Staley v Pivot Group Pty Ltd [No 3] - [2009] WASC 355

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: STALEY -v- PIVOT GROUP PTY LTD [No 3] [2009] WASC 355

CORAM: KENNETH MARTIN J

HEARD: 14 OCTOBER 2009

DELIVERED : 1 DECEMBER 2009

FILE NO/S: CIV 1776 of 2009

BETWEEN: JOHN ROBERT STALEY
ELIZABETH FLORENCE STALEY
Plaintiffs
AND
PIVOT GROUP PTY LTD (ACN 008 459 685)
Defendant
(BY ORIGINAL ACTION)
PIVOT GROUP PTY LTD (ACN 008 459 685)
Plaintiff
AND
JOHN ROBERT STALEY
ELIZABETH FLORENCE STALEY
Defendants
(BY COUNTERCLAIM)

Catchwords:

Costs - Indemnity basis - Trial adjourned on day two - Inexcusable conduct - Orders made

Legislation:

Transfer of Land Act 1893 (WA), s 129C

Result:

Plaintiffs pay the defendant's costs thrown away by reason of adjournment of the trial on an indemnity basis

Category: B

Representation:

Original Action

Counsel:

Plaintiffs: Mr K C B Staffa
Defendant: Ms C L Donald

Solicitors:

Plaintiffs: Staffa Lawyers
Defendant: Lavan Legal

Counterclaim

Counsel:

Plaintiff: Ms C L Donald
Defendants: Mr K C B Staffa

Solicitors:

Plaintiff: Lavan Legal
Defendants: Staffa Lawyers

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

Brookvista Pty Ltd v Meloni [2009] WASCA 180
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122(S); (2003) 28 WAR 95
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72

KENNETH MARTIN J: A five day trial which commenced on Monday 21 September 2009, needed to be adjourned shortly after the commencement of day two. The basis upon which senior counsel had opened the plaintiffs' case throughout the course of the preceding day was said to be incorrect. Senior counsel for the plaintiffs, Mr Clarke SC, foreshadowed that an amendment to the plaintiffs' statement of claim was required and that time would be required for the plaintiffs to formulate the amendment. Counsel for the defendant accepted (reluctantly) that the trial could not proceed. I indicated that the plaintiffs must pay the costs thrown away as a result of the abovementioned developments. However, I allowed the parties time to formulate precise costs orders and to file any further affidavit materials or written submissions concerning costs thrown away by reason of the adjournment.
Essentially, the defendant seeks the following costs orders in terms of a minute of proposed orders dated 13 October 2009 (Minute):
1.The plaintiffs pay the defendant's costs thrown away by reason of the adjournment of the trial on 21 September 2009 and 22 September 2009, to be taxed if not agreed and for the purpose of such taxation:
1.1upon such taxation pursuant to s 280(2)(c) of the Legal Profession Act 2008 any limits fixed by any applicable costs determination are removed and on the basis that the defendant shall be entitled to an indemnity in respect of costs incurred by the defendant except to the extent that such costs were not reasonably incurred;
1.2the defendant be entitled to forthwith tax its costs in respect of:
1.2.1the two days of trial 21 September 2009 and 22 September 2009;
1.2.2the costs of transcript for the two days;
1.2.3two counsel attending;
1.2.4any costs claimed against the defendant by any expert witness in respect of their proposed evidence in the week 21 September - 25 September 2009;
1.3The defendant have leave to tax separately any further costs thrown away upon such costs being ascertained by the defendant.
2.The plaintiffs to pay the defendant's costs of today [ie the costs in relation to the application on Wednesday 14 October 2009] to be taxed if not agreed on the basis specified in Order 1.
3.The parties have liberty to apply generally.
The situation is somewhat unusual in that the trial commenced, but needed to be adjourned at the plaintiffs' behest.
In support of what essentially is an application for indemnity costs thrown away by reason of the adjournment, the defendant filed an affidavit of Angela Kate Hastie sworn 13 October 2009 and referred to an earlier affidavit of Ms Hastie sworn 22 July 2009. The defendant also filed an outline of written submissions on the issue of costs, and a chronology of events in support of its submissions in relation to costs on 13 October 2009.
There is no doubt that in appropriate circumstances, I am empowered to make an award of indemnity costs in the defendant's favour against the plaintiffs. Essentially, what is required is the identification of some element of improper or unreasonable conduct on the part of the parties or their legal advisers in relation to the case: see Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122(S); (2003) 28 WAR 95 at [25].
By way of the briefest background, it is necessary to point out that the litigation between the parties essentially concerns issues associated with a right of way which links the plaintiffs' lot 547 at 3470 Caves Road Willyabrup, to the defendant's property at lot 549. The right of way is of some 10 metres width and runs along the southern boundary of the defendant's adjoining lot, providing the sole means of access and egress for the plaintiffs and their visitors.
The catalyst for the dispute between the parties is the plaintiffs' intention to seek development approval from the Shire of Busselton to commence a 'Cellar Door' business from their lot. It is envisaged by the plaintiffs that members of the public, in accessing the plaintiffs' cellar door operation, would obtain access and egress via the right of way from Caves Road. The defendant is concerned about an increased level of third party usage of the right of way impacting on its vineyard operation, as well as the aesthetics and general ambiance of their property. Essentially, what arises are concerns about a battleaxe block access scenario between Caves Road and the plaintiffs' property, which to date has conducted a vineyard operation, but without a Cellar Door facility. By its counterclaim, the defendant seeks to invoke s 129C of the Transfer of Land Act 1893 (WA) (TLA) to, in effect, narrow the plaintiffs' rights under the existing right of way. Such relief may inhibit a cellar door operation being approved by the Shire of Busselton upon the plaintiffs' property.
The plaintiffs seem to accept, albeit grudgingly, that they must be held responsible for some costs thrown away by reason of the adjournment. Such an order was foreshadowed by me at the time. Nevertheless, the plaintiffs strenuously resist any orders at the level of indemnity costs. In support of their position, they rely upon the affidavits of Malcolm Cockman, affirmed on 13 October 2009, the plaintiffs' solicitor (and junior counsel at the trial), Kevin Colin Staffa, affirmed on 13 October 2009 and Aaron Bell, affirmed on 13 October 2009. In addition, the plaintiffs filed a written outline of submissions which states:
22.It is not possible to know whether there are any costs thrown away for the Defendant as a result of the adjournment of the trial without knowing the final form of the Plaintiffs' claim for relief. The Plaintiffs' claim may end up being in exactly the same form as it currently is - it is not possible to know until DA 2 (Development Application No 2) has been determined by the Shire.
23.The Defendant is not entitled to an order for costs thrown away so far as those costs relate to its counterclaim; as there is an absolute statutory prohibition on costs being awarded in favour of the applicant under s 129C(8) of the TLA.
I accept the plaintiffs' submission as to s 129C(8) of the TLA and the prevailing constraint in that context against costs associated with that issue being awarded in favour of a moving party for relief under s 129C. However, it seems to me that the Minute seeking costs thrown away by reason of the adjournment of the trial does not infringe this prohibition. As at day two of the trial, senior counsel for the plaintiffs had completed his opening submissions at about 4 pm the previous day. Counsel for the defendant was commencing his opening of the defendant's case. No evidence, other than documents consensually tendered, had been received prior to senior counsel for the plaintiffs' revelation that the plaintiffs were no longer in a position to continue. An order for costs thrown away essentially relates to wasted costs arising out of a duplication in work and effort that would not otherwise have been encountered, but for the unforseen adjournment.
The first essential question is does the defendant satisfy the requisite threshold for establishing that it is appropriate in the prevailing circumstances to make, what is, in effect, a punitive costs order against the plaintiffs - on the basis that the plaintiffs must not only bear the costs thrown away by reason of the adjournment at a party/party taxed basis, but that the defendant should receive essentially a full indemnification for its costs thrown away, under orders proposed by the Minute.
It is necessary to set out an extract from the submission of senior counsel for the plaintiffs which preceded the adjournment of trial on 22 September 2009. Mr Clarke SC said:
There are some developments that have occurred just now that I need to tell your Honour about.
KENNETH MARTIN J:   Of course.
CLARKE, MR: The consequences of which are not clear to me as I stand here and I need to explain it in open court and will see where we go. Before I take your Honour to those documents can I indicate broadly what is happening here? Your Honour knows that I indicated to the court and to my learned friend yesterday that a change had been made such that we were no longer propounding the proposal under the development application to be bituminised and it was to be gravel only. This morning as I have come to court I have been provided by [my] learned junior a bundle of correspondence and I have sought to take instructions in relation to it.
The reason I am stating this right now is that on any view it involves a change in the case and will involve a change in the pleading. Your Honour, the background to this - and this I confess is giving evidence from the bar table, which is most unsatisfactory but I believe that I have no choice here. The position, broadly speaking, has been that in relation to the development application the plans for the right of way that I have taken your Honour to yesterday in detail, that before the development application including those plans could be processed the consent of the defendant was required. That consent was sought recently but not obtained, we had no response.
…
However, in order to initiate the processing of the application it has been necessary - as a result of the fact that without Pivot's consent to the amendments that I took your Honour to yesterday the council wouldn't even consider it, it's been necessary to withdraw those amendments, proposed amendments …
KENNETH MARTIN J:   To the width of the right of way? No?
CLARKE, MR:   To withdraw in its entirety all that I took your Honour to yesterday in those four sheets and to substitute only plans which indicate what is there now, which is the first set of drawings I took your Honour to, the survey drawings, so that the proposal at the moment is no change …
…
CLARKE, MR:   So that I regret, your Honour, I did not know but I was in error yesterday in propounding those sheets of papers, Mr Harding's drawings, as part of the development application. It's not. It is, however what we will propose hereafter upon the council indicating that changes are required. (ts 145 ‑ 147)
At ts 148, Mr Clarke said:
As a result of that, your Honour, it's plain that I will need to amend the statement of claim because it was the case that the development application contained and propounded the drawings that I took your Honour to now and paragraph - if your Honour has the pleading?
KENNETH MARTIN J: Yes.
CLARKE, MR: Paragraph 24 of my client's statement of claim is now not correct. It's now no longer correct as no changes are presently indicated. What I would seek to do, however, your Honour, and I would need to make changes. I would need to add additional paragraphs that my client will propound those changes but I can't say that my client is propounding them now, because it's not. So that, your Honour, I will need to change the pleading.
It appears that, only at the commencement of day two of the trial, was counsel for the defendant provided with the further documents relating to the plaintiffs' amended development application. The documents had been lodged at the Shire of Busselton the previous week. Mr Bennett referred to the fact that the action had been before me for directions in the CMC List on the morning of 17 September 2009 (the second‑last working day before the commencement of the trial). A pleading issue had arisen over a reference to a responsive plea in the plaintiffs' reply and defence to counterclaim which concerned an alleged obligation of the defendant to provide consent to the Shire of Busselton. This was contained in the plaintiffs' reply in terms that 'The court ought to order us to provide the consent' (see ts 151). Mr Bennett continued:
If your Honour goes to the bundle of documents that I said we hadn't been given discovery of yesterday and were supplied to me in court this morning, can your Honour turn up a letter from my friend's junior Mr Staffa, also dated the 17th. Half‑way through the bundle.
KENNETH MARTIN J: To Mr Bancroft of the Shire of Busselton?
BENNETT, MR: Yes. If your Honour reads the third‑last paragraph, Mr Staffa interrogates Mr Bancroft, or the council and then says: 'We need to know the position on the above matters as if the answers to the above are in the affirmative then we may be instructed to immediately withdraw the proposed right of way access road upgrade which forms part of the application and replace it with a feature site survey drawing which is already available. Please let me know by return what the position is. (ts 151)
On Thursday 17 September 2009, at 12.27 pm, it would appear that Mr Staffa received a response from the Shire in terms:
It's confirmed that if an application for the planning consent only proposes development on land that's owned by your client then it's not necessary that the application be signed by any other party.
Mr Bennett was referring to the content of documents only provided to him at court on the morning of day two of the trial (see ts 152).
Mr Bennett submitted:
So whilst simultaneously appearing before your Honour [referring to the CMC List hearing on Thursday 17 September 2009] complaining about our amendments to the counterclaim but mindful that the defence had raised an issue that our consent was not obtained, the plaintiffs were taking steps to fundamentally alter the case, which they did that day; acknowledged on Friday by the council; no documentation discovered; we were rebriefing experts on the bituminised [sic bituminisation] and the gate and the sign; we were obtaining witness statements which we filed and served on Friday, one of which we indicated we couldn't file and serve and it was completed over the weekend by Mr Rowe, the town planner, on a factual basis that had been altered yet again by the plaintiffs.
In this case, the obligation of continuing discovery, at minimum, demanded that the plaintiffs advise the defendant on Thursday 17 September 2009 (ie at a time less than two working days before the trial was due to commence) that the plaintiffs' development application to the Shire of Busselton was being altered once again. When the plaintiffs originally commenced proceedings it was by reference to a development application of December 2008 lodged by Mr Staley himself. Subsequently, there followed a withdrawal of that application and its replacement with a fresh development application. That change caused a significant alteration to the plaintiffs' case. However, as Mr Bennett explained, the defendant was prepared to meet that change head on at the time, in order to keep the September 2009 trial dates. The ramifications of the plaintiffs' altered case were ventilated at directions hearings before me in the CMC List as regards the amendments to the statement of claim, defence, counterclaim and reply.
On Thursday 17 September 2009, it should have been blindingly apparent to the plaintiffs' solicitor that the further change in his clients' development application would be highly material to issues to be ventilated at the imminent trial. At minimum, the defendant's solicitors should have been immediately advised at this point, as to what was occurring. But there was no communication from the plaintiffs' solicitor of this vital information. The concerning obligations of continuing discovery, not to mention commonsense and plain courtesy, dictated that these late changes should have been communicated in a timely manner to the defendant's solicitors. The failure to do so was egregious and inexcusable.
Worse was to follow however. I specifically exclude from my observations the conduct of senior counsel for the plaintiffs who seems to have been completely unaware of these developments until shortly before the commencement of day two of the trial. Nevertheless, it was inexcusable that senior counsel for the plaintiff was placed in a position whereby these very significant developments were not drawn to his attention, leading to the trial being opened throughout day one upon an erroneous factual foundation. The wasted costs incurred as a consequence are obvious. Senior counsel for the plaintiffs' conduct in frankly putting these matters before the court on day two with candour is beyond reproach. However, the trial has miscarried as a result and in wholly unacceptable circumstances which thoroughly ground the making of indemnity costs orders against the plaintiffs.
In Brookvista Pty Ltd v Meloni [2009] WASCA 180, Newnes JA delivered the reasons of the Court of Appeal, setting aside costs orders made by a trial judge in the scenario of a trial which needed to be adjourned - and where the costs thrown away were fixed at $25,000 by the trial judge. Newnes JA set out some applicable principles at [26] to [28] of his reasons. But, Brookvista was not a scenario of a party seeking, in effect, an order for indemnity costs. See Newnes JA at [32] referring to Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [44]. In the present case, the effect of the proposed orders in the Minute submitted by the defendant is to pursue indemnity costs.
Furthermore, in Brookvista, there was insufficient information before the primary judge to justify a fixed costs order (see Newnes JA at [35]). In the present circumstances, the Minute seeks orders for taxed costs, albeit on a solicitor/client (indemnity) basis.
The plaintiffs' written outline of submissions and affidavits previously mentioned, raise a number of matters in attempted explication of what occurred. The documents refer to the expedited character of the trial which had been ordered and to a loss of some days in preparation time - by reason of the defendant allegedly preventing a re‑survey of the easement in June 2009. But the fact of the matter is that there was no application by the plaintiff to adjourn the fixed trial dates before the trial commenced on Monday 21 September 2009, as might otherwise have been the case were there any real difficulties in relation to having the matter ready to proceed at the date fixed for trial.
The plaintiffs' solicitor makes repeated reference to asserted delays to the plaintiffs' surveyor justifying noncompliance with directions given in the case management of the action. As I indicated to senior counsel for the plaintiffs on day two of the trial (at ts 165 ‑ 166) the plaintiffs' failure to give notice to the defendant of the looming arrival on of the plaintiffs' surveyor in order to conduct the survey was the crux of the problem. As I said at ts 166:
If there had been notice then perhaps that wouldn't have occurred. It seems to me there's an overwhelming need for an injection of notice and courtesy in terms of developments on either side with the right of way.

Arguments submitted on behalf of the plaintiffs to the effect that the trial may, in its eventual duration, have exceeded five days, also miss the point. Unnecessary waste and delay has undoubtedly affected the orderly progress of this trial - as a result of the plaintiffs' case being opened on an erroneous factual foundation. The correct facts as to the state of the plaintiffs' development application were known to the plaintiffs' solicitor. But he does not appear to have communicated the true state of affairs even to the plaintiffs' senior counsel, until the commencement of day two of the trial. That conduct is wholly inexcusable and warrants the orders sought by the defendant for costs thrown away on an indemnity basis.
Therefore, orders should be made in terms of the defendant's Minute.