Sev.en Global Investments Pty Ltd (ACN 661 272 233) v Global Loan Agency Services Australia Nominees Pty Limited (ACN 608 945 008)
[2024] WASC 424 (S)
•18 DECEMBER 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: SEV.EN GLOBAL INVESTMENTS PTY LTD (ACN 661 272 233) -v- GLOBAL LOAN AGENCY SERVICES AUSTRALIA NOMINEES PTY LIMITED (ACN 608 945 008) [2024] WASC 424 (S)
CORAM: HILL J
HEARD: ON THE PAPERS
DELIVERED : 18 DECEMBER 2024
FILE NO/S: CIV 1990 of 2024
BETWEEN: SEV.EN GLOBAL INVESTMENTS PTY LTD (ACN 661 272 233)
First Plaintiff
PIPER PRESTON PTY LTD (ACN 142 962 409)
Second Plaintiff
AND
GLOBAL LOAN AGENCY SERVICES AUSTRALIA NOMINEES PTY LIMITED (ACN 608 945 008)
First Defendant
GLOBAL LOAN AGENCY SERVICES AUSTRALIA PTY LTD (ACN 608 829 303)
Second Defendant
SEQUOIA IDF ASSET HOLDINGS S.A.
Third Defendant
TAURUS MINING FINANCE FUND AIV L.P
Fourth Defendant
TAURUS MINING FINANCE ANNEX FUND AIV L.P
Fifth Defendant
TAURUS MINING FINANCE FUND NO.2, L.P.
Sixth Defendant
SALT LAKE POTASH LIMITED (ACN 117 085 748) (RECEIVERS AND MANAGERS APPOINTED)
Seventh Defendant
Catchwords:
Practice and procedure - Costs - Appropriate costs order following trial - Whether special costs order should be made - Turns on own facts
Legislation:
Rules of the Supreme Court1971 (WA) O 66 r 1
Supreme Court Act 1935 (WA) s 37
Result:
Third to sixth defendants to pay the plaintiffs' costs
No order as to costs as between the plaintiffs and first and second defendants
Special costs order made
Category: B
Representation:
Counsel:
| First Plaintiff | : | No appearance |
| Second Plaintiff | : | No appearance |
| First Defendant | : | No appearance |
| Second Defendant | : | No appearance |
| Third Defendant | : | No appearance |
| Fourth Defendant | : | No appearance |
| Fifth Defendant | : | No appearance |
| Sixth Defendant | : | No appearance |
| Seventh Defendant | : | No appearance |
Solicitors:
| First Plaintiff | : | Baker McKenzie |
| Second Plaintiff | : | Baker McKenzie |
| First Defendant | : | Hamilton Locke |
| Second Defendant | : | Hamilton Locke |
| Third Defendant | : | King & Wood Mallesons |
| Fourth Defendant | : | King & Wood Mallesons |
| Fifth Defendant | : | King & Wood Mallesons |
| Sixth Defendant | : | King & Wood Mallesons |
| Seventh Defendant | : | King & Wood Mallesons |
Case(s) referred to in decision(s):
Crawley Investments Pty Ltd v Elman [2014] WASC 233 (S)
Electricity Generation and Retail Corp trading as Synergy v Woodside Energy Ltd [2014] WASC 469 (S)
Frigger v Lean [2012] WASCA 66
Gray v Sirtex Medical Ltd formerly known as Paragon Medical Ltd [2009] WASC 126
Sev.en Global Investments Pty Ltd v Global Loan Agency Services Australia Nominees Pty Ltd [2024] WASC 424
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 (S)
Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388
The Pilbara Infrastructure Pty Ltd v Brockman Iron Pty Ltd [No 2] [2014] WASC 345 (S)
HILL J:
On 15 November 2024, I delivered my reasons for decision following the trial of this matter (Primary Reasons).[1] On 19 November 2024, I made orders to give effect to the Primary Reasons, as well as for the filing of minutes of proposed orders, affidavits and submissions in relation to the costs orders that each party contended should be made. These orders provided that the question of costs would be decided on the papers.
[1] Sev.en Global Investments Pty Ltd v Global Loan Agency Services Australia Nominees Pty Ltd [2024] WASC 424.
The plaintiffs sought orders for the third to sixth defendants to pay their costs of the action, and that there be no order as to costs as against the first and second defendants, with these parties to bear their own costs. In contrast, the defendants sought orders that the plaintiffs pay their costs of the action. All parties sought special costs orders, although in respect of different items. The parties filed affidavits in support of the position each contended for.[2]
[2] Affidavit of Gavin Geza Rakoczy filed 22 November 2024 (plaintiffs); Affidavit of Samuel James Dundas filed 29 November 2024 (third to sixth defendants).
For the reasons that follow, it is my view that the appropriate costs orders are:
(a)the third to sixth defendants pay the plaintiffs' costs to be assessed if not agreed;
(b)there be no order as to costs as between the plaintiffs and the first and second defendants; and
(c)the plaintiffs' costs be taxed without regard to the limits imposed for items 1, 4, 10(a) and (c) and 19 of the Supreme Court Scale of Costs 2024 in Table B of the Legal Profession (Supreme and District Courts) (Contentious Business) Costs Determination 2024 (Costs Determination), and that adjustments to the hourly rates in Table A be made.
General principles
Costs orders
Under s 37 of the Supreme Court Act 1935 (WA), the court has a wide discretion to award costs. While the discretion is broad, it is not unfettered and must be exercised judicially.[3]
[3] Frigger v Lean [2012] WASCA 66 [53].
The general rule is that costs should follow the event; that is, the successful party should recover their costs from the opposing party. The rationale for this general rule is that where a party has unjustifiably brought another party before the court, that party should be liable to compensate the other in costs.[4]
[4] Gray v Sirtex Medical Ltd formerly known as Paragon Medical Ltd [2009] WASC 126 [62].
It is incumbent on an unsuccessful party to satisfy the court that there are good reasons it should not pay the successful party's costs.[5] As was noted by the Court of Appeal in Strzelecki Holdings Pty Ltd v Jorgensen:[6]
What constitutes 'success' in proceedings is to be determined by the reality of the circumstances involved in the case. The Court may depart from the general rule that costs follow the event and modify a costs order to take into account matters such as any unreasonable conduct of a generally successful party, or to the failure of that party on one or more specific issues. The exercise of the discretion in that way is recognised by a number of rules in the [Rules of the Supreme Court], together with the practice of the Court, and authority. So, for example, if the Court is of the opinion that the conduct of a successful party - either before or after the commencement of the litigation - has resulted in costs being unnecessarily or unreasonably incurred, the Court may deprive that party of costs, either wholly or in part, and it may further order that party to pay the costs of an unsuccessful party, either wholly or in part …
Under O 66 r 1(3) RSC, where a party, though generally successful in an action, has, by the introduction of some issue or issues on which it has failed, increased the costs, the Court may order such party to pay the costs of such issue or issues. It is well-recognised that an order that a successful party recover only a portion of its costs, where it has not been wholly successful, should not be made as a matter of course, for at least two reasons. First, it is often the case that a successful party will not succeed on every issue raised. Secondly, to attempt, in every case, an analysis of which party was successful on which issue would add uncertainty and complexity to the outcome of litigation, and add to the time and cost of costs arguments. Consequently, the power to apportion costs in this way should only be exercised where there are discrete and severable issues on which the generally successful party failed, and which added to the cost of the proceedings in a significant and readily discernible way. Furthermore, while parties should be encouraged to consider carefully what matters they put in issue, justice may not be served if, by too ready a resort to deciding questions of costs according to success on particular issues, parties are dissuaded by the risk of costs from canvassing all issues which might be material to the decision in the case.
Where the Court decides, in the exercise of its discretion, to modify the usual costs orders to reflect the limited success of the successful party, that power will be exercised broadly, and as a matter of impression, and without any attempt at mathematical precision (which is likely to prove illusory in any event). That approach reflects the fact that it may be difficult to separate the factual and evidentiary substratum of different issues, the fact that some issues are more important than others, and the fact that some issues are subsidiary to others.
Special costs orders
[5] Rules of the Supreme Court1971 (WA) O 66 r 1(1).
[6] Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388 [50] - [52] (footnotes omitted).
Pursuant to s 141(3) of the Legal Profession Uniform Law Application Act 2022 (WA) (Uniform Law), the court has the power to make special costs orders.
On an application for special costs, the court considers two questions:
(a)Is the maximum amount allowable under the applicable Costs Determination inadequate, in the sense there is a fairly arguable case that, on taxation, costs may properly be allowed in an amount greater than the maximum amount?
(b)Does the inadequacy of the costs allowable under the Costs Determination arise because of the unusual difficulty, complexity, or importance of the matter?
Each of these questions is addressed as a matter of impression, rather than matters of detailed evaluation, precision or science.[7] As Martin CJ noted in Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd, on an application for special costs under the previous legislative regime:[8]
[O]nce an order is made for the taxation of costs, it is not appropriate for the court to usurp the function of the taxing officer. Rather, under s 280(2) of the Act, the function of the court is limited to setting the parameters within which the taxing officer will tax the relevant bill, providing any specific directions which will assist the taxing officer to assess the quantum of the costs to be allowed on taxation. Because the quantum of costs to be allowed is to be determined by taxation, the powers conferred upon the court by s 280(2) of the Act are to be exercised as matters of impression rather than science, taking into account the greater expertise of taxing officers in fixing the amount of costs properly and reasonably allowed.
[7] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 (S) [12].
[8] Electricity Generation and Retail Corporation trading as Synergy v Woodside Energy Ltd [2014] WASC 469 (S) [4].
The effect of s 141(1) of the Uniform Law is to confine the costs recoverable by a successful party to the limits imposed by the relevant Costs Determination. As was noted by the Court of Appeal in Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2], in referring to the identical provision in the previous Act,[9] this provision is 'protective of the party charged and, more generally, serves the due administration of justice by limiting the allowable scope for legal costs'.[10]
[9] Legal Profession Act 2008 (WA) s 280.
[10] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [11].
In considering the first question, it is not sufficient for a party to show it has incurred costs greater than the limit in the Costs Determination. However, the fact that a party has incurred significantly greater costs in each step of the litigation, when viewed in the context of the unusual difficulty, complexity or importance of the matter, may enable the court to conclude there is a fairly arguable case that each of the items identified is inadequate.[11]
[11] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [14].
What costs orders should be made?
All parties claimed they were the successful party in the proceedings and, on that basis, sought payment of their costs.
The plaintiffs submitted that these proceedings arose as a consequence of Sequoia's instruction to GLAS Agent not to apply the Payment to discharge Piper Preston's debt. On the four issues that were required to be determined, the plaintiffs said they were successful on each, even though orders were not made to require the execution of documents assigning Sequoia's interests under the Facility Agreement and Security Trust Deed to 7GI.
In contrast, the defendants contended that the reality of this case was that the primary issue was whether the first to third defendants were required to take steps to enable 7GI to become a Beneficiary under the Security Trust Deed.
In considering what is the appropriate order as to costs, I start from the position that, in my view, the plaintiffs were the successful party at trial. This is notwithstanding the fact that the plaintiffs did not obtain all relief that was sought at trial. The success of the plaintiffs is evident from the orders made on 19 November 2024 granting declaratory relief. These can be contrasted with the orders sought by the defendants which were to dismiss the plaintiffs' claims and enter judgment for the defendants. Given this conclusion, the prima facie position is that the plaintiffs are entitled to receive their costs of the action.
In my view, none of the matters that have been raised by the third to sixth defendants in their submissions warrant a departure from the usual costs order that costs should follow the event. In particular, while correspondence sent by the defendants' solicitors prior to trial acknowledged that a right of subrogation would arise on an unconditional tender of payment, at trial, there was no concession that an unconditional payment had occurred or that 7GI was entitled to a declaration that it was subrogated to the benefit of Sequoia's security under the Security Trust Deed.
In relation to the costs as between the plaintiffs and the first and second defendants, I consider there should be no order as to costs between these parties. The primary issue raised against the first and second defendants was whether they were required to accept the unconditional tender of the Payment. In circumstances where the case against these parties significantly altered during the course of the trial, I consider that no order should be made in relation to these parties.
In reaching this conclusion, I specifically have not and do not make any findings as to whether any obligation arises as to the payment of costs under any of the relevant agreements. That was specifically not raised at trial and it is not appropriate to deal with or comment on this issue at this stage.
Should special costs orders be made?
All parties agreed that this matter was an appropriate matter in which the court should exercise its discretion to make special costs orders. I agree with this submission. As stated in the Primary Reasons, these proceedings raised questions of law which can be fairly described as 'unusually' difficult and complex.
Given this conclusion, as well as the contents of the affidavit of Mr Rakoczy, I am satisfied that the allowance for the items in the Costs Determination for pleadings, the initial directions hearings, and preparation for trial are inadequate and that the plaintiffs' costs for these items should be taxed without reference to the limits in the scale.
The plaintiffs also sought an order that their costs be taxed without regard to the limits imposed on hourly rates in Table A.
The evidence of the plaintiffs is that Ms Taylor SC charged $850 per hour and $8,500 per day and that Mr Zappia charged $700 per hour and $7,000 per day (all exclusive of GST). In relation to the solicitors retained by the plaintiffs, the evidence is that each of their hourly rates is higher than the maximum rates in Table A of $572 per hour for a senior practitioner, $418 per hour for a junior practitioner and $352 for a restricted practitioner.
While I accept the plaintiffs' evidence, the court does not lift the limit on hourly rates simply because a party has engaged lawyers who charge at a higher rate from the rates provided in Table A.[12] That said, it is not uncommon for rates, particularly for counsel, to be lifted above that allowed in the Costs Determination. In considering the costs of the plaintiffs, I will allow an uplift on the rate in the Costs Determination for senior counsel to the rate charged by Ms Taylor SC and an uplift of 25% of the rate for Mr Zappia and for the plaintiffs' solicitors. This is on the basis that, in my view, there are a relatively limited number of legal practitioners who specialise in the areas of law raised in this proceeding. Given the complexity of the issues raised and the fact that it was listed for trial within seven weeks of commencement, I also consider it is appropriate that, on any assessment of costs, the assessment proceed on the basis that it was appropriate to brief senior counsel and two junior counsel, and for their involvement in preparing the case to be included in the assessment of that item.
[12] Crawley Investments Pty Ltd v Elman [2014] WASC 233 (S); The Pilbara Infrastructure Pty Ltd v Brockman Iron Pty Ltd [No 2] [2014] WASC 345 (S).
Conclusion
For these reasons, I consider that the appropriate costs orders are as follows:
1.The third to sixth defendants pay the plaintiffs' costs to be assessed if not agreed.
2.There be no order as to costs as between the plaintiff and the first and second defendants.
3.Pursuant to s 141(3) of the Legal Profession Uniform Law Application Act 2022 (WA), the costs payable pursuant to Order 1 be taxed:
(a)without regard to the maximum allowable hourly and daily rates imposed by Table A for senior counsel in the Legal Profession (Supreme and District Courts) (Contentious Business) Costs Determination 2024;
(b)by increasing the maximum allowable hourly and daily rates for counsel and the hourly rates for solicitors fixed under Table A by 25%; and
(c)without regard to the limits imposed by Table B for items 1, 4, 10(a) and (c) and 19 of the Supreme Court Scale of Costs 2024 in the Legal Profession (Supreme and District Courts) (Contentious Business) Costs Determination 2024.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JN
Associate to the Honourable Justice Hill
18 DECEMBER 2024
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