Song v South Beach Management Pty Ltd as trustee for the South Beach Two Development Trust [No 5] - [2023] WASC 323

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   SONG -v- SOUTH BEACH MANAGEMENT PTY LTD AS TRUSTEE FOR THE SOUTH BEACH TWO DEVELOPMENT TRUST [No 5] [2023] WASC 323
CORAM:   SEAWARD J
HEARD:   28 JULY 2023
DELIVERED          :   28 AUGUST 2023
FILE NO/S:   CIV 3152 of 2019
BETWEEN:   CHANGFU SONG
First Plaintiff
YUANCHAO XUE
Second Plaintiff
TOPSTAR MARKETING (AUST) PTY LTD
Third Plaintiff
AND
SOUTH BEACH MANAGEMENT PTY LTD AS TRUSTEE FOR THE SOUTH BEACH TWO DEVELOPMENT TRUST
First Defendant
CAMERON ANDREW KEAST BARR
Second Defendant
LLOYD RICHARD CLARK
Third Defendant

Catchwords:

Costs thrown away - Order sought for costs thrown away on an indemnity basis - Whether the costs reasonably incurred had been wasted - Whether disclosure by the defendants significantly altered the plaintiffs case - Whether plaintiff is entitled to entirety of costs incurred up until the date of disclosure - Whether costs are to be awarded on an indemnity basis - Where there is no logical, fair and reasonable basis upon which to fix the costs

Suspension or variation of costs order - Whether there are special circumstances that justify making a suspension order - Where costs order was made on an incorrect factual basis

Legislation:

Supreme Court Act 1935 (WA) s 37
Rules of the Supreme Court 1971 (WA)
Civil Judgments Enforcement Act 2004 (WA) ss 3, 15

Result:

Application for costs thrown away allowed in part
Application for indefinite suspension of costs order granted

Category: B

Representation:

Counsel:

First Plaintiff	:	Mr K Dundo
Second Plaintiff	:	Mr K Dundo
Third Plaintiff	:	Mr K Dundo
First Defendant	:	Mr M L Bennett
Second Defendant	:	Mr M L Bennett
Third Defendant	:	Mr M L Bennett

Solicitors:

First Plaintiff	:	KD Legal
Second Plaintiff	:	KD Legal
Third Plaintiff	:	KD Legal
First Defendant	:	Bennett
Second Defendant	:	Bennett
Third Defendant	:	Bennett

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

Ashwin v Minara Resources Ltd [No 2] [2010] WASC 330
Brookvista Pty Ltd v Meloni [2009] WASCA 180
Russell v Lee Holdings [No 2] [2020] WASC 257
Sino Iron Pty Ltd v Mineralogy Pty Ltd [2022] WASC 151
Song v South Beach Management Pty Ltd as Trustee for the South Beach Two Development Trust [No 2] [2021] WASC 243
Song v South Beach Management Pty Ltd as Trustee for the South Beach Two Development Trust [No 4] [2023] WASC 298
Strzelecki Holdings Pty Ltd v Jorgensen (2019) 54 WAR 388
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S)

SEAWARD J:

This action concerns a property development in South Fremantle and has been on foot for some time.
On 19 May 2023, the plaintiffs filed a chamber summons seeking summary judgment against the defendants and the following two additional costs orders:
(a)that the defendants pay to the plaintiffs the costs thrown away for the period 16 August 2019 to 16 March 2023 in relation to a number of different categories of costs; and
(b)that order 2 of the orders of the Honourable Justice Smith made 14 December 2020 be suspended, or in the alternative varied.
On 2 June 2023, the defendants filed an application to strike out certain paragraphs of the plaintiffs' second substituted statement of claim.
All these applications were heard together before me on 28 July 2023. On 8 August 2023, I published my reasons for dismissing the plaintiffs' application for summary judgment and the defendants' strikeout application: see Song v South Beach Management Pty Ltd as Trustee for the South Beach Two Development Trust [No 4] [2023] WASC 298 (Primary Reasons). In those reasons, I indicated that my decision and reasons in relation to the plaintiffs' costs applications would follow separately. These are my reasons.
These reasons do not address who should pay the costs of the summary judgment, strike out or costs applications. I will hear further from the parties in the relation to those costs.
These reasons should be read together with my Primary Reasons, and I will adopt the same defined terms. Owing to the complexity of the pleadings and the background facts, I have not repeated those here and instead rely on the explanation of these matters in my Primary Reasons. However, it is sufficient to say that the catalyst for these two costs applications is the disclosure by the defendants to the plaintiffs (and associated discovery) in March 2023 that the defendants now believe that:
(a) the Trust Deed dated 20 May 2011 was likely executed on around 27 June 2011;
(b) the Deed of Variation dated 20 May 2011 was likely executed on around 29 June 2011; and
(c) the Deed of Amendment dated 27 May 2011 was likely prepared by Stuart Macdonald sometime between 15 October 2013 and 28 July 2014.
(the Disclosure)
The significance of the Disclosure (in the context of the plaintiffs' case) is that the Deed of Amendment did not amend the Trust Deed in accordance with the requirements contained in cl 23 of the Trust Deed. This, in turn, has the consequence that the Trust Deed was not validly amended by the Deed of Amendment, and the purported execution of the Deed Poll and the issuing of Class P Units was not valid. The plaintiffs say that these are significant factual matters relied on by the plaintiffs in pleading various breaches of duties they say are owed by the first defendant to the plaintiffs, the misleading and deceptive conduct claim, and underpin the claims of accessorial liability against the second and third defendants. As a result of the Disclosure, the plaintiffs amended their pleadings, and filed a second substituted statement of claim, dated 19 May 2023.
The plaintiffs attached to their written submissions a chronology of events specifically relevant to orders 4 - 5. I have attached that chronology as Annexure A to these reasons.

Order 4 – costs thrown away

The plaintiffs seek an order that the defendants pay their costs thrown away as a result of the Disclosure of the true date of the Deed of Amendment on an indemnity basis.
The plaintiffs have categorised the amounts sought into the following categories:
(a)Category 1: the preparation, amendments, discovery and extensive conferral in respect of the Statement of Claim, Amended Statement of Claim and Further Amended Statement of Claim: $75,104;
(b)Category 2: the applications for leave to issue subpoenas, application to access the documents produced by Chew+Matthews under the Subpoena dated 23 October 2020, opposing the application to set aside the Subpoena issued to McMahon Clarke on 21 September 2022 and the issue of all 10 subpoenas: $47,164.47;
(c)Category 3: opposing the Defendants' Summary Judgment and Strike out Application: $41,792.50;
(d)Category 4: the preparation of the Plaintiffs' Further Amended Writ of Summons, Substituted Statement of Claim, Amended Substituted Statement of Claim following conferral, Further Amended Substituted Statement of Claim following conferral in respect of the Defendants' further summary judgment application and responding to the Defendants' request for further and better particulars: $81,250;
(e)Category 5: considering the Defence and preparation of the Reply and Amended Reply: $14,202.50; and
(f)Category 6: seeking specific discovery orders: $2,775.
The plaintiffs seek a total of $262,288.47 in costs and have asked the court to award those costs on an indemnity basis either fixed in the above amount or taxed if not agreed.

Costs thrown away

The legal principles regarding the award of costs thrown away are not controversial. The court has a broad discretion in relation to the award of costs. However, that discretion is not unfettered and must be exercised judicially.[1] Costs may be dealt with at any stage of proceedings and the court may order that costs be paid forthwith notwithstanding that the proceedings are not concluded.[2]
[1] Section 37 Supreme Court Act 1935 (WA); Strzelecki Holdings Pty Ltd v Jorgensen (2019) 54 WAR 388 [48].
[2] O 66 r 10(1), Rules of the Supreme Court 1971 (WA).
The term 'costs thrown away' is not defined in the Rules of the Supreme Court 1971 (WA) (SCR). However, an order for costs thrown away means that the beneficiary of the order receives the costs incurred for work done but wasted as a result of the other party's error or failure to comply with the procedure set by the rules.[3] For costs to be thrown away, they must have been reasonably incurred and relate to work which in the circumstances has been wasted.[4] This involves demonstration of a causal connection between the costs incurred and the relevant event.
[3] Ashwin v Minara Resources Ltd [No 2] [2010] WASC 330 [8].
[4] Brookvista Pty Ltd v Meloni [2009] WASCA 180 [28].
The relevant event relied on by the plaintiffs is the Disclosure. This occurred by letter from the defendants' solicitors on 9 March 2023 and was deposed to in the Third Barr affidavit.
The plaintiffs rely on the affidavit of Frances Lai, affirmed 19 May 2023 which attaches a letter from the defendants' solicitors to the plaintiffs' solicitors dated 6 August 2018 (prior to the writ being filed).[5] The letter, in responding to allegations of misleading and deceptive conduct, refers to and relies upon the Deed of Amendment as authorising the issue of the Class P Units.
[5] Affidavit of Frances Lai [5] and attachment FL-4.
The plaintiffs submit therefore that since 6 August 2018, the defendants have been relying on the Deed of Amendment as having been made on the date stated on it (being 27 May 2011) and it having validly varied the Trust Deed.[6]
[6] Plaintiffs' submissions in support of chamber summons [70].
However, during the course of the action, the plaintiffs questioned the dates of the Deed of Variation and the Deed of Amendment and whether these documents were actually executed on a later date and backdated to 2011. In furtherance of this hypothesis, the plaintiffs issued numerous subpoenas and on 24 October 2022 obtained orders for specific discovery in relation to this issue. It was as a result of investigations done by the defendants as part of responding to that order for specific discovery, that documents were discovered which led the defendants to conclude that the Deed of Amendment had in fact been signed at some point between 15 October 2013 and 28 July 2014 and had been backdated to 2011 and therefore to make the Disclosure.
The plaintiffs submit that since the Disclosure their case has significantly and fundamentally shifted, and the plaintiffs have been required to effectively replead their case (in the second substituted statement of claim filed 12 May 2023) and significant costs in the period 16 August 2019 (being the date that senior counsel for the plaintiffs was engaged) and 16 March 2023 (being the date of the Third Barr affidavit) would not have been incurred and wasted. The plaintiffs submit that there is a direct correlation between the wasted costs and the failure to make the Disclosure earlier.[7]
[7] Plaintiffs' submissions in support of chamber summons [72] - [73].
The plaintiffs submit that given the defendants held out that the true date of the trust documents was the date on which they purport to have been made, all pleadings drafted have proceeded on that basis from the beginning of the action.[8]
[8] ts 28 July 2023, 174 and 202 - 203.
Counsel for the plaintiff confirmed during oral submissions that the plaintiffs were seeking the payment of all of the plaintiffs' costs incurred until 16 March 2023, being the date of the Third Barr affidavit when the true date of the various trust documents was deposed to.[9]
[9] ts 28 July 2023, 173 - 174.
The defendants accept that the plaintiffs are entitled to recover (to the extent they are reasonably incurred) of their costs thrown away in the following categories:[10]
(a)Category 2: the applications for leave to issue subpoenas, application to access the documents produced by Chew+Matthews under the Subpoena dated 23 October 2020, opposing the application to set aside the Subpoena issued to McMahon Clarke on 21 September 2022 and the issue of all 10 subpoenas;
(b)Category 3: part only - being opposing the Defendants' Summary Judgment Application (but not the strike out application); and
(c)Category 6: seeking specific discovery orders.
[10] Defendants' submissions in opposition to plaintiffs' costs applications [15].
The defendants do not, however, accept the amount of costs claimed.
This concession is properly made. The work in categories 2 and 6 would not have been necessary if the defendants had discovered the documents relevant to the true date of the trust documents earlier, and accordingly this work can be properly described as being thrown away. I also accept that had the Disclosure occurred prior to the defendants' summary judgment application (filed on 11 September 2020) then this application would not have been commenced. Accordingly, these costs can be properly described as being thrown away.
However, I am not satisfied that all of the work referred to in the remaining categories can be described as being thrown away by reason of the Disclosure.
Categories 1 and 4 deal with the various amendments to the writ and statement of claim. There has been a total of six statements of claim filed before the current second substituted statement of claim. Only the last amendment followed the Disclosure. A review of the latest version of the statement of claim, and a comparison with the previous versions, reveals that all the facts relevant to the plaintiffs' current articulation of their case were already pleaded as at the date of the Disclosure except for the true dates of the amendments to the trust documents. That is, the majority of the facts as previously pleaded remain in near identical form and are still required for the plaintiffs' current case.
The differences in the current second substituted statement of claim relate to the effect of the purported amendments to the Trust Documents; the precise formulation of aspects of the alleged breaches of fiduciary duty and the precise formulation of the misleading and deceptive conduct claim. The current second substituted statement of claim still contains the same three broad categories of claim: breach of fiduciary duties by the first defendant; misleading and deceptive conduct by the first defendant and accessorial liability of second and third defendants. However, the breach of fiduciary duties case has been reformulated so that it now contains three alleged breaches. Two of which are new (breach of the duty of care and skill and breach of the trust terms duty) whilst the third (breach of the duty of honesty and good faith) has been reformulated in part (but not completely). These reformulations are at least partly due to the Disclosure.
The misleading and deceptive conduct claim has been re-pleaded and reformulated to a degree (but not entirely). There is no longer a pleading that the First Information Memorandum was misleading, rather, the focus is on conduct which the plaintiffs allege was calculated to mislead and deceive the plaintiffs as to the financial status of the project and to conceal the Loss of Rights Risk. Both the concealment of the financial status of the project and the Loss of Rights Risk were included in the previous versions of the statement of claim and much of the particular conduct now relied upon was also pleaded in earlier versions of the statement of claim in some form. However, the precise articulation of the misleading and deceptive conduct claim has been re‑drafted.
The accessorial liability claim against the second and third defendants remains the same.
In light of the above, I do not accept the plaintiffs' submission that all of their costs associated with the various versions of the writ and the statement of claim are thrown away as a result of the Disclosure. Having considered the amendments made in the second substituted statement of claim and compared these to the pleadings that existed prior to the amendments, I am of the view that only 20% of the plaintiffs' costs of preparing their previous statements of claim have been thrown away by reason of the Disclosure.
Category 1 also includes discovery. The plaintiffs have not provided any explanation as to how the discovery referred to in this category (which does not include the specific discovery orders associated with the true dates of the trust documents encompassed in category 6) is thrown away by the Disclosure. Accordingly, I do not consider it can be said that there have been any costs thrown away in relation to informal discovery as sought in category 1.
Category 3 also deals with the defendants' application dated 11 September 2020 to strike out certain paragraphs of the then existing statement of claim. This application was made and heard at the same time as the defendants' summary judgment application. Whilst the summary judgment application was dismissed, the strike out application was granted and certain paragraphs of the statement of claim struck out with leave to replead given.[11] The resulting pleading was the substituted statement of claim, dated 8 September 2021. The defendants submit that the strike out application related to technical issues concerning how the plaintiffs' pleaded their case, and not with the nature of the case advanced by the plaintiffs, and the plaintiffs have not established how these costs would have been avoided if the Disclosure had occurred earlier.[12]
[11] Song v South Beach Management Pty Ltd as Trustee for the South Beach Two Development Trust [No 2] [2021] WASC 243.
[12] Defendants' submissions [18] - [19].
The reasons of Allanson J in Song v South Beach Management Pty Ltd as Trustee for the South Beach Two Development Trust [No 2][13] reveal that the paragraphs of the statement of claim were struck out primarily due to the lack of any pleading of material facts that establish a causal link between the claimed misleading and deceptive conduct and the loss claimed; and the lack of pleading of any material facts relating to the duties and conduct of the Trustee to the terms of the Trust Deed in the breach of fiduciary duties claim.
[13] Song v South Beach Management Pty Ltd as Trustee for the South Beach Two Development Trust [No 2] [2021] WASC 243.
Having reviewed the version of the statement of claim current as at the date of the strike out application, the paragraphs complained of in the strike out application do not appear in the current version of the second substituted statement of claim. Substantial amendment of the statement of claim occurred in the substituted statement of claim dated 8 September 2021, and it far more closely resembles the current second substituted statement of claim than the versions prior to 2021. Further, the paragraphs complained of are not generally the paragraphs pleading factual matters, but rather the paragraphs pleading the various breaches of fiduciary duty or paragraphs associated with the misleading and deceptive conduct claim. These are the paragraphs which were most impacted by the Disclosure and subject to the most amendments following the Disclosure. However, the deficiencies in the statement of claim regarding causation are not caused by or impacted by the Disclosure. These are matters which required amendment in any event.
Accordingly, in all the circumstances, I am satisfied that 50% of the plaintiffs' costs of defending the strike out application were thrown away as a result of the Disclosure.
Category 4 also deals with conferral in relation to the defendants' further summary judgment application (filed 17 December 2021 but resolved by way of conferral between the parties and never heard by the court) and responding to the defendants' request for further and better particulars dated 14 March 2022.

The plaintiffs have not provided any explanation regarding the details of this second summary judgment application. Absent such details, and the fact that it was resolved without the need for a hearing, I do not consider it is appropriate to make any order for costs thrown away in relation to responding to this application.
The defendants' request for further and better particulars related to the minute of proposed further amended substituted statement of claim filed 31 January 2022. Of the 18 paragraphs the subject of a request for further and better particulars: 14 paragraphs are identical to the current pleading; only three are paragraphs that are no longer contained in the current pleading; and one paragraph is substantially the same in the current pleading. Of the three paragraphs which no longer exist, the plaintiffs either did not provide any further and better particulars (on the basis they were not necessary) or instead referred to and relied on answers given in relation to paragraphs which do remain in the current pleading. In these circumstances, I do not consider there are any costs thrown away as a result of the Disclosure.
In category 5 the plaintiffs seek all of their costs of considering the defence and drafting the reply and amended reply. I am not satisfied the plaintiffs are entitled to any of these costs. To date there has only been one defence filed. The amendment to the reply did not result from an amendment to that defence. Unless and until an amended defence is filed (and any further amended reply is filed) it is not possible to determine whether there have been any costs thrown away in this regard, and to date there have been none.
Accordingly, in all the circumstances I am satisfied that the plaintiffs are entitled to their costs thrown away in relation to the following matters only:
(a)the plaintiffs' applications for leave to issue subpoenas; the application to inspect the documents produced by Chew+Matthews under the Subpoena dated 23 October 2020; opposing the application to set aside the subpoena issued to McMahon Clarke on 21 September 2022 and the issue of all 10 subpoenas referred to in the table annexed to the plaintiffs' submissions in reply dated 14 July 2023 (being Category 2);
(b)the plaintiffs' opposing the defendants' summary judgment application dated 11 September 2020 (being part of category 3);
(c)50% of the plaintiffs' costs of opposing the defendants' strike out application dated 11 September 2020 (being part of category 3);
(d) the plaintiffs' applications for specific discovery orders (being category 6); and
(e)20% of the plaintiffs' costs of preparing their previous versions of the statement of claim.
The remaining questions are whether the costs should be paid on an indemnity basis, whether the costs should be fixed or assessed and who should pay those costs.

Costs to be fixed or taxed

In relation to the three categories of costs which I consider have been thrown away, it is not presently possible for me to fix an amount of costs (regardless of the basis upon which the costs are to be assessed). This is because I have been provided with insufficient information from the plaintiffs to enable this to occur. All I have been provided with is a final figure of costs claimed for each category, with no details as to the work involved, the hours worked, or the hourly rates incurred. Aside from perhaps the costs of the pleadings thrown away, there is presently no 'logical, fair and reasonable' basis upon which to fix the costs and accordingly the costs thrown away should be taxed.[14]

Indemnity costs and who should pay the costs

[14] Brookvista Pty Ltd v Meloni [2009] WASCA 180 [27], [34].

The plaintiffs seek an order that the defendants pay the costs on an indemnity basis. The principles regarding indemnity costs are not in contest and are detailed in the decision of Swansdale Pty Ltd v Whitcrest Pty Ltd,[15] and I have not repeated those principles in these reasons.
[15] Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S).
The plaintiffs submit that the defendants had ample time and opportunity to properly investigate and disclose the true date of the Deed of Amendment. This could have been done (at least) when reviewing their records for the 2020 summary judgment application (in which they filed an affidavit comprising some 3,000 pages); when the defendants responded to the plaintiffs' subpoena application by filing an affidavit to the effect that it was not the defendants' usual practice to backdate documents, and on various other occasions detailed in the written submissions.[16]
[16] Plaintiffs' submission in support of chamber summons [74].
The defendants accept that the defendants had the means of discovering the backdating earlier, but submit that their failure to do so was not unreasonable[17] and therefore does not warrant an indemnity costs order.
[17] Defendants' submissions in opposition to plaintiffs' costs applications [15.1].
The defendants rely on the explanation contained in the Third Barr affidavit[18] and the contents of the signed but not affirmed affidavit of Mr Macdonald.[19] In particular, the defendants submit that the backdating of the trust documents was not discovered or disclosed earlier because it had been concealed by a former trusted employee (Mr Macdonald) both at the time the documents were prepared (by not copying the second or third defendants in to any of the relevant emails; and in the absence of instructions to backdate)[20] and after the matter had been commenced (by signing but not affirming an affidavit in which he deposed that the Deed of Amendment was prepared shortly after the other trust documents in May 2011).[21] The second defendant deposes that neither he nor the third defendant gave any instructions to Mr Macdonald to backdate the trust documents and that at all times he trusted Mr Macdonald to prepare documents of this type for each to sign.[22]
[18] See Primary Reasons [49] - [52].
[19] Affidavit of Stuart Alexander Macdonald, dated 2 December 2020, being attachment DES-1 to the Swain affidavit.
[20] Defendants' submissions in opposition to plaintiffs' costs applications [32]; Third Barr affidavit [20], [22].
[21] Affidavit of Stuart Alexander Macdonald, dated 2 December 2020, being attachment DES-1 to the Swain affidavit.
[22] Third Barr affidavit [18], [21] - [22].
Further, the defendants submit that the backdating was not easy for the defendants to discover due to the following matters:[23]
(a)the relevant emails were contained only on Mr Macdonald's email accounts, and these email accounts were required to be restored from backups and provided to the defendants' solicitors for review using e-discovery software;[24]
(b)the Deed of Amendment appears to have been prepared by Mr Macdonald himself, using a precedent from another unrelated matter in 2013. Again, neither the second nor third defendants were copied in to any emails in relation to the deed on this unrelated project. These emails were only discovered when key word searches were applied to the entire data set of documents;[25]
(c)the discovery of the backdating has occurred following the drawing of inferences from the documents that exist on the unrelated project; the lack of any contemporaneous documentary evidence from 2011 in relation to the Deed of Amendment and other emails from 2014 concerning the preparation of the Deed Poll.[26]
[23] Defendants' submissions in opposition to plaintiffs' costs applications [33].
[24] Third Barr affidavit [6] - [8].
[25] Third Barr affidavit [13], [19], [22].
[26] Third Barr affidavit [14]; Lai affidavit attachment FL-6.
In all the circumstances the defendants submit that the original belief that the trust documents were correctly dated was reasonable, and the defendants informed the plaintiffs as soon as they became aware that the trust documents were backdated. Accordingly, there is no basis for the costs thrown away to be ordered to be taxed on an indemnity basis.
In all the circumstances I am not satisfied that it is appropriate to order that the costs thrown away be taxed on an indemnity basis. The backdating of the trust documents is a serious matter. However, the only evidence presently before me as to the circumstances surrounding that backdating and the timing of the identification of that backdating is that contained in the Third Barr affidavit and the signed but not affirmed affidavit of Stuart Macdonald. Neither deponent has been cross examined and my conclusions as to that evidence is necessarily limited to the purposes of considering the indemnity costs application.
On the basis of the explanation provided, I am satisfied that there is a reasonable explanation for the defendants continuing to maintain (despite questioning by the plaintiffs) that the trust documents were signed on the dates contained in the documents. I am also satisfied that the identification of the backdating was not a simple task, as it was concealed from the second and third defendants; has involved the restoration of email accounts; review using e-discovery software; a review of documents concerning an unrelated development and a degree of inference. I am also satisfied that there has been no delay in informing the plaintiffs once the true position was known.
Whilst the plaintiffs have attacked the credibility of the second and third defendant's explanation of their signing of the trust documents, as I outlined in my Primary Reasons[27] given the affidavit evidence filed, this is a factual issue which is not possible to resolve at an interlocutory stage and is a matter for trial.
[27] Primary Reasons [77] - [84].
It is not in dispute that the fact of the backdating is a very serious matter, and it is one that has changed the manner in which the proceedings are pleaded and will be defended (at least by the first defendant). However, I am not satisfied on the evidence before me that the conduct of the defendants in relation to the backdating and the Disclosure is such that it warrants the court's mark of disapproval by imposing an indemnity costs order.[28] Rather, the appropriate order is that the costs be taxed on a party-party basis.
[28] See Sino Iron Pty Ltd v Mineralogy Pty Ltd [2022] WASC 151 (Quinlan CJ).

Order 5 – suspension of costs order

The plaintiffs seek an order that order 2 of the Orders of the Honourable Justice Smith made 14 December 2020 be suspended or, in the alternative, varied. This application is (properly) conceded by the defendants and accordingly, when I delivered my Primary Reasons I made this order, with my reasons to follow.
On 23 October 2020 the plaintiffs obtained leave to issue a subpoena to Chew+Matthews, the first defendant's former solicitors. The plaintiffs issued that subpoena on the same date, and it sought the following documents:
All correspondence, emails, documents or other copy or digital records:
(a) of instructions to Chew + Matthews provided by an officer of South Beach Management Pty Ltd as trustee for the South Beach Two Development Trust in respect of deeds of variation to the South Beach Two Development Trust (SBM) constituted by deed dated 20 May 2011, between 20 May 2011 and 30 September 2014 (Period);
(b) of advice from Chew + Matthews to SBM or an officer of SBM in relation to the matters referred to in paragraph (a) above; and
(c) all draft deeds prepared by Chew + Matthews in respect of the matters referred to in paragraph (a) during the Period.
The plaintiff sought to inspect the documents produced in response to the subpoena, and the first defendant objected to the plaintiffs inspecting all documents produced on the grounds that the documents contained the substance of communications between Chew+Matthews (as solicitor) and the first defendant (as client) in respect of which the first defendant claimed legal professional privilege.
In response, the plaintiffs submitted that the claim of privilege could not be maintained as the first defendant was part of a fraudulent activity, namely backdating the Deed of Amendment dated 27 May 2011.
The parties filed affidavit evidence and submissions and the inspection application was heard on 14 December 2020 by Smith J. After hearing from the parties and inspecting the documents, Smith J ordered:
(a) the plaintiffs' application for inspection be refused; and
(b) the plaintiffs pay the defendants' costs of the application for inspection to be taxed if not agreed and payable forthwith.
The transcript from the hearing reveals that her Honour was satisfied the documents were subject to legal professional privilege and:[29]
I'm also satisfied that the exception to advice privilege, that no privilege attaches to a document or advice that is obtained in furtherance of a fraud or impropriety, is not made out, and this is because there is no evidence contained in any of the documents produced by Chew + Matthews that establish or reveal any evidence whatsoever as to whether or not the deed of amendment was executed on the date that it bears in handwriting to be 27 May 2011. So in effect, Mr Dundo, my reasons for decision is I don't think any of these documents assist with your client's lines of inquiry.
[29] ts 14 December 2020, 27 - 28.
The plaintiffs' application to suspend is made pursuant to s 15 of the Civil Judgments Enforcement Act 2004 (WA) (CJEA) which provides as follows:
(1) A person against whom a judgment is given may apply for an order suspending the enforcement of all or part of the judgment to —
(a) the court that gave the judgment; or
(b) a court that is dealing with an appeal against the judgment.
(2) The court may deal with such an application in the absence of the person entitled to the benefit of the judgment if it is just to do so.
(3) On such an application, the court may only make such an order if there are special circumstances that justify doing so.
(4) A suspension order may be made for any period (including an indefinite period) and may be made on terms as to costs or otherwise.
The term 'judgment' is defined in s 3 of the CJEA as:
(a) a monetary judgment; or
(b) a judgment or an order of a court that requires or has the effect of requiring a person —
(i) to give possession of any property to another person; or
(ii) to do an act, to not do an act, or to cease doing an act;
The term 'monetary judgment' is defined as:
a judgment or an order of a court that requires or has the effect of requiring a person to pay money, whether or not the judgment or order contains any other requirements.
These definitions are sufficiently broad to include a costs order of the type made by Smith J on 14 December 2020 in the present case.[30]
[30] See also Russell v Lee Holdings [No 2] [2020] WASC 257 [20] (Martin J).
Accordingly, the question is whether there are special circumstances that justify making a suspension order and, if so, for how long.
I am satisfied that there are special circumstances which justify making an indefinite suspension order. The purpose for the plaintiffs issuing the subpoena to Chew+Matthews was to obtain documents going to the date on which the various trust documents, including the Deed of Amendment, had been signed.
At the date of issuing the subpoena (and at the date the inspection application was heard and decided), the defendants' case was the various trust documents were signed on the dates recorded in those documents and were made following the procedures set out in the Trust Deed.
The Disclosure was conveyed by the defendants' solicitors to the plaintiffs' solicitors by letter dated 9 March 2023. That is, after the Chew+Matthews subpoena inspection application had been heard and determined.
Accordingly, the hearing before Smith J proceeded on the incorrect factual basis and was based on submissions and affidavit evidence from the defendants which has now proven to be incorrect in a material and significant respect. Further, had the defendants discovered and disclosed the incorrect backdating of the Deed of Amendment prior to October 2020, then the need for the plaintiffs to issue subpoena may have been obviated in the first place.
I consider these to be special circumstances which justify suspending the costs order indefinitely, and the plaintiffs should not have to bear the costs of the inspection application.

Conclusion

I will hear further from the parties as to the appropriate orders and as to costs in relation to this application and the summary judgment and strike out applications.

Annexure A - Procedural History

Date	Event
19 December 2019	The Plaintiffs filed the Writ of Summons with Indorsement of Claim
3 February 2020	The Plaintiffs filed the Statement of Claim
27 May 2020	Informal Discovery by the Defendants
29 July 2020	Plaintiffs filed the Amended Statement of Claim following conferral with the Defendants
5 August 2020	Plaintiffs filed the Further Amended Statement of Claim
13 August 2020	Plaintiffs filed the Application for leave to issue a subpoena pursuant to Order 36B Rule 2(2B)(b)(ii) to Chew+Matthews
11 September 2020	Defendants file an application for summary judgment and in the alternative, to strike out paragraphs of the Further Amended Statement of Claim (Summary Judgment and Strike out Application)
12 September 2020	The Defendants file the Affidavit of Cameron Andrew Keast Barr comprising 226 annexures and totalling 3001 pages in support of the Summary Judgment and Strike out Application
23 October 2020	Orders by the Honourable Justice Allanson granting leave to the Plaintiffs to issue a subpoena to Chew+Matthews. The Plaintiffs issued the subpoena to Chew+Matthews (First Chew+Matthews Subpoena)
4 December 2020	The Defendants make an application opposing the Plaintiffs' application to access the documents produced by Chew+Matthews (Chew+Matthews Documents)
14 December 2020	Hearing before the Honourable Justice Smith dealing with the Defendants' application. Orders by the Honourable Justice Smith refusing the Plaintiffs application to access the Chew+Matthews Documents
23 December 2020	Defendants' Summary Judgment and Strike out Application heard over 1 day
23 July 2021	Reasons for Decision delivered by the Honourable Justice Allanson in respect of the Summary Judgment and Strike out Application
2 August 2021	Plaintiffs filed the Application for leave to issue 5 subpoenas pursuant to Order 36B Rule 2(2B)(b)(ii)
17 August 2021	Plaintiffs issued 5 subpoenas
17 August 2021	Order by the Honourable Justice Allanson granting leave to the Plaintiffs to issue 5 subpoenas
20 August 2021	Plaintiffs' make a further application, by email to His Honour's Associate, seeking leave to issue a subpoena to Dentons. Order by the Honourable Justice Allanson granting leave to the Plaintiffs to issue the further subpoena to Dentons
6 September 2021	Defendants object to the Plaintiffs' inspection of all documents returned pursuant to the 6 subpoenas
8 September 2021	Plaintiffs file the Further Amended Writ of Summons
8 September 2021	Plaintiffs file the Substituted Statement of Claim
17 November 2021	Plaintiffs file the Amended Substituted Statement of Claim following conferral with the Defendants
8 December 2021	Defendants file application to strike out the entirety of the Amended Substituted Statement of Claim
17 December 2021	Defendants file an application for summary judgment including leave to apply for summary judgment
31 January 2022	Plaintiffs file the Minute of Proposed Further Amended Substituted Statement of Claim following conferral with the Defendants
5 July 2022	Defendants file a Defence
6 July 2022	Plaintiffs file a subpoena to the Commonwealth Bank of Australia
26 July 2022	Plaintiffs' solicitors send an email to the Defendants' solicitors requesting electronic versions of the Deed of Variation and Deed of Amendment (Request for electronic deeds)
12 August 2022	Plaintiffs file the Reply
16 August 2022	The Defendants' solicitors email the Plaintiffs' solicitors scanned copies of the documents in respect to the Request for electronic deeds
9 September 2022	Plaintiffs file a subpoena to McMahon Clarke
21 September 2022	Plaintiffs file a subpoena to McMahon Clarke (Second McMahon Clarke Subpoena)
10 October 2022	Defendants file an application seeking to set aside the Second McMahon Clarke Subpoena
20 October 2022	Plaintiffs file the Amended Reply
24 October 2022	The Honourable Justice Allanson makes an order requiring that Defendants to give specific discovery on affidavit of 'all documents, including any electronic communications which are created after 27 May 2011 and before 6 August 2014 … relating to the preparation of the Deed of Amendment.'
9 March 2023	Plaintiffs' solicitors receive a letter from the Defendants' solicitors informing the Plaintiffs that the Deed of Amendment had been back dated along with other documents
16 March 2023	Defendants file the Affidavit of Cameron Andrew Keast Barr disclosing the back dated documents

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CH
Associate to Justice Seaward
28 AUGUST 2023