Staley v Pivot Group Pty Ltd [No 6]
[2010] WASC 228 (S)
•30 AUGUST 2010
STALEY -v- PIVOT GROUP PTY LTD [No 6] [2010] WASC 228 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2010] WASC 228 (S) | |
| Case No: | CIV:1776/2009 | 21 & 22 SEPTEMBER 2009, 4-7 & 10-13 MAY 2010 AND ON THE PAPERS | |
| Coram: | KENNETH MARTIN J | 30/08/10 | |
| 8/11/10 | |||
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Orders for costs of action on indemnity basis | ||
| B | |||
| PDF Version |
| Parties: | JOHN ROBERT STALEY ELIZABETH FLORENCE STALEY PIVOT GROUP PTY LTD |
Catchwords: | Costs Application by successful defendant for indemnity costs of trial Unreasonable conduct on part of plaintiff relied upon Indemnity costs orders made |
Legislation: | Nil |
Case References: | Arundel Chiropractic Centre Pty Ltd v Deputy Commission of Taxation [2001] HCA 26; (2001) 179 ALR 406 Cazaly Iron Pty Ltd v Minister for Resources [No 5] [2008] WASCA 181 EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59 Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 Staley v Pivot Group Pty Ltd [No 3] [2009] WASC 355 Staley v Pivot Group Pty Ltd [No 5] [2010] WASC 124 Staley v Pivot Group Pty Ltd [No 6] [2010] WASC 228 Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129(S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 8 NOVEMBER 2010 FILE NO/S : CIV 1776 of 2009 BETWEEN : JOHN ROBERT STALEY
- ELIZABETH FLORENCE STALEY
Plaintiffs
AND
PIVOT GROUP PTY LTD
Defendant
Catchwords:
Costs - Application by successful defendant for indemnity costs of trial - Unreasonable conduct on part of plaintiff relied upon - Indemnity costs orders made
Legislation:
Nil
(Page 2)
Result:
Orders for costs of action on indemnity basis
Category: B
Representation:
Counsel:
Plaintiffs : Mr D Garnsworthy & K C B Staffa
Defendant : Ms C L Donald
Solicitors:
Plaintiffs : Staffa Lawyers
Defendant : Lavan Legal
Case(s) referred to in judgment(s):
Arundel Chiropractic Centre Pty Ltd v Deputy Commission of Taxation [2001] HCA 26; (2001) 179 ALR 406
Cazaly Iron Pty Ltd v Minister for Resources [No 5] [2008] WASCA 181
EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Staley v Pivot Group Pty Ltd [No 3] [2009] WASC 355
Staley v Pivot Group Pty Ltd [No 5] [2010] WASC 124
Staley v Pivot Group Pty Ltd [No 6] [2010] WASC 228
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129(S)
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1 KENNETH MARTIN J: My reasons for decision in the aftermath of this 10-day trial were delivered on 30 August 2010, dismissing the plaintiffs' claim. A counterclaim brought by the defendant was, by leave, discontinued earlier in April 2010, before the trial substantively resumed in May.
2 The parties were provided with an advance copy of my reasons, in accordance with Consolidated Practice Direction 8.1, pars 1 - 18, on 27 August 2010. The following Monday, 30 August 2010, counsel for the successful defendant, Ms Donald, moved for what are essentially indemnity costs orders against the plaintiffs in the aftermath of the trial result, as regards both the action and the counterclaim, in terms of a minute provided to the court, in terms:
1. The plaintiffs' claim be dismissed.
2. The plaintiffs pay the defendant's costs of the:
2.1 claim, to be taxed if not agreed, including any reserved costs and transcript fees; and
2.2 counterclaim, to be taxed if not agreed, except to the extent those costs solely relate to the defendant's claim for modification of the right of carriageway pursuant to s 129C of the Transfer of Land Act1893 (WA).
3. Upon taxation of the costs referred to in order 2 herein, pursuant to section 280(2)(c) of the Legal Profession Act 2008 (WA), any limit fixed by any applicable costs determination, including any limits with respect to hourly rates, be removed on the basis that the defendant shall be entitled to an indemnity in respect of costs incurred, except to the extent that such costs were unreasonably incurred.
3 At that time I made an order, per paragraph 1 of the defendant's minute, dismissing the plaintiffs' claim. But I otherwise reserved for determination all issues as to costs. Counsel for the unsuccessful plaintiffs, Mr Garnsworthy, indicated to me at the time that the application for indemnity costs orders by the defendant would be opposed. But he sought time to file written submissions explaining that stance of the plaintiffs. The parties also expressed their amenability to me dealing with the issue of costs on the papers, on a basis that the plaintiffs be allowed 10 days to file written submissions as to their position and the defendant would thereafter have seven days within which to respond. In due course, I received the plaintiffs' written submissions of 7 September 2010 (filed 8 September 2010). Thereafter, responsive written submissions from the
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- defendant, of 16 September 2010, were received. On 22 September 2010, I received from the plaintiffs further written submissions in response to the defendant's submissions. I had not made provision in my orders for a receipt of that further communication. Nevertheless, I have considered and assessed its content.
4 On 30 August 2010, Ms Donald had moved, in effect, for indemnity costs orders, on the argued basis that my reasons for judgment contained a catalogue of unacceptable conduct by the plaintiffs that more than met the applicable legal threshold for such orders by establishing improper, or at least unreasonable, conduct on the part of the plaintiffs, or their legal advisers.
5 The relevant legal principles governing the making of indemnity costs orders are recently summarised in the court's reasons for judgment in Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129(S) [10]. Moreover, in Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [8] - [9], Pullin J (as his Honour then was) said:
The usual costs order is one for party and party costs. An order for indemnity costs will only be made if there is some special or unusual feature in the case to justify a departure from the ordinary practice. In effect, the court has jurisdiction to make an indemnity costs order whenever justice requires such an order. Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190 at 191; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233. When the justice of the case does require such an order, then the court will have a discretion as to whether the order should be made.
Many examples can be found where an indemnity costs order has been made. Suffice it to say that most of these involve some element of improper, or at least unreasonable, conduct on the part of the parties or their legal advisors in relation to the case. See the examples given by Sheppard J in Colgate-Palmolive v Cussons (supra)at page 233 and the circumstances referred to in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 and in Unioil's case. …
- Pullin J also observed, at [10] and [11]:
In this case, the plaintiff submits that there was unreasonable conduct in the running of the defendant's case.
Even if there has been such conduct, an indemnity costs order will not be made if the costs would be covered by an order for party and party costs (see Unioil's case at 193) or by a special costs order.
(Page 5)
6 In moving for indemnity costs orders against the plaintiffs, Ms Donald pressed as essential considerations:
(a) the plaintiffs' conduct throughout the matter both leading up to and during the trial; and
(b) the court's ultimate finding that the plaintiffs' claims had no basis in fact.
7 The defendant also relied upon my trial reasons at [91], where I had observed that the plaintiffs' case had been something of a moving feast by frequent and often significant shifts in the plaintiffs' case, both before trial and then from the start of the trial up to its conclusion on day 10: see Staley v Pivot Group Pty Ltd [No 6] [2010] WASC 228 [91] - [92].
8 In written responsive submissions of 16 September 2010, the defendant said:
3. This perpetual motion in the plaintiffs' case produced the result whereby a neighbourhood boundary dispute could not be resolved by less formal means [92]. Effectively, this perpetual motion in the plaintiffs' case meant that the defendant had no real opportunity by resolve this matter by less formal means and was required to defend the status quo during a 10-day Supreme Court trial.
4. The plaintiffs' conduct placed an unreasonable burden on the defendant, requiring the defendant, at each point of change in the plaintiffs' case, to revisit, reassess and, in some cases, reformulate its defence to the claims levelled by the plaintiffs. This constant flux in the plaintiffs' case placed an unreasonable and cumulative burden on the defendant.
5. In addition, the Court's finding that there was no basis in fact for the plaintiffs' claim at trial was a matter wholly within the plaintiffs' knowledge prior to the commencement of the proceedings. At trial (as referred to in the defendant's closing submissions) despite the plaintiffs' claims of obstruction, the evidence indicated that since the plaintiffs purchased Location 547 in 1998, they experienced no obstruction of the right of carriageway. Had the plaintiffs been properly proofed with respect to this issue, being a central issue in the case, it would have been clear that the plaintiffs' claim was not sustainable.
9 The plaintiffs' written submissions not only opposed the making of special (indemnity) costs orders, but went further (although this was not foreshadowed by counsel for the plaintiffs on 30 August 2010), seeking orders that the defendant pay the plaintiffs' costs of the defendant's
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- discontinued counterclaim on an indemnity basis (by reference to an affidavit of the plaintiffs' solicitor, Mr Staffa, affirmed 6 September 2010: see par 3(b)). The plaintiffs' written submissions (par 6.02) also seek costs in relation to 'the injunction application abandoned by the Defendant'.
10 At a late stage of the matter, with the trial being concluded, the plaintiffs strictly should have sought leave to file and have read Mr Staffa's affidavit in support of their arguments. Nevertheless, I have had regard to Mr Staffa's affidavit of 6 September 2010 and to his annexures thereto. Essentially, the affidavit sets out a chronology of events relied upon by the plaintiffs in augmentation of their stance opposing indemnity costs orders. It is not clear to me why the plaintiffs thought it appropriate or necessary to file a further affidavit, when a chronology would have sufficed.
11 The plaintiffs' submissions also assert that the formulation of the indemnity costs orders under the defendant's minute is incorrect as a matter of principle. By reference to decisions such as Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 and EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59, the plaintiffs contend that the defendant's minute should have been formulated on the basis of articulating, at par 3, an accepted limitation to an award of indemnity costs, by the standard proviso 'save for costs of unreasonable amount or unreasonably incurred'. Paragraph 3 of the minute refers, by way of proviso, only to costs 'unreasonably incurred'. The plaintiffs' arguments raises the need to add further limiting words, namely, 'and of unreasonable amount'.
12 The plaintiffs point out that indemnity costs orders have already been made in favour of the defendant during the course of the litigation, it being said that there must be no double counting in relation to:
(a) costs thrown away by the required adjournment of the trial in September 2009; and
(b) costs thrown away by the amendment to the statement of claim.
13 The plaintiffs do make a limited concession in their submissions, that special orders as to costs may be appropriate in relation to:
(a) getting up the case; and
(b) counsel fee on trial (but not including subsequent days of trial),
(Page 7)
- but not otherwise.
14 The plaintiffs seek to remind the court (correctly) that as a matter of principle, indemnity costs orders carry extraordinarily punitive costs consequences and therefore should only be made where special circumstances are demonstrated justifying such orders. Accordingly, the court must exercise considerable caution before allowing itself to be satisfied that such an order is appropriate. The plaintiffs mention observations by Callinan J in Arundel Chiropractic Centre Pty Ltd v Deputy Commission of Taxation [2001] HCA 26; (2001) 179 ALR 406 [40], where his Honour said:
I would not order indemnity costs as the occasion for an order for these should, in my opinion, be exceedingly rare, as they have a tendency to encourage extravagance and put the quantum of legal fees beyond the effective scrutiny of the courts and their taxing officers. By costs on a solicitor and client basis I mean the actual costs incurred on proper and necessary instructions by the client, and the actual costs and outlays to the extent that they were reasonably incurred in this case.
Costs disposition
15 Essentially, by reference to the numerous observations I rendered in my reasons for decision in Staley v Pivot [No 6] (see [28], [33], [35] - [37], [44], [72] - [73], [75] and [78]), I am of the view that the present action is an exceptional case where, in the aftermath of a 10-day trial, it is very clear to me that indemnity costs orders should be made in favour of the defendant against the plaintiffs, as regards the plaintiffs' unsuccessful claims against the defendant.
16 The justification for indemnity costs orders in the present case goes well beyond the fact that the plaintiffs were ultimately unsuccessful at trial in respect of their claims for declaratory relief, as regards what they viewed as maintenance works upon the right of way, and their objections against the warning sign to trespassers erected on the defendant's gate at the Caves Road entrance, at the eastern end of the right of way. Accepting, as a matter of principle, that considerable caution is called for before making an indemnity costs order, I am nevertheless well satisfied here that such orders are fully appropriate.
17 This conclusion is reached by reason of what I assess as the wholly unreasonable manner in which the plaintiffs conducted the proceedings right from commencement of the litigation up to the end of what was, in the end, a 10-day trial. I feel it is appropriate to refer again only to one observation I made at [92] of the reasons concerning the 'perpetual
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- motion' in the plaintiffs' case, even after the case recommenced in May 2010 and following the earlier most unsatisfactory circumstances in which an urgent trial had commenced in September 2009, but then had to be adjourned: see my reasons in Staley v Pivot Group Pty Ltd [No 3] [2009] WASC 355.
18 On its recommencement in May 2010, the trial still manifested on a daily basis the unsatisfactory hallmarks of a 'work in progress', as it continued to evolve and shrink to a point where, ultimately, only declaratory relief was sought, and mainly focused in geographic location to the western end of the right of way. The conduct of the trial in that evolving way, in my view, was wholly unnecessary and unreasonable, reflecting inadequate preparation by way of proofing of witnesses and a failure to come to grips with some in principle deficiencies in the claim at a much earlier time. The sanction of an indemnity costs order is, in those circumstances, fully appropriate to mark the court's disapproval of what has taken place.
19 Paragraph 4.60.14 of the plaintiffs' written submissions of 8 September 2010 reads:
The proposition that a case is in a constant state of flux (which is not conceded) does not lead to the conclusion …
20 However, at [92] of the reasons for decision, I said:
The plaintiffs' seemingly perpetual motion has produced, in my view, the unfortunate consequence that what is essentially a neighbourhood boundary dispute of rather small moment between rural landowners could not be resolved through less formal means, rather than by a full-scale 10 day trial in the Supreme Court of Western Australia. My firm impression arising out of the trial is that, with the plaintiffs' case in a state of flux and revision over precisely what roadworks it was proposing - even up to day 10 of the trial, as I have explained above, it is no surprise that the parties were unable to earlier reach a more sensible compromise.
21 My observations at [92] are not open as subject matter for concession by the plaintiffs.
22 The plaintiffs' ongoing adjustments to its case (even during the trial) would have made it difficult to reach an earlier out of court resolution. Resolution is hard to achieve in circumstances where one party has not arrived at a final position about its intended case - as the plaintiffs' conduct in the trial conclusively showed.
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23 At par 3.00 of plaintiffs' written responsive submissions (filed without leave on 22 September 2010), Mr Garnsworthy submitted:
To describe the plaintiff's [sic] case as perpetual motion (twice) is to descend to the level of abuse. The plaintiff [sic] says that the defendant did have the opportunity to resolve the issues at mediation but had no willingness to do so. Mr and Mrs Lawrence [sic] did not attend the mediation.
24 That submission was also inappropriate.
25 Having reached a conclusion that the costs of the plaintiffs' unsuccessful action should be awarded as a matter of principle to the defendant on an indemnity basis, it becomes necessary to deal with the issue of the discontinued counterclaim, which the defendant initially advanced, but then withdrew with leave in April 2010.
26 It is my view that the plaintiffs' wholesale amendments to its case by way of excisions, under its further amended statement of claim of 15 April 2010, provided a proper and reasonable platform for the defendant to decide, at that time, that in the face of what had become a significantly truncated case, it was no longer necessary for the defendant to pursue a counterclaim and so, to discontinue at that point.
27 It is clear from par 2.2 of the defendant's minute, that the defendant does not seek any costs in respect of aspects of the counterclaim by which it pursued relief under s 129C of the Transfer of Land Act. That (properly made) concession acknowledges the constraints of s 129C(8), which debars an order for costs in such circumstances.
28 However, in addition to relief under s 129C, the defendant's counterclaim had, before it was discontinued, also sought:
An injunction restraining the plaintiffs themselves or by their servants or employees and otherwise from causing or permitting excessive use of the ROW.
29 This relief by the counterclaim was conceived by the defendant in earlier circumstances when the plaintiffs had been pursuing an application to the Shire of Busselton seeking approval for a cellar door facility to be commenced from lot 547 - an eventuality that was likely to have carried with it a prospect of the accompanying increase in traffic flow along the right of way. An abandonment by the plaintiffs of their cellar door proposal (as reflected in the excision amendments to the plaintiffs' case carried into effect under the further amended statement of claim of
(Page 10)
- 15 April 2010) removed the cellar door increased traffic threat and therefore any need, from that time, for the injunctive relief sought by the defendant on its counterclaim.
30 However, the ultimate merits of this aspect of the discontinued counterclaim were never finally evaluated at a trial. I am of the view, therefore, that the defendant should not have the costs of the counterclaim, even as is sought under the minute, since it is not clear to me that the defendant would ultimately have been successful at a trial on the non-s 129C aspects of its counterclaim. The defendant should be permitted, without any cost penalty, to withdraw that counterclaim - by there being no orders made against it regarding the costs of the discontinued counterclaim. The plaintiffs will not receive an order in their favour for costs as regards the discontinued counterclaim, let alone the requested order for indemnity costs. Accordingly, I will not make any costs orders concerning the discontinued counterclaim, other than for orders already made.
31 There is merit, I think, in the plaintiffs' observations to the effect that the defendant has had the benefit of indemnity costs orders in respect of its costs thrown away, associated both with the adjournment of the trial in September 2009, and then in respect of the amendment to the statement of claim. Accordingly, it seems appropriate to avoid doubling up, to preface order 2 in the defendant's minute by the words, 'Save to the extent that earlier orders dealing with aspects of the costs of this action have already been made in the defendant's favour (which orders shall subsist)', and then continuing per order 2 of the minute.
32 Furthermore, it seems that there is also merit in the plaintiffs' observation as to the formulation of indemnity costs orders in terms of a standard further qualification as to 'unreasonable amount', as well as against costs 'unreasonably incurred': see Flotilla [24]. So, I will amend and augment order 3 of the minute accordingly, to provide: 'except to the extent that such costs were unreasonably incurred or are of unreasonable amount'.
33 I do note observations in the parties' submissions concerning the decision in Cazaly Iron Pty Ltd v Minister for Resources [No 5] [2008] WASCA 181 [9] and [10]. In my view, it is appropriate here that order 3 in the minute be made express on the basis of it removing all limits in respect of maximum allowable times, amounts and hourly and daily rates - an outcome towards full indemnification I consider to be appropriate in the circumstances. That would nevertheless leave open any ultimate
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- approval of the defendant's bill of costs by the taxing officer, under the taxing officer's assessment towards the costs as claimed by the defendant, if shown by the plaintiffs to be either unreasonable in amount, or unreasonably incurred: Cazaly [10]; Flotilla [28].
34 The plaintiffs' written submissions foreshadowed that if indemnity costs orders were to be made, that the plaintiffs would seek to be granted leave to inspect the defendant's solicitor's file. I have already dealt with a similar application by the plaintiffs, and declined then to make such an order on a previous occasion in the interlocutory context: see Staley v Pivot Group Pty Ltd [No 5] [2010] WASC 124. No relevant material is relied upon by the plaintiffs in support of such file inspection orders at this time (there being nothing in Mr Staffa's affidavit to which I referred which, in my view, provides a basis for such a file inspection order). It would be a matter for the plaintiffs to seek to persuade a taxing officer that such an inspection order was appropriate, were it able to do so. Therefore I again decline the request to make an inspection order, on the basis of the plaintiffs' ambit request in that regard.
35 Accordingly, the orders which I make at the publication of these reasons as to costs shall be in terms as set out below. I have already, of course, made my order in terms of par 1 of the defendant's minute on 30 August 2010 - namely that the plaintiffs' claim be dismissed.
36 There will now be the following further orders dealing with costs by way of final disposition of the matter, in these terms:
2. Save to the extent that earlier orders dealing with aspects of the costs of this action have already been made in the defendant's favour (which orders shall subsist) the plaintiffs shall also pay defendant the costs of the claim to be taxed if not agreed, including any reserved costs and transcript fees.
3. There will be no orders made concerning the parties' costs of the defendant's counterclaim.
4. Upon a taxation of the costs herein, pursuant to s 280(2)(c) of the Legal Profession Act 2008 (WA), any limit fixed by any applicable costs determination, including any limits with respect to hourly rates, shall be removed on the basis that the defendant is to be entitled to a full indemnity in respect of its costs incurred of the action, except to the extent that such costs were unreasonably incurred or of an unreasonable amount.
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