Saraceni v Mentha [No 2]
[2021] WASC 192
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: SARACENI -v- MENTHA [No 2] [2021] WASC 192
CORAM: KENNETH MARTIN J
HEARD: 25 MAY 2021
DELIVERED : 14 JUNE 2021
FILE NO/S: CIV 2734 of 2012
BETWEEN: LUKE SARACENI
Plaintiff
AND
MARK MENTHA
First defendant
SCOTT LANGDON
Second defendant
KORDAMENTHA PTY LTD
Third defendant
Catchwords:
Defamation - Strikeout application - Amendments to long-standing pleaded popular/false innuendos - Subsequent objection to amendments as abuses of process - Truth defence implications - Other litigation decided by civil trial - Suggestion of amendment to avoid unstated repercussions of trial reasons
Legislation:
Rules of the Supreme Court 1971 (WA)
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr M L Bennett |
| First defendant | : | Mr J MacLaurin SC |
| Second defendant | : | Mr J MacLaurin SC |
| Third defendant | : | Mr J MacLaurin SC |
Solicitors:
| Plaintiff | : | Bennett + Co |
| First defendant | : | Norton Rose Fulbright Australia |
| Second defendant | : | Norton Rose Fulbright Australia |
| Third defendant | : | Norton Rose Fulbright Australia |
Case(s) referred to in decision(s):
Batistatos v Roads and Traffic Authority NSW [2006] HCA 27; (2006) 226 CLR 256
PNJ v The Queen [2009] HCA 6; (2009) 83 ALJR
Rural Bank v Mammoth Investments [2019] WASC 409
Saraceni v Mentha [2013] WASC 95
UBS AG v Tyne [2018] HCA 45; (2018) 265 CLR 77
Victoria International Container Ltd v Lunt [2021] HCA 11
Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378
Westgem Investments Pty Ltd v Commonwealth Bank of Australia Ltd [No 6] [2020] WASC 302
KENNETH MARTIN J:
This is the defendants' application by chamber summons dated 9 December 2020 to strike out certain paragraphs within the plaintiff's most recent pleading of his statement of claim. This is the plaintiff's second further re‑amended statement of claim, amended without leave and filed on 2 December 2020 (the 2FREASOC).
There had been an earlier amendment to the plaintiff's pleading on 13 October 2020 (when the plaintiff filed an amended statement of claim (ASOC)). Some of the October amendments were, in effect, revised somewhat by the 2 December 2020 amendments under the 2FREASOC.
Prior to October 2020 the plaintiff's statement of claim had been unchanged since his amendments of 22 July 2016.
A previous interlocutory decision of mine in this same action delivered now over some eight years ago, had dealt with a number of interlocutory aspects of the then pleadings in this defamation action, which was commenced by writ some time ago on 18 October 2012: see Saraceni v Mentha [2013] WASC 95 (Saraceni v Mentha [2013]).
The state of the pleadings in the action looks to have remained static in the period after 2 September 2016 (when the defendants had filed an amended substituted defence (ASD)), until 13 October 2020 ‑ when the first of the two tranches of 2020 amendments made to the statement of claim pleading were effected.
Under the Rules of the Supreme Court 1971 (WA) (RSC), leave to amend a pleading is not required in the period seven (7) weeks prior to the commencement of trial of the matter: see RSC O 21 r 3(1). Here, no trial date has yet been sought, let alone allocated. There is capacity however, under O 21 r 3(3), for a counterparty to object to an amendment made without leave and to seek to have it disallowed for good reason.
The present interlocutory application of the defendants seeks to strike out under RSC O 20 r 19 or alternatively, to have disallowed under O 21 r 3(3), five component paragraphs of the current iteration of the plaintiff's 2FREASOC.
The challenges
The paragraphs challenged by the defendants' interlocutory application by the chamber summons can be organised into three broad categories.
First category of challenge: pars 7.1 and 13.1
First are the innuendo amendment pleas under pars 7.1 and 13.1 and which, for all intents and purposes, are identical.
By these pleas the plaintiff contends that the natural and ordinary meaning of two related publications were defamatory against him.
These were the publications identified as 'the Utterance' of 4 July 2012 by par 6 of the 2FREASOC and by a subsequent written 'Media Release', also of 4 July 2012 - the terms of which are found in par 11 of the 2FREASOC.
From 2FREASOC pars 7.1 (out of the Utterance) and as well from par 13.1 (out of a Media Release) are contended to emerge the false innuendos as contended for and complained of by the plaintiff.
The essence of the defendants' grievance raised on the present application relates to the content of the amendments made to these imputations without leave by the plaintiff during 2020.
More specifically, in a chronological sense the amendments complained of emerged after 27 August 2020. That date is significant. It is the day Tottle J published reasons for decision in the wake of civil trials conducted before his Honour in a number of actions in this court under Westgem Investments Pty Ltd v Commonwealth Bank of Australia Ltd [No 6] [2020] WASC 302 (Westgem [No 6]).
From the Westgem [No 6] reasons it is apparent that the plaintiff in the present defamation action, Mr Luke Saraceni, was a Westgem [No 6] litigation participant, namely as the seventh plaintiff (of some 19 plaintiffs) in action CIV 2722 of 2012. That action was brought by all those plaintiffs against three defendants, namely, Commonwealth Bank of Australia Ltd (first defendant), Westpac Administration 2 Ltd (second defendant) and Westpac Administration 3 Ltd (third defendant). There appear to have been a number of other actions tried and resolved under his Honour's reasons in that decision, being COR 77 of 2014, CIV 1596 of 2011, CIV 1651 of 2011 and CIV 1652 of 2011. I note that his Honour's reasons are currently pending appeal.
Essentially, the present challenge of the defendants directed against 2FREASOC pars 7.1 and 13.1 proceeds on a primary basis that the pleas as they came to be amended in 2020, constitute an abuse of process of the court. This is said to arise, essentially, because the amendments are unexplained, but chronologically, followed the publication of the reasons for decision in Westgem [No 6]. The defendants duly argue that it must be inferred that the plaintiff's objective was to alter and refine the former alleged defamatory imputations which had stood for some time, in order to avoid (adverse) repercussions against Mr Saraceni arising from the reasons for decision and the outcome of Westgem [No 6].
Less strongly argued but, nevertheless, part of the challenge against the par 7.1 and par 13.1 2FREASOC amendments appears to be a more orthodox defamation challenge, on a basis that the imputations as they came to be altered by the 2020 amendments are not, applying the usual defamation thresholds, capable of being arguably derived from the subject publications complained of - namely, from the Utterance and then from the Media Release.
I should say that the content of the Utterance and the Media Release are set out in full in [15] and [19] of my Saraceni v Mentha [2013] reasons for decision. Consequently, I do not need to set them out again.
Also bound up as another component of the defendants' challenges is an associated submission that the 2020 amendments made to 2FREASOC pars 7.1 and 13.1 without leave at the time, ought be disallowed in any event.
I will return to resolve the defendants' challenges put against pars 7.1 and 13.1 of the 2FREASOC shortly.
Second category of challenge: pars 7.3 and 13.3
The second broad category of challenge by the defendants' application attacks the amendments of 2020 made to the popular or false innuendo pleas presenting under pars 7.3 and 13.3 (which are again identical) albeit also derived from the Utterance and the Media Release, respectively.
For the record, 2FREASOC pars 7.3 and 13.3 (in clean form) vis-à-vis the Utterance and then the Media Release respectively contend for an imputation that the plaintiff was defamed by a natural and ordinary meaning that he:
misappropriated $7 million, being the net proceeds of the sale of Seaport's interest in the Vasse Newtown Project which amount was to be paid to the joint financiers of Raine Square to reduce the Raine Square debt.
As articulated under the first tranche of the defendants' written outline of submissions of 18 February 2021, the challenge directed against pars 7.3 and 13.3, relates to the deletion of the words 'for his own benefit' in the introductory words of each plea, as used in the phrase 'misappropriated for his own benefit $7 million'.
According to par 26 of the defendants' written submissions:
The objection to these amendments is that they seek to delete the phrase 'for his own benefit' between the word 'misappropriated' and '$7 million' without making it clear what is the reason for this, what is its intended import and how it differs from the initially pleaded meaning ...
The present challenge by the defendants against pars 7.3 and 13.3 can be disposed of in brief terms.
Upon examination, the allegedly problematic words 'for his own benefit' following the first word used by the imputation, namely 'misappropriated', were indeed introduced under amendments effected to par 7.3 and 13.3 by the plaintiff on 13 October 2020 (ie, amendments as made in the ASOC). But then, the very same words, 'for his own benefit', came to be removed later, under the 2 December 2020 amendments to these same subparagraphs (ie, as an amendment in the 2FREASOC).
Consequently, the suggested problematic phrase 'for his own benefit' has now been fully excised. The word 'misappropriated' looks to have been used in this imputation plea for years, extending back at least to the time of Saraceni v Mentha [2013] WASC 95 (see [21] of those reasons and a reference there to pars 7.3 and 13.3, as they then stood).
As I apprehended the oral arguments submitted by the defendants concerning pars 7.3 and 13.3, the other 2020 amendments to these subparagraphs - were not submitted to be problematic.
There may well have been some misunderstanding here over when the impugned phrase 'for his own benefit' was introduced, but then removed. Nevertheless, a letter from the defendants' lawyers (Norton Rose Fulbright) to the plaintiff's lawyers (Bennett + Co) of 28 October 2020, sent at a point following the first tranche of 2020 amendments to the statement of claim (ie, the ASOC) is relevant to the present fate of par 7.3 and its counterpart par 13.3. That letter is at annexure CFN‑14 to the affidavit of Christopher Francis McLeod sworn 9 December 2020 - was read by the defendants for the purposes of the present application.
Paragraphs 2.3 and 3.3 of the Norton Rose Fulbright correspondence to Bennett + Co read in terms:
2.3As to paragraph 7.3:
(1)The phrases 'for his own benefit' and 'which were required by contract to be paid' are incapable of arising from the words of the Utterance.
(2)There is nothing in the Utterance to suggest misappropriation for the Plaintiff's own benefit or at all (only that they continue to be 'unaccounted' for).
(3)There is also nothing in the Utterance to suggest that there was a contract in place requiring $7 million to be paid. There is, in fact, no mention of a contract at all, and the previous observations about the $7 million figure as opposed to net proceeds is repeated.
...
3.3As to paragraph 13.3:
We repeat, mutatis mutandis, the observations in paragraph 2.3 above as to the phrase 'for his own benefit' in relation to paragraph 7.3 of the FRASOC.
The grievance raised under the communication of 28 October 2020 to the plaintiff's lawyers from the defendants' lawyers looks then to have been accepted. Consequently, under a second tranche of 2020 amendments, the plaintiff had excised the phrases 'for his own benefit' and 'were required by contract', as is now reflected in the 2FREASOC.
There is thus no basis for any abuse of process argument over what took place concerning pars 7.3 and 13.3 in terms of an initial inclusion, but then an eventual excision, of the two phrases at issue during 2020.
Nor did I understand the defendants' submissions on the present application to be contending (in relation to pars 7.3 and 13.3) that the imputation as it now stands in the 2FREASOC is not capable of being arguably derived from the words of the two publications complained of. The position may of course be different at the trial.
If, however, I have misunderstood the defendants' arguments in that respect and a strike out contention is presently advanced as to the derivation of the as modified imputation, then I would respectfully reject it and conclude to the contrary as a matter of its arguability prior to a trial.
For those brief reasons, all interlocutory challenges as presently directed against 2FREASOC pars 7.3 and 13.3 (which were relevantly identical), must fail.
Third category of challenge: par 6
The third category of challenge by the defendants' application concerns a new phrase introduced into the particulars given to par 6, which is the Utterance plea.
The 2020 amendment complained of the added words, 'and the administering of interrogatories' to the first sentence of the particulars.
Consequently, the first sentence of the par 6 particulars, with augmentation of the words as added by the amendment of 2020, reads in the 2FREASOC (in marked-up form):
Further particulars of the matter and form of publication will be provided after discovery and inspection and the administering of interrogatories.
The defendants' application challenges this amendment for a number of reasons. Leave, of course, is required in order to administer interrogatories: see RSC O 27 r 1(1). As a customary part of obtaining leave, a draft of the proposed interrogatories is almost inevitably required and is provided to the court for a purpose of assessing and considering a grant of leave to administer the particular proposed interrogatories ‑ even if the proposed administration itself is not opposed.
Here the defendants point out that under their defence pleading (currently the ASD of 2 September 2016), they have unequivocally admitted the plaintiff's Utterance plea as it is made under par 6. Given an unqualified admission, they contend, in effect, that there can be no basis to interrogate and that, consequently, the plaintiff's amendment to foreshadow such an administration ought be disallowed at the present time as misconceived.
However, I am of the view that, as a matter of prudent case flow management, the defendants' challenge against the introduced phrase concerning interrogatories, must be rejected as premature. The defendants' arguments resisting any future administration of interrogatories concerning the Utterance plea may ultimately be ascertained to be correct. However, that is not a matter properly to be determined at the present. If, in due course, the plaintiff does seek leave to administer interrogatories concerning the Utterance then the issue, if still controversial, can be considered then, with the benefit of fully exposed arguments on each side and supported by a minute of the proposed terms of a draft interrogatory - in respect of which any leave to administer is sought.
Consequently, I decline to excise the amendment phrase foreshadowing an administration of interrogatories in the particulars to 2FREASOC par 6.
That essentially leaves only for my resolution the first and primary category of dispute the subject of the present controversy concerning 2FREASOC pars 7.1 and 13.1. I return to that controversy below.
2FREASOC pars 7.1 and 13.1
As earlier indicated, although derived from different publications (albeit related), namely the Utterance and then the Media Release each of 4 July 2012, the amended terms of the innuendo complained of and sought to be disallowed under pars 7.1 and 13.1, is the same imputation.
Prior to the first tranche of 2020 amendments to the statement of claim of 13 October 2020 (the ASOC), pars 7.1 and 13.1 read as follows:
The Utterance/Media Release was defamatory in its natural and ordinary meaning and meant and was understood to mean that the Plaintiff:
(7.1 and 13.1) lied to the joint financiers of Raine Square;
Then, by the 13 October 2020 amendments made to pars 7.1 and 13.1, the contended natural and ordinary meaning was altered, to then read (in clean form):
(7.1 and 13.1) lied to the joint financiers of Raine Square, such as to his intention to pay to them the sum of $7 million;
Then, by the further (minor) amendment to pars 7.1 and 13.1 under the 2FREASOC, the word 'such' was ruled through so as to be excised from out of each subparagraph.
That last change left each subparagraph plea by the 2FREASOC to read (in clean form):
(7.1 and 13.1) lied to the joint financiers of Raine Square as to his intention to pay to them the sum of $7 million;
From out of this evolutionary process it may be appreciated that it is the addition of a limiting and following phrase, 'as to his intention to pay to them the sum of $7 million' which is sought to be impugned upon the present strike out application by the defendants.
As earlier indicated, the primary basis of the challenge is essentially as to a contended abuse of process. In some way, the defendants are contending Mr Saraceni is seeking to evade, minimise or avoid suggested adverse repercussions carried from out of the reasons for decision of Tottle J in Westgem [No 6].
Also contended, in effect, as a secondary basis of challenge is a contention that the limiting phrase added in 2020 cannot be arguably derived from out of the content of the Media Statement or the Utterance.
As I indicated to senior counsel for the defendants during oral arguments on 25 May 2021, it is really only if the as amended meaning under par 7.1 (and par 13.1) is ascertained to be a permissible and derivable imputation (as extracted from the words of the publications complained of) that it would then become necessary to canvass at greater length the wider abuse of process arguments.
Arguably derived
The first question is whether the amended meaning now seen under pars 7.1 and 13.1 (as contended) can arguably be extracted from the terms of the Utterance and from the Media Release.
In my view, the answer to that question must overwhelmingly, be in the affirmative.
The second paragraph of the Utterance in par 6 of the 2FREASOC (and found repeated again in the Media Statement at par 11) reads:
Mr Saraceni raised over $7 million from a sale to the syndicate of investors for an interest in the then stalled Vasse Newtown project. Despite telling the joint financiers the net proceeds of the sale of Seaport's interests in Vasse Newtown would be applied to reducing the Raine Square debt, this money was never applied to the Raine Square debt and the application of the monies received from the syndicate of investors continues to be unaccounted.
On my assessment, applying the usual defamation arguability standard by reference to the ordinary and reasonable reader (hearer), the 2020 amendment limiting words as added at the end of pars 7.1 and 13.1 (in terms of Mr Saraceni's intention concerning paying the joint financiers $7 million), is open from the words of the source. It is arguable for the purposes of a trial.
Argument to the contrary was, indeed, rather faint. That is understandable bearing in mind the observed words of the Utterance set out above and the Media Release.
Clearly, the subject matter of the second paragraph of the Utterance is as to a sum of $7 million, that was not received by the joint financiers and was further said to be unaccounted out of the net proceeds of a sale of Seaport's interests in the Vasse Newtown project.
With the 2FREASOC par 7.1 (as amended) imputation being derivable and legitimately arguable from the words of the Utterance (and par 13.1 derivable from the Media Statement), the question then is whether they can be struck down alternatively, on the basis of being an abuse of the process of the court.
Abuse of process
A strikeout application in this respect presents as being without direct precedent. I accept, of course, from the case authorities cited from the High Court upon the present application, that the categories potential of abuses of process, are not closed. To this end, see Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378 and UBS AG v Tyne [2018] HCA 45; (2018) 265 CLR 77. To those I would supplement by adding the High Court's decision in Batistatos v Roads and Traffic Authority NSW [2006] HCA 27; (2006) 226 CLR 256 at [9], and also PNJ v The Queen [2009] HCA 6; (2009) 83 ALJR at [3], as recently applied by Kiefel CJ, Gageler, Keane and Gordon JJ in Victoria International Container Ltd v Lunt [2021] HCA 11 at [14]. Batistatos is discussed in my own reasons addressing another alleged abuse of process in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2020] WASC 40.
There are, of course, certain well recognised instances of conduct which can readily be seen to meet the description of an abuse of process. Civil proceedings pursued for advancing a collateral purpose or the re‑litigating of a matter already decided upon, being obvious examples.
The present application, however, presents as wholly unique, as regards the contentions of abuse of process. To be clear, the contention is not one of any challenge by way of want of prosecution or of the defendants sustaining an irremediable prejudice from out of the 2020 amendments. Instead, the contention appears to be that the 2020 imputation refinement, by way of its narrowing of the scope of the pars 7.1 and 13.1 pleas, is an endeavour to circumvent or navigate around some alleged adverse effects of the decision of Tottle J in Westgem [No 6] - given that the amendments came to be made after the reasons for decision of his Honour were published on 27 August 2020.
But the difficulty is that no clear or coherent argument was ever assembled by the defendants concerning what precisely are, any of the suggested adverse repercussions arising from Westgem [No 6] that might, in this defamation action, bear upon Mr Saraceni vis-à-vis the defendants. That failure is insurmountable.
Westgem [No 6]
First, I note Mr Saraceni, albeit a seventh plaintiff in CIV 2722 of 2012, did not give evidence during that trial before Tottle J. Consequently, no adverse credibility findings could have been made against him, as a witness. None of the defendants to this current defamation action were direct parties to the litigation resolved under Westgem [No 6].
Nevertheless, during the course of the parties' exchanged written submissions in this application, attention was directed to various passages from those reasons of Tottle J, in particular between [999] and [1020].
In the Westgem [No 6] reasons, his Honour observed at [1011]:
I find that the Financiers entered the Restated [Multi-Option Facility Agreement] on the assumption that Mr Saraceni still owned a 66.67% interest in the Vasse Newtown project. In this respect they were misled.
At [1014] his Honour came to observe, under the heading 'Loss not established':
I am satisfied that the implied representation that Mr Saraceni's interest in the Vasse Newtown project was 66.67% was a cause of Financiers' entering into the Restated MOFA.
Then at [1015]:
The Financiers claim that they suffered loss and damage because had they known the true position they would have acted differently, that is, not provided the additional funding on the terms which they did or not entered into the Restated MOFA on its agreed terms at all and would have taken the opportunity to improve their position. It was for the Financiers to adduce the evidence required to prove these losses, that is, to establish that they would have acted in the manner they alleged.
Next, at [1016]:
The fact that after they had learned that Mr Saraceni had reduced his interest in the Vasse Newtown project, the Financiers continued to provide funding, essentially under the terms of the Restated MOFA, when they were provided with the opportunity not to do so by Westgem's failure to make the $23 million repayment on 30 September 2010 is, of itself, convincing evidence the claimed loss was not, in fact, suffered.
Finally, at [1020]:
I am not satisfied that the Financiers suffered loss of the nature alleged by them.
But what allegedly emerges out of these reasons in Westgem [No 6] vis-à-vis Mr Saraceni and the defendants of a binding or consequential character to the present defamation action, was not a subject of any developed submission on the present application.
In particular, no submission was put by the current defendants concerning any argument of a res judicata, or an issue estoppel ‑ contended to arise as between Mr Saraceni and the defendants out of anything in the reasons of Tottle J.
Absent such a focus, I am simply not in a position to render any assessment over a contended intent of Mr Saraceni to circumvent any adverse suggested consequences of Tottle J's reasons.
Consequently, the fact that tranches of 2020 amendments have been implemented to the statement of claim pleading of Mr Saraceni from a timing perspective after the Westgem [No 6] reasons, is simply not enough to suggest, let alone find, that the court's processes have been circumvented or undermined in a fashion that would affront the interests of justice sufficient for the purposes of proving an abuse of process. The plaintiff's resistance submissions to that end, put both in writing and by counsel during argument, must be accepted.
A caveat
There is, however, a caveat to my observations. Part of the argument as put for the defendants concerned a somewhat underdeveloped argument about potential adverse consequences upon its own responsive defence pleas under the ASD of 2 September 2016. The defence pleading, as regards the meanings under the then pleaded statement of claim pars 7.1 and 7.2, recites that the meanings were true in substance and in fact: see ASD par 7A with its lengthy particulars.
The further plea looks, in effect, to be a Polly Peck like plea, by par 7B concerning a plea of truth in substance made to the assertion that there were reasonable grounds to suspect that the plaintiff made false and misleading representations to joint financiers - which meaning is then said by the ASD to be true in substance and in fact. I refer also to a truth defence plea to the like imputation by pars 13.1 and 13.3 under ASD par 13A concerning the Media Release and an equivalent par 13B plea of reasonable grounds to suspect under par 13B concerning the Media Release.
The short point is that, in relation to the plaintiff's amendments as made without leave during 2020 in respect of par 7.1 and par 13.1, it may be the case, and I put it no higher than that, that the plaintiff's amendments will occasion a need for the defendants to revise and amend their current defence pleading, particularly insofar as it is currently framed as regards truth defences pleaded under ASD par 7A (towards the Utterance) and par 13A (towards the Media Release).
It may be the case that the defendants are occasioned a loss by way of an incurrence of costs thrown away by a process of their needing to respond consequentially to the plaintiff's 2FREASOC pars 7.1 and 13.1 amendments (without leave). If this proves to be the case, then a reasonable opportunity for the defendants to bring an application in respect of their incurrence of loss by wastage, in the form of their costs thrown away (in a true sense, which may be found discussed in one of my interlocutory decisions concerning costs thrown away: see Rural Bank v Mammoth Investments [2019] WASC 409 [48] - [50]), ought be reserved to them, should they make application to that end within a reasonable period of amending their current ASD, if they choose to take that course.
Consequently, I would reserve liberty to the defendants for a period of, say, 30 days after the filing of any re‑amended substituted defence to bring such an application, were it thought appropriate.
Conclusion and orders
Save for that reservation, this interlocutory application by the defendants must otherwise be dismissed in all other respects.
Prima facie, the usual costs order in respect of an essentially unsuccessful application, ought to follow that event. In the result, the defendants would pay the plaintiff's costs of the application, if not agreed, then to be assessed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RC
Research Associate to the Honourable Justice Martin
14 JUNE 2021
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: SARACENI -v- MENTHA [No 2] [2021] WASC 192 (S)
CORAM: KENNETH MARTIN J
HEARD: ON THE PAPERS
DELIVERED : 17 JANUARY 2022
PUBLISHED : 17 JANUARY 2022
FILE NO/S: CIV 2734 of 2012
BETWEEN: LUKE SARACENI
Plaintiff
AND
MARK MENTHA
First defendant
SCOTT LANGDON
Second defendant
KORDAMENTHA PTY LTD
Third defendant
Catchwords:
Practice and procedure - Application for costs thrown away - Matter determined on the papers - No true wastage of costs - Application dismissed with costs
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr M L Bennett |
| First defendant | : | Mr J MacLaurin SC |
| Second defendant | : | Mr J MacLaurin SC |
| Third defendant | : | Mr J MacLaurin SC |
Solicitors:
| Plaintiff | : | Bennett + Co |
| First defendant | : | Norton Rose Fulbright Australia |
| Second defendant | : | Norton Rose Fulbright Australia |
| Third defendant | : | Norton Rose Fulbright Australia |
Case(s) referred to in decision(s):
Ashwin v Minara Resources Ltd [No 2] [2010] WASC 330
Saraceni v Mentha [No 2] [2021] WASC 192
Simmons v Love [No 2] [2016] WASC 167
KENNETH MARTIN J:
Introduction
In my primary reasons for decision in Saraceni v Mentha [No 2] [2021] WASC 192 I added some observations at [75] through [79]. Those observations reserved liberty to the defendants for a period after the filing of any re‑amended substituted defence to potentially bring an application seeking any costs thrown away. Particularly at [78] I said 'in respect of the incurrence of loss by wastage in the form of costs thrown away (in a true sense, which may be found discussed in one of my interlocutory decisions concerning costs thrown away) …'
Albeit later than envisaged, the defendants' lawyers eventually filed written submissions in support of an application made by them for costs thrown away, on 22 October 2021 (folio 94). At pars 8 and 9 they said:
8.The defendants amended their defence on 20 August 2021 in response to the amendments allowed to the plaintiff's pleading.
9.The amendments reflect the need to address the plaintiff's amended pleading (see paragraphs 7A and 13A of the Further Re‑Amended substituted defence (FRASD) [7]),
The written submissions contend that the defendants' responsive amended defence pleading had to adapt to, and take account of, the addition of the concept of $7 million being inserted into the plaintiff's imputation. By par 10 of those submissions, there is reference made to the need for the addition of further particulars to paragraphs of the defence (v through to zz).
The defendants also say, by par 11, that there was an addition of Polly Peck pleas at pars 7AA and 13AA - which required consideration.
Nevertheless, the plaintiff's written submissions of 2 November 2021 (folio 95) reject the conceptual basis of the application of the defendants for any costs thrown away being awarded. They say at par 2:
2.The 2 types of costs identified by the defendants show that they seek more than simply costs thrown away:
2.1First, the defendants say the amendments required the addition of particulars. The defendants retained all of their existing particulars and added 3 new ones (which themselves have been subsequently amended).
2.2Secondly, the defendants refer to the addition of 'Polly Peck' pleas at paragraphs 7AA and 13AA. These are new pleas where there were no previous Polly Peck pleas.
3.The plaintiff accepts that an order for 'costs thrown away' or 'wasted costs' would usually be made consequent upon a pleading amendment. In this case, however, the Court has the benefit of the defendants' Further Re‑Amended Defence filed 20 August 2021. The additional particulars and the new Polly Peck pleas are the only substantive amendments. The defendants' costs of preparing them cannot be said to be costs thrown away, in the sense of costs previously incurred and now rendered wasted.
As to the correct legal basis for a costs thrown away order, the plaintiffs also refer to observations of Le Miere J in Ashwin v Minara Resources Ltd [No 2] [2010] WASC 330 at [8], and to the observations approved there by his Honour from the text Quick on Costs at [1.1230]. The author had said '[c]osts attributable to work useful for the ongoing conduct of the substantive proceedings are not costs thrown away'. In essence, the plaintiff's response is that the defendants have not shown any wasted legal work and so, have not demonstrated a proper basis for any costs thrown away in the true sense and thus, that the court should make no such order.
The lawyers for the defendants added some further brief submissions by way of reply sent under cover of their correspondence to my chambers of 15 November 2021.
Decision
My reservation in the primary reasons by way of 'caveat', was directed at preserving the potential position of the defendants under those pleading amendment circumstances. This would be if there had been some level of wasted work incurred by the defendants' lawyers, in terms of wasted preparations on their part, attributable to the plaintiff's change of stance under his latest amended pleading. A need to show true waste is the subject of my observations in Simmons v Love [No 2] [2016] WASC 167 delivered 7 June 2016. Under the heading 'Construction of the phrase "the costs incurred and thrown away''' I had then observed at [58] through [64]:
As noted, the terminology of RSC O 66 r 3(1) ('the costs of and occasioned by any amendment') differs from that of consent order 6 ('the costs incurred and thrown away by reason of a party amending a pleading').
Objectively, the phrasing of consent order 6 operates, first, to displace the operation of RSC O 66 r 3(1). Second, it then implements an arrangement under which a party making an amendment is made liable for the other party's costs to the extent that those costs: (a) were incurred by the making of the amendment and (b) had been wasted (in a sense of not being useful to the ongoing conduct of the proceedings).
This conjoint approach is pragmatic, recognising, as it does, that pleadings often develop in the course of proceedings and sometimes a number of amendments (without leave) may be required during the interlocutory stages of an action - but, nevertheless, costs consequences ought to be visited on parties whose amendments lead to costs being thrown away for the other parties.
The words 'incurred' and 'thrown away' should be read conjunctively to recognise that a taxing officer must undertake a two-phase assessment in a determination as to whether or not the costs are properly regarded as thrown away. First, the claimed costs must be reasonably and properly incurred in responding to an amendment. Second, the claimed costs must have indeed been wasted.
As to that two-phase process, in Brookvista Pty Ltd v Meloni [2009] WASCA 180 [28] Newnes JA (Buss JA agreeing) said that '[f]or costs to be thrown away, they must have been reasonably incurred and relate to work which in the circumstances has been wasted' and then referred to The Fashion Warehouse Pty Ltd v Pola [1984] 1 Qd R 251. In that latter case, Williams J discussed a line of authority relating to the phrase 'costs thrown away' and said that '[a]ll that those cases establish is that for costs to be allowed as "costs thrown away", they must have been, in the opinion of the Taxing Officer, reasonably incurred and relate to work done which has become wasted in the circumstances' (254).
The nature of that two-phase process is also addressed in Laing O'Rourke (BMC) Ltd (formerly Barclay Mowlem Construction Ltd) v Dampier Port Authority [2007] WASC 87 (Martin CJ), particularly at [39] where his Honour said:
On that view, the work done and the costs incurred by the respondent in preparing the schedule of objections were thrown away by reason of the appellant's repleading of the statement of claim. Of course, the usual practice is to require any party seeking the indulgence of an amendment to a pleading to pay the costs thrown away by reason of that amendment. However, that practice only extends to costs properly and reasonably incurred. On this approach, the real question in this case becomes whether the costs incurred by the respondent in preparing the schedule of objections were properly and reasonably incurred. If, and to the extent they were properly and reasonably incurred, principle would suggest that they should be recouped by the respondent.
See also Quick on Costs at [1.220].
There is, on my assessment, no error in principle demonstrated in the taxing officer's determination as to what costs were reasonably and properly incurred and had been wasted, in relation to the plaintiffs' claims for costs under bill items 9, 10, 13 and 15.
On my reckoning, here the defendants' submissions do not demonstrate any level of wastage in terms of preparatory work done, which is no longer of any utility after being completed under defence tasks, and whilst responding to the plaintiff's prior iterations of his statement of claim. If there was such genuinely wasted work, I would have expected it to have been identified more precisely, by evidence - such as by a supporting affidavit. There is no evidence of such wastage.
No doubt if the matter ever proceeds to a trial, and the defendants are ultimately vindicated there in the result, they will be then claiming for the costs of the legal work from the plaintiff and associated with the most contemporary iterations of their defence pleading. But that would not be a claim for costs thrown away, as the concept is correctly understood.
In all the circumstances, the claim as advanced by the defendants for costs thrown away - must be rejected.
I would also accept the submission of the plaintiff's lawyers that 'the plaintiff should have his costs of responding to the defendants' misconceived application' (par 6 of the plaintiff's written submissions of 2 November 2021).
Orders
This application was submitted for my determination wholly on the papers.
The following orders will issue contemporaneously with the publication of these reasons, being that:
a)the defendants' application of 22 November 2021 seeking costs thrown away by reason of the most contemporary amendments to the plaintiff's statement of claim, is dismissed; and
b)the defendants should pay the plaintiff's costs of this unsuccessful application, to be assessed by a taxing officer, if not agreed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DM
Associate to the Honourable Justice Martin
17 JANUARY 2022
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