Sparta Nominees Pty Ltd v Orchard Holdings Pty Ltd
[2002] WASC 54 (S)
•28 MARCH 2002
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA IN CIVIL |
| CITATION | : | SPARTA NOMINEES PTY LTD -v- ORCHARD HOLDINGS PTY LTD & ORS [2002] WASC 54 (S) |
| CORAM | : MURRAY J |
| HEARD | : 16-20, 23 JULY 2001 |
19-23 NOVEMBER 2001
| DELIVERED | : 28 MARCH 2002 | ||
| SUPPLEMENTARY | |||
| DECISION | : 15 APRIL 2002 | ||
| FILE NO/S |
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| BETWEEN |
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AND
ORCHARD HOLDINGS PTY LTD
(ACN 009 472 780)First Defendant
KEITH ANDERSON
Second Defendant
SUE-ANN ANDERSON
Third Defendant
Catchwords:
Costs - Forfeiture of lease and relief against forfeiture - Principles to be applied to award of costs - Relaxation of scale limits for purposes of taxation - Turns on own facts
[2002] WASC 54 (S)
Legislation:
Rules of Supreme Court, O 66 r 1, r 12
Result:
Costs orders made
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr J Lin |
| First Defendant | : | Mr G J O'Hara |
| Second Defendant | : | Mr G J O'Hara |
| Third Defendant | : | Mr G J O'Hara |
Solicitors:
| Plaintiff | : | Jackson McDonald |
| First Defendant | : | Kott Gunning |
| Second Defendant | : | Kott Gunning |
| Third Defendant | : | Kott Gunning |
Case(s) referred to in judgment(s):
City of Rockingham v Curley & Ors [2000] WASCA 202(S)
Greenwood Village Pty Ltd v Tom the Cheap (WA) Pty Ltd [1976] WAR 49
Howard v Fanshawe [1895] 2 Ch 581
Langley v Foster (1910) 10 SR(NSW) 54
Case(s) also cited:
Nil
[2002] WASC 54 (S)
MURRAY J
MURRAY J: The plaintiff is a landlord. It leased a supermarket to the first defendant. The second and third defendants are principals of the first defendant and the defendants may effectively be treated as one party for the purpose of the consideration of costs orders.
2 The plaintiff's claim was for forfeiture of the lease for breach of
covenants by the lessee. That claim succeeded. I ordered that as from July 2000, the plaintiff had a right of forfeiture of the lease of the supermarket subject to the lessee's right to relief from forfeiture, a counterclaim which it raised successfully, resulting in the grant of relief from forfeiture of the lease. Also at issue in the proceedings was the validity of the purported exercise by the first defendant of an option to renew the lease for a period of 10 years from and including 20 February 2001. I made the declaration that the first defendant had validly exercise the option to renew.
3 The question which now arises is what orders for the payment of
costs should be made. The plaintiff seeks its costs of the claim to be taxed and an order that each party bear their own costs in relation to the first defendant's claim for relief from forfeiture. In addition, it seeks an order that the limits provided in the scale of costs be removed entirely, or those concerned particularly with the provision of particulars, the giving of discovery, getting up for trial and counsel's fee be removed and that counsel be allowed a fee on brief in relation to the hearing on 19 November 2001. The significance of the last order is that the action was tried for six days in July 2001, a period originally estimated by the parties to be sufficient. The trial was not, however, completed during that period and was then adjourned sine die. It could not be relisted until 19 November 2001 when a further five days were required to complete the trial.
4 Finally, for completeness I mention that the plaintiff sought the
dismissal of an action CIV 2553 of 2000 with no order as to costs being made. That order was made and in these reasons I need say nothing more about the reasons for doing so.
5 The defendants seek an order that each party bear its own costs of the
proceedings and naturally in those circumstances no special order as to costs would be made. The effect would be, as I understand it, much the same as granting to each party its costs of the claim and the counterclaim upon which they respectively succeeded.
[2002] WASC 54 (S)
MURRAY J
6 The general rules as to costs are principally those contained in the
Rules of the Supreme Court, O 66 r 1 which so far as material is in the following terms:
"(1) Subject to the express provisions of any statute and of these Rules the costs of and incidental to all proceedings including the administration of estates and trusts shall be in the discretion of the Court but, without limiting the general discretion conferred on the Court by the Act, and subject to this Order, the Court will generally Order that the successful party to any action or matter recover his costs. (2) If the Court is of opinion that the conduct of a party either before or after the commencement of the litigation or that a claim by a party for an unreasonably excessive amount has resulted in costs being unnecessarily or unreasonably incurred it may deprive that party of costs wholly or in part, and may further order him to pay the costs of an unsuccessful party either wholly or in part. (3) Where a party though generally successful in an action has, by the introduction of some issues or issues on which he has failed, increased the costs the Court may order such party to pay the costs of such issue or issues."
7 It would ordinarily follow therefore that the party succeeding on the
claim and counterclaim respectively would, subject to any disentitlement by the application of r 1(2) or (3), be entitled to the costs following each event but, of course, this is a particular situation in respect of the counterclaim which is for relief from forfeiture on the basis that the party making that counterclaim is itself in breach of covenants in the lease and liable to forfeiture on that account. By s 81(2) of the Property Law Act 1969 (WA), the power to grant relief from forfeiture may be granted on terms in respect of "costs, expenses, damages, compensation, penalty or otherwise". The legislation therefore envisages that although the defendant may obtain the relief sought, it may nonetheless have to meet the reasonable claims of the wronged party to be compensated for the breach. No such claim was made in this case and the relief from forfeiture was granted unconditionally.
| 8 | Nonetheless, in Langley v Foster (1910) 10 SR(NSW) 54 at 62, Simpson CJ in Eq said that prima facie one of the terms imposed for the grant of relief against forfeiture should be the payment of all costs |
[2002] WASC 54 (S)
MURRAY J
because it is that party's own breach of the lease which gives rise to the
claim for relief. Nonetheless, his Honour added that:" … this is not a hard and fast rule, for, if it were, a lessor might always oppose relief being granted knowing he would always get his costs from the lessee. If the court thinks the lessor ought not to have opposed in toto the grant of relief from forfeiture, the court may make the lessor pay the costs so far as they have been increased by the lessor resisting the claim to relief on any terms. But the court may make, and has in one case at any rate made, the lessee pay all the costs, notwithstanding the lessor contested his claim for relief at all. It is a question for the court's discretion in each case."
9 In a case of a similar kind to this one, Greenwood Village Pty Ltd v Tom the Cheap (WA) Pty Ltd [1976] WAR 49, Jackson CJ in granting relief against forfeiture of the lease of a supermarket for non-payment of rent was said by the editor at 53 to see no reason to depart from what was described as "the general rule that the tenant should pay the costs of the action [for possession] but not the landlord's costs of resisting the tenant's claim for relief against forfeiture." His Honour referred to Howard v Fanshawe [1895] 2 Ch 581.
10 It is not easy in this case to decide with any accuracy what
proportion of the trial and the evidence and the debate about matters of law was devoted to the claim and the counterclaim respectively. Some particular matters may be mentioned. The plaintiff abandoned one or two of the claims of breach which were initially relied upon but it pursued the substantive claims for forfeiture of the lease for breach of the lessee's covenants to keep the premises in good repair and condition, to keep them clean and, principally, to conduct the business of the supermarket with due diligence, a covenant said to have been breached in a number of respects upon which the plaintiff substantially succeeded.
11 It was necessary, to make good this claim, that the evidence should
relate not only to particular instances of apparent default but be directed to establish a course of conduct over a period to establish the relevant failures. The evidence on both sides, however, necessarily went further and much time was spent discussing the material aspects of the operation of the supermarket virtually up to the time when the trial commenced. That was necessary from the defendant's point of view to establish its claim for relief from forfeiture and the evidence led for the plaintiff in respect to the whole period could not, in my opinion, be said to have
[2002] WASC 54 (S)
MURRAY J
involved the costs being increased in a way which was unnecessary or
unreasonable.12 In my opinion, however, expressed in my reasons for judgment, the
defendant's claim for relief from forfeiture was a strong one and I should observe that it necessarily followed, upon my view of the law, that the defendant's exercise of the option to renew the lease must be regarded as having been valid and effective.
13 I accept that the general rule is as stated above. It seems to me, with
respect, to be sensible. There is no question that the defendant should bear its own costs in relation to the counterclaim for relief from forfeiture and that it should pay the plaintiff's costs in the action for possession. So far as the plaintiff is concerned, I can see no reason to depart from the general rule in this case. The plaintiff should therefore have its costs of pursuing the action for possession but not of resisting the counterclaim for relief against forfeiture. Broadly speaking, in my opinion, the justice of the case would be met by an order that the first defendant should pay the plaintiff 50 per cent of the costs of the action to be taxed.
The plaintiff's application for a special order as to costs is made under the Rules of the Supreme Court, O 66 r 12(1) which provides:
"Where the Court is of opinion that a special Order as to costs should be made by reason of the unusual complexity or importance of the case or for any other good or sufficient reason the Court may order that any particular allowances in any relevant scale be raised or a limit removed and in giving any such direction the Court may fix a limit within which the Taxing Officer may allow such costs."
15 The application for the order in this case, as is made clear by the
terms of Mr Lin's affidavit filed in support, is based, not on the unusual complexity or importance of the case, but upon the work reasonably required of the plaintiff's solicitors and counsel for which the order for the payment of costs is to provide compensation. In City of Rockingham v Curley & Ors [2000] WASCA 202(S); 25 July 2001, the Full Court said of such an application:
"The reference in the rule to 'any other good or sufficient reason' makes it clear that consideration of the remuneration reasonably to be provided for work properly carried out may of itself provide good and sufficient reason to make a special order: Schmidt v Gilmour [1988] WAR 219, 220. A number of
[2002] WASC 54 (S)
MURRAY J
later decisions have further expounded the approach the court will take. The decision most recently reported would appear to be Collins v Westralian Sands Ltd (1993) 9 WAR 56 where it was held that the purpose of the order is to enable the successful party to recover costs reasonably incurred. So the court will examine the work done, consider whether it was necessarily or reasonably done and consider what remuneration ought to be provided in broad terms, matching that against the capacity to make an award within the terms of the relevant scale, appreciating always that it is ult imately for the Taxing Officer to make the proper allowance upon a more detailed consideration of the litigation and the claim for costs placed before that officer."
16 Mr Lin's affidavit refers to extensive work required of the plaintiff's
solicitors to answer a request by the defendant's solicitors for further and better particulars of the statement of claim, the further and better particulars extending to 58 pages of document. He says the cost involved will well exceed the maximum amount of $1,800 which might be awarded on taxation under the Supreme Court scale. Similarly, the plaintiff was required to give discovery of documents comprising four lever arch files and over 521 items. Again the work involved, he says, will certainly cost more than the $1,800 limit prescribed by the scale.
17 As to getting up for trial, Mr Lin suggests that the maximum amount
of $27,000 equating to 100 hours' work by a senior practitioner would provide insufficient remuneration. Finally, he points out that the plaintiff would be required to pay counsel's fee in an amount of $56,980. He points out that if the scale is followed, the maximum fee on brief for the first day of trial and preparation is $9,200 and the maximum fee for the second and successive days of hearing is $2,300. On that basis, the plaintiff would be entitled to recover no more in respect of counsel's fee than the sum of $32,200. Mr Lin suggests that the difficulty for the plaintiff is exacerbated by the extensive break which occurred between the hearing in July 2001 and the completion of the trial in November 2001. That, he says, necessitated counsel preparing for the hearing in November to a large extent as if this was preparation for a new trial. Counsel charged for two and a half days' preparation.
18 As to the provision of particulars and the giving of discovery, it
seems to me that that was all reasonably necessary work and the arguments that the scale limits should be removed in the case of those items is a good one. I would so order.
[2002] WASC 54 (S)
MURRAY J
19 As to the solicitors' costs of getting up for trial, I have no doubt that a
considerable amount of work would have been required. However, the factual issues involved in the proofing of witnesses and the preparation of witness statements and bundles of documents and the like would not have been of any great complexity. It would be work which would require expenditure of time certainly, but work of a sort which could be performed by any competent junior practitioner. The limit imposed by the scale, the amount of $27,000, is not, in my opinion, ungenerous. Rather than remove the limit in this case, I am prepared to raise it to a point which would represent, in my opinion, a reasonable maximum in relation to getting up for trial in the particular circumstances of this case without, of course, in any way fettering the discretion of the taxing officer upon his or her more detailed consideration of the litigation and the costs incurred, to make a proper allowance below that limit. In that context, I would order that the upper limit be increased from the sum of $27,000 to the sum of $35,000.
20 As to counsels' fee, again there is much to be said for the argument
that the delay of some four months in resuming the hearing would impose an additional burden of preparation upon counsel for which some allowance should reasonably be made but not, I think, to the extent that the additional preparation should be equated with that for the commencement of the trial by allowing a second fee on brief. On my calculation, if that second fee on brief was allowed but the maximum rates per day for junior counsel provided in the scale were adhered to, the maximum recovery would be the sum of $39,100. As Mr Lin says in his affidavit, if the limits provided in the scale are strictly adhered to, the maximum recovery would be $32,200.
It was necessary to adjourn the trial and resume it in November 2001 because the parties' solicitors grossly underestimated the amount of time required for trial despite the efforts made by all involved to make the trial process as efficient as possible. It seems to me that that may not be laid exclusively at the door of the first defendant by removing the limit on counsel's fee so as to permit all costs reasonably incurred in this regard to be recovered. Further, the prima facie position to be taken is that the maximum rates provided in the scale provide reasonable remuneration to counsel. I would see no reason to depart from that prima facie position in the circumstances of this case. I am of the opinion that the only special order which should be made is by way of a minor relaxation of the limits imposed by the scale to take account to some degree of the extra work which would reasonably have been required of counsel to prepare for the resumption of the trial in November 2001. I would increase the maximum
[2002] WASC 54 (S)
MURRAY J
provided by the scale so that no more may be recovered in respect of
counsel's fee than the sum of $35,000.22 Other than in those respects, taxation should proceed in accordance
with the relevant scale of costs and I would ask counsel to provide in agreed and complete terms a minute of the final orders which I am prepared to make.
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