Phillips v Price

[2007] WASC 54 (S)

PHILLIPS -v- PRICE [2007] WASC 54 (S)

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2007] WASC 54 (S)
Case No:	CIV:1825/2005	Heard:	5 FEBRUARY  & 16 APRIL 2007
Coram:	HASLUCK J	Delivered:	11/03/07
Supplementary Delivered:	16/04/07
No of pages:	7	Judgment Part:	1 of 1
Result:	Defendant to pay plaintiff's costs of action No order for indemnity costs
Category:	B
PDF Version

Parties:	STEPHEN PHILLIPS JOHN ERNEST PRICE
Catchwords:	Costs Costs orders after civil trial Whether plaintiff entitled to recover costs of action on an indemnity basis Grounds upon which an indemnity order for costs may be made Held that conduct of defendant does not justify an order for indemnity costs Turns on own facts
Legislation:	Rules of the Supreme Court 1971 (WA), O 66 r 1(1) Supreme Court Act 1935 (WA), s 37(1)
Case References:	Phillips v Price [2007] WASC 54 Saunders v Vautier (1841) Cr & Ph 240 SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : PHILLIPS -v- PRICE [2007] WASC 54 (S) CORAM : HASLUCK J HEARD : 5 FEBRUARY & 16 APRIL 2007 DELIVERED : 12 MARCH 2007 SUPPLEMENTARY
DECISION : 16 APRIL 2007 FILE NO/S : CIV 1825 of 2005 BETWEEN : STEPHEN PHILLIPS

Plaintiff

AND

JOHN ERNEST PRICE
Defendant

Catchwords:

Costs - Costs orders after civil trial - Whether plaintiff entitled to recover costs of action on an indemnity basis - Grounds upon which an indemnity order for costs may be made - Held that conduct of defendant does not justify an order for indemnity costs - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 66 r 1(1)

Supreme Court Act 1935 (WA), s 37(1)

(Page 2)

Result:

Defendant to pay plaintiff's costs of action

No order for indemnity costs

Category: B

Representation:

Counsel:

Plaintiff : Mr P A Tottle
Defendant : No appearance

Solicitors:

Plaintiff : Tottle Partners
Defendant : No appearance

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

Phillips v Price [2007] WASC 54
Saunders v Vautier (1841) Cr & Ph 240
SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26


(Page 3)

HASLUCK J:

Introduction

1 The plaintiff in these proceedings, Stephen Phillips, has called upon me to make a determination as to whether the plaintiff is entitled to recover the costs of the action.

2 This application gives rise to an issue as to whether the plaintiff is entitled to recover indemnity costs.

The nature of the proceedings

3 In these proceedings the plaintiff sought a declaration that the defendant, John Ernest Price, held certain shares in the capital of a company known as Bollway Pty Ltd on trust for the plaintiff. The plaintiff's case was that he had provided the purchase price for the shares with the result that the defendant held the same pursuant to a resulting trust or constructive trust in favour of the plaintiff.

4 On the defendant's case, the plaintiff was not entitled to call for a transfer until the outcome of the so-called AES reconstruction proposal was known. The defendant said that by a partly written and partly oral agreement made between the plaintiff and Net X, the plaintiff agreed to cause the sum of $400,000 to be invested in the capital of Bollway for the purpose of effecting a reorganisation of AES. Such an agreement was said to be of advantage to the plaintiff as a director and shareholder of AES.

5 The plaintiff commenced proceedings on 11 July 2005 shortly after his demand for a transfer of the shares to him had been made and refused.

6 On 8 March 2006 the defendant provided the plaintiff with a signed transfer of the subject shares upon the basis that by then the outcome of the reconstruction proposal was known. Thereafter, the issue to be determined was whether the defendant had been entitled to resist the plaintiff's call for a transfer when it was made initially.

The judgment

7 On 12 March 2007 I delivered a judgment in favour of the plaintiff to the effect that there was no basis upon which the defendant was entitled to refuse or fail to comply with the initial request for a transfer: Phillips v Price [2007] WASC 54.

(Page 4)

8 In the course of reviewing the legal principles concerning resulting trusts and constructive trusts I said at [133] of the judgment that if the evidence showed that the title to the disputed property was to be held pursuant to some common purpose or intention other than the immediate enjoyment of the property by the person providing the price then it would be difficult to make a finding that the titleholder (in this case the defendant) was acting unconscionably.

9 The evidence before me showed that the parties had given consideration to entering into a joint venture of sorts associated with the AES reconstruction proposal. Moreover, there was a degree of ambiguity as to the source and ownership of the sum of $400,000 eventually advanced by the plaintiff. Some of the funds were arguably put up by a colleague of the plaintiff named Kasturi on the basis that the plaintiff would act as his agent. However, in the end, I was not persuaded that the common purpose had been defined exactly by a contractual relationship due to a lack of certainty about the terms of the venture. It was for this reason that I held that the plaintiff was entitled to succeed in his claim.

10 To my mind, it has to be said that there was some force in the defendant's contention that the subject shares were being held conditionally on the plaintiff's behalf, although I was not ultimately persuaded to that point of view.

The costs issue

11 After handing down the judgment I adjourned the matter to 16 April 2007 so as to afford the parties time to study the reasons for decision and to make submissions as to costs. It appears from an affidavit of service dated 21 March 2007 that the defendant was given notice of the hearing. I must now deal with the question of costs.

12 By s 37(1) of the Supreme Court Act 1935 the Court has a discretion to determine the costs of proceedings. By O 66 r 1(1) of the Rules of the Supreme Court the Court will generally order that the successful party to any action or matter recover his costs.

13 I consider that the usual rule should be applied in the present case and I am therefore minded to order the defendant to pay the costs of the proceedings.

14 However, the plaintiff seeks an order that the defendant pay his costs of the action on an indemnity basis, that is that the defendant pay all the

(Page 5)

plaintiff's costs (including reserved costs) save insofar as they are of an unreasonable amount or have been unreasonably incurred.

15 The decided cases indicate that indemnity costs may be ordered where a financially stronger party has deliberately protracted the proceedings, or the Court seeks to mark its strong disapproval of conduct designed to subvert the case management principles reflected in the rules, or a party persists in a defence which it knows or ought to know would be hopeless (and so causes unnecessary expense and cost to the plaintiff), or allegations are made that ought not to have been made or one party has by its conduct prolonged the proceedings.

16 These principles emerge from the cases cited by the plaintiff in his written submissions dated 21 March 2007 including SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26.

The plaintiff's contention

17 The plaintiff contends that in the present case there was a persistence by the defendant in a hopeless defence. Further, the defendant raised a false issue, which was eventually abandoned, as to the ownership of the funds provided to purchase the subject shares.

18 It is said further that the defendant, by relying upon questionable claims of ill-health and upon other specious grounds, obtained unwarranted adjournments and generally prolonged the proceedings.

General observations

19 It follows from my earlier observations that I am not persuaded that the defences advanced by the defendant were entirely without merit. It appears from the facts and matters referred to in the judgment that the parties came very close to concluding a joint venture or agreed common purpose and that would have provided a basis for the defendant to resist the call for a transfer of the shares until the outcome of the reconstruction proposal was known.

20 Thus, I made these observations at [138] of the principal judgment:

"The defendant by his particulars relies upon various emails and other exchanges. However, it is apparent from my earlier review of the exchanges between the plaintiff and the defendant that although the parties obviously came close to finalising mutually acceptable arrangements, there is no document, or combination of documents and events, which can be regarded as

(Page 6)

expressing a final intention to enter into contractual relations. It seems that they were overtaken by an apparently pressing need to satisfy the administrator, Mr Kitay, that the required funds were in hand. …"

21 The finding that the parties did not reach a concluded agreement was adverse to the defendant. It could not be said that the defendant was holding the shares on trust subject to certain agreed conditions. This meant that the plaintiff was entitled at all material times to call for a transfer of the subject shares pursuant to the rule in Saunders v Vautier (1841) Cr & Ph 240.

22 Nonetheless, having regard to the many and somewhat confusing exchanges between the parties, the defendant arguably had prospects of persuading the Court that the exchanges could be characterised as a joint venture of sorts and that the shares were to be held by the defendant on a conditional basis to abide the outcome of the reconstruction proposal. The defendant could also point to a degree of ambiguity as to the ownership of the funds used to acquire the shares.

Conclusion

23 It follows from my general observations that I am not prepared to hold that the defendant's defence was hopeless. Hence, I am not prepared to grant indemnity costs on this ground.

24 It follows from my general observations also, having regard to the principles in the decided cases, that I am not prepared to grant indemnity costs on the basis that the defendant raised false issues or relied upon allegations that ought not to have been made.

25 Further, I am not prepared to grant indemnity costs on the basis that the defendant unnecessarily prolonged the proceedings. Evidence of ill-health was provided by the defendant in support of certain of the requests for adjournment. That evidence has not been conclusively refuted, although it was not sufficient to obtain an adjournment of the trial itself.

26 The defendant's lack of compliance with programming orders was arguably affected by his ill-health and by his position (eventually) as an unrepresented litigant resident in another State. Accordingly, I am not prepared to grant indemnity costs upon this basis.

(Page 7)

Summary

27 In summary, then, I decline to make the order for indemnity costs sought by the plaintiff. I will make an order that the defendant pay the plaintiff's costs of the action, such costs to be taxed.

28 The orders are as follows:

1. The defendant is to pay the plaintiff's costs of the action including any reserved costs, such costs to be taxed and paid by the defendant forthwith.

2. The costs allowed to the plaintiff under par 1 are to include all costs of and incidental to the defendant's application to adjourn the trial as if the defendant had issued a chamber summons seeking that adjournment.