Ruskin Nominees Pty Ltd v Avago Pty Ltd [No 5] - [2011] WADC 63

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: RUSKIN NOMINEES PTY LTD -v- AVAGO PTY LTD [No 5] [2011] WADC 63

CORAM: STEVENSON DCJ

HEARD: 25 FEBRUARY 2011

DELIVERED : 25 FEBRUARY 2011

PUBLISHED : 18 APRIL 2011

FILE NO/S: CIV 670 of 2001

BETWEEN: RUSKIN NOMINEES PTY LTD
Plaintiff
AND
AVAGO PTY LTD
Defendant

Catchwords:

Costs - Orders sought after trial - Proceedings took over 10 years to get to trial - Interest on judgment sum - Indemnity costs orders - Special costs orders - Costs orders without regard to the scale limits - Certificate for trial transcript

Legislation:

District Court of Western Australia Act 1969
Legal Practice Act 2003
Supreme Court Act 1935

Result:

Costs orders made against the defendant in favour of the plaintiff

Representation:

Counsel:

Plaintiff: Mr S V Forbes
Defendant: Ms M L Coulson

Solicitors:

Plaintiff: S C Nigam & Co
Defendant: Lawton Gillon

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

Nil

STEVENSON DCJ: [This judgment was delivered extemporaneously on 25 February 2011 and has been edited from the transcript.]

Introduction

As I have indicated, the application before the court concerns the issue of costs following the trial in this matter in respect of which I delivered reasons for decision on 3 September 2010. The judgment followed a 13‑day hearing in October and November 2009, and further in May 2010.
I refer to and incorporate the content of my reasons for decision, and do not propose to repeat much of them, except to note, of course, that the action and claims themselves were concerned with an incident which occurred on 26 August 1999. In that regard, as I said in the judgment, these proceedings have been obviously long and protracted. It seems to me, given the inability of the parties to resolve the issue of costs, they will continue on for some further time.
The application of the plaintiff is that cost orders should be made in terms of its minute of proposed orders dated 25 November 2010. There are four relevant applications contained within the minute. The first concerns the issue of interest on the judgment sum. The second, whether or not there should be an indemnity costs order in the matter. The third concerns an application by the plaintiff for a special costs order in relation to the limits prescribed by the relevant determinations of the legal costs committee from time to time and, finally, with respect to the issue of the cost of the transcript.

Interest on the judgment sum

Dealing firstly with the issue of interest, the court, of course, has a discretion under s 32 of the Supreme Court Act1935 and the District Court of Western Australia Act 1969 to order the payment of interest on the judgment sum. That discretion must of course be exercised judicially. I have had regard to the affidavits and the written submissions of the parties in respect of this matter, and the other matters to which I will come to in a moment.
The plaintiff issued an invoice to the defendant, dated 31 August 1999, for the amount which it said was due and payable to it as a result of the drilling and blasting of the overburden, and what is known as the production blast, at the defendant's quarry in August 1999. The invoice did not contain any demand with respect to the payment of interest. It did contain a note to the defendant that payment is required within 30 days of the invoice date.
In my view, there is no legal or procedural requirement for the exercise of the discretion to award interest which is dependant on there being some demand for interest by the creditor from the debtor at the relevant time. The principle behind the court's power to award interest is of course to compensate the party who has been, in effect, kept out of the money that was due to them, and obviously the discretion must be exercised appropriately, having regard to the circumstances of the particular case. There is also, in my view, in the power to award interest, an underlying function. That is to encourage the early resolution of disputes.
The invoice was not responded to, and there was evidence in the course of the trial from the officer of the defendant, which indicated his attitude to the invoice, and I suspect to much of the way he conducted the bookwork and the paperwork associated with the business of the defendant.
There was a period of time, just over six months, before the plaintiff caused a letter of demand, dated 11 March 2000, to be sent to the defendant in respect of the invoice. There was a further year before the plaintiff commenced these proceedings by writ dated 16 March 2001.
The position therefore is that the proceedings themselves were commenced about 16 months after the cause of action or claim arose, following on from the failed production blast on 26 August 1999. It is, of course, plain that there was much disagreement between both parties at the time of the failed production blast and, for want of a better term, 'finger‑pointing' as to whose blame or fault it was.
The reality is, and the fact is, both parties did not at that time turn their mind to either any meaningful communication between themselves as to how the plaintiff's money claim should be resolved or, more critically, in relation to the evidence which existed at the time which might have proved the reason why the production blast failed. This tardiness, in my view, created much of the difficulty which has infected these proceedings since they were commenced.
It is also the case that, having looked at the court file and the chronology provided in the material for the purpose of this application, that obviously the proceedings were conducted over a period of 10 years before they came to trial.
My view is that with the case management powers it would have been open to the plaintiff to have brought the matter on at an earlier point in time if it had exercised the powers available to it under the rules of court if it had wished to do so. It seems to me that, for example, in 2002 there was a hole in the procedure where there was some delay, and over the 10 plus‑year period of the litigation, in my view, there were periods of time when the plaintiff could have pressed the matter to trial more quickly than it did so. I mention these things because, in my view, in considering whether or not the court should award interest, it is relevant to have regard to the time that the proceedings have taken to be resolved, and the reason why they have taken so long.
It is also plain from the court record that the defendant in this matter has from the outset, it seems to me, caused as much delay as possible in the proceedings, beginning with its involvement in having the judgment in default set aside against it. Having regard to the principles which do apply, and to which I have referred, and the circumstances to which I have referred, in my view there should be an order in favour of the plaintiff that the defendant pay interest on the judgment sum. In my view, having regard to the matters I have mentioned and the factors to which I have referred, the date which can be conveniently used to describe the period should be from 16 March 2001 when the writ was issued.
That, in my view, takes into account the delay in the plaintiff pressing its claim, and the delay in instituting the proceedings, there being nothing of any substance having happened before it did so except for the letter of demand on 11 March 2000. It also takes into account that some of the delay in the matter reaching trial should also, in my view, be the responsibility of the plaintiff.
With respect to order 1 on the plaintiff's minute of proposed orders, the order will be the defendant pay interest at the rate of 6% per annum on the judgment sum from 16 March 2001 to 3 September 2010.
That should allow the parties to do the calculation. I will just note, as I have said, 16 March 2001 is the date the writ was lodged, and 3 September 2010 is the date my reasons for decision were handed down in this matter.
I also note that the judgment after trial was entered on 9 December 2010 in terms that:
1.The defendant pay the plaintiff the sum of $36,962.03.
2.The defendant's counterclaim be dismissed.
3.Costs be reserved.

Indemnity costs

The second aspect of the issues between the parties relating to costs concerns the plaintiff's application in par 2 of its minute for an indemnity costs order. That order is set out in the alternative. The plaintiff contends three different options. There are reasons for those three different bases set out in the plaintiff's submissions and affidavit material.
The first alternative propounded by the plaintiff is that there should be an indemnity costs order after 30 August 2001 on the basis that the plaintiff on that date, by letter dated that date to the defendant's solicitors, offered to settle the action upon payment of the sum of $37,401.23 plus costs to be taxed, and indicated that it would waive its claim for interest with effect from 26 August 1999 should the matter settle within 21 days from that date.
That interest component, according to the material before the court, was worth about $4,500 at that point in time. The offer was not accepted.
The second alternative propounded by the plaintiff is premised on comments made by Deputy Registrar Hewitt during a hearing on 24 February 2006 at which time he, in the course of that matter, had the opportunity to reflect on the likely inability of the defendant to succeed in its counterclaim, at least with respect to that part of it which concerned the calculation of the defendant's alleged loss of profit relating to the production and sales from the quarry.
Deputy Registrar Hewitt obviously has much wisdom because he perceived at that point in time in the proceedings that the defendant was facing grave difficulty with its claim, and this was borne out as a result of the trial itself.
The third alternative propounded by the plaintiff is premised on a further written settlement offer contained in the plaintiff's solicitor's letter dated 23 September 2009 to the then defendant's solicitors which contained an offer to avoid which was, at that point in time, estimated to be an eight‑day trial on the basis that the defendant pay $30,000, and taxed costs of the action in full and final settlement of all claims; that the defendant's counterclaim be dismissed; and that payment of the $30,000 be made within 28 days of acceptance.
It is plain on any view that both parties, even if that offer had been accepted, were well and truly by that point at time in these proceedings, going to be out of pocket, irrespective of the cost orders which might flow from the offer or the result of any trial. It was already a 'dead loss' for them. The principles in relation to the court's jurisdiction and power to make an indemnity costs order are contained in the parties' written submissions. It is, of course, a special order because it requires the court to give consideration as to whether or not it is appropriate in the circumstances to depart from the usual costs order which are awarded in favour of the successful party on a party‑party basis.
Like any discretion exercised by the court, it must be exercised judicially. It has been said that there must be some special or unusual feature in the case to justify the court exercising its discretion. Usually that is by reference to consideration of the refused settlement offer or proposal, and having regard to the result of the trial and the judgment obtained.
However, the basis upon which the discretion may be exercised is obviously not closed. If a party persists in pursuing on what, on a proper consideration, fairly and evenly might be regarded as a hopeless case that will, depending on the nature of the case and the circumstances, also be a basis upon which a court may award indemnity costs.
It is, of course, necessary that the court not move too quickly to characterise the losing party's position as hopeless to justify an award of indemnity costs to the successful party. The court, however, may have regard to the conduct of the parties throughout the course of the litigation with knowledge of the trial process and the issues which were agitated and argued at the end of the day; and the extent to which the conduct and the issues sought to be argued have increased the cost of the proceedings.
There is also authority for the proposition that an indemnity costs order may be appropriate if there has been some element of improper or, at least, unreasonable conduct by a party or the party's legal advisors.
As I remarked in my reasons for decision, I regard this case as unique and hopefully of antiquity, on the basis that claims of this size and magnitude ought not, if properly advised, ever be run to the extent that they have been run in the court where the parties are put in a position where they must pay many thousands of dollars more of costs both legally and to experts over and above what the claim on any view could be worth. There are other procedures which, these days, would have resulted in this claim being settled at a very early stage, and that is why I regard it as something of antiquity and out of the past. It is also, of course, the case that an indemnity costs order may not be appropriate if the claimed costs would be likely to be recovered under the standard order for party and party were not to be exceeded. If the scale allowance is sufficient, then there would be no need for an indemnity costs order.
In this regard it is necessary for the court to have a broad brush approach, using its knowledge of the proceedings to form its view. In my view, the offer of 23 September 2009 on any fair and reasonable basis should have been accepted by the defendant at that point in time, shortly before the matter was due to proceed to trial.
At that point in time the defendant would have well appreciated its preparedness and the quality of the evidence prepared for its counterclaim, and the risk it faced in proceeding to trial. I note the submissions of the defendant in relation to the offer being made only shortly before the trial; but, in my view, that is when the parties would have been most acutely aware of the issues which confronted them if the trial had run when it was proposed to run on that occasion. On any view, in my opinion, that offer was a reasonable offer and the defendant ought to have accepted it.
I do not regard the comments of Deputy Registrar Hewitt at the hearing in February 2006 as being, in themselves, of sufficient quality or import to base an indemnity costs order.
That then takes me back to the first offer. In my view, that offer, while obviously better in outcome than the defendant obviously was able to achieve many years later at much greater cost, it needs to be understood in the context of the litigation as it was at the point in time that it was made and the knowledge of both parties of the circumstances arising out of the failed production blast.
As I have mentioned in my reasons for decision, it is plain that both parties did not turn their mind to what the most likely cause of the failed production blast was at or immediately after its failure in August 1999. The matter was allowed to drift unattended, and the evidence of those involved in the blast was lost with the effluxion of time and place because some of the drillers involved subsequently relocated overseas.
In my view, there should be an indemnity costs order because, as was apparent from the reasons for decision the defendant, notwithstanding the counterclaim filed, did not, in my view, seriously approach its counterclaim at any point in time but simply went through a process of attempting to build the evidence necessary in a way which might get it to the door of the court; presumably on the basis that it did not ever expect the matter to proceed to trial because something might happen to the plaintiff, or the plaintiff would walk away from its claim.
The defendant's evidence has added a great deal of time and, in my view, unnecessary complexity in the way in which it was prepared and sought to be put before the court. Yet, when it was put to scrutiny in the trial process, it was found to be inadequate and wanting in many critical respects. There was also, in the evidence at trial in my view, demonstrated in the evidence of the defendant's officers an unpreparedness to actually deal with the plaintiff's claim and also, critically, to actually deal with and commit the resources necessary, in a timely way, to prove the counterclaim which was mounted.
Simple recordkeeping at the time would have reduced a great deal of cost and time to all advisors involved in the dispute. The attitude of the defendant, in my view, to the counterclaim is the reason why it did not get to first base, because the same attitude also infected the defendant's approach to the issue of causation. It obviously contended at trial that the plaintiff was somehow in breach of its duty and that the so‑called breach, which was never properly identified, was somehow causative of the failed production. It was inadequately prepared and, in my view, inadequately run by the defendant.
There should be an indemnity costs order, and in my view the appropriate date from which indemnity costs should flow is from 10 October 2001 which is the date that the defendant filed its defence and counterclaim. It was from that date that the issue of the counterclaim became a live issue, and one which obviously the plaintiff then had to contend with.
With respect to par 2 of the plaintiff's minute of proposed order, the order will be the defendant pay the plaintiff's costs of both the claim and the counterclaim, including reserved costs, on a party‑party basis until 10 October 2001, and on an indemnity basis thereafter.
I appreciate that those costs will need to be taxed, and obviously the reasonableness of the costs claimed will be a matter for the exercise of the discretion of the taxing officer.

Costs without regard to scale limits

The third claim of the plaintiff relates to a special costs order in respect of a number of matters premised on the alleged unusual difficulty, complexity, or importance of the claim.
The court has power under s 215 of the Legal Practice Act 2003, if it is of the opinion that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, to order payment of costs above those fixed by the determination.
In this regard, the plaintiff seeks a special costs order in respect of getting up, the counsel fee on brief, the second and subsequent days of the trial, and the mediation conference on 18 August 2009.
In order to make a special costs order, the court must form an opinion which has two parts. Firstly, that the amount of the costs allowable in respect of the matter under a legal costs determination is inadequate; and the second is that the inadequacy arises because of the unusual difficulty, complexity or importance of the matter.
In my view, having regard to the history of the matter and the nature of the counterclaim which was the driving issue in this proceeding and at trial, there was some unusual difficulty and perhaps a little complexity because of the way in which the claim was formulated and expressed, and referred to by the experts in their voluminous reports. All of that material had to be digested and understood by the plaintiff in order to see what it was that the counterclaim was aimed at, and the evidence relied upon.
As to the first issue of whether or not the legal costs determination is inadequate of the costs, in my view, the matter to which I have just referred in this particular case, using the broad brush approach rather than matters of detail, and having regard to what is contained in the affidavit material regarding likely costs which have been incurred and which they might be taxed at, in my view there should be a special order. I do not accept, however, that the matters the subject of the issues between the parties were, in themselves, legally particularly difficult or complex, but it is the way in which the counterclaim was presented in the expert reports and pleadings that added some difficulty and some complexity to the process.

Even at trial it was plain that the experts themselves, and the way in which they were briefed and instructed by the parties, were expressing opinions on different things and about different matters. In my view, as I indicated in my reasons, there was on the part of, in particular, the defendant's experts a degree of getting into the ring and advancing the defendant's cause as opposed to being truly independent experts, and cognisant of their duty to the court in that regard, and in particular what their role was.
All of that frustrated the trial process, and it was necessary for the trial to be elongated to enable information and further expert opinion evidence to be exchanged between the parties' experts. In that regard, even though after the first tranche of the trial, I did direct that there be a conferral between experts, I note now, having seen the letter of the plaintiff's solicitors to the defendant's solicitors in that regard dated 16 December 2009, that it does not reflect the order and direction I gave in this regard. It simply contains an invitation to Mr Delaney to contact Dr Hagan if he wished to do so.
In my view, in view of the time and the difficulty involved in the preparation and pre‑trial process, given the late start to the counterclaim and the issues it gave rise to, there should be a special costs order in relation to getting up, and also the counsel fee on brief.
I am not persuaded in the exercise of my discretion that there is any proper basis to also make an order in that regard in respect of the second and subsequent days of the trial. Once prepared and understood, the material should have been canvassed sufficiently so that its content was appreciated. I do not see any need to extend the order in respect of second and subsequent days of trial.
With respect to the mediation conference on 18 August 2009, while I obviously support the attendance of counsel if they had been retained in the matter being present if they have a valuable role to play - sometimes they do and sometimes they do not, and it very much depends on the individual concerned and the basis and the way in which they have been briefed - there should be recognition by way of a special costs order. However, I do not agree that it follows automatically that the success of a mediation conference is likely to be enhanced if the parties are encouraged to bring all necessary legal advisors, including counsel. That, as I have said, would depend on who counsel is and what the circumstances are, and the extent to which there has been some conferral between the parties as to how they wished to use the mediation process to actively explore the issues and promote any prospect of settlement.
In this case I am not persuaded that there is any proper basis to make a special costs order in respect of the mediation conference which was obviously unsuccessful. With respect to par 3, the order will be the plaintiff's costs be taxed without regard to the limits described by the relevant determinations of the legal costs committee from time to time in relation to:
(a)getting up; and
(b)counsel fee on brief.

Certificate for transcript

In my view, there should be a certificate for the transcript in view of the length of the trial, the process of synthesis at the trial of the expert's reports and their evidence, and in identifying the issues. Obviously, the fact that the trial was split over two separate years is also a material consideration.

Orders made

For these reasons I make the following orders:
1.The defendant pay interest at the rate of 6% per annum on the judgment sum from 16 March 2001 to 3 September 2010.
2.The defendant pay the plaintiff's costs of both the claim and the counterclaim including reserved costs on a party‑party basis until 10 October 2001 and on an indemnity basis thereafter.
3.The plaintiff's costs be taxed without regard to the limits prescribed by the relevant determinations of the legal costs committee from time to time in relation to:
(a)getting up; and
(b)counsel fee on brief.
4.There be a certificate for the transcript.