Pourzand v Telstra Corp Ltd
[2012] WASC 210 (S)
•20 JUNE 2012
POURZAND -v- TELSTRA CORPORATION LTD [2012] WASC 210 (S)
Pending Appeal
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 210 (S) | |
| Case No: | CIV:1714/2010 | 19 JUNE 2012 | |
| Coram: | EDELMAN J | 20/06/12 | |
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Orders made | ||
| B | |||
| PDF Version |
| Parties: | HOSSEAN POURZAND JENNY MARIA POURZAND TELSTRA CORPORATION LTD |
Catchwords: | Practice and Procedure Costs Whether costs allowable for travel expenses incurred by client to attend trial and provide instructions Practice and procedure Costs Whether indemnity costs order should be made Rejection of defendant's offer was unreasonable in all the circumstances |
Legislation: | Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010 (WA) Rules of the Supreme Court 1971 (WA), O 66 r 3, O 66 r 51 |
Case References: | Australian Blue Metal Ltd v Hughes [1970] 2 NSWR 119 Cachia v Hanes [1994] HCA 14; (1994) 179 CLR 403 Calderbank v Calderbank [1975] 3 All ER 333 CGU Workers Compensation (Vic) Ltd v Rees [2003] VSCA 18; (2003) 6 VR 227, 231 Cockburn Cement Ltd v The Minister for the Environment (WA) [2011] WASC 260 (S) Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1 Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298 Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85 Petrunic v Barnes [1989] VR 927 Secretary, Department of Foreign Affairs and Trade v Boswell (1992) 39 FCR 288 Walton v McBride (1995) 36 NSWLR 440 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- JENNY MARIA POURZAND
Plaintiffs
AND
TELSTRA CORPORATION LTD
Defendant
Catchwords:
Practice and Procedure - Costs - Whether costs allowable for travel expenses incurred by client to attend trial and provide instructions
Practice and procedure - Costs - Whether indemnity costs order should be made - Rejection of defendant's offer was unreasonable in all the circumstances
Legislation:
Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010 (WA)
Rules of the Supreme Court 1971 (WA), O 66 r 3, O 66 r 51
(Page 2)
Result:
Orders made
Category: B
Representation:
Counsel:
Plaintiffs : Mr P J Hannan
Defendant : Mr S M Davies SC & Mr H H Jackson
Solicitors:
Plaintiffs : Lewis Blyth & Hooper
Defendant : Lavan Legal
Case(s) referred to in judgment(s):
Australian Blue Metal Ltd v Hughes [1970] 2 NSWR 119
Cachia v Hanes [1994] HCA 14; (1994) 179 CLR 403
Calderbank v Calderbank [1975] 3 All ER 333
CGU Workers Compensation (Vic) Ltd v Rees [2003] VSCA 18; (2003) 6 VR 227, 231
Cockburn Cement Ltd v The Minister for the Environment (WA) [2011] WASC 260 (S)
Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1
Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298
Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85
Petrunic v Barnes [1989] VR 927
Secretary, Department of Foreign Affairs and Trade v Boswell (1992) 39 FCR 288
Walton v McBride (1995) 36 NSWLR 440
(Page 3)
1 EDELMAN J: This supplementary judgment concerns the orders to be made following my primary reasons in this matter. This decision concerning the appropriate orders was reserved for a day to permit Telstra to investigate a matter concerning reserved costs. With one exception the orders sought by Telstra should be made.
Uncontroversial orders
2 At the handing down of my judgment Telstra sought seven orders. I have renumbered the orders in the conclusion to these reasons, and I follow that numbering below.
3 Orders 1 and 4 were uncontroversial.
4 Order 2 also became uncontroversial. Telstra had initially sought an order that the Pourzands pay any reserved costs. Telstra was provided with the opportunity to consider whether any costs had been reserved and whether the circumstances in which they were reserved meant that the award of those costs should still follow the event. By email the solicitors for Telstra indicated that no costs had been reserved.
5 As to order 5, the Pourzands did not have any serious opposition, particularly in circumstances in which (i) I had indicated that my preference was for written closing submissions; (ii) O 69 r 3 of the Rules of the Supreme Court 1971 (WA) permits an order for costs in relation to the transcript, and the transcript was used by both parties in preparation of written closing submissions; and (iii) the provision of written submissions substantially reduced the time required for oral closing submissions.
6 There was also no real opposition to order 6. As I explained to counsel, order 6 may, in any event, be superfluous because O 66 r 51(2) of the Rules of the Supreme Court provides that where a party is required to obtain some special certificate for costs, there shall be deemed to be reserved to such party liberty to apply within 30 days.1
7 Orders 1, 2, 4, 5 and 6 should be made. They are set out below.
Special costs order for travel and accommodation costs
8 There was a dispute concerning another order in which Telstra sought the 'travel and accommodation costs of Ms Dean occasioned by her presence in Court to give instructions during the trial'.
(Page 4)
9 Senior counsel for Telstra relied upon a paragraph in Civil Procedure Western Australia2which describes as 'a special order which may commonly be required' that the client be given an allowance to be fixed by the taxing officer for days present in court to give instructions.
10 As counsel for the Pourzands correctly submitted, since Ms Dean was a witness as well as the person providing instructions for Telstra her reasonable airfares may be recoverable as expenses in relation to her attendance in the capacity as a witness. However, the Scale of Costs (now Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010 (WA)) has never made provision for a party to recover the party's travel costs separately from attendance as a witness.
11 Since this issue affected only a small amount of accommodation expenses, counsel understandably did not focus upon any authority on this point. There is some authority which supports the position in Civil Procedure Western Australia. In Petrunic v Barnes,3 Murphy J considered that the expenses of a party in attending court may be recoverable, saying more often than not 'it is both necessary and proper that a party be present throughout a hearing to instruct counsel or his legal representative'. Other cases are to similar effect.4.
12 On the other hand, as Professor Dal Pont has observed, this approach (and decision in Petrunic) 'has fallen into disfavour' because the cost of attending court can be described neither as costs nor as out-of-pocket expenses.5 At the end of the 18th century Sir Edward Coke observed of the Statute of Gloucester6that it has always been the position that costs of a plaintiff do not extend 'to the costs and expences of his travell and losse of time'.7.
13 The approach in the line of cases exemplified in Petrunic was rejected by a majority of the High Court in Cachia v Hanes.8 And what was said in Cachia about a self-represented litigant applies also to a represented litigant. As Kirby P said in Walton v McBride,9'[i]t would be completely unacceptable to afford a litigant in person no costs (save as a
(Page 5)
- witness) of attending at court whilst permitting a litigant to recover who could afford, or had, legal representation to do so'.10
14 This order should not be made.
The indemnity costs order
15 Telstra also sought an order (order 3) for indemnity costs.
16 On 29 March 2012, the solicitors for Telstra wrote to the solicitors for the Pourzands. The letter was marked 'without prejudice save as to costs'. The letter can be summarised as follows.
(1) Reference was made to the lay and expert statements served on behalf of the Pourzands.
(2) It was said that the Pourzands will not succeed at trial. Contradictions in the Pourzands' case were pointed out. It was correctly said (as was the case at trial in relation to the major work) that there was a lack of any reference to authority for the Pourzands to carry out the work they undertook. It was also correctly said (and I also found) that there was no basis for the Pourzands to recover costs in replacing the ceilings when that work was done without authority and in breach of the Lease.
(3) Notwithstanding the poor prospects of success identified in the letter, Telstra made an offer 'in a genuine attempt to resolve this dispute once and for all, without the need for either party to needlessly incur further legal costs'.
(4) The offer was for payment by Telstra of $350,000 (including GST, if any) in full and final settlement of all claims relating to or arising out of any fact or issue raised in the proceedings. Upon payment of the settlement sum, the parties would mutually release and forever discharge each other from all claims relating to or arising out of any fact or issue raised in the proceedings.
(5) The offer was open for a period of 14 days from receipt of the letter.
(6) If the offer were not accepted, Telstra said that it intended to produce the letter on the question of costs. Telstra said that it would seek an order that the Pourzands pay Telstra's costs from
- the date of the letter on an indemnity basis in accordance with the principles in Calderbank v Calderbank.11
17 The leading decision in this jurisdiction in relation to indemnity costs is Ford Motor Company of Australia Ltd v Lo Presti.12In that case, Buss JA (Wheeler JA agreeing) explained that the 'critical question' is whether an applicant (here, Telstra) can satisfy the court that the rejection of the offer by the other party was unreasonable in the circumstances.13.
18 In Lo Presti, Buss JA14. approved comments from the Court of Appeal of Victoria in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2)15 that the assessment of unreasonableness is a matter of judgment and impression and recited a number of non-exhaustive factors to consider in the assessment of whether the rejection of an offer is unreasonable in the circumstances:
(1) the stage of the proceeding at which the offer was received;
(2) the time allowed to the offeree to consider the offer;
(3) the extent of the compromise offered;
(4) the offeree's prospects of success, assessed as at the date of the offer;
(5) the clarity with which the terms of the offer were expressed; and
(6) whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it.
19 Counsel for the Pourzands submitted that Telstra's arguments about unreasonableness fail 'at the first hurdle' which was said to be the quantum of the offer.16 I do not accept this submission. There is only one hurdle for Telstra to surmount. That hurdle is to show that the Pourzands' rejection of Telstra's offer was unreasonable. All the six (non-exhaustive) factors above are matters to consider in the assessment of whether the rejection of the offer was unreasonable.
20 Senior counsel for Telstra addressed each of these matters in turn.
(Page 7)
21 As to (1), the offer was received six weeks before trial. It was received at a time when the Pourzands would have been commencing final preparation for the case. They must have had a good appreciation of the issues. In Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2),17 Basten JA observed that as final preparation commences, both parties may reasonably be expected to have a clear perception of the strengths and weaknesses of their positions, so that the reasonableness of a particular offer may be speedily assessed. Because significant costs will be accruing on a daily, even hourly, basis there is a heightened incentive to respond within the time permitted. Although the need to address the terms of an offer, provide advice and obtain instructions will often be a significant distraction from final preparation, in this case that distraction would have been minimal for the reasons expressed below.
22 As to (2), (5) and (6), the offer was crisp and clear. The Pourzands would have been in little doubt about Telstra's position. The period of 14 days to consider the offer was reasonable. It would not have been a significant distraction from preparation to consider and to address the offer. Telstra's position concerning the possibility of indemnity costs was also clearly foreshadowed.
23 The real dispute between the parties concerned (3) and (4). Counsel for the Pourzands submitted that the extent of the compromise offered by Telstra, and the Pourzands' prospects of success, meant that the offer was not unreasonable.
24 Counsel for the Pourzands submitted that the offer from Telstra of $350,000, whilst not derisory, was not a substantial offer especially once it was considered in light of the likely costs of the action which they, or Telstra, would have incurred to that point. There was no evidence before me of those costs. Counsel for the Pourzands mentioned a possible figure of $200,000 which might have been incurred by Telstra. He then suggested that the Pourzands' costs should be assumed to be the same. Even if there had been evidence that this was the approximate cost incurred, the size of the offer was nearly double this estimate of the costs incurred. The offer also substantially exceeded the whole of the amount which was ultimately agreed to be the quantum of the Pourzands' make good claim in relation to the ceilings. It was also almost a quarter of the entire sum claimed by the Pourzands. In all the circumstances (including
(Page 8)
- the prospects of success which I address below) the size of the offer was extremely generous. It was unreasonable for the Pourzands to reject it.
25 I turn then to the prospects of success, assessed at the date of offer. An insurmountable obstacle for the Pourzands' case at that stage was, as Telstra pointed out in its letter of offer, the lack of authorisation for Mr Pourzand to perform the major work which was undertaken.
26 Counsel for the Pourzands said that it was not unreasonable to refuse the offer because there were good grounds for optimism after the evidence of Mr Hutchings in cross-examination on the last day of trial. The evidence to which counsel referred was Mr Hutchings' subjective motivations and understandings and that, in the words of counsel, Mr Hutchings 'wasn't worried about anything, so long as Telstra didn't have to pay for it'.18 This submission should not be accepted for two reasons.
27 First, even if Mr Hutchings' evidence in cross-examination did provide some support for the Pourzands' case, the reasonableness of Telstra's offer is not to be assessed with the benefit of hindsight. It is to be assessed at the date it was made.
28 Secondly, the evidence of Mr Hutchings to which counsel referred did not provide any basis for overcoming the fundamental difficulty with the Pourzands' case which was that the major work was done without any authorisation or knowledge by Mr Hutchings or by Telstra.
29 The matters in cross-examination to which counsel was apparently referring related to Mr Hutchings' evidence in relation to an exchange of emails which he had with Mr Kendle of Perth Management Services and also to Mr Hutchings' evidence concerning his subjective lack of concern about some minor improvements. I will address each of these points.
30 On 14 July 2009, Mr Kendle had explained that the Pourzands were willing to assist to upgrade the level 3 and level 4 bathrooms to assist to secure a prospective tenant for the Telstra space. Mr Hutchings replied by email 35 minutes later saying that he (Mr Hutchings) agreed that it would be in the interests of both the Pourzands and Telstra for the improvements to be made to the base building before the Lease expired. Mr Hutchings said that he would be happy to meet with Mr Kendle and Mr Pourzand to discuss this.
(Page 9)
31 The evidence of Mr Hutchings in cross-examination in relation to this was that Mr Hutchings considered that it was in the interests of both parties for those improvements to be made because (i) the toilets in the 'base building' were not in the area of Telstra's Lease; and (ii) those improvements would improve the prospects of the premises being re-let.19 Further, he had no expectation that Telstra would be asked to pay for these improvements.20
32 Mr Hutchings also said in cross-examination, referring to minor improvements such as painting balconies and removing blinds, that of those 'things we had discussed',21 his primary concern was that Telstra would not have to pay for those improvements.
33 Although no objection was taken to this line of cross-examination, it is hard to see the relevance of Mr Hutchings' subjective views at all, least of all concerning work that Mr Pourzand might do in an area of the Building which was not part of the Lease, or his subjective views about minor work which Mr Pourzand might do which he considered would enhance Telstra's prospects of re-leasing the premises.
34 The short point is that Mr Hutchings' evidence concerning the major work was clear: he never saw it; he had not been asked for authority for it to be undertaken; and he did not expect that it would be undertaken. And Telstra knew nothing of those works. It is also clear that the premises could not have been re-let for the 5 months (at least) during which the major works were undertaken. These matters were always insurmountable obstacles and the Pourzands' objective prospects of success at the date of offer were poor.
35 Although I have addressed, in turn, each of the six (non-exhaustive) factors set out in Lo Presti, all of which point towards unreasonableness in the rejection of the offer, this does not mean that each factor has equal weight, or even that these are the only relevant factors. The assessment of unreasonableness is an overall matter of judgment and impression, although I accept that the quantum of the offer, in light of prospects of success, is a very significant factor.
36 My overall conclusion is that it was unreasonable for the offer to be rejected by the Pourzands. It is appropriate to make the order for
(Page 10)
indemnity costs sought by Telstra. The Pourzands did not raise any objection to the form of this order sought by Telstra.
Conclusion: orders to be made
37 My orders are:
1. The action is dismissed.
2. The plaintiffs pay the defendant's costs of the action to be taxed if not agreed.
3. The defendant's costs as from 29 March 2012 be taxed and paid on an indemnity basis such that the plaintiff is to pay all the costs incurred by the defendant except insofar as they are of an unreasonable amount or have been unreasonably incurred, so that subject to those exceptions the defendant is completely indemnified by the plaintiff for its costs.
4. There be a certificate for the cost of the transcript.
5. The costs include reasonable costs of preparing written closing submissions.
6. The defendant has liberty to apply for any further special costs orders within 28 days.
1Cockburn Cement Ltd v The Minister for the Environment (WA) [2011] WASC 260 (S).
2 Kendall and Curthoys Civil Procedure Western Australia [66.1.22].
3Petrunic v Barnes [1989] VR 927, 930 (Murphy J).
4Australian Blue Metal Ltd v Hughes [1970] 2 NSWR 119, 123 (Helsham J); Secretary, Department of Foreign Affairs and Trade v Boswell (1992) 39 FCR 288, 292 (the Court).
5 G Dal Pont The Law of Costs(2nd ed, 2009) 577 [17.39].
6 1278 (UK) 6 Edw 1 c 1.
7 Coke, Second Part of the Institutes of the Laws of England (1797 ed), 288.
8Cachia v Hanes [1994] HCA 14; (1994) 179 CLR 403, 417 (Mason CJ, Brennan, Deane, Dawson & McHugh JJ).
9Walton v McBride (1995) 36 NSWLR 440, 453.
10 See also CGU Workers Compensation (Vic) Ltd v Rees [2003] VSCA 18; (2003) 6 VR 227, 231 [12] (Batt JA).
11Calderbank v Calderbank[1975] 3 All ER 333.
12Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1.
13Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1, 9 [21], [23].
14Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1, 8 [17] - [19].
15Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298 [23] - [24].
16 ts 470.
17Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd (No 2) [2008] NSWCA 85 [20].
18 ts 471.
19 ts 405.
20 ts 406.
21 ts 411 (Mr Hutchings).
0
11
2