St Kilda Beach Taxi School and Staffing Pty Ltd v Central Taxi Management Pty Ltd

[2012] WADC 114

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   ST KILDA BEACH TAXI SCHOOL AND STAFFING PTY LTD -v- CENTRAL TAXI MANAGEMENT PTY LTD [2012] WADC 114

CORAM:   BOWDEN DCJ

HEARD:   11 - 13, 26 & 27 APRIL 2012

DELIVERED          :   23 JULY 2012

FILE NO/S:   CIV 624 of 2011

BETWEEN:   ST KILDA BEACH TAXI SCHOOL AND STAFFING PTY LTD

Plaintiff (First defendant by counterclaim)

AND

CENTRAL TAXI MANAGEMENT PTY LTD
First defendant (Second defendant by counterclaim)

EMBLETON MOTOR CO PTY LTD
Second defendant (Plaintiff by counterclaim)

KIM JOHNSON
Third defendant (Plaintiff by counterclaim)

ABDURAHAM SAEDI
Third party (Third defendant by counterclaim)

Catchwords:

Application to set aside default judgment made 10 1/2 months after judgment and after two prior applications dismissed - Lease of taxi plates - Whether a sham and/or unenforceable - Action in detinue

Legislation:

Nil

Result:

CTM's application to set aside the default judgment obtained by Mr Johnson and Embleton on 16 May 2011 is dismissed
St Kilda's claim for damages against CTM is dismissed
Embleton do deliver taxi plate 529 forthwith to St Kilda
Embleton pay damages to St Kilda assessed at $18,249
Embleton's and Mr Johnson's counterclaim against St Kilda and Mr Saedi is dismissed
Embleton and Mr Johnson's Third Party Notice is dismissed
CTM pay damages to Embleton assessed at $72,968

Representation:

Counsel:

Plaintiff (First defendant by counterclaim)     :    Mr M Strbac

First defendant (Second defendant by counterclaim): Mr K Kappadath

Second defendant (Plaintiff by counterclaim)    :     Mr B G Grubb

Third defendant (Plaintiff by counterclaim)    :     Mr B G Grubb

Third party (Third defendant by counterclaim)    :     Mr K Kappadath

Solicitors:

Plaintiff (First defendant by counterclaim)     :    Delta Legal

First defendant (Second defendant by counterclaim): Starnet Legal Pty Ltd

Second defendant (Plaintiff by counterclaim)    :     Metaxas & Hager

Third defendant (Plaintiff by counterclaim)    :     Metaxas & Hager

Third party (Third defendant by counterclaim)    :     Starnet Legal Pty Ltd

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

Adams v Brinklow (Unreported; WASC; Library No 5883, 1985)

Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27

Carr v Finance Corp of Australia Ltd (No 1) (1981) 147 CLR 246

Clayton v Le Roy (1911) 2 KB 1031

Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25

Commissioner of Taxation (Cth) v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; (2000) 172 ALR 346

Continuity Promotions Ltd v O'Connor's Nenagh Shopping Centre Ltd [2006] EWHC 3462 (QB)

Faithfull v Woodley (1889) 43 Ch D 287

Fazio v Fazio [2010] WASC 263

GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50

Laws v Australian Broadcasting Tribunal [1990] HCA 31; (1990) 170 CLR 70

Lloyd v Osborne (1899) 20 LR (NSW) L 190

Pickard v Sears (1837) 6 Ad & El 469

Racovalis v Rescom Mortgages Pty Ltd [2010] VSCA 55

Solid Capital Markets (UK) Ltd v Little Rock Mining Inc [2001] EWCA Civ 2104

Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd [1957] HCA 10

Watson v Foxman (1995) 49 NSWLR 315

Western Power Corporation v Normandy Power Pty Ltd [2001] WASC 202

BOWDEN DCJ: 

Introduction

1. The plaintiff (hereinafter referred to as St Kilda) is the owner of taxi plate number 529 which it purchased in November 2008.

2. St Kilda leased that plate to the first defendant (hereinafter referred to as CTM) in December 2008. When the lease expired CTM could not return the plate as it was, and still is, in the possession of the second defendant (hereinafter referred to as Embleton).

3. St Kilda seeks an order against Embleton for delivery up of the plate and an account of profits and seeks damages, interest and costs against both CTM and Embleton as a result of the failure to return the plate.

4. Embleton refuses to return the plate to St Kilda claiming they are a bona fide lessee of the plate for a period of five years with an option for a further five years having leased it from CTM or the third party (hereinafter referred to as Mr Saedi) in December 2008 without notice of the prior St Kilda - CTM lease.

5. Embleton and Mr Johnson, who is a director of Embleton, by counterclaim seeks a declaration that they validly lease the plate and in the alternative seek damages, costs and interest against St Kilda, CTM and Mr Saedi.

6. Embleton and Mr Johnson also bring a third party notice against Mr Saedi, who is a director of CTM, seeking indemnity and/or contribution if they are found liable to St Kilda.

7. St Kilda, Embleton and Mr Johnson obtained default judgment against CTM in May 2011 and at trial CTM applied to set the judgment obtained by Embleton and Mr Johnson aside.

CTM's applications to set aside the default judgments

1. St Kilda obtained default judgement on 31 May 2011 as a result of CTM's failure to file a defence to their statement of claim.  No application was made to set that judgement aside.

2. Embleton and Mr Johnson obtained default judgement on 16May 2011 as a result of CTM's failure to file a defence to their counterclaim.  Prior to the trial CTM applied, by summons and supporting affidavit filed on 29 March 2012, to set that judgment aside (the initial application).

3. The initial application was heard before Registrar Kingsley on 5 April 2012 (Easter Thursday, the last working day before the trial commenced).  CTM sought to adjourn the application to the morning of the trial so it would be dealt with by the trial judge.  Both the adjournment and substantive applications were refused.

4. On the first day of the trial, 10April  2011, Mr Kappadath  appearing on behalf of CTM applied by oral motion to set the default judgment aside (the second application).  He said the court should reconsider or re‑entertain the initial application.

5. I treated that as a new application and not an appeal from the registrar's decision and dismissed it (ts 18 ‑ 19) due to the 10 1/2 month delay in bringing the application, the failure to explain that delay, and the prejudice to Embleton and Mr Johnson as they had prepared their case on the basis of a valid judgement.  During the second application Mr Kappadath flagged his intention to make a third application at the conclusion of all the evidence (ts 6).

6. On 27April 2012 Mr Kappadath made a third application on the basis that as all the evidence had been heard the overwhelming merit of the defence should be recognised and because the default judgment may imposes some hindrance or difficulty in granting the relief CTM and/or Mr Saedi sought (ts 731).  Mr Kappadath claimed no prejudice would be suffered by Embleton or Mr Johnson.

7. In considering the third application the circumstances of the first and second application must be taken into account.  It would be artificial to approach the third application in a vacuum.  The delay I refer to hereafter is the delay from the date of judgment and not from the dismissal of the first and second applications.

8. The court has power to entertain the application even after previous applications have failed: O 22 r 10, Carr v Finance Corp of Australia Ltd(No 1) (1981) 147 CLR 246, 248.

9. The discretion of the court on such an application is unfettered and to be exercised in accordance with the circumstance of each individual case and therefore no hard and fast rules can be laid down.  Past cases, at best, can only provide a guide to the matters to be considered.

10. I observe that Embleton and Mr Johnson have lost the opportunity to cross‑examine Mr Saedi on the reasons for the delay, because the third application was made after he gave evidence at the trial and he was not questioned by his counsel as to any reasons for that delay.  Notwithstanding the advance notice, that failure may have lead Embleton and Mr Johnson to believe no application was to be made.

11. Both counsel referred to Racovalis v Rescom Mortgages Pty Ltd [2010] VSCA 55 where the court, in considering whether an application to set aside a default judgment was an abuse of process, said that although the factors to consider would vary from case to case they would usually include the effect on a party who, having been successful in opposing a prior application, is faced with a second application, the effect of any delay in making a separate application, whether there was an explanation for the new material relied upon not being provided to the court on the earlier application, the nature of that material, whether a fair trial could be held, the evils of permitting a separate application including the risk of conflicting decisions, the unnecessary vexing of respondents, judge shopping, the diminution of certainty in the conduct by litigants of their affairs and the adverse consequences to the administration of justice [30].

12. These factors are also relevant in determining whether a default judgment should be set aside.  The overriding consideration is whether the justice of the case demands that the application be granted: Adams v Brinklow (Unreported; WASC; Library No 5883, 1985) bearing in mind the fundamental duty of the court to do justice between the parties.

13. In this case there is no suggestion of judge shopping, or delay in bringing the application, if delay is assessed from the date of the dismissal of the prior two applications however the default judgment ought not be set aside.

14. Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27 makes it clear there is significant public interest in the administration of civil justice and there is a responsibility on judges to ensure the limited resources the State commits to that purpose are not wasted.

15. Aon emphasises that case management principles should not supplant the objective of doing justice between the parties according to law however the waste of public resources, undue delay and the concomitant strain and uncertainty imposed on litigations are matters that should be taken into account in the exercise of the discretion [30].

16. The court also pointed out the potential for loss of public confidence in the legal system if courts were seen to readily accede to applications, made without adequate explanation or justification, for adjournments or for amendments giving rise to adjournments or for vacation of fixed trial dates resulting in the resetting of the interlocutory process [30].

17. The judgment CTM seek to set aside was obtained on 16 May 2011.

18. In Mr Saedi's defence to the counterclaim dated 10 August 2011 it states '… the first defendant (CTM) will make application to set aside the default judgment entered against it '.  Mr Saedi is represented by the same solicitors and council as CTM and is its director.

19. Notwithstanding this CTM chosen not to make any application until April 2012 and this is a significant consideration.  The delay however, like the merits of the defence, is just one of the many factors to be considered.  The overriding consideration is whether the interests of justice mean the default judgment should be set aside.

20. Embleton and Mr Johnson should not be put in a position where they arrive at court for an assessment of damages and are then subject to an application to set the judgement aside.

21. A party placed in that situation is forced to either apply to adjourn or proceed having been 'off footed' at the last minute by the applicant.  If the trial proceeds they are disadvantaged in a number of ways.  For example only limited discovery, if any, may have been made, their rights to deliver interrogatories may have been lost, and their preparation and pre trial discussions and negotiations have all proceeded on the basis that the judgement stood.  If they proceed they do so with their current pleadings whereas if a timely successful application was made those pleadings may have been amended as a result of discovery and other interlocutory processes.  If they chose to apply for an adjournment many months may elapse before a new trial date is obtained.

22. The affidavit of Mr Boden filed in the first application refers to CTM having received advice from counsel that '… an application ought to be made to set aside the default judgment' however it does not detail when that advice was given or explain the delay in making the initial application.  The affidavit goes nowhere near providing any reason as to why there was such a delay.  Mr Saedi gave no evidence that sought to explain let alone justify the delay.  The delay of 10 1/2 months before any application was made remains unexplained.

23. The new material relied upon in the third application is the evidence of Mr Saedi and Mr Kasimoglu given at the trial.  That evidence was available and the substance of it could have been provided to the court, in affidavit form, in any of the earlier applications; instead the only affidavit provided was from the solicitor.  No explanation is offered as to why this evidence was not made available previously.

24. In Continuity Promotions Ltd v O'Connor's Nenagh Shopping Centre Ltd [2006] EWHC 3462 (QB) default judgment had been entered for $90,584.96 Euro in a case where the court had no jurisdiction to hear the claim.

25. His Honour Judge Langan said that only in exceptional cases would a court decline to set aside a judgment when it had no jurisdiction to hear the claim [24], however taking into account that the claimant had not acted recklessly in commencing proceedings, the delay of 11 months before the application was made and the absence of any excuse to justify such a delay, he allowed the default judgment to stand [24] ‑ [33].

26. His Honour pointed out that if the application had been made earlier the claimant would not have been put to additional expenses and if it had been determined in favour of the defendant the claim in all probability would be 'well on its way' to being finally determined.

27. In Solid Capital Markets (UK) Ltd v Little Rock Mining Inc [2001] EWCA Civ 2104 a delay of almost 12 months in bringing a similar but not identical application was described by Lord Justice Mantell as an 'extraordinary delay' and he said by reason of that delay alone the judge at first instance was entitled to dismiss the application [21]. His Lordship stressed the need for finality in proceedings [19].

28. The desirability of a party having their case determined on its merit is an important consideration.  However the undoubted merits of the defence and the desirability of CTM having their day in court are in my opinion outweighed by the other factors.

29. The fact the default judgment may be a hollow judgment (ts 20) and that CTM effectively has no assets (ts 511) are not matters I take into consideration.

30. In my opinion the court should not sanction an approach to litigation that allows a party to do nothing for 10 1/2 months and then at the last minute apply to set the judgement aside.  To allow the application would diminish the certainty and finality of litigation.

31. Whether the decision to apply at such a late stage was tactical or as a result of CTM's late attention to the litigation hardly matters, it was their decision and their failure to act and they should now pay the consequences of their decisions.

32. If it leads to conflicting decisions in that having heard the merits of the case I effectively find the facts as their director Mr Saedi alleges so be it, that is just a consequence of the manner in which CTM chose to conduct the litigation.

33. It is unfair to set aside the default judgement.  It turns the clock back to the style of conducting litigation, all to common 20 years ago, that encourages late applications which either delay or tactical disadvantage the other parties.

34. It is no answer to say that Embleton and Mr Johnson could apply to adjourn the trial or that a costs order could be made in their favour.  There is nothing more likely to bring courts into disrepute as the continual adjourning of trial dates which are fixed well in advance. It could encourage the belief amongst the litigants that trial dates are simply no more than another opportunity to make interlocutory or other applications and thereby avoid a trial and this would lower confidence in the administration of the courts.

35. I accept that case management principles should never override the justice of a particular case nor should the courts adopt an inflexible 'proceed at all costs' approach.  However I cannot see anything unjust in CTM being now required to suffer the consequences of the manner in which they chose to conduct the litigation.

36. As a result of case management considerations, the length of the delay, the failure to explain the delay, the failure to explain why the evidence now relied was not called upon at the earlier applications, the prejudice suffered by Embleton and Mr Johnson in the sense that they had prepared for the case on one basis only to be presented at the last moment with the application, the evils of permitting multiple applications, the diminution of certainty in litigation and the adverse consequences to the administration of justice I dismiss the application.

The effect of the default judgment

1. By failing to provide a defence to St Kilda's claim and to Embleton and Mr Johnson's counterclaim CTM is taken to have admitted the allegations or fact contained in the respective claim and counterclaim: Faithfull v Woodley (1889) 43 Ch D 287, 289.

2. However at the time the default judgments were obtained Mr Saedi was not a party to the action and the facts which are deemed to be admitted against CTM in the absence of their pleadings are not deemed to be admitted against Mr Saedi: Laws v Australian Broadcasting Tribunal [1990] HCA 31; (1990) 170 CLR 70, 85 ‑ 86.

St Kilda's claim assessment of damages against CTM

1. St Kilda is entitled to damages against CTM as a result of the default judgment of 31May 2011.

2. St Kilda claimed a total of $2,003.95 for air ticket, travel fees, car rental, hotel accommodation, incidentals (exhibit 8) and particularised those as costs incurred in travelling to Perth from Melbourne to secure a new lease for the plate after the expiration of the their lease with CTM on 30September 2010.

3. However the evidence shows these expenses were paid by Mr Ismail personally and not St Kilda.  Although Mr Ismail said he was reimbursed for the expenses by Mr Joel, a director of St Kilda, there is nothing to show that reimbursement was on behalf of St Kilda (ts 99) and accordingly I am not satisfied the expenditure was incurred by St Kilda and do not allow the claim.

Embleton and Mr Johnson's assessment of damages against CTM

1. Mr Embleton and Mr Johnson are entitled to damages against CTM as a result of the default judgment of 16 May 2011 which I have refused to set aside.

2. By their failure to provide a defence to Embleton and Mr Johnson's counterclaim, CTM is taken to have admitted the pleading in those documents, relevantly that the plate lease from CTM to Embleton was for a period of five years with an option of a further five years.

3. Mr Siviour prepared a report of 5 April 2012 detailing the losses suffered by Embleton.  I accept Mr Siviour is an experienced forensic accountant and whilst I do not doubt his mathematical calculations there are errors in his report.

4. I consider the damages payable should only be calculated from the dates the plates are to be returned to St Kilda.

5. Mr Siviour (exhibit 2.20) calculated damages based on Embleton's loss of future profit in two alternates.  The first was based on future revenue escalating by 6.2% per annum, as it actual had from the period 2010‑2011 and 2011‑2012.  The second was based on the escalation of 8.4%, as predicted by Embleton and unverified by accounting or bank statements.

6. I consider future revenue ought to be calculated on 6.2% per annum increase as this is supported by past increases.  I have used an average weekly net profit of $237 as the base. I have increased the amount in Mr Siviour's report by $100 per week due to the plates lease payments (an expense) incorrectly being calculated as $455 when it is $355 (without GST).  I have applied the 6% discount to each year.

1. The future economic loss of Embleton is as follows:

23 July 2012 – 30 June 2013	$11,613
1 July 2013 – 30 June 2014	$12,096
1 July 2014 – 30 June 2015	$12,015
1 July 2015 – 30 June 2016	$11,886
1 July 2016 – 30 June 2017	$12,000
1 July 2017 – 30 June 2018	$12,084
3- June 2018 – 30 November 2018	$5,115
TOTAL	$76,809

1. Mr Osman and Mr Bekhit both said that on occasions there were difficulties obtaining sufficient number of taxi drivers to keep vehicles on the road and this and other contingencies ought to be recognised by a 5% deduction.

2. I therefore allow Embleton's claim at $72,968.

St Kilda's claim against Embleton

The pleading point

1. Embleton submit St Kilda's claim against them in detinue ought be dismissed as it fails to plead sufficient material facts to support the cause of action.

2. Although Embleton's written submissions also deal with bailment and conversion St Kilda's claim is based in detinue.

3. The essential elements of detinue are a demand by a plaintiff for the return of their goods, and the refusal by the defendant to return them: Lloyd v Osborne (1899) 20 LR (NSW) L 190, 193; Clayton v Le Roy (1911) 2 KB 1031.

4. It is said there is nothing in the statement of claim whereby Embleton is alleged to have wrongly refused to comply with the demand.  I do not consider that the word 'wrongful' needs to be included in the statement of claim provided the plaintiff's entitlement to possession; demand for the return of the property and a failure to return are pleaded. All these matters are pleaded in pars 9 ‑ 14 of the statement of claim.

5. There is no merit in the submission that the statement of claim does not plead a cause of action.

6. Paragraph 15 of the statement of claim maybe superfluous or a reference to the plea for an account for profit but all the elements of detinue are pleaded.

Embleton's case

1. As pleaded in their defence and counterclaim Embleton seek to establish the lease between St Kilda and CTM is a sham and otherwise unenforceable and it is necessary to examine the circumstances of that lease.

The St Kilda - CTM lease

The evidence

1. Mr Muhbub Ismail manages all licensing of St Kilda's taxis in Western Australia and Victoria and has worked for St Kilda for approximately 15 years.

2. His evidence was that on 25 November 2008 he had a brief discussion with Mr Saedi and told him he was travelling to Western Australia to purchase some taxi plates. Mr Saedi expressed interest in leasing one of those plates.

3. At that time CTM was not incorporated as a company.

4. In any event Mr Ismail travelled to Western Australia and purchased plate 529 on 28 November 2009 and on the same day contacted Mr Saedi to ask if he was still interested in leasing it.  Mr Saedi replied affirmatively and said he was in the process of forming a new company, which would happen very soon.  He told Mr Ismail when this occurred the plate would be put under the new companies name and the deal signed.  Mr Ismail asked him to send a cheque immediately and told him that when he returned they would sign the paper work.

5. On 1 December 2008 Mr Ismail received a cheque for the amount he specified, from Mr Saedi's personal bank account.

6. Subsequently on 28 December 2008 Mr Saedi, on behalf of CTM and Mr Ismail, on behalf of St Kilda, entered into a lease agreement (exhibit 1.2).

7. Mr Ismail said he was sure the lease was executed on that date.  The lease was witnessed by a person he knew by sight but whose name he could not recall.  He said he did not know the person very well but met him at the café where the lease was signed.  All he knew was the witness lived in the Weirabee area and was about to leave the café when he asked him to witness the lease.

8. He said that since the commencement of the plate lease St Kilda had received the maximum payable by statute for the lease of the plate and continued to do so even thou their lease with CTM had expired.

9. I found Mr Ismail to be a straight forward, honest reliable and credible witness and accept his evidence.

10. Mr Saedi confirmed Mr Ismail's account of what occurred.

Is the lease between St Kilda and CTM a sham and/or otherwise unenforceable?

1. Embleton and Mr Johnson effectively say St Kilda are really suing on the verbal agreement of 28 November which is a sham and unenforceable and fundamentally incomplete and, if not, the 28December 2008 written contract is also a sham and unenforceable.

2. Embleton rely on the following factors.

3. Firstly, St Kilda's pleaded case was that the lease was executed and commenced on 28 December 2008 whereas Mr Saedi and Mr Ismail's evidence was the lease was entered into verbally with CTM and commenced on 28 November 2008.

4. Secondly, they say that even if the Statement of claim had been amended to allege the lease commenced on 28 November 2008 it would still not be valid because CTM was not incorporated until 15 December 2008 and therefore CTM was not capable of entering into a lease on 28 November 2008 and there was no plea that a pre‑incorporation contract had been made or novated.

5. Thirdly, they say their was no consideration moving from CTM for the lease of 28 November as the $1,690 was paid by Mr Saedi's from his personal bank account.

6. Fourthly, they say the alleged contract of 28 November 2008 was fundamentally incomplete because there was no final consensus as to the weekly lease payments, the term of the lease, the identity of the lessor or payment of rank fees.

7. I reject all of these submissions.

8. St Kilda argued the verbal agreement of 28 November 2008 was a pre‑incorporation contract later ratified by the written contract of 28 December 2008.  I also reject this submission.

9. Notwithstanding Mr Saedi and Mr Ismail's evidence that the lease was entered into verbally on the 28 November 2008 and commenced on that date it is matter of fact and law for the court to determine when the lease commenced.

10. The parties to an agreement may vary or extinguish some of its terms by a subsequent agreement: Tallerman & Co Pty Ltd v Nathan's Merchandise (Vic) Pty Ltd [1957] HCA 10; GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 [226]. In doing so the parties will have made 'two contracts': Commissioner of Taxation (Cth) v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; (2000) 172 ALR 346, 350.

11. The evidence establishes two separate contracts for the lease of the plate a verbal one of 28 November 2008 and the second written one of 28 December 2008 (exhibit 1.2).

12. The verbal contract did not specify the length of its terms and therefore is determinable at will or upon reasonable notice nor did it cover issues such as rank fees.  The written contract by incorporating terms not included in the verbal contract such as the length of its term, the period of notice for its termination, the obligation on the lessee to pay rank fees and the like was a separate or new 'second' contract and it is upon that written contract that St Kilda sue.

13. It becomes unnecessary, therefore, to investigate the terms of and consideration for, the verbal contract and whether it was ratified pursuant to s 131 of the Corporations Act 2001 as St Kilda brings its action upon the written contract by which time CTM was incorporated, the contract was supported by consideration and it cannot be said to be fundamentally incomplete in its terms and the parties to it are readily identified.

14. Embleton also allege that the lease of 28 December 2008 is a sham because it was a disguise or a false front which attempted to validate the earlier alleged verbal agreement of 28 November 2008 which both Mr Saedi and Mr Ismail agreed commenced on 28 November 2008 or 1 December 2008 but knew could not be binding because CTM was not incorporated and did not exist as a legal entity.

15. I also reject this submission.

16. Firstly, there is absolutely nothing to establish St Kilda through Mr Ismail and CTM through Mr Saedi believed the agreement of 28 November was not binding.  On the contrary everything indicates they considered it was a binding agreement although formally to be written up at a later date. Mr Ismail requested that monies be paid forthwith, Mr Saedi payed those monies forthwith and Mr Saedi said he was going to form a new company and did so and they both ensured exhibit 1.2 was executed in the corporate names as agreed.

17. Secondly, Embleton says Mr Saedi had given a lease and possession of plate 529 to Embleton on or about the 18December 2008, and therefore at the time exhibit 1.2 was executed (28December 2008) Mr Saedi knew that CTM could not take either a lease or possession of the plate because he had already given both to Embleton.

18. The fact that Mr Saedi was given the plate and parted with possession of it before the lease of the 28December 2008 does not establish that lease was a sham, it is entirely consistent with a believe on his part that a valid lease existed between St Kilda and CTM from the 28November 2008.  Mr Ismail's act in parting with possession of the plate is consistent with a belief on his part that a valid lease existed between St Kilda and CTM from the 28November 2008.

19. Mr Ismail and Mr Saedi may not have understood the intricacies of contract law and that there were in fact two contracts but their actions are entirely consistent with their belief their was a binding agreement from 28 November.

20. Further it is said that the changing of the date in two places on exhibit 1.2 from 28 November 2008 to 28 December 2008 is evidence that St Kilda and Mr Saedi and or CTM are perpetrating a sham.  I do not find it unusual that mistakes are made in documents over dates whether it be the day, month or year and I do not infer anything from those changes other than a mistake as to the month was made.  I accept Mr Ismail evidence that exhibit 1.2 was executed on the 28 December 2008.

21. Further it is said the failure of both Mr Saedi and Mr Ismail to disclose the identity and whereabouts of the person who witnessed their signatures on exhibit 1.2 compounds any doubt surrounding the execution of exhibit 1.2 and is positive evidence of the length to which both Mr Saedi and Mr Ismail are prepared to go to reinforce the sham.

22. I do not find it is unusual for documents to be witnessed by a person who the parties only know by sight.  A witness should, of course, write their name, address and occupation so they can be contacted if necessary in relation to the attestation but I do not infer from the fact these details were not provided that the document is a sham. I accept Mr Ismail evidence about the circumstances in which exhibit 1.2 was executed.

23. Embleton and Mr Johnson also point out that Mr Saedi admits that all monies paid by Embleton for plate 529 were paid into his account and not CTM's.  There is, however, nothing to establish St Kilda were aware of this.  Mr Saedi acts in having the money paid into his account show he has little knowledge of and in my opinion scant regard to CTM existence as a separate legal entity but does not satisfy me that the lease was a sham.

24. The essence of the sham lease alleged is that both parties used it as a disguise or a false front to attempted to validate a lease (28November 2008) they both knew could not be binding because CTM was not incorporated and did not exist as a legal entity.

25. None of the facts referred to, either individually or collectively, lead me to infer that either St Kilda or Mr Saedi knew or believed the 28November 2008 agreement was not binding.  On the contrary as shown in [90] everything indicates they considered it was a binding agreement.

26. I reject Embleton's contention that the lease between St Kilda and CTM is not a valid lease and is a sham or unenforceable.

27. Embleton then say that even if there was a valid enforceable lease between those parties they are a bona fide purchaser for value of the leasehold interest in plate 529 and had no notice of any prior lease between St Kilda and CTM.

28. Whilst there is absolutely no doubt that Embleton had no notice of the prior lease between St Kilda and CTM the circumstances in which Embleton came into possession of plate 529 now need to be considered.

How taxi plate 529 came into Embleton's possession

The evidence

1. The evidence in this regard came from Mr Osman, who in 2003 was employed by Embleton, essentially as their taxi manager, and Mr Saedi.

2. There are no meaningful differences between their evidence on this point.  They both said Mr Saedi advised Mr Osman by phone in December 2008, although the exact date was uncertain, to collect a taxi plate from Nova Communications.  Mr Osman did so and the plate collected was plate 529.  There was no discussion in that brief phone call as to the amount of the payments, how long Embleton were to be in possession of the plate or any other details.

3. Mr Saedi later made his bank details available to Embleton so that payments could be made.

4. Clearly it was in the expectation of both Mr Saedi and Embleton that some payments would be made for the plate.  That expectation arose because of a prior agreement between the parties.

5. Even if the plate 529 was not in existence at the time of the prior agreement (in the sense that it was not owned  or leased at that time  by any of the parties), the terms of that agreement could, in some circumstances, be the terms upon which plate 529 was to be dealt with. Mr Strbac and Mr Kappadath's submission to the contrary is rejected as is their submission that as plate 529 was not specifically referred to by plate number, it could not be covered by that agreement.

The earlier agreement

The parties' contentions

1. Embleton and Mr Johnson say the earlier agreement was entered into in April 2008 whereby Mr Saedi, inter alia, agreed to provide an unspecified number of plates for Embleton to lease for $355 plus GST per week per plate for a five‑year period with an option of a further five years (hereinafter referred to as the 5 year term).  Separate payments were agreed for the lease of any vehicles supplied and the taxi rank fees were to be paid by Embleton.  They say plate 529 was subsequently supplied in accordance with that agreement.

2. Mr Saedi says an agreement was reached in May 2008 and related to Embleton managing four plates which were specifically identified.  He says there was no five‑year term specified and the agreed fee was $500 all up for the plate and vehicles he supplied, with Embleton responsible for all other expenses.  He says the agreement was terminable at will or upon reasonable notice as no fixed period was specified and that plate 529 was not mentioned at the meetings and was not in existence (in the sense I have referred to) at that time and therefore not covered by that agreement.

The evidence

1. The prior agreement was constituted solely by oral conversations between the parties.  Vastly different versions of when the meetings occurred, who was present and what was discussed were given.

The evidence

Embleton's version of the oral agreement

1. Three witnesses were called on behalf of Embleton.  All say they were present at a meeting with Mr Saedi which occurred in April 2008 and they all say Mr Kasimoglu was not present.

2. Embleton's witnesses were Mr Johnson, who was and is their sole director and shareholder, Mr Bekhit who was and is their service and car yard manager and Mr Osman who was in 2008 its taxi fleet manager and is currently employed by Embleton.

3. Mr Johnson said he received two or three calls in March 2008 from Mr Saedi who said he was purchasing Western Australian plates and looking for Western Australian people to lease them and Mr Johnson suggested they meet.

4. Messrs Johnson, Osman and Bekhit all say that in April 2008 Mr Saedi attended Embleton's premises.

5. All three gave similar account of what occurred when Mr Saedi arrived at reception and of the meeting in Mr Johnson office.

6. They all described a relatively brief meeting and all said the discussions were between Mr Johnson and Mr Saedi.

7. Although each of their recollections were slightly different, they all maintained Mr Saedi said he was acting on behalf of Victorian taxi plate owners and asked if Mr Johnson was interested in leasing plates.

8. They all agreed that Mr Johnson said words to the effect that he did not have enough vehicles and Mr Saedi said he could provide as many vehicles as were needed.  All said it was agreed the vehicles supplied by Mr Saedi would be leased at $100 plus GST per week per vehicle.

9. All three said Mr Johnson told Mr Saedi he needed plates on long‑term leases otherwise he was not interested and Mr Saedi responded by asking how long he wanted and Mr Johnson  nominated as a minimum the 5 year term.

10. All three witnesses said this proposal was accepted.  Mr Saedi, said according to Mr Bekhit and Mr Osman words to the effect of 'I will give you five by five' or according to Mr Johnson 'deal done'.  There is not, in my opinion a critical distinction between the words used.  What is clear is they all say Mr Johnson nominated the 5 year term and this was accepted by Mr Saedi.

11. Mr Johnson made no mention in his evidence‑in‑chief of there being an agreement that Mr Saedi would pay $355 plus GST per week for each plate although in cross‑examination, he said this was agreed (ts 211), later in his evidence he said they did not talk about the lease payments (ts 216), then said they must have mentioned it (ts 217) and then said it may have been mentioned (ts 217).  Mr Johnson said the amount of lease payments was not relevant to him because the maximum rate payable was specified by the Department of Transport regulations and everyone expected the maximum rate to be paid and he said normally people did not talk about it (ts 216).

12. Mr Osman, when first asked to recount the discussions, made no reference to the amount to be paid for the lease of the plates.  Later he said the amount set by the Department of $355 plus GST was discussed (ts 301).

13. Mr Bekhit said he could not recall payment figures being discussed in relation to the plate lease.

14. Mr Osman said it was also agreed that the rank fees would be paid by Embleton to Swan taxis and although Mr Johnson did not mention this in his evidence‑in‑chief, in cross‑examination he said this was agreed.

15. None of the Embleton witnesses gave any evidence of discussions as to whom the money was to be paid or when the supply of plates or cars would commence or terminate.  All three said CTM was never mentioned.

16. All three maintained this was the first time they had personally met Mr Saedi and said there were only four people present at the meeting and there were no discussion over the number of plates to be supplied and no identifiable (by number) plates were discussed.

17. Mr Johnson said he trusted Mr Saedi as he trusted all people he dealt with and he could not be suspicious of a person who was willing to do business with him.  He said he had built his business on trust.  He agreed the arrangement proposed by Mr Saedi was a good business opportunity for Embleton.

Embleton's version of events occurring after the meeting

1. All three Embleton witnesses say that after this meeting Mr Saedi forwarded four vehicles, in May 2008, to Embleton's premises.

2. They said Mr Saedi also forwarded at various times five taxi plates which were ultimately attached to vehicles, once nomination forms were lodged with the appropriate department and the vehicles licensed.  All the vehicles were licensed in Embleton's name.

3. The plates supplied by Mr Saedi, and the dates they were attached to licensed vehicles were as follows; plate 468 on 7 April 2008, plate 597 on 4 June 2008, plate 181 on 13 June 2008, plate 879 on 10 October 2008 and plate 529 on 19 December 2008 (exhibit 2.5 ‑ 2.9).

4. It is not in dispute that plate 529 was attached to a vehicle supplied by Mr Saedi.  The nomination form allowing this to be done was signed by Mr Johnson and refers to the owner of the plate as St Kilda (exhibit 8).  Mr Johnson said he received the nomination form in or about December 2008.

5. All lease payments, commencing shortly after 19 December 2008 and continuing to this date, in relation to plate 529 have been paid to Mr Saedi's Westpac bank account.

1. Mr Johnson said Mr Saedi later offered to supply another plate for a 2 1/2 year period however he declined, as this period was too short, and he said he needed long lease periods for the arrangement to return what he considered to be a suitable profit.

2. Mr Johnson said that quite often plates were dealt with on a verbal basis, although he agreed in the past he used contracts similar to exhibit 5 (which provide, inter alia, the lease can be terminated on one month's notice).

Mr Saedi's version of the oral agreements

1. Mr Saedi and Mr Kasimoglu both gave evidence of their version of the prior agreement.  They have been business partners since 2008.

2. Mr Saedi said that on two occasions being 2 February 2008 and 28 March 2008 he together with Mr Kasimoglu met Mr Osman and Mr Johnson at Embleton's premises.

3. On 2 February he said, when acting for the owner of plate 672, he gave it to Embleton (ts 486) who leased (exhibit 5) it for 12 months.

4. Mr Saedi said that on the 28 March 2008, when acting for the owner of plate 816, he gave it to Embleton who leased it for 12 months.

5. Mr Kasimoglu confirmed this evidence and said his participation on each occasion was limited to exchanging pleasantries.

6. In each case Mr Saedi said he had brokered the purchase of the plate on behalf of the respective owners but was not the lessee of the plates.

7. Mr Saedi and Mr Kasimoglu both said they jointly purchased four unregistered motor vehicles at auction in Victoria for a cost of approximately $64,000 (exhibits 9.1 ‑ 9.4) and  said these vehicles were subsequently delivered to Embleton premises in May 2008.

8. Ms Saedi said the four vehicles were already at Embleton's premises on 30 May 2008 when he and Mr Kasimoglu met with Mr Johnson.

9. He said by that date he had access to four plates being plate 597 which he had purchased jointly with Mr Kasimoglu about December 2007, plate 181 purchased by Mr Kasimoglu in September 2007 and plate 468 and plate 879 both purchased by Mr Kapelin about 29May 2008 and jointly leased by Mr Saedi and Mr Kasimoglu from that date.  He said he wanted Embleton to manage the plates and vehicles.

10. Mr Saedi said he did most of the talking at the meeting.  Mr Kasimoglu confirmed this by saying that he did not talk much, although in cross‑examination he said he intervened when necessary.

11. They both said Mr Saedi asked Mr Johnson if he could operate four plates on their behalf and provide the drivers, do the maintenance and all the 'other things' and Mr Johnson asked them to return the next day and they left. They both said Mr Johnson was the only other person present at that meeting.

12. Mr Saedi said when he and Mr Kasimoglu returned the next day (31 May 2008), Mr Johnson set a price of $500 per week saying effectively there will be nothing else left for Mr Saedi to do and, Mr Johnson said he would make all the payment and do all the paperwork and their would be no headaches.  Mr Saedi said he was not happy and asked for $550 but Mr Johnson said no.  Mr Kasimoglu evidence, whilst similar in most respects to Mr Saedi, said the latter asked for $600 per week.

13. Mr Saedi said as he and Mr Kasimoglu were due to leave Western Australia the next day, and as Mr Kasimoglu was travelling overseas to see his sick father he felt he had no other options than to agree to the $500 per week.

14. Mr Saedi said there was no discussion about the length of the agreement or how it was to be terminated and Mr Osman and Mr Bekhit were not present at that meeting and there was no agreement to lease the plates for the 5 year term.  Mr Kasimoglu confirmed this evidence.

15. Both Mr Saedi and Mr Kasimoglu said they never authorised the transfer of the ownership of the vehicles to Embleton, and each denied Mr Saedi said he represented the taxi plate owners, or was acting as agents or brokers for any person.

16. Mr Kasimoglu said the reason for the arrangement with Embleton was that he was going overseas and therefore could not manage the vehicles.  He said he only told Mr Saedi of this during a flight to Perth and that is when Mr Saedi told him he would arrange for them to be 'run' by someone else.

17. Mr Saedi denied he was sub-leasing the plates and said he was entering into an operator's agreement with Embleton whose responsibility it was to provide the drivers and to manage, operate and maintain the taxis and attend to all outgoings.

Mr Saedi's version of events occurring after the meetings

1. Mr Saedi said that in December 2008 he arranged for plate 529 to be collected by Embleton in circumstances I have previously explained.  He said that he was not sure if the conversations with Mr Osman occurred before or after CTM was registered on 15 December 2008.  He said he never gave a nomination form to anyone associated with Embleton and never had a nomination form for that plate signed by St Kilda.

2. Mr Kasimoglu said he had no involvement with Embleton between May 2008 and Jan 2009 but in November or December 2008 he and Mr Saedi discussed their intentions of starting their own business operating taxis and in mid January 2009 they tried to retrieve the cars and plates from Embleton because they were ready to proceed with their business plans.

3. To effect this Mr Kasimoglu said he came to Perth in January between 17 and 19 January 2009 to recover the four cars and taxi licences and it was then that Mr Saedi told him of the fifth taxi plate, being St Kilda's, and asked him to recover that as well.  He said that was his only dealing with plate 529.

4. Mr Kasimoglu said he went to Mr Johnson's office to collect all of the cars and licence (plates).  Mr Johnson responded by saying 'Which cars, which licences?' and when he replied 'Four cars, five licences', Mr Johnson told him they were all his and when he asked Mr Johnson how he put the cars under his name Mr Johnson told him 'That's not your business' laughed and shoved him from the door.  He said the whole meeting lasted for 2 or 3 minutes.

5. Mr Kasimoglu said he came back to Perth in about October 2009 and explained to Mr Johnson that he did not like any trouble, asked for the licences and cars and again Mr Johnson showed him the door.  He said some time latter he went to the Bayswater police to seek their help but was told it was a civil matter.

6. Mr Saedi said in March 2010 he told Mr Osman in a telephone conversation that he needed plate 529 back and Mr Osman asked for a five month extension which he refused. Mr Saedi said he told him the date by which the plate was to be returned.  He said in July 2010 he sent a letter to Embleton, which was not produced in court, on CTM company letterhead demanding the return of the plate.

7. He said he did not register any encumbrance over the vehicles because they were 100% owned by he and Mr Kasimoglu and they should have been registered in their names.  He said problems only arose there he realized the vehicles were registered in Embleton's name and he then went to the registry office (dates not given) and the Northbridge police station (November 2010) to see what could be done (ts 568 ‑ 577).

8. He also said that when he could not get the plates he did not pursue it any further as having been to the police and the DPI there was nothing more he could do and he just let it go.  He said he was avoiding conflict and courts are very expensive.

9. He said the monies paid for plate 529 were  paid to Central Taxi Services which was business name operated by Mr Kasimoglu and himself and banked into an account in his name not CTM's.  Notwithstanding that CTM operated a bank account from January 2009 the money never went to the company.  Mr Saedi's only reply when queried about that was 'it happened'.

10. He said that at no stage did he mention CTM in any of his dealings with Embleton.

What was agreed between the parties?

1. Before deciding what was agreed between the parties the credibility of the witnesses must be considered.

Findings on credibility

1. I can accept or reject all of the evidence of a witness or accept part of their evidence.

2. The witnesses clearly fall into two camps, neither is impartial.

3. A business relationship exists between all of Embleton's witnesses, Mr Johnson, Mr Osman and Mr Bekhit.

4. Similarly there is a business relationship between Mr Saedi and Mr Kasimoglu who are in a partnership.

5. As McLelland CJ said in Watson v Foxman (1995) 49 NSWLR 315, 318 ‑ 319:

   … human memory of what was said in conversations is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the process of memory are overlaid, often subconsciously, by perceptions or self‑interest as well as conscious considerations of what should have been said or could have been said.  All too often what is actually remembered is little more than the impression from which plausible details are then, again often subconsciously, constructed all this is a matter of ordinary human experience.

6. I found Mr Ismail a straight forward honest reliable and credible witness and I accept his evidence.  Exhibit 1.2 provides objective support for much of his evidence.

7. On many issues I found Mr Johnson's evidence unsatisfactory.

8. He acknowledged Embleton and he initially plead the meeting occurred on 4 June 2008 with Mr Kasimoglu present but later pleadings allege the meeting occurred in April 2008 without Mr Kasimoglu.

9. Mr Johnson was unable to explain these changes.  He said he could not remember telling his lawyers the meeting was in June, nor that Mr Kasimoglu was present although he also agreed he could not remember telling the lawyers to make the amendments.  However in the overall scheme of things I place little weight on this change in pleadings.

10. Mr Johnson's evidence was, in part, completely contradictory.  He said all the vehicles supplied by Mr Saedi were leased from him (ts 151) yet  later said the vehicle supplied by Mr Saedi that was attached to plate 529 had been purchased  by him  from Mr Saedi (ts 475).

11. Further he agreed he signed a statutory declaration stating that vehicle, a Ford Falcon, was purchased for $4,000 however he said in evidence he did not know how much it had been purchased for, saying Mr Saedi never told him how much the latter paid for the vehicle.

12. On one hand Mr Johnson says he purchased the vehicle on the other hand he says he was leasing the vehicle.

13. Either Mr Johnson evidence that he purchased the vehicle was incorrect and knowing that vehicle had been provided by Mr Saedi he made absolutely no enquiry to ascertain the price Mr Saedi paid for it before he signed the statutory declaration or, if the evidence he purchased the vehicle was correct he completed a statutory declaration saying he purchased the vehicle for $4,000 when on his own evidence he did not pay that amount.

14. Taking the most favourable view for Mr Johnson, the former, it shows he is prepared to declare information to be true without making any enquiry to verify the accuracy of that information.

15. I reject his explanation that as he honestly believed the market value of the vehicle was $4,000 he provided that figure for both the market value and purchase price.  I consider he used this as a convenient explanation for his failure to make enquiry and in an effort to justify the statutory declaration.

16. Mr Johnson believed, incorrectly that the statutory declaration required disclosure of both the market value and the purchase price.  In fact it does not.  The purchase price is only required if the deponent knows that information.  However because Mr Johnson believed it was necessary to disclose both he completed the purchased price section without making any enquiry as to the purchase price of the vehicle.

17. On other occasions his evidence was internally inconsistent.  For example he said that at the meeting in April 2008 Mr Saedi said he had approximately six plates to lease, in other parts of his evidence he said Mr Saedi told him he had an open number of plates.  This establishes, at best for Mr Johnson's, a lack of precision in his evidence.

18. This evidence is also contrary to Mr Osman's evidence who said there were no specific number of plates mentioned (ts 368) and Mr Bekhit's evidence that to the best of his recollection an unlimited or open number of plates and not a defined number  were referred to (ts 408).

19. Mr Johnson's said initially Mr Saedi signed exhibit 5 in his presence (ts 179).  When it was later pointed out that Mr Saedi had not signed the document he said he could not remember Mr Saedi signing.  It shows his recollection of past events is on occasions poor and how readily he is prepared to give evidence of matters that did not occur.

20. Mr Kappadath made much of Mr Johnson saying (ts 269 ‑ 270) '… I do sign contracts but that contract does not really mean nothing'.  Mr Kappadath says as a result of that answer I can be satisfied Mr Johnson was the type of person who did not honour written contracts or did not think they meant anything.

21. I place little weight on this answer as when Mr Johnson went to explain what he meant he was stopped from doing so and indeed complained that the cross‑examiner would not let him finish his answer.  In those circumstances I do not consider this answer reflects adversely on his credit.

22. There is absolutely nothing wrong with the cross‑examiner confining the witness's answer nor indicating the answer may be clarified by his opponent in re‑examination.  However where the cross‑examiner effectively prohibits the witness from providing additional information qualifying his previous answer I decline to draw, in the absence of that additional information, the inference sought by Mr Kappadath.

23. Mr Johnson agreed that in proceedings in the Supreme Court CIV 2950 of 2010 relating to other plates that came into Embleton's possession as a result of the same discussions with Mr Saedi in April 2008 his pleadings asked the court to imply a term in the agreement that the plates lease could be terminated by giving reasonable notice or alternatively not terminated unless the plaintiff committed an unrectified breach thereof (ts 201 ‑ 203).

24. The pleadings are not verified on oath and do not amount to an assertion of belief in correctness of the facts pleaded: Laws v Australian Broadcasting Tribunal.  An assertion in a pleading does not constitute an admission by the party filing the pleading and does not constitute evidence given by Mr Johnson.  I do not have regard to those pleadings.

25. I also found aspects of Mr Osman's evidence unsatisfactory.

26. His evidence was internally inconsistent.  He said he did not know who owned plate 529 until he received a call from Mr Ismail towards the end of 2010 (ts 389) however he signed exhibit 8 on 19 December 2008 on behalf of the plate owner and the form identifies St Kilda as the owner of the plate.

27. When Mr Strbac asked Mr Osman about the meeting in April 2008 and whether he sought any guarantees as to the minimum number of plates and vehicles to be supplied Mr Osman replied (ts 368):

    We didn't ask for a guarantee … if I come to your workshop and I got four vehicles worth about $100,000 that makes me comfortable to make a deal with you.  $100,000 you put $100,000 in my table for example that is four vehicles which he bought them there was about 20 $22,000 for each vehicle that's $80,000 to $90,000 he put them right on our yards.

28. That answer is significant.  The whole tenor of the answer is that there was no need to ask for a guarantee because Mr Saedi had already established his genuineness by delivering the vehicles to the yard.

29. This is completely contrary to Mr Osman's earlier evidence (ts 364) that the vehicles were supplied after the April meeting.

30. He said the vehicles supplied by Mr Saedi were owned by Embleton because they were paying $110 for those vehicles for five years and then they would own the vehicles (ts 359, 355).

31. This evidence is nonsensical and inconsistent and contrary to his earlier evidence that the agreement was for the vehicles to be leased at $110 per week (ts 302).

32. It appears to have been given by Mr Osman to explain why the vehicles were licensed in Embleton's name.  As we will see later Embleton do not need to own the vehicles to licence them in their name, however it is a clear inference Mr Osman thought they did and he was prepared to adjust his evidence accordingly.

33. Mr Osman's evidence leaves me unconvinced as to the accuracy and truthfulness.  In my opinion it lacked credibility and was given from the viewpoint of supporting his employer.

34. Mr Bekhit's evidence was criticised because he was the person responsible for acquiring vehicles for Embleton's taxi fleet and he licensed Mr Saedi vehicles in Embleton's name (ts 395).  Mr Johnson had earlier said the acquisition forms required to achieve this needed to show the vehicles had been 'acquired by Embleton' (ts 246).

35. Mr Saedi and Mr Kasimoglu say they did not authorise the licensing of the vehicles in Embleton name and accordingly Mr Kappadath asserted that Mr Bekhit was discredited because he was complicit with Mr Johnson to affect 'unauthorised transfers to further their dubious operation'.  I reject this submission.

36. Irrespective of Mr Saedi and Mr Kasimoglu evidence the question of whether Embleton were entitled to licence these vehicles depends on whether the latter complied with the Road Traffic Act 1974.

37. Under the Road Traffic Act s 5, an owner in relation to a vehicle means, inter alia, the person who is entitled to the immediate possession of the vehicle. Section 17 provides the owner of a vehicle may apply for the grant of a licence of that vehicle by submitting the appropriate application form and paying the appropriate fee.

38. There is insufficient evidence in the absence of all the materials used to licence all the vehicles being tendered to establish whether there was non‑compliance with the Road Traffic Act.

39. Mr Bekhit's could not recall the plate lease payment figures being discussed, as I have found they were, and this causes me to  have reservations about the accuracy of his evidence.  His evidence also lacks independence as he is still employed by Embleton.

40. I found Mr Siviour to be an experienced forensic accountant although there was an error in his calculations and ultimately they were of little use.

41. On many issues I found Mr Saedi evidence unsatisfactory.

42. Mr Saedi said he commenced leasing plate 468 from Mr Kaplan on 29 May 2008 and the first time he discussed that plate with Mr Johnson was on 30 May 2008 (ts 520).  However he admitted he personally attended on Mr Osman and gave him plate 468 in April 2008 (ts 521).  He was not able to give any explanation as to why he would give Embleton the plate in April 2008 if it was one of the plates subject to an agreement that was only discussed with Mr Johnson on the 30 May 2008, the day after he came into possession of it.

43. Mr Kappadath sought to explain this by saying I could draw the inference that plate 468 was already in Embleton's possession in April 2008 because its previous owner had nominated (attached) it to an Embleton owned or leased vehicle and later sold the plate to Mr Kaplan.  He said the evidence of Mr Osman in relation to plate 672 shows Embleton's practice, upon the sale of a plate, was to leave that plate attached to their vehicle and send the lease payments to the new owner.

44. This inference is not able to be drawn from the proven facts, and is pure speculation.  Plate 672 was managed by Embleton prior to and subsequent to its sale (ts 329 ‑ 331).  They nexus required to draw such a link, that plate 468 was managed by Embleton before its sale to Mr Kaplan, was not established.  On the contrary Mr Saedi evidence shows he arranged for the delivery of that plate to Embleton (ts 528) so clearly it was not in their possession prior to the sale.

45. Embleton's possession of the plate in April 2008 is consistent with it having been delivered to Embleton after the April 2008 meeting as alleged by Embleton's witness.

46. Mr Saedi evidence was also inconsistent.  He said on numerous occasions that he did not act as a broker in relation to plates yet exhibit 11 establishes that from 1 February 2008 he and Mr Kasimoglu, operating a business under the name of Central Taxi Service Perth  and the nature of that business was a 'taxi broker, selling and buying taxis and docket services'.  Mr Saedi also said in his evidence he brokered the purchase of plates 468, 672 and 816 (ts 664 ‑ 666).

1. Further he maintained he was not St Kilda's agent however his defence of 12 August 2011 specifically pleads in par 4 that he was their agent.  Mr Saedi admitted he had seen the defence and gave instructions to his solicitors to sign it. He said he had not misled his solicitors but said he did not take notice of what was in the document.

2. He said in one part of his evidence he personally attended on Mr Osman and gave him plate 468 in April 2008 (ts 521), later he effectively said it was delivered by others.

3. He said he never mentioned CTM in any of his meetings with Mr Johnson or Mr Osman, however when he wrote in July 2010 demanding the plates return he says he wrote on CTM's letterhead (ts 615).

4. He maintained the total amount he was to be paid was $500 for each vehicle/plate combination.  However when he was being asked about plate 529 and the receipt of $890 he replied '… it is 529, like I said it's ours, expecting only to get 390 …', '…it should be 529, 390 and they should pay $500 for the other cars' (ts 559).

5. There would be no reason for Ms Saedi to state that he was expecting to receive $390 for plate 529 if the agreement was $500 for each vehicle/plate combination.

6. I also found Mr Kasimoglu evidence in parts unsatisfactory.

7. He originally maintained he did not talk much at the meetings on 30 and 31 May 2008. Under cross‑examination he said he interfered when necessary.

8. Although the two answers are not necessarily inconsistent it seemed to me in evidence‑in‑chief he was keen to portray his passive role in the meeting whereas when questioned over aspects of his evidence which emphasised and reinforced matters favourable to Mr Saedi he justified and sought to validate his evidence by saying he contributed where necessary.

9. Mr Kasimoglu said he advised Mr Saedi, when they were flying together, that he would not be able to deal with the vehicles in Perth because he had to go to Turkey and Mr Saedi told him he would arrange for them to be run in Perth by someone (ts 702).  If that flight was before the vehicles were in Perth it tends to support Embleton's version of events.  If the flight was after the vehicles arrived in Perth on what basis had the vehicles they been sent to Perth?

10. Significantly both Mr Kasimoglu and Mr Saedi evidence was that the four vehicles were already at Embleton's premises before they met with Mr Johnson in May 2008.  I find it implausible that these four vehicles were sent to Embleton's premises without any prior discussions and some form of arrangement between the parties and the fact that neither Mr Saedi nor Mr Kasimoglu gave evidence of those discussions leads me to conclude I have not been told of all the discussions between Embleton and themselves.

11. Additionally Mr Kasimoglu evidence lacked independence as he has a longstanding business relationship with Mr Saedi's.

12. Although  he said in evidence he had not previously made a witness statement or discussed his evidence with his solicitors when asked if his counsel had previously heard what he was now saying in evidence he replied 'for the first time and I have the answers ready for his questions'.

13. Mr Grubb made much of the remark effectively asking me to infer that he could only have the answers ready for counsel's questions if he had previously discussed the evidence with another person.  I think too much emphasis is placed on this answer.  The answer may simply refer to being ready to answer the questions asked of him in court and I do not consider this answer effect his credibility.

Conclusions as to the prior dealings

1. As a result of the  unsatisfactory nature of the various witnesses evidence detailed above and the partiality of Mr Johnson, Mr Oman, Mr Bekhit, Mr Saedi and Mr Kasimoglu and the lack of any contemporaneous documents directly relating to the terms of the agreement and bearing in mind McLelland CJ comments in Watson v Foxman I assess the witnesses evidence in light of the inherent probability of a particular version of events in the context of established objective facts (Fazio v Fazio [2010] WASC 263 [51] (Martin CJ)).

2. The agreement made was between Embleton and Mr Saedi personally.  It was made eight months before CTM was incorporated and all parities agree CTM was not mentioned.

3. I am satisfied the meeting occurred in April 2008.  The objective facts establish the four vehicles owned by Mr Saedi were delivered in May 2008 and, in my opinion, it defies belief and I find it improbable that vehicles of that value would be delivered to Embleton without any prior discussions or arrangements and this leads me to conclude that it is more probable than not that Mr Johnson's evidence in this regard is correct.

4. There is no objective evidence which makes it more probable that the meeting was attended by anyone other than Mr Johnson and Mr Saedi. There is no documentary evidence to support either position.  At the end of the day I am not persuaded that anyone other than Mr Johnson and Mr Saedi were present at the meeting.

5. I am satisfied that Mr Saedi did say he acted as agent for the plates owners.  The objective facts support this conclusion.  Mr Saedi's acts, before and after the meeting, are consistent with acting as agents for Victorian plate owners.  In February and March 2008 he acted as a broker on the purchase of plates 672 and 816 and immediately thereafter on behalf of the owners took those plates to Embleton so they could be leased.  Mr Saedi subsequently delivered five other plates to Embleton to manage.  Effectively that management involved, amongst other thing, Embleton leasing the plates.  These acts make it more probable than not that he did represent he was acting as the plate owners agent at the meeting and I am satisfied he did.

6. I found Mr Johnson's evidence on a number of matters unsatisfactory however the objective circumstances lead me to consider his evidence that it was separately agreed that $110 was to be paid per vehicle and $390 per plate for unlimited numbers is more probable than Mr Saedi's version of $500 lump sum per taxi limited to four identifiable plates and vehicles combined.

7. The objective evidence establishes that of the four vehicles ultimately supplied all were owned jointly by Mr Kasimoglu and Mr Saedi and of the four plates supplied before plate 529, one was owned by Mr Saedi, one jointly by Mr Saedi and Mr Kasimoglu, two by Mr Kaplan.  Plate 529 was owned by St Kilda.

8. At the time of the meeting Mr Saedi must have known of the possibility that the plates to be supplied in future might be owned by people different to those who owned the vehicles. Logically he would need to be able to calculate and advise the respective owners of the plates and vehicles of the amounts they were to receive.

9. Additionally, if the arrangement was as claimed by Mr Saedi by the time plate 529 was supplied in December 2008 he had already supplied the identified four plates and four vehicles and would have no basis to expect to receive $390 for plate 529.  However he said he was, 'expecting only to get 390 …' for plate 529.  These factors lead me to consider Mr Johnson's evidence that the payments for vehicles and plates were agreed as separate amounts is the more plausible.

10. The objective facts establish Embleton payed all other outgoings for the operation of the vehicles as taxis, such as rank fees, vehicle licensing fees and the like.  I am satisfied that person experienced in the industry such as Mr Johnson and Mr Saedi would have discussed these payments, however there are  insufficient objective facts to enable me to say whether taxi rank fees were discussed individual or encompassed in an agreement that all other expenses would be paid by Embleton.

11. Notwithstanding these findings, the crucial question is whether I am satisfied there was an agreement for the plates to be leased for the five years term.  The burden rests upon Embleton and Mr Johnson to satisfy me their was such a term and I am not so satisfied because of the partiality and  unsatisfactory nature of the evidence given by Embleton's witnesses outlined previously and the lack of any written agreement and lack of any contemporaneous documents supporting the agreement.

12. Further whilst generally I found Mr Saedi evidence on a number of matters unsatisfactory the objective circumstances lead me to consider his evidence that there was no such term as more plausible than the evidence of Embleton's witnesses.

13. At the time of the meeting it must have been in Mr Saedi contemplation that not all the plates he would provide would be owned by him.  The objective evidence establishes that people buy and sell taxi plates regularly for a variety of reasons.  It seems inherently implausible that Mr Saedi would effectively tie up taxi plates that he may not own for a minimum period of 5 years with a potential for 10 years.

14. I accept the amount to be paid by Embleton to Mr Saedi was the statutory maximum and therefore in one regard the owners could not get a higher rate from anyone else, however Mr Saedi must have known the plate owners could at any time sell the plates and he would have to deliver them to the new owner who could appoint whoever they wished to manage the plates and he must also have been aware that existing plate owner may in future appoint other people to manage their plates and he would be required to deliver the plates to those persons.

15. These factors lead me to consider Mr Saedi evidence that there was no such term as more plausible than the evidence of Embleton's witnesses.

Estoppel ,agency, breach of implied warranty of authority, Fair Trading Act and Trade Practices Act claims against ST Kilda, CTM and Mr Saedi

1. Insofar as the other claims against St Kilda, Mr Saedi and CTM are concerned whether they are based in agency, actual or the ostensible authority of an agent, or breach of implied warranty of authority of a non‑agent (if such a claim did exist the factual conduct supporting it would, in my opinion, be conduct enlivening a claim  properly falling  within the Trade Practices Act 1974 of Fair Trading Act 1987) or under the Fair Trading Act or Trade Practices Act (as it then was) or estoppel, such claims can only succeed if I was satisfied Mr Saedi agreed or represented either on his own behalf or CTM, that the plates were to be leased for the 5 year term or his conduct established some other basis for an estoppel.  I am not so satisfied and those claims fail.  I add however the following comments.

2. Insofar as the agency claims against St Kilda are concerned I do not accept Mr Saedi or CTM were appointed as an agent to act on St Kilda's behalf.  Although I accept Mr Saedi represented he was acting on behalf of Melbourne taxi plate owners generally, I do not accept that he was authorised by St Kilda's to act as their agent.

3. It is inherently improbable that St Kilda would authorise somebody to act as their agent when Mr Ismail has been managing all of their licensing in Victoria and Western Australia for about 15 years.  I accept Mr Ismail's evidence without reservation.  I found him to be an honest, credible and straightforward witness.

4. Insofar as the estoppel claim against St Kilda are concerned the doctrine of estoppel provides that if a person by their words or conduct wilfully causes another to believe in the existence of a state of things and induces that other to act on that believe so as to alter his previous position the former is precluded from asserting against the latter a different state of things: Pickard v Sears (1837) 6 Ad & El 469 (Lord Denman).

5. There is nothing whatsoever in the conduct of St Kilda giving rise to any estoppel against them.  St Kilda's action in handing physical possession of the plate to Mr Saedi was entirely in accordance with their belief that they had a binding contract from the  28 November 2008 which obliged them to hand over the plate.

6. Insofar as the estoppel claim against Mr Saedi is concerned it is said his conduct in banking into his personal bank account all monies paid by Embleton pursuant to the alleged agreement creates an estoppel.

7. The fact that payments were made into his personal account is entirely consistent with the agreement I find Mr Saedi made in his personal capacity.  The receipt of the payments either alone or in combination with other evidence does not allow any inference to be drawn establishing an agreement for the five‑year term and the mere fact payments were paid into his account does not create any estoppel.

Embleton and Mr Johnson's claims against Mr Saedi as a director of CTM and the third party notice

1. Embleton and Mr Johnson also plead causes of action against Mr Saedi on the basis that as a director of CTM he was knowingly concerned in its conduct which they say created an estoppel and/or breached either the Fair Trading Act or Trade Practices Act (as it then was) and/or resulted in CTM breaching its implied warranty of authority.

2. I am not satisfied Mr Saedi  on his behalf or CTM represented the plates were to be leased for the five year term and no conduct creating an estoppel or breaching either the Fair Trading Act or Trade Practices Act or an implied warranty of authority has been established.

3. Although the default judgment against CTM in favour of Embleton and Mr Johnson has not been set aside Mr Saedi was not 'knowingly concerned' or aiding and abetting any breach by CTM of the Fair Trading Act or Trade Practices Act there was no breach.  CTM was not incorporated until December 2008 and he was acting in his personal capacity when the April 2008 agreement was made.

4. Even if he was acting on behalf of CTM in the delivering plate 529 to Embleton in December 2008 or at any other time there would be no basis for any liability as I am not satisfied the 5 year term was agreed or any other claim based on estoppel or breach of implied warranty, or of the Fair Trading Act or Trade Practices Act or agency has been established.

5. Embleton and Mr Johnson have also failed to show they are entitled to any indemnity or contribution from Mr Saedi in any capacity under the third party notice in respect of any damages awarded against them in St Kilda favour.

6. Those damages result solely from CTM's failure to provide a defence to Embleton and Mr Johnson's counterclaim and my refusal to set that default judgement aside and not from any conduct on their behalf.

Conclusion on St Kilda - CTM lease and Mr Saedi –Embleton lease

1. The St Kilda - CTM lease for plate 529 is neither a sham nor unenforceable.

2. As the owner of the plate St Kilda was entitled to possession of it upon the expiration of their lease with CTM on 30 September 2010.

3. However Plate 529 was supplied by Mr Saedi, in December 2008, to Embleton in accordance with their oral agreement entered into in April 2008 whereby, inter alia, an unspecified number of unidentified plates would be supplied by Mr Saedi for Embleton to lease at $390 per week.

4. That agreement was made by Mr Saedi in his personal capacity.

5. Embleton were, as they claim, a bona fide lessee of that plate for value from Mr Saedi and had no notice of the lease between St Kilda and CTM.

6. I am not satisfied on the balance of probabilities that Embleton had a lease of the plates for the 5 year term as alleged. Embleton and Mr Johnson have not sought to, or satisfied, me of a lease for any other period and accordingly the lease of the plates was either terminable at will or, at the most favourable for Embleton and Mr Johnson, upon reasonable notice: Western Power Corporation v Normandy Power Pty Ltd [2001] WASC 202 [188]. Any protection of, or priority provided to, Embleton's lease pursuant to s 7 of the Chattel Securities Act 1987 ceased upon the expiration of that reasonable notice.

7. In March 2010 Mr Saedi told Mr Osman the date upon which he required the return of the plate, being 30September 2010 (ts 501).  The objective evidence establishes St Kilda were demanding the return of the plate by that date and this makes it highly probable that Mr Saedi demanded Embleton return the plate by that date.  I accept Mr Saedi's evidence in this regard.

8. That constituted reasonable notice of the termination of the arrangement and upon the expiration of that notice Embleton would have been in wrongful possession of the plate.

9. However St Kilda communications of November and December 2010 (exhibit 1.5) extended to 2 February 2011 the time allowed to Embleton to surrender the plate.

10. Since 2 February 2011 Embleton's possession of plate 529, despite demand, gave St Kilda a cause of action.

11. Embleton refused and still refuse to return the plate, quite possibly because their approach seems to be that as Mr Saudi could not receive more for the plate than the statutory maximum payments which they are paying him and he pays to St Kilda, no one has suffered any real loss.

12. There has been nothing in the conduct of St Kilda or Mr Saedi that creates an estoppel against them.

13. St Kilda claim against Embleton is established.

St Kilda's assessment of damages against Embleton

1. St Kilda seeks an account of profit from Embleton.

2. This is an alternate to normal compensatory damages and often results in the party called to account being required to pay more than the plaintiff lost.

3. An account of profit is only available in respect of profits made by Embleton after obtaining notice of the demand to return the goods and failing to do so: Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25, 34 ‑ 35.

4. Exhibit 1.5 shows that Embleton was given until 2 February 2011 to return the plate and failed to do so.

5. Mr Siviour using the 6.2% accelerator calculated an average weekly profit to Embleton of $137 for the period July 2011 to June 2012 however I increase this by $100 per week as a result of the error in his calculations which establishes a figure of $237.  I allow this figure from 2 February 2011 until 23 July 2012 being 77 weeks calculated to $18,249 which I allow.

6. No basis was shown to allow GST on this figure.

   The orders I propose to make therefore are as follows:

   1CTM's application to set aside the default judgment obtained by Mr Johnson and Embleton on 16 May 2011 is dismissed;

   2.St Kilda's claim for damages against CTM is dismissed;

   3.Embleton do deliver taxi plate 529 forthwith to St Kilda;

   4.Embleton pay damages to St Kilda assessed at $18,249;

   5.Embleton's and Mr Johnson's counterclaim against St Kilda and Mr Saedi is dismissed;

   6.Embleton and Mr Johnson's Third Party Notice is dismissed; and

   7.CTM pay damages to Embleton assessed at $72,968.

7. I shall hear the parties as to the appropriate costs order.

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION: ST KILDA BEACH TAXI SCHOOL AND STAFFING PTY LTD -v- CENTRAL TAXI MANAGEMENT PTY LTD [2012] WADC 114 (S)

CORAM:   BOWDEN DCJ

HEARD:   ON THE PAPERS

DELIVERED          :   23 JULY 2012

SUPPLEMENTARY

DECISION              :23 AUGUST 2012

FILE NO/S:   CIV 624 of 2011

BETWEEN:   ST KILDA BEACH TAXI SCHOOL AND STAFFING PTY LTD

Plaintiff (First defendant by counterclaim)

AND

CENTRAL TAXI MANAGEMENT PTY LTD
First defendant (Second defendant by counterclaim)

EMBLETON MOTOR CO PTY LTD
Second defendant (Plaintiff by counterclaim)

KIM JOHNSON
Third defendant (Plaintiff by counterclaim)

ABDURAHAM SAEDI
Third party (Third defendant by counterclaim)

Catchwords:

Costs - Turns on its own facts

Legislation:

Nil

Result:

Orders for costs to be taxed or agreed made

Representation:

Counsel:

Plaintiff (First defendant by counterclaim)         :        Mr M Strbac

First defendant (Second defendant by counterclaim): Mr K Kappadath

Second defendant (Plaintiff by counterclaim)   :        Mr B G Grubb

Third defendant (Plaintiff by counterclaim)     :        Mr B G Grubb

Third party (Third defendant by counterclaim)        :        Mr K Kappadath

Solicitors:

Plaintiff (First defendant by counterclaim)         :        Delta Legal

First defendant (Second defendant by counterclaim): Starnet Legal Pty Ltd

Second defendant (Plaintiff by counterclaim)   :        Metaxas & Hager

Third defendant (Plaintiff by counterclaim)     :        Metaxas & Hager

Third party (Third defendant by counterclaim)        :        Starnet Legal Pty Ltd

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

Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S)

Brazendale v Kenna [1961] Tas SR 199

Bullock v London General Omnibus Co [1904 ‑ 7] All ER Rep 44

Capolingua v Phylum Pty Ltd (1991) 5 WAR 137

Fennell v Supervision & Engineering Services Holdings Pty Ltd (1988) 47 SASR 6

Mannix v Loumbos Pty Ltd [2000] NSWCA 32

McFadzean v Construction, Forestry, Mining & Energy Union (2007) 20 VR 250

Sanderson v Blyth Theatre Co [1903] 2 KB 533

1. BOWDEN DCJ:  On 23 July 2012 I delivered judgment in this matter.

2. Subsequently the parties provided written submissions on costs and these are the reasons for the orders I now make.

The claim

1. St Kilda brought an action against Central Taxi Management Pty Ltd (CTM) and Embleton jointly and severally seeking damages, interest, costs and such further relief as the court deemed fit and against Embleton and Mr Johnson seeking an order for delivery up of a taxi plates, an account of profits, costs and such further order as the court deemed fit.

2. On 31May 2011 St Kilda obtained judgment with costs to be taxed, in default of pleadings against CTM and an order that their damages be assessed however, at trial they were unable to prove those damages and I dismissed their claim for damages.

3. I make no order as to the costs of assessing the damages payable by CTM to St Kilda as notwithstanding St Kilda's failure to prove those damages the time devoted to this issue was for all intents and purposes insignificant.

4. St Kilda's claimed against Embleton, inter alia, alternatively damages or an account of profits and the latter claim was successful, they also succeeded in obtaining an order that taxi plate 529 be delivered up to them by Embleton.

5. Embleton and Mr Johnson say St Kilda failed in its counterclaim [sic] for damages as against Embleton and never elected as between damages or an account of profits prior or during the trial and was only successful in its account of profits by relying on the evidence of Embleton's expert and should therefore not be awarded any costs of its counterclaim [sic] as against Embleton on the basis that it never incurred any costs.

6. I reject this contention.

7. I accept that St Kilda did not incur any costs in respect of Mr Siviour and clearly at taxation they would not recover any costs in this regard, however they clearly incurred costs in the action and were the successful party.  The fact that they did not recover damages against Embleton on one of their alternative claims does not disentitle them to costs.

8. Costs of an issue of  fact maybe awarded where the evidence on that issue can be distinguished without difficulty from evidence on other issues: Brazendale v Kenna [1961] Tas SR 199, 208 and that where there is multiplicity of issues and mixed success has been enjoyed by the parties a court may take a pragmatic approach to the framing of the order of costs taking into account the success (or lack of success) of the parties on an issue basis: McFadzean v Construction, Forestry, Mining & Energy Union (2007) 20 VR 250.

9. However in Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S) the Court of Appeal stated:

   5It is clear that while the court has a broad discretion as to costs, generally costs will follow the event: Rules of the Supreme Court 1971(WA), O 66 r 1(1). It is incumbent upon the unsuccessful party to satisfy the court that there are good reasons why it should not pay the other party's costs: Nikolaou v Papasavas, Phillips & Co (No 2) [1989] HCA 11; (1989) 166 CLR 394, 407.

   6The court may, in the exercise of its discretion, order that a successful party recover only a portion of its costs where that party has been unsuccessful in respect of certain discrete issues. But that should not be done as a matter of course. To embark as a general practice upon an analysis of which party was successful on each issue, or necessarily to deprive a successful party of some portion of its costs if it has lost on a particular issue, would be likely to add further uncertainty and complexity to the outcome of litigation, derogate from the prospect of settlement, and oblige the court to hear lengthy and frequent arguments in relation to costs as an additional burden on its resources and the costs of the parties: see MacKinnon v Petersen (Unreported, NSWSC, 19 April 1989) (Cole J); Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [67] - [68] (McHugh J). Litigation is time-consuming, expensive and burdensome enough already.

   7In addition, 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 risks of costs from canvassing all issues which might be material to the decision in the case: Doric Products Pty Ltd v Lockwood Security Products Pty Ltd [2002] FCA 282; NRMA Ltd v Morgan (No 3) [1999] NSWSC 768 [24].

   8In Amaca Pty Ltd (formerly James Hardie & Co Pty Ltd) v Hannell [2007] WASCA 158 (S), the position was put as follows:

   '[T]he power to adjust an order for costs by reference to particular issues upon which the generally successful party has failed, is properly exercised only where there are discrete and severable issues upon which the generally successful party has failed, and which have added to the cost of the proceedings in a significant and readily discernible way [7].'

10. The alternate claim for damages upon which St Kilda was not successful  did  not add to the costs in a significant and readily discernible way, and was not  a discreet or severable issue and their should be no departure from the normal costs order in favour of  the successful party.

11. I also reject Embleton and Mr Johnson's submission that CTM should pay St Kilda's costs of the action. 

12. All most all of the trial was devoted to the issue of whether Embleton and Mr Johnson established CTM and or Mr Saedi agreed to a five year lease with an option for a further five years for the taxi plates previously supplied.  This issue was pivotal to Embleton and Mr Johnson's claims against St Kilda based on issues associated with the Trade Practices Act 1974, Fair Trading Act 1987, agency, implied warranty of authority and/or estoppel and to their claim of being a bona fide purchaser for value.  Additionally they raised against St Kilda issues going to the validity of the taxi plate lease with CTM   and the allegation that the lease was a sham.  They failed on all these issues and as the successful party St Kilda is entitled to its costs and I order Embleton and Mr Johnson pay St Kilda's costs of the action as one set.

The counterclaim and notice to admit facts

1. By their counterclaim Embleton and Mr Johnson brought actions against St Kilda, CTM and Mr Saedi on various grounds.

2. They obtained default judgment, with costs to be taxed against CTM on 16 May 2011 and an order that their damages be assessed. They were successful in assessing their damages at the trial. CTM should pay Embleton and Mr Johnson's costs of the assessment of those damages.

3. Embleton and Mr Johnson's claims against St Kilda and Mr Saedi were not successful.

4. Embleton point out that CTM made unsuccessful applications to set aside the judgment, at the start of the trial and at the completion of all of the evidence, and say it would be unreasonable to allow Mr Saedi any costs of his defence to the counterclaim as CTM relied upon his evidence in those applications.  Effectively Embleton says Mr Saedi ran his entire defence on the basis of aiding CTM to set aside the default judgment.

5. Whilst that may have been a collateral effect of his defence, Mr Saedi ran his defence because he was the third defendant to  the counterclaim made by Embleton and Mr Johnson who also  bought a third party notice against him.  He was successful in his defence on both matters and is entitled to his costs notwithstanding that CTM used his evidence in unsuccessful applications. CTM will be ordered to pay the costs of those unsuccessful applications to set aside the default judgment.

6. A successful party may be deprived of costs if guilty of misconduct in relation to the litigation, or the circumstances leading up to litigation, as where by lax conduct, the successful party effectively invites litigation or unnecessarily protracts the proceedings: Mannix v Loumbos Pty Ltd [2000] NSWCA 32. This conduct can relate to pleadings which impede the identification of the real issue in the conduct of the trial: Capolingua v Phylum Pty Ltd (1991) 5 WAR 137.

7. I accept Mr Saedi's pleadings were to say the least minimalistic and amounted to a bear denial effectively putting Embleton and Mr Johnson to proof of their claim

8. I do not consider that there is any reason to make a Bullock order Bullock v London General Omnibus Co [1904 ‑ 7] All ER Rep 44 or a Sanderson order Sanderson v Blyth Theatre Co [1903] 2 KB 533. A Bullock order can be laid where a prudent plaintiff really have no choice but to join the separate defendant: Fennell v Supervision & Engineering Services Holdings Pty Ltd (1988) 47 SASR 6, 15.

9. Whilst it may have been prudent for Embleton to join Mr Saedi to the proceedings as he was the director and shareholder of CTM the reality is Embleton and Mr Johnson were not successful in their claim against Mr Saedi and, subject to the costs relevant to the notice to admit facts, I do not consider that there is anything in his conduct which should deprive him of an award for costs.

10. I order Embleton and Mr Johnson pay St Kilda and Mr Saedi costs of the counter claim action to be taxed or agreed, except for the costs incidental to the notice to admit facts dated 8 March 2012 which costs are to be paid by Mr Saedi pursuant to O 66 r 3(2) Rules of the Supreme Court 1971.

The third party action

1. Embleton and Mr Johnson also brought a third party notice against Mr Saedi which was not successful and the appropriate order is that they pay Mr Saedi costs of the third party action except for the costs incidental to the notice to admit  facts dated 8 March 2012.

CTM applications to set aside the default judgment

1. CTM had judgment and costs entered against them on 16 May 2011 by Embleton and Mr Johnson.  I refused their two applications to set aside that default judgment and it should pay Embleton and Mr Johnson costs of those failed applications to be taxed as one set.

2. The orders I make are as follows:

   1.Embleton and Mr Johnson (the second and third defendants) pay St Kilda (the plaintiff) costs of the action to be taxed or agreed;

   2.There be no order as to costs in relation to the assessment of damages payable by CTM (the first defendant) to St Kilda;

   3.CTM (the second defendant by counterclaim) pay Embleton and Mr Johnson (the plaintiffs by counterclaim) costs of the assessment of damages payable by CTM, to be taxed as one set or agreed;

   4.Embleton and Mr Johnson (the plaintiffs by counterclaim) pay St Kilda (the first defendant by counterclaim) and Mr Saedi (the third defendant by counterclaim) costs of the counterclaim to be taxed or agreed except for the costs incidental to the notice to admit facts dated 8 March 2012 which costs are to be taxed or agreed and paid by Mr Saedi;

   5.Embleton and Mr Johnson (the plaintiffs by counterclaim) pay Mr Saedi (the third party) costs of the third party action to be taxed or agreed except for the costs incidental to the notice to admit facts dated 8 March 2012 which costs are to be taxed or agreed and paid by Mr Saedi;

   6.CTM (the  second defendant by counterclaim) pay Embleton and Mr Johnson (the plaintiffs by counterclaim) costs  to be taxed as one set or agreed of the applications of 10 April 2012 and 27 April 2012 to set aside the default judgment of 16 May 2011; and

   7.There be liberty to apply.