R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd
[2009] WASC 206 (S)
•27 JULY 2009
R J BAKER NOMINEES PTY LTD -v- PARSONS MANAGEMENT GROUP PTY LTD [2009] WASC 206 (S)
Pending Appeal
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2009] WASC 206 (S) | |
| Case No: | CIV:1977/2007 | 15 & 16 JUNE 2009 & ON THE PAPERS | |
| Coram: | BEECH J | 27/07/09 | |
| 18/08/09 | |||
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Costs orders made | ||
| B | |||
| PDF Version |
| Parties: | R J BAKER NOMINEES PTY LTD (ACN 008 852 168) PARSONS MANAGEMENT GROUP PTY LTD (ACN 074 618 885) |
Catchwords: | Costs Confidential and privileged nature of mediation Scope of exception to mediation privilege in Supreme Court Act 1935 (WA) s 71(3)(c) Plaintiff awarded judgment in the sum of $283,283 Calderbank offer made in the sum of $270,000 inclusive of interest and costs Whether offer should be construed as if it excluded GST Appropriate costs orders Turns on own facts |
Legislation: | Supreme Court Act 1935 (WA) s 71 |
Case References: | Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd [2008] WASCA 119 Amaca Pty Ltd v Hannell [2007] WASCA 158(S) Permanent Building Society v Wheeler [No 2] (1993) 10 WAR 569 RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206 Western Areas Exploration Pty Ltd v Streeter [No 2] [2009] WASCA 15 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 18 AUGUST 2009 FILE NO/S : CIV 1977 of 2007 BETWEEN : R J BAKER NOMINEES PTY LTD (ACN 008 852 168)
- Plaintiff
AND
PARSONS MANAGEMENT GROUP PTY LTD (ACN 074 618 885)
Defendant
Catchwords:
Costs - Confidential and privileged nature of mediation - Scope of exception to mediation privilege in Supreme Court Act 1935 (WA) s 71(3)(c) - Plaintiff awarded judgment in the sum of $283,283 - Calderbank offer made in the sum of $270,000 inclusive of interest and costs - Whether offer should be construed as if it excluded GST - Appropriate costs orders - Turns on own facts
(Page 2)
Legislation:
Supreme Court Act 1935 (WA) s 71
Result:
Costs orders made
Category: B
Representation:
Counsel:
Plaintiff : No appearance
Defendant : No appearance
Solicitors:
Plaintiff : Metaxas & Hager
Defendant : Solomon Brothers
Case(s) referred to in judgment(s):
Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd [2008] WASCA 119
Amaca Pty Ltd v Hannell [2007] WASCA 158(S)
Permanent Building Society v Wheeler [No 2] (1993) 10 WAR 569
RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206
Western Areas Exploration Pty Ltd v Streeter [No 2] [2009] WASCA 15
(Page 3)
- BEECH J:
Introduction
1 On 27 July 2009 I delivered my reasons on the trial of this action: RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206. In summary:
(a) I dismissed RJB Nominees' contract claim that it was entitled to be paid on the basis that payment would be made in part by the transfer of lots 81 and 83 at a price of $190,000; and
(b) I upheld RJB Nominees' contract claim for the agreed price of the Original Scope of Work and the Additional Work, and for a payment at cost plus 10% for the Forward Earthworks, being a total of $283,283.35.
2 I also found that, had the alternative contract claim not succeeded, I would have upheld RJB Nominees' quantum meruit claim except in relation to the work performed in November 2005.
3 On 27 July 2009 I ordered that PMG pay RJB Nominees $283,283 and interest on that sum at 6% from 22 September 2007 until judgment.
4 I also ordered that the parties exchange submissions and any affidavits on the question of costs, and that the question of costs be determined on the papers.
5 Both parties contend that they are entitled to an order for costs in their favour. In essence, RJB Nominees contends that it was the successful party and should have its costs on that basis. Among other things, PMG relies on offers it made to RJB Nominees before and after the action was commenced.
6 I begin with RJB Nominees' objections to the evidence relied on by PMG.
Objections
7 PMG filed an affidavit of Mr Christopher Williams, a solicitor employed by PMG's firm of solicitors. The affidavit comprised 15 paragraphs and 14 annexures. Objection was taken to 10 of the paragraphs. A substantial part of the affidavit and its annexures are unnecessary. The first seven annexures and annexure CSW-10 are already before the court. All but one of these annexures were evidence in
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- the trial. The other annexure is part of the court record, being the writ of summons in one of the two actions the subject of the trial.
8 I will deal in a summary way with the objections, although I do not consider that the evidence objected to makes any difference to the conclusion I have reached in relation to the appropriate costs order to be made.
9 I uphold the objections to pars 6, 7, 10, 12, 13 and 14 on the ground of secondary evidence. I also uphold the objection to the first sentence of par 7 on the ground that it is conclusion and comment.
10 I overrule the objections to pars 9 and 11 on grounds of relevance. Notwithstanding that, I consider that the offer made by RJB Nominees by letter of 23 June 2007 does not bear in any significant way upon my decision.
11 I overrule the objection to par 15. The grounds of the objection go to weight of the evidence, not to admissibility.
12 Paragraph 8 of Mr Williams' affidavit gives evidence about things said and done at a court conducted mediation in the action. RJB Nominees objects to this evidence on the ground that it offends the confidentiality of the mediation process, which is given a statutory privilege by s 71(1) of the Supreme Court Act 1935 (WA). For the reasons that follow, I uphold that objection.
13 Section 71 is in the following terms:
71. Privilege
(1) Subject to subsection (3), evidence of -
(a) anything said or done;
(b) any communication, whether oral or in writing; or
(c) any admission made,
in the course of or for the purposes of an attempt to settle a proceeding by mediation under direction is to be taken to be in confidence and is not admissible in any proceedings before any court, tribunal or body.
(Page 5)
- (2) Subject to subsection (3) -
(a) any document prepared in the course of or for the purposes of an attempt to settle a proceeding by mediation under direction;
- (b) any copy of such a document; or
(c) evidence of any such document,
is to be taken to be subject to a duty of confidence and is not admissible in any proceedings before any court, tribunal or body.
- (3) Subsections (1) and (2) do not affect the admissibility of any evidence or document in proceedings if -
(a) the parties to the mediation consent to the admission of the evidence or document in the proceedings;
(b) there is a dispute in the proceedings as to whether or not the parties to the mediation entered into a binding agreement settling all or any of their differences and the evidence or document is relevant to that issue;
(c) the proceedings relate to a costs application and, under the rules of court, the evidence or document is admissible for the purposes of determining any question of costs; or
(d) the proceedings relate to any act or omission in connection with which a disclosure has been made under section 72(2)(c).
(4) A mediator cannot be compelled to give evidence of anything referred to in subsection (1) or (2) or to produce a document or a copy of a document referred to in subsection (2) except -
(a) in proceedings referred to in subsection (3)(d); or
(b) in proceedings relating to a costs application where there is a dispute as to a fact stated or a conclusion reached in a mediator's report prepared under the rules of court on the failure of a party to cooperate in the mediation and the evidence or document is relevant to that issue.
(Page 6)
- (5) In subsections (3) and (4) -
costs application means an application for the costs of the mediation or of the proceedings to which mediation relates.
15 The only rule of court which, by its terms, makes any evidence or document admissible for the purpose of determining a question of costs is O 29 r 3(2) of the Rules of the Supreme Court 1971 (WA). That rule is in the following terms:
(2) A Mediation Registrar or a mediator -
(a) shall not, unless the parties agree, report to the Court on a mediation conference;
(b) whether or not the parties agree, may report to the Court on any failure by a party to cooperate in a mediation conference; but the report shall not be disclosed to the trial judge except for the purposes of determining any question as to costs.
- That rule has no application to the present case.
16 PMG relies upon an order made by a case management Registrar in the action. The Registrar's order of 29 January 2007 was in the following terms:
By consent the mediation be conducted on a confidential basis. The parties shall not tender in evidence in any proceedings or disclose to any person who did not attend the mediation anything said or done, any communication (whether oral or in writing), or any document made or created in the course of or for the purpose of the mediation except:
…
(b) in regard to any questions of costs.
(Page 7)
17 PMG submits, and I accept, that pursuant O 29A r 3(2)(j), (k) and (l) of the Rules of the Supreme Court, case management Registrars are given power to 'set the terms or conditions' for a mediation conference and to deal with anything in relation to that conference. PMG submits that:
(a) the case management Registrar's order of 29 January 2007 was a case management direction setting a term or condition for the mediation conference;
(b) 'under' is defined in s 5 of the Interpretation Act 1984 (WA) to include 'by', 'in accordance with', 'pursuant to', and 'by virtue of';
(c) the case management direction was made 'by', 'in accordance with', 'pursuant to', or 'by virtue of' O 29A r 3(2)(j), (k) and (l); and
(d) consequently, evidence of what occurred at the mediation is admissible 'under' the rules of court with respect to a costs application.
18 I do not accept that submission. In my opinion, on a proper construction, evidence or documents are admissible for the purposes of determining any question of costs 'under the rules of court', for the purposes of the exception in s 71(3)(c), only if the rules of court make specific and express provision to that effect. In other words, the exception is not engaged by a case management order. Moreover, I do not think that it is open to a case management Registrar (or any judicial officer) to make a case management direction under O 29 or O 29A of the Rules of the Supreme Court that affects the protection afforded to a mediation by s 71 of the Supreme Court Act.
19 The legislative history is relevant to the proper construction of s 71. The legislative history was explained by Buss JA in Western Areas Exploration Pty Ltd v Streeter [No 2] [2009] WASCA 15 [9] - [11]. Section 71 of the Supreme Court Act was inserted by s 18 of the Courts Legislation Amendment Act 2000 (WA). That latter Act also amended s 167(1) of the Supreme Court Act by deleting par (q) and inserting, in its place, the following:
(1) Rules of court may be made under this Act, by the judges of the Supreme Court, for the following purposes:
…
- (q) For enabling and regulating the mediation of any of the differences between any parties to a proceeding generally and, in particular, providing for -
(i) the reference of a proceeding or any part of a proceeding to a mediator with or without the consent of any party to the proceeding;
(ii) the conduct of the mediator and of the parties;
(iii) the terms and conditions upon which the mediation conference is to be held; and
(iv) the admissibility of evidence in relation to a mediation for the purpose of determining the costs of the mediation or the costs of the proceedings between the parties to the mediation.
21 In Western Areas Exploration v Streeter the argument put by PMG in this case does not appear to have been raised and was not specifically addressed by the Court of Appeal. Nevertheless, the reasoning of Buss JA (with whom Wheeler and Pullin JJA agreed) seems to me to provide strong support for the construction which I anyway prefer.
22 Buss JA commented on the close connection between s 71(3)(c) and the amended s 167(1)(q). He observed that each provision is 'concerned in substance with the admissibility of evidence in relation to a mediation under a Rule of Court for the purpose of determining any question of costs between the parties to the mediation' [32].
23 In Western Areas Exploration v Streeter, the appellants argued that evidence was 'under the rules of court' admissible for the purposes of determining a question of costs (within the meaning of s 71(3)(c)) if it complied with O 37 of the Rules of the Supreme Court. This rule regulates the form and contents of affidavits for use in civil proceedings in
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- the court. The Court of Appeal rejected that contention. In doing so, Buss JA came to the following conclusion as to the proper construction of these provisions.
38. In my opinion:
(a) s 71(1) and (3), read with the amended s 167(1)(q); and
(b) the contrast between para (c) of s 71(3) on the one hand, and paras (a), (b) and (d) of s 71(3) on the other, to which I have referred at [28]-[31] above,
indicate that the exception in s 71(3)(c) authorises the admissibility of evidence or documents relating to statements, communications and admissions made, in the course of or for the purposes of an attempt to settle a proceeding by mediation under direction, only where the evidence or documents are sought to be given or tendered:
(c) in proceedings relating to a 'costs application' (as defined in s 71(5)); and
(d) the Rules specifically permit the evidence or documents to be admitted in evidence for the purposes of determining any question of costs (whether in relation to the mediation only or in relation to the civil proceedings as a whole).
39. The construction of s 71(1) and (3) that I prefer is consistent with (and, indeed, reinforced by) the Attorney-General's second reading speech which suggests a Parliamentary intention, in enacting Pt VI of the Act, relevantly, to impose on the parties to civil proceedings a statutory obligation of confidence and to extend the 'without prejudice' basis of court ordered mediation. The new statutory provisions were intended to reinforce the public policy objectives of encouraging parties to settle civil proceedings by the mediation process as soon as practicable before trial. The Attorney-General's speech confirms the ordinary meaning which is conveyed by the statutory text.
40. Order 29 r 3 did not, in the present case, authorise the admission into evidence of the affidavits sought to be relied on by the appellant. No other provision of the Rules specifically authorised the admission of the affidavits. The exception in s 71(3)(c) was therefore unavailable.
In the present context, his Honour's use of the word 'specifically' in [38(d)] and [40] should be noticed.
24 That brings me to the question of the appropriate costs orders.
(Page 10)
The appropriate costs orders
25 It is convenient to consider the question of costs in two stages. First, I will consider the question in the absence of any offer to settle the action. Then I will consider the effect of the offers relied upon by PMG.
26 By O 66 r 1(1) of the Rules of the Supreme Court the court has a broad discretion in relation to costs but, absent other considerations, will usually order that the successful party recover his or her costs.
27 By O 66 r 1(3) of the Rules of the Supreme Court if a party, although generally successful, has failed on some issue or issues which increased the costs of the action, that party can be ordered to pay the costs of those issues. That will generally be appropriate only where the successful party failed on discrete issues which added to the costs of the action in a significant and readily discernable way: Amaca Pty Ltd v Hannell [2007] WASCA 158(S) [7].
28 Order 66 r 2(a) of the Rules of the Supreme Court provides as follows:
2. Costs where several causes of action or several defendants etc.
In the absence of any special order -
(a) where the statement of claim contains more than one cause of action and the plaintiff succeeds on one or more causes of action and the defendant succeeds on another or others, costs shall be allowed to the plaintiff on the cause or causes of action on which he succeeds and to the defendant on that or those on which he succeeds, in the same manner as if separate actions had been brought.
29 The effect of this rule is that a defendant is prima facie entitled to its costs on causes of action on which the plaintiff fails. However, an order of that kind is not made as of course. The court looks at the realities of the case and attempts to do justice. Where all causes of action arise out of the one course of dealing with the same facts, there would usually be one order for the general costs of the action moulded as necessary to ensure that substantial justice is done: Permanent Building Society v Wheeler [No 2] (1993) 10 WAR 569, 574 - 575.
30 In this action, RJB Nominees failed in its primary claim that payment for the work it did would be made in part by the transfer of lots 81 and 83 at a price of $190,000. RJB Nominees succeeded in its secondary
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- alternative contract claim for the price of the work done, and otherwise would have substantially succeeded on the quantum meruit claim.
31 The same facts and evidence were relevant to the question of whether the primary claim would succeed and whether the secondary contract claim would succeed. The additional evidence in relation to quantification of the damages for the primary contract claim was insubstantial.
32 PMG's position at trial was to deny liability on any ground.
33 In substance, therefore, in relation to one set of facts RJB Nominees said that it was either entitled to something over $500,000, or was entitled to about $280,000, while PMG contended that RJB Nominees was entitled to nothing.
34 In those circumstances, it seems to me that (leaving aside any offer of settlement) RJB Nominees was the successful party in the action and should, subject to one matter, have its costs of the action. The exception relates to the costs of the original action incurred before 22 September 2007.
35 The action heard and determined at trial was the consolidation of two actions. RJB Nominees commenced the first action (CIV 1527 of 2006) in May 2006. In that action the claim was for transfer of the land by specific performance or damages. There were no alternative claims.
36 A second action (CIV 1977 of 2007) was commenced on 21 September 2007. It made the primary claim for the transfer of land or its value, but also included, as an alternative, a claim for quantum meruit. (Contrary to a submission of PMG, the quantum meruit claim was pleaded from the beginning of the section action.)
37 Prior to the commencement of the second action, therefore, the only claim made by RJB Nominees was the claim in relation to lots 81 and 83. That claim failed. In those circumstances, in my opinion, it is appropriate that RJB Nominees pay PMG's costs of action CIV 1527 of 2006 up to and including 20 September 2007.
38 That brings me to the effect of the offers relied upon by PMG. The offers are in two categories: offers made before the litigation commenced; and the Calderbank offer of 26 June 2007.
39 I begin with the pre-litigation offers.
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40 PMG relies upon the offers it made to RJB Nominees on 17 February 2006 and 14 March 2006.
41 The history of the communications between the parties is recounted in my reasons on the trial. From 17 February 2006 the parties were at odds about the terms on which work was to be done by RJB Nominees. In that context, Mr Kerry Parsons stated, at the meeting of 17 February 2006 and in a letter written that day, that PMG was willing to pay cash or transfer the blocks on a certain basis. On 14 March 2006, after further correspondence, Mr Kerry Parsons sent an email to Mr Baker. Part of the content of the email is set out in [57] of my primary reasons. The email also said that 'I am sure that you will see [the] funniness of what I have stated and accept the compromise or take cash'.
42 These emails reflect the parties' competing positions at the time during which their dispute emerged. Most of the work was done after those emails. The original action was commenced some months later. Before the action was commenced, by letter of 20 September 2007 RJB Nominees, by its solicitors, demanded payment of $283,283.35. To my mind, what was said by Mr Kerry Parsons in the communications in February and March 2006 is of little weight in determining the appropriate costs order for the action.
43 I turn to the Calderbank offer relied upon by PMG.
44 On 26 June 2007 PMG's solicitors wrote to RJB Nominees' solicitors. The letter was 'without prejudice save as to costs'. The letter rejected the offer which had been made by RJB Nominees and made a counter-offer, expressed as follows:
1. Our client agrees to pay your client the sum of $270,000 (inclusive of interest and costs) in full and final settlement of any claims your client has or may have against our client.
2. The sum of $270,000 is comprised of the sum of:
2.1 $193,000 in respect of the works undertaken by your client for the subdivision of lot 74 Harold Street, Gosnells (the 'Subdivision'), that are referred to in your client's statement of claim in [the original action]; and
2.2 the sum of $76,700 in respect of the other claims that your client alleges that he has for payment for other works undertaken in respect of the Subdivision that were referred to by your client at the mediation held on 15 May 2007.
(Page 13)
45 There were other terms in the letter providing for a release by RJB Nominees of PMG, orders dismissing the proceedings, and the parties entering into a mutually acceptable deed of release.
46 It will be seen that the offer is expressed to be for $270,000. RJB Nominees obtained judgment for a greater sum, namely $283,283.
47 PMG submits that its offer of 26 June 2007 should be construed as an offer of $270,000 plus GST, namely $297,000. PMG refers to a number of background facts and aspects of the letter (PMG's submissions pars 17 and 18). I am not persuaded that the offer of 26 June 2007 should be construed as an offer of $297,000. When a figure is specified in an offer of settlement it seems to me that there would need to be strong justification to read the offer as offering something more than the figure specified. Moreover, it was PMG who made the offer and therefore chose its terms. I do not think that RJB Nominees can be said to have been unreasonable in failing to interpret the offer as exclusive of GST, or in failing to seek clarification from PMG.
48 PMG also contends that a conventional estoppel arises from RJB Nominees' solicitors' email of 30 October 2007 and PMG's solicitors' letter of the next day. RJB Nominees' solicitors' email of 30 October 2007 included the following:
Please tell me why my client should not have a partial judgment pursuant to Order 14 for $283,283.35 inclusive of GST. That is the agreed value of the work in the second quotation which your client accepted in writing plus the value of the forward earthworks. I think it is also the amount your client offered in full and final settlement. (emphasis added)
- PMG relies upon the italicised words. Further, PMG says that nothing to the contrary was said in its solicitors' letter of 31 October 2007.
49 In my opinion, these letters fall well short of establishing conventional estoppel to the effect alleged by PMG. The elements of an estoppel by convention include the following:
(1) the parties had proceeded on the basis of an underlying assumption of fact, law or both, of sufficient certainty to be enforceable (the assumption);
(2) to the extent that the proponent relies on an assumption of law or an assumption of mixed fact and law, the assumption of law must relate to private legal rights, which includes a common assumption as to the effect of contracts or agreements;
(Page 14)
- (3) each party has, to the knowledge of the other, expressly or by implication accepted the assumption as being true for the purposes of the transaction;
(4) such acceptance was intended to affect their legal relations in the sense that it was intended to govern the legal position between them;
(5) the proponent was entitled to act and has, as the other party knew or intended, acted in reliance upon the assumption being regarded as true and binding;
(6) the proponent would suffer detriment if the other party were allowed to resile or depart from the assumption; and
(7) in all the circumstances it would be unconscionable to allow the other party to resile or depart from the assumption: Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd [2008] WASCA 119 [27], [164].
50 There is no sufficient evidence to establish these elements. For example, there is no evidence of any reliance or detriment.
Conclusion
51 For the reasons I have given I make the following orders:
1. The plaintiff pay the defendant's costs in action CIV 1527 of 2006 up to and including 20 September 2007, such costs to be taxed if not agreed; and
2. The defendant pay the plaintiff's costs of the action from 21 September 2007, such costs to be taxed if not agreed.
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