DECEMBER 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: NORWEST CRANE HIRE PTY LTD -v- GERALDTON MOTOR BODY BUILDERS & FABRICATORS PTY LTD [2018] WASC 408
CORAM: SMITH J
HEARD: 10 DECEMBER 2018
DELIVERED : 21 DECEMBER 2018
FILE NO/S: CIV 3176 of 2017
BETWEEN: NORWEST CRANE HIRE PTY LTD
First Plaintiff
NORWEST CRANE HIRE #2 PTY LTD
Second Plaintiff
AND
GERALDTON MOTOR BODY BUILDERS & FABRICATORS PTY LTD
First Defendant
BLAKENEY'S TRANSPORT EARTHMOVING AND CRANE HIRE PTY LTD
Second Defendant
WILLIAM LESLIE BLAKENEY
Third Defendant
Catchwords:
Interpleader - Usual order for costs of parties interpleading considered - Plaintiffs' costs be shared equally between second and third defendants - Claim for costs of second defendant be paid by third defendant failed - No successful or unsuccessful party to the proceedings - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 17 r 15
Result:
Defendants to pay plaintiffs' costs on an indemnity basis
Defendants to bear own costs
Category: B
Representation:
Counsel:
| First Plaintiff | : | Ms R A Collins |
| Second Plaintiff | : | Ms R A Collins |
| First Defendant | : | No appearance |
| Second Defendant | : | Mr C L Hollett |
| Third Defendant | : | Mr M F Holler & Mr G H Lawton |
Solicitors:
| First Plaintiff | : | Price Sierakowski |
| Second Plaintiff | : | Price Sierakowski |
| First Defendant | : | No appearance |
| Second Defendant | : | Solomon Hollett Lawyers |
| Third Defendant | : | Lawton Lawyers |
Case(s) referred to in decision(s):
Blakeney v Blakeney [2016] WASCA 76
Re McPherson, Thom & Co; Sandhurst & Northern District Trustees Co Ltd v Coombie Pastoral Co Pty Ltd [1929] VLR 295
Watson v Park Royal (Caterers) Ltd [1961] 2 All ER 346
SMITH J:
Applications for costs orders were heard on 10 December 2018. After hearing from the parties, I made orders that:
(a)the second and third defendants each pay 50% of the plaintiffs' costs of the interpleader on an indemnity basis, to be taxed if not agreed;
(b)the second and third defendants should bear their own costs of the interpleader.
What follows are my reasons for the orders.
Background to the second interpleader proceedings
The court has before it an application for costs arising out of interpleader proceedings brought by the first and second plaintiffs by originating summons on 22 December 2017 (second interpleader proceedings).
The first interpleader proceedings brought by the plaintiffs commenced on or about 14 April 2015 in respect of possession of a Liebherr LTM1250/6 250 tonne crane (the crane) hired from the second defendant pursuant to a hire contract between them dated 29 July 2013 (hire contract). The parties to those proceedings were the first and second defendant in these proceedings. The first interpleader proceedings were resolved by an order made by consent made by Registrar Boyle on 20 May 2015, in CIV 1543 of 2015, as follows:
1.The second plaintiff pay to the National Australia Bank Account BSB 086-643 Account No 14-159-4690 in the name of Geraldton Motor Body Builders and Fabricators Pty Ltd the sum of $93,371.19 within 7 days of the date of this Order.
2.Whilst the Liebherr LTM1250/6 250 tonne crane ('the crane') remains in the possession of either of the plaintiffs pursuant to an equipment hire contract between the plaintiffs and the second defendant, the plaintiff's [sic] pay the sum of $31,123.73 on the 6th day of each month into the bank account referred to in paragraph 1 above, the first of such payments to be made on the 6th June 2015.
3.Subject to paragraph 6 below, the plaintiffs pay the sum of $71,628.81 into a bank account in the joint names of the first and second defendants within 7 days of being notified of the details of that account by the solicitors for the first and second defendants.
4.Whilst the crane remains in the possession of either of the plaintiffs pursuant to an equipment hire contract between the plaintiffs and the second defendant, the plaintiffs pay the sum of $23,876.27 on the 6th day of each month into the joint bank account referred to in paragraph 3 above.
5.All monies paid into the joint account of the first and second defendants pursuant to paragraphs 3 and 4 above are to be held in escrow pending agreement of the defendants or further order of the Court.
6.The first and second defendant pay the plaintiffs' costs fixed in the sum of $12,000, such costs to be deducted from monies due to the defendants pursuant to paragraph 3 above.
7.Otherwise the proceedings are hereby dismissed.
The order made on 20 May 2015, in CIV 1543 of 2015, dealt only with the proceeds of the hire contract. The orders did not resolve the issue of ownership of the crane or who should have possession of the crane on the termination of the hire contract to the plaintiffs.
The plaintiffs instituted the second interpleader proceedings as they were still in possession of the crane. The plaintiffs sought direction from the court as to the delivery of the crane by the plaintiffs following termination of the hire contract.
When the originating summons in this matter was filed there were two defendants to the second interpleader proceedings, the first defendant, Geraldton Motor Body Builders and Fabricators Pty Ltd, and the second defendant, Blakeney's Transport Earthmoving and Crane Hire Pty Ltd. In the summons, the plaintiffs sought that the defendants appear before the court to state the nature of their respective cases to their entitlement to ownership of the crane.
On 12 February 2018, an order was made by Registrar Whitby joining William Leslie Blakeney as the third defendant in these proceedings. The order was not opposed by the second defendant.
The third defendant, William, is a brother to Timothy Blakeney (Tim), who is a director of the second defendant. Tim and William are directors of the first defendant. The first defendant is the trustee of the T & B Investment Trust. The brothers are beneficiaries of the trust. The T & B Investment Trust was established to own plant, equipment, trailers, vehicles, spare parts and cranes which were utilised by Geraldton Cranes & Haulage Pty Ltd. Geraldton Cranes & Haulage owned and conducted a crane hire and truck haulage business from premises in Boyd Street, Geraldton. Its owner, directors and shareholders were William and Tim.[1]
[1] These facts and the facts that follow in [10] ‑ [12] of these reasons were cited by the Court of Appeal as undisputed in Blakeney v Blakeney [2016] WASCA 76 [3].
Tim and William, as directors of the first defendant, have been in deadlock about the split of assets of the first defendant. There have been extensive negotiations between Tim and William in an attempt to resolve that deadlock. Tim has asserted that an asset split agreement had been reached under which the brothers have agreed to go their separate ways and divide the assets of their company.
It is common ground that the first defendant purchased the crane. William contends that the crane is and always has been the property of the first defendant. Tim contends that as part of the asset split agreement he acquired the right, title and interest in the crane to the exclusion of the first defendant.
In COR 227 of 2014, William sought and obtained leave from Master Sanderson to institute an action on behalf of the first defendant for recovery of monies in respect of the hire of the crane to the plaintiffs. The Court of Appeal set aside the order of the Master.[2]
[2] Blakeney v Blakeney [2016] WASCA 76.
The ownership of the crane, and the ownership of a number of other assets by family companies and related family trusts and the existence of the asset split agreement is the subject of consolidated proceedings in CIV 2547 of 2016.
From September 2016, the plaintiffs delivered various hire agreement termination notices to the second defendant. The hire agreement did not, however, terminate. The plaintiffs continued to hire the crane but sought unanimous direction (through their solicitors from the solicitors of the defendants) as to where the plaintiffs were to deliver up the crane.
It became clear to the plaintiffs that they faced competing claims as to the ownership of the crane and the place to which it should be returned.
On 17 October 2017, the plaintiffs' solicitors provided notice to the solicitors for the third defendant that the plaintiffs were terminating the hire arrangement of the crane, effective 31 October 2017.
On 10 November 2017, solicitors for the second defendant and Tim Blakeney requested that the crane be delivered to the second defendant in accordance with the terms of the hire contract and provided an address in Worree (a suburb of Geraldton).[3] On 17 November 2017, solicitors for the third defendant sent a letter to the plaintiffs' solicitors objecting to this and requested that the crane be delivered to another address in Geraldton, noting that if the crane was not so returned and if their client suffered damage they would look to the plaintiffs for compensation.[4]
[3] Affidavit of Bernard Wayne Johnson sworn 22 December 2017 [54(d)], Annexure BJ-22.
[4] Affidavit of Bernard Wayne Johnson sworn 22 December 2017 [54(f)], Annexure BJ-24.
On 22 November 2017, the second defendant sent a letter to the third defendant's solicitors stating that:[5]
(a)neither the third defendant or his employees were authorised on behalf of the first defendant to contact the plaintiffs or to make any claim to be doing so on behalf of the first defendant; and
(b)the second defendant held the third defendant responsible for the unlawful interference with the crane and held him personally liable for any loss that may be suffered by the second defendant or Tim Blakeney as a consequence, including but not limited to the loss of rental income.
A copy of the letter was sent to the plaintiffs' solicitors.
[5] Affidavit of Bernard Wayne Johnson sworn 22 December 2017 [54(h)], Annexure BJ-26.
In the letter sent on 22 November 2017, the second defendant's solicitors stated that the second defendant would rely on that letter for an order that the third defendant be liable for the payment of any costs incurred by the parties in any interpleader proceedings, including on an indemnity basis. This position was reiterated in correspondence on 29 November 2017[6] and 20 December 2017.[7]
[6] Affidavit of Bernard Wayne Johnson sworn 22 December 2017 [54(k)], Annexure BJ‑29.
[7] Affidavit of Bernard Wayne Johnson sworn 22 December 2017 [54(p)], Annexure BJ‑34.
On 28 November 2017[8] and 7 December 2017,[9] the plaintiffs' solicitors sent an email to the solicitors for the second defendant and the third defendant in which they asked whether the parties had come to any agreement as to delivery of the crane.
[8] Affidavit of Bernard Wayne Johnson sworn 22 December 2017 [54(i)], Annexure BJ-27.
[9] Affidavit of Bernard Wayne Johnson sworn 22 December 2017 [54(l)], Annexure BJ-30.
No agreement was reached. On 20 December 2017, the solicitors for the third defendant sent a letter to the plaintiffs' solicitors in which it was stated:[10]
[10] Affidavit of Bernard Wayne Johnson sworn 22 December 2017 [54(o)], Annexure BJ-33, pages 106 ‑ 107.
Circumstances relevant to this matter are as follows:
1.The crane is registered to Geraldton Motor Body Builders and Fabricators (GMBBF).
2.You have been previously provided with a copy of the Decision of Master Sanderson dated the 3rd March 2015 when he says there is no asset split agreement. Accordingly the crane remains the property of Geraldton Motor Body Builders and Fabricators as trustee for The T&B Investment Trust.
3.That aspect of the Master's decision was not overturned by the Court of Appeal.
4.You acknowledge that the board is deadlocked.
5.Our client has a duty as continuing director of GMBBF to make the request that he has.
6.Our client has a further interest in this matter by virtue of his being a beneficiary of the T&B Investment Trust.
7.The crane is worth upwards of $1 million.
8.By returning the crane other than in accordance with our client [sic] instructions, you expose your clients to a substantial damages claim.
9.The address to which you have been directed on behalf of Tim to direct the crane is a residential address, where the crane cannot be stored.
In the circumstances the crane remains the property of GMBBF and should be delivered in accordance with the interests of that company and the instructions of our client and not to a third party with no proprietary interest in the crane.
The appropriate course of action for your client in the circumstances is to commence Interpleader Proceedings. Would you please advise by way of conferral why you will not undertake that course of action.
The orders made by the court on 21 June 2018 in the second interpleader proceedings
The second interpleader proceedings were substantially determined by consent between the second and third defendants in orders made by the court on 21 June 2018.
The interpleader proceedings were listed for hearing on 21 June 2018. On the eve of the trial, the second and third defendants reached an agreement except in relation to the following matters:
(a)orders for costs; and
(b)the terms of an order which related to the reimbursement of expenses to the second defendant from the proceeds of any hire contract to be paid into the joint account (referred to in the order made by Registrar Boyle on 20 May 2015).
The second defendant sought reimbursement of expenses incurred from 1 August 2013 to the date of trial. After hearing from counsel for the second and third defendants, and after considering the affidavit evidence on the issue, I found that the second defendant should only be entitled to reimbursement for expenses from 6 February 2015. The reason why I made that finding was that:
(a)prior to 6 February 2015, the expenses had been incurred by the second defendant during the period of time that it was in receipt of the entire proceeds of the hire of the crane to the plaintiffs; and
(b)the effect of Registrar Boyle's order (in settlement of the first interpleader proceedings) was that from 6 February 2015, the proceeds of hire received from the plaintiffs were paid into a joint bank account administered by the first and second defendants' solicitors.
After determining that the commencement date for reimbursement for expenses or costs in order 21 should be 6 February 2015, with the exception of that amendment to order 21, the remaining orders were made by consent of the parties. These orders were as follows:
1.The Affidavits of:
(a)Bernard Wayne Johnson sworn 22 December 2017;
(b)Timothy Charles Blakeney sworn 13 April 2018;
(c)Craig Leonard Hollett sworn 18 June 2018;
(d)William Leslie Blakeney affirmed 12 January 2018; and
(e)William Leslie Blakeney affirmed 6 June 2018;
have been taken as read.
2.Each document annexed to any Affidavit filed in these proceedings will be regarded as authentic, prepared by its apparent author and, in the case of a communication, sent by the person appearing to have sent it, and received by the person appearing to have received it on or about the date which it bears.
3.Each document annexed to any Affidavit filed in these proceedings and referred to by any party, either in submission or in evidence, will be taken to have been tendered.
4.At the conclusion of the hire of the 250 Tonne Liebherr Crane and associated equipment (collectively referred to hereinafter as 'the Crane') by the First and Second Plaintiffs, the Crane shall be returned to the Second Defendant in accordance with the terms of the hire agreement between the First and Second Plaintiffs and the Second Defendant dated 29 July 2013.
5.The Second Defendant shall be responsible for arranging to securely store the Crane when it is not otherwise on hire as set out in the following Orders.
6.The Crane shall remain registered in the name of the First Defendant, pending any further orders in consolidated Supreme Court Action CIV 2547 of 2016, or the joint agreement of the Second and Third Defendants. Should any of the associated equipment currently be registered in the name of the Second Defendant, then the associated equipment shall remain registered in the name of the Second Defendant, pending any further orders in consolidated Supreme Court Action CIV 2547 of 2016, or the joint agreement of the Second and Third Defendants.
7.The Crane shall be insured in the name of the Second Defendant, with the First Defendant to be noted for its respective rights and interests.
8.The Second Defendant shall be authorised at its reasonable discretion to enter into any further hire contracts (wet or dry) for the Crane on commercial terms as agent for the First Defendant, including all negotiations, pending any further orders in consolidated Supreme Court Action CIV 2547 of 2016, or the joint agreement of the Second and Third Defendants.
9.The Second Defendant shall be entitled to enter into a separate hire agreement for any of the associated equipment referred to in Order 6 that is not registered in the name of the First Defendant. The Second Defendant shall be entitled to retain the proceeds of the separate hire agreement, pending any further orders in consolidated Supreme Court Action CIV 2547 of 2016.
10.All hire contracts entered into pursuant to Order 8 must be in writing and the hire contract details are to be provided by the Second Defendant to the solicitors for the Third Defendant, Lawton Lawyers, within 7 days of entry into the hire contract by email.
11.Subject to Orders 9 and 18 - 20, any payments made pursuant to any hire contracts are to be paid into the joint bank account held in the names of the First and Second Defendants with St George Bank, being BSB 116-879 Account Number 422754460 ('the Joint Account'), with the money to be held in escrow, pending any further orders in consolidated Supreme Court Action CIV 2547 of 2016, or the joint agreement of the Second and Third Defendants.
12.Both the Second Defendant and the Third Defendant are permitted to have internet access to the Joint Account, but will have no authority to transact on the Joint Account. All transactions on the Joint Account will continue to be jointly authorised by Craig Hollett and Garry Lawton as the authorised signatories only, pending any further orders in consolidated Supreme Court Action CIV 2547 of 2016, or the joint agreement of the Second and Third Defendants.
13.Timothy Charles Blakeney shall be authorised to determine, at his sole reasonable discretion, the rates of hire for the Crane, whether it be on a dry or wet hire basis.
14.It shall be a condition of any hire contract that the third-party hirer shall be required to obtain their own insurances for the Crane. Such insurances will be in addition to the insurances referred to in Order 7.
15.The Second and Third Defendants are each at liberty to enter into a hire contract to hire the Crane on commercial terms.
16.The Second Defendant must account to the Third Defendant on not less than a monthly basis, with such accounting to include:
(i)details of any hire contract not previously provided under Order 9;
(ii)details of all expenses incurred in connection with the Crane, such as registration, insurance, licensing costs not previously provided under Order 17;
(iii)copies of all invoices issued for the hire of the Crane;
(iv)details of all costs incurred for the maintenance of the Crane not previously provided under Order 18;
(v)details of any running costs of the Crane not previously provided under Order 18;
(vi)photo of machine hours from both cabs and photo of odometer reading taken after the completion of each hire contract;
(vii)all service and condition reports;
(viii)all statutory reports that are available, including Department of Mines, Industry Regulation and Safety inspections and certification.
17.The Third Defendant, either personally or through any third party, shall not interfere or attempt to interfere with the Second Defendant's management of the Crane, including contacting any potential or actual hirer of the Crane, in relation to any hire contract for the Crane or any query about the hire of the Crane.
18.All expenses associated with the costs of registration, licensing, insurance of the Crane and any Tax payable (including GST and BAS) on the income earned by the Crane shall be paid from the Joint Account upon demand. If the expenses have been paid by the Second Defendant on behalf of the First Defendant, then the Second Defendant shall be entitled to be reimbursed those expenses within 7 days of making a demand for reimbursement to the Third Defendant or his solicitor.
19.All costs associated with maintenance and the running costs of the Crane are to be at the reasonable discretion of the Second Defendant and shall be paid from the Joint Account within 10 business days from the provision of any tax invoice by the Second Defendant. If such costs have already been paid by the Second Defendant on behalf of the First Defendant, then the Second Defendant shall be reimbursed those costs from the Joint Account within 7 days of providing the relevant tax invoice to the Third Defendant or his solicitor.
20.If the Second Defendant makes a demand for reimbursement under Orders 18 and 19 above, then such demand shall be accompanied by copies of any documents evidencing that the expense or cost has been incurred.
21.The Second Defendant shall be reimbursed any expenses or costs referred to in Orders 18 and 19 that have been incurred between 6 February 2015 and the date of these Orders, but not yet reimbursed from the Joint Account.
22.The Third Defendant acknowledges that the details of any hire contract of the Crane may be commercially sensitive and confidential, and shall provide a written undertaking within 7 days of the making of these Orders that he will not disclose that information to any other person, including employees or contractors, without the written permission of the Second Defendant.
23.The Third Defendant may disclose details of any hire contract of the Crane to his lawyers, Lawton Lawyers, or his barrister on the basis that his lawyers or barrister are instructed that such information is commercially sensitive and confidential and is not to be disclosed to any third party and the lawyers or barrister shall give an undertaking not to disclose such information to any third party, without first obtaining the written authority of the Second and Third Defendants.
24.The Third Defendant acknowledges that the details of any hire contract of the Crane may be commercially sensitive and confidential, and shall not use or attempt to use the details of any information provided by the Second Defendant pursuant to these Orders, for his or any other parties' benefit to the detriment of the First or Second Defendant.
25.In the event that the Third Defendant, or any third party on his behalf breaches the terms of these Orders, then the Second Defendant shall be entitled to make an application to the Court to seek orders for the remedy of the breach, including seeking a variation of these Orders.
26.The issues in respect of costs be adjourned sine die.
27.Liberty to apply in relation to any issues of costs.
The application for costs of the second interpleader proceedings
The plaintiffs seek an order that they be paid their costs on an indemnity basis in accordance with the general rule as to costs in interpleader proceedings, either by order:
(a)that the second and third defendant each pay 50% of the costs of the plaintiffs; or
(b)alternatively, the second and third defendant pay their costs by apportioning liability between the defendants having regard to their relative success in, and responsibility for, the litigation.
The third defendant says the plaintiffs' costs of the interpleader should be paid on an indemnity basis shared equally between the second and third defendant and they should each bear their own costs. In the alternative to the latter, the third defendant says that the costs of the second and third defendant should be adjourned, and be heard and determined at the conclusion of the determination of the consolidated proceedings in CIV 2547 of 2016.
The second defendant submits that the plaintiffs' costs of the interpleader proceedings should not be paid by the second defendant. It says there should be an order that the plaintiffs bear their own costs of the interpleader proceedings, and the third defendant should pay its (the second defendant's) costs of the proceedings on an indemnity basis.
The second defendant argues that the need to participate in the second interpleader proceedings were brought about as a result of the failure of the plaintiffs to properly consider if there were, in fact, two competing claims to the crane.
In the alternative, the second defendant claims that the second interpleader proceedings were brought about as a result of the improper and unreasonable actions of the third defendant in asserting rights to the crane which do not exist.
Consequently, the second defendant claims that it is appropriate that the court make orders in the following terms:
(a)there be no order as to the plaintiffs' costs of the interpleader proceedings;
(b)in the alternative to (a), the third defendant pay the plaintiffs' costs of the interpleader proceedings, including on an indemnity basis;
(c)the plaintiffs pay the second defendant's costs of the interpleader proceedings, including on an indemnity basis; and
(d)in the alternative to (c), the third defendant pay the second defendant's costs of the interpleader proceedings, including on an indemnity basis.
General principles that apply for orders as to costs in favour of a plaintiff in interpleading proceedings
Order 17 r 15 of the Rules of the Supreme Court 1971 (WA) provides:
Subject to rules 1 to 11, the Court may in and for the purposes of any interpleader proceedings make such order as to costs or any other matter as it thinks just.
The general rule as to costs of an interpleader summons is as stated by Lowe J in Re McPherson, Thom & Co; Sandhurst & Northern District Trustees Co Ltd v Coombie Pastoral Co Pty Ltd as follows:[11]
The rule to be deduced from these cases in regard to costs is that where the applicant on an interpleader summons has come promptly to the Court when faced with conflicting claims, and has been guilty of no conduct which has increased costs, prima facie he should have a complete indemnity, so far as the fund will permit, for his costs; that is to say, he is prima facie entitled in such circumstances to his costs as between solicitor and client. In most cases of interpleader, however, the proceedings on the part of the applicant are of the simplest nature, and his costs should not require to be taxed in order that he should have a full indemnity. In such cases - and these I think will be the general rule - the Judge on the hearing will fix the costs of the applicant at an amount which will give that indemnity.
[11] Re McPherson, Thom & Co; Sandhurst & Northern District Trustees Co Ltd v Coombie Pastoral Co Pty Ltd [1929] VLR 295, 301.
The second defendant properly points out that it is sufficient for a party seeking interpleader relief to show, in the words of Edmund Davies J in Watson v Park Royal (Caterers) Ltd, there is 'a real foundation for an expectation that they would be sued'.[12]
[12] Watson v Park Royal (Caterers) Ltd [1961] 2 All ER 346, 352.
However, the second defendant argues that the test is not met as there is no basis upon which the third defendant could sue the plaintiffs because there is nothing to indicate in the letters written by the third defendant's solicitors to the plaintiffs' solicitors that the crane is an asset to which the third defendant (as a mere beneficiary of a discretionary trust) could make a claim of possession. Thus, it is claimed the plaintiffs should pay the second defendant's costs on an indemnity basis as the second interpleaders proceedings could have been avoided, if the plaintiffs:
(a)had recognised that there was no cogent or arguable basis for the third defendant's claim; and
(b)had followed the provisions of the crane hire contract.
As to its claim for indemnity costs against the third defendant, the second defendant says the actions of the third defendant were likely to have been the primary cause of the plaintiffs' election to commence the second interpleader proceedings.
The second defendant argued that if the court was not minded to order that the plaintiffs pay the second defendant's costs, including on an indemnity basis, due to the insufficient grounds for seeking to interplead, an order should be made requiring the third defendant to pay the second defendant's and the plaintiffs' costs on an indemnity basis, as it was the third defendant's wrongful claim to the crane which caused the plaintiffs to commence interpleader proceedings. In support of this claim, the second defendant put an argument that the orders made disposing of the second interpleader proceedings gave effect to orders that were equivalent to a proposal for settlement of the dispute about the possession of the crane (on termination of the hire contract) that were put to the third defendant by the second defendant's solicitors in open correspondence (prior to the commencement of the second interpleader proceedings) in letters dated 22 November 2017, 29 November 2017 and 20 December 2017.[13] In the circumstances, the third defendant's refusal of that proposal was said to be unreasonable and should attract an indemnity costs order.
[13] Affidavit of Bernard Wayne Johnson sworn 22 December 2017, Annexures BJ-26, BJ-29 and BJ-34.
Conclusion
Having heard the submissions made by the parties, I was not satisfied that the second defendant has made out any of its claims for orders as to costs.
The inquiry into the veracity of the third defendant's claim to a right to sue for possession of the crane and/or a claim for damages is not an inquiry that is open to be made in determining the costs applications of the second interpleader proceeding. This is because:
(a)these are issues which are raised as issues of fact and law to be determined in a trial of matters raised in the consolidated proceedings in CIV 2547 of 2016. In any application for costs in interpleader proceedings it would not be appropriate to attempt to investigate or to determine issues going to the likelihood of success of a cause of action in another matter; and
(b)the second interpleader proceedings have been the subject of orders that were substantially made by consent by the second and third defendant. There is no successful or unsuccessful party to the proceeding.
In circumstances of demonstrated distrust between the Blakeney brothers following a breakdown in their relationship and an attempt at resolving a split of assets in 2013, including the ownership of the crane, and the obligation to account to each other pending resolution of the consolidated proceedings, the orders made on 21 June 2018 provide for procedures for the possession and future hire of the crane which are, in effect, interim orders to be complied with by the second and third defendants pending the ownership issues surrounding the crane being resolved in the consolidated proceedings.
The orders made on 21 June 2018 provide for open and transparent procedures not only for the possession and future hire of the crane but include appropriate procedures for the management of the proceeds of hire, storage, repair, insurance and payment of associated costs of the crane.
The orders made on 21 June 2018 are clearly made for the benefit of both the second and the third defendant.
I was not satisfied that the orders made on 21 June 2018 should be regarded as equivalent to the proposal conveyed to the third defendant by the second defendant's solicitors prior to the commencement of the second interpleader proceedings. It is apparent that, until the date of the hearing set for the trial of the second interpleader proceedings, the parties were still in dispute as to the orders that should be made.
On 7 June 2018, the third defendant filed a minute of proposed orders in which there were some differences to the second defendant's amended minute that was filed on 20 June 2018 which, but for the order that was amended following argument in respect of the expenses (order 21) became the orders made on 21 June 2018.
In the letter the second defendant's solicitors sent to the third defendant's solicitors on 29 November 2017, the second defendant made the point that (subject to the reservation that the parties were in dispute as to the ownership of the crane pending the determination of the question of ownership in the consolidated proceedings in CIV 2547 of 2016) a number of conditions should be agreed between the parties that provided for the interim possession of and hire of the crane.
Paragraphs 2, 3 and 5 of the letter dated 29 November 2017 are reflected in the orders made on 21 June 2018. However, the orders made on 21 June 2018 are far more prescriptive in their terms. In addition, order 15 (which authorises the second and third defendants to each be at liberty to enter into a hire contract to hire the crane on commercial terms) was not a condition suggested by the second defendant through its solicitors prior to the institution of the second interpleader proceedings. Nor were any orders which related to reimbursement for expenses or costs as provided for in orders 20, 21 and 22 of the 21 June 2018 orders, suggested as conditions of an agreement by the second defendant's solicitors, prior to the commencement of the second interpleader proceedings.
For these reasons, I formed the opinion that the second defendant and the third defendant should bear their own costs of the second interpleader proceedings.
As to the plaintiffs' claim for indemnity costs, I formed the view that the second and third defendants should each pay 50% of the plaintiffs' costs of the second interpleader proceedings on an indemnity basis.
Other than to file a comprehensive affidavit in support of its application, the plaintiffs took no part in the second interpleader proceedings.
The plaintiffs have properly maintained a neutral position and have only sought to be heard in respect of their claim for costs to be paid on an indemnity basis.
The reason why I made the order was that I was satisfied that the requirements for the usual order as to costs as referred to in the Re McPherson principles had been satisfied as follows:
(a)Firstly, I was satisfied that the proceedings had been properly brought.
(b)Secondly, I was satisfied that the plaintiffs were faced with conflicting claims. Whether such claims could succeed is not a matter that the plaintiffs were required to assess, as the plaintiffs were not a party to any relevant proceedings other than the first interpleader proceedings. It is notable that in all the relevant correspondence that passed between the solicitors for the second and third defendants in November 2017, the heading in each one of the letters by a reference to the first interpleader pleadings, CIV 1543 of 2015, in which the first defendant was a party.
(c)Thirdly, I was satisfied that from the plaintiffs' point of view objectively a real foundation for the first defendant's claim to the claim to damages and conversion was raised prior to the institution of the second interpleader proceedings as it is not in dispute that the first defendant was the registered owner of the crane. As the plaintiffs point out in their written submissions, despite the deadlocked position of the directors of the first defendant, there was a foundation for an expectation that the plaintiffs could be sued by the first defendant at some point. Such a potential claim is capable of being brought by the first defendant:
(i)by any liquidator appointed upon the winding up of the first defendant on a just and equitable ground; and
(ii)in circumstances where through oppression proceedings, or a commercial arrangement, a director may take control of the company, there is a prospect that some time in the future, claims (foreshadowed by the third defendant) may be brought by the company.
Consequently, despite the deadlock, the plaintiffs were exposed to be sued in the future as a result of the dispute as to the possession of the crane (on termination of the hire contract).
(d)Fourthly, I was satisfied that the plaintiffs had not been guilty of any conduct which has increased costs. It properly stood aside whilst the second interpleader proceedings were resolved between the second and third defendants.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
VV
Associate to the Honourable Justice Smith21 DECEMBER 2018
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