Swansdale Pty Ltd v Whitcrest Pty Ltd
[2010] WASCA 129 (S)
•8 JULY 2010
SWANSDALE PTY LTD -v- WHITCREST PTY LTD [2010] WASCA 129 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2010] WASCA 129 (S) | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:57/2009 | 5 MARCH 2010 AND ON THE PAPERS | |
| Coram: | PULLIN JA KENNETH MARTIN J | 8/07/10 | |
| 13/10/10 | |||
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Indemnity costs awarded to successful respondents | ||
| A | |||
| PDF Version |
| Parties: | SWANSDALE PTY LTD (ACN 079 005 477) MUNKBERG PTY LTD (ACN 078 824 567) RUSSMEX PTY LTD (ACN 079 030 550) WHITCREST PTY LTD (ACN 009 113 473) ROCHWOOD PTY LTD (ACN 079 005 440) MARK JOHN BEESON LYNDON EDWARD DYSON ENDOPINE PTY LTD (ACN 079 030 452) LUPIN NOMINEES PTY LTD (ACN 008 998 990) |
Catchwords: | Costs Special costs orders Fixed, alternatively, indemnity costs sought Principles underlying indemnity costs orders |
Legislation: | Nil |
Case References: | Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 Brookvista Pty Ltd v Meloni [2009] WASCA 180 Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 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 Ltd (1988) 81 ALR 397 J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 Quancorp Pty Ltd v MacDonald [1999] WASCA 101 Re Malley SM; Ex parte Gardner [2001] WASCA 83 Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Unreported, FCA, 3 May 1991) Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : SWANSDALE PTY LTD -v- WHITCREST PTY LTD [2010] WASCA 129 (S) CORAM : PULLIN JA
- KENNETH MARTIN J
DECISION : 13 OCTOBER 2010 FILE NO/S : CACV 57 of 2009 BETWEEN : SWANSDALE PTY LTD (ACN 079 005 477)
- First Appellant
MUNKBERG PTY LTD (ACN 078 824 567)
Second Appellant
RUSSMEX PTY LTD (ACN 079 030 550)
Third Appellant
AND
WHITCREST PTY LTD (ACN 009 113 473)
First Respondent
ROCHWOOD PTY LTD (ACN 079 005 440)
Second Respondent
MARK JOHN BEESON
Third Respondent
LYNDON EDWARD DYSON
Fourth Respondent
ENDOPINE PTY LTD (ACN 079 030 452)
Fifth Respondent
LUPIN NOMINEES PTY LTD (ACN 008 998 990)
Sixth Respondent
- First Appellant
MUNKBERG PTY LTD (ACN 078 824 567)
Second Appellant
RUSSMEX PTY LTD (ACN 079 030 550)
Third Appellant
AND
WHITCREST PTY LTD (ACN 009 113 473)
First Respondent
ROCHWOOD PTY LTD (ACN 079 005 440)
Second Respondent
MARK JOHN BEESON
Third Respondent
LYNDON EDWARD DYSON
Fourth Respondent
ENDOPINE PTY LTD (ACN 079 030 452)
Fifth Respondent
LUPIN NOMINEES PTY LTD (ACN 008 998 990)
Sixth Respondent
(Page 3)
ON APPEAL FROM:
For File No : CACV 57 of 2009
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : MASTER SANDERSON
Citation : SWANSDALE PTY LTD -v- WHITCREST PTY LTD [2009] WASC 117
File No : CIV 2156 of 2008
For File No : CACV 107 of 2009
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : MASTER SANDERSON
Citation : SWANSDALE PTY LTD -v- WHITCREST PTY LTD [No 2] [2009] WASC 179
File No : CIV 2156 of 2008
Catchwords:
Costs - Special costs orders - Fixed, alternatively, indemnity costs sought - Principles underlying indemnity costs orders
Legislation:
Nil
Result:
Indemnity costs awarded to successful respondents
(Page 4)
Category: A
Representation:
CACV 57 of 2009
Counsel:
First Appellant : Mr S Owen-Conway QC & Mr T Galic
Second Appellant : Mr S Owen-Conway QC & Mr T Galic
Third Appellant : Mr S Owen-Conway QC & Mr T Galic
First Respondent : Mr P Mendelow
Second Respondent : Mr P Mendelow
Third Respondent : Mr P Mendelow
Fourth Respondent : Mr P Mendelow
Fifth Respondent : Mr P Mendelow
Sixth Respondent : Mr P Mendelow
Solicitors:
First Appellant : Galic & Co
Second Appellant : Galic & Co
Third Appellant : Galic & Co
First Respondent : Haydn Robinson
Second Respondent : Haydn Robinson
Third Respondent : Haydn Robinson
Fourth Respondent : Haydn Robinson
Fifth Respondent : Haydn Robinson
Sixth Respondent : Haydn Robinson
(Page 5)
CACV 107 of 2009
Counsel:
First Appellant : Mr S Owen-Conway QC & Mr T Galic
Second Appellant : Mr S Owen-Conway QC & Mr T Galic
Third Appellant : Mr S Owen-Conway QC & Mr T Galic
First Respondent : Mr P Mendelow
Second Respondent : Mr P Mendelow
Third Respondent : Mr P Mendelow
Fourth Respondent : Mr P Mendelow
Fifth Respondent : Mr P Mendelow
Sixth Respondent : Mr P Mendelow
Solicitors:
First Appellant : Galic & Co
Second Appellant : Galic & Co
Third Appellant : Galic & Co
First Respondent : Haydn Robinson
Second Respondent : Haydn Robinson
Third Respondent : Haydn Robinson
Fourth Respondent : Haydn Robinson
Fifth Respondent : Haydn Robinson
Sixth Respondent : Haydn Robinson
(Page 6)
Case(s) referred to in judgment(s):
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Brookvista Pty Ltd v Meloni [2009] WASCA 180
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
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 Ltd (1988) 81 ALR 397
J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) (1993) 46 IR 301
Quancorp Pty Ltd v MacDonald [1999] WASCA 101
Re Malley SM; Ex parte Gardner [2001] WASCA 83
Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Unreported, FCA, 3 May 1991)
Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190
(Page 7)
1 REASONS OF THE COURT: The successful respondents to these two appeals seek orders by which the respondents' costs of both appeals would be fixed by the court and ordered to be payable forthwith. Alternatively, the respondents seek costs on an indemnity basis. The issue of costs, with the parties' consent, is being determined on the papers.
2 The respondents' written submissions of 20 July 2010 are supported by an affidavit sworn by the respondents' solicitor, Haydn Ross Robinson, of the same date. Mr Robinson's affidavit contains a breakdown of the respondents' solicitor and counsel costs by reference to hourly charges, generating, in aggregate, a figure claimed of $34,181.40.
3 The respondents' first proposal would circumvent a taxation and seek to have this court immediately fix the respondents' costs of both appeals. This approach is rationalised on the very general basis that a taxation would incur additional expense and delay for the respondents.
4 The respondents say that the level of costs they seek is substantially below a maximum amount that could be awarded in their favour on a (party and party) taxation. Hence it is put that the level of the fixed costs claimed is reasonable. The respondents' written submission proceeds:
15. The Court has a proper basis to determine the costs claimed are, [sic] logical, fair and reasonable.
16. For these reasons the Court should fix the costs of these appeals, a fortiori because this will avoid the expense and delay involved in taxation.
17. If taxation is required, extra costs will be incurred which under Item 29 in the Table of the 2008 Determination, are such amounts as are reasonable in the circumstances. Taxation in these appeals will be unproductive and complicated because of there being 2 appeals not consolidated but heard together, albeit the Respondents do not make too much noise about this complication.
18. The conduct of the Appellants has already wasted the scarce resources of the Court including two special appointments and these appeals. The Court should not provide further indulgences to the Appellants by allowing them to unproductively consume more of the Court resources [sic] by the parties being committed to taxation.
19. The utility in the Court now fixing costs is potentially amplified because it is possible the taxing officer would tax and allow costs to the Respondents in the amounts now claimed.
(Page 8)
5 In the alternative, the respondents seek an order for indemnity costs against the unsuccessful appellants. The respondents' submission as to the alternative orders is (in part):
23. The Respondents are cognisant of the principle [that] an indemnity costs order will not be made if the costs would be covered by an order for party and party costs or by a special costs order: Flotilla at[11].
24. In these appeals it cannot be said costs of $34,181.40 sought by the Respondents will be awarded as party and party costs.
25. The Respondents do not here contend a special costs order should be made because they do not say these appeals involve unusual difficulty, complexity or importance, as is required by s280(2) of the Legal Practitioners [sic: Profession] Act 2008.
26. But it is contended an indemnity costs order should be made, albeit that may result in the same outcome - an order for the Appellants to pay $34,180.40.
27. Where the conduct of the defaulting party deserves sanction by the Court, that may properly be reflected in an order for indemnity costs: Oshlack v Richmond River Council (1998) 193 CLR 72 at [44]; Brookvista at [32].
28. The conduct of the Appellants referred to above and otherwise in the Reasons of the Court of Appeal clearly falls within the conduct proscribed by Pullin J. in Flotilla. The conduct caused the undue prolongation of appeals based on groundless contentions, the appeals were commenced or continued in circumstances where the Appellants, properly advised, should have known that they had no chance of success and substantial irrelevant and inadmissible evidence was sought to be adduced by the Appellants.
6 The appellants resist both alternatives advocated by the respondents, albeit they appear to accept (as they must) that the successful respondents are at least entitled to their taxed costs of the appeal.
7 The appellants point out (correctly) that an order for indemnity costs will only be made in exceptional circumstances, referring to Re Malley SM; Ex parte Gardner [2001] WASCA 83. The appellants contend that, had their senior counsel not advised that the appeals enjoyed 'reasonable prospects of success', the appeals would not have been commenced (more correctly, that the application for leave to appeal in CACV 57 of 2009 and the application for an extension of time within which to seek leave to appeal in CACV 107 of 2009 would not have been brought).
(Page 9)
8 The appellants' submission of 17 August 2010 concludes:
3. There is no finding that the unsuccessful Appellants engaged in any form of misconduct. There is no finding that the unsuccessful Appellants unreasonably prosecuted the appeal or that the appeal was prosecuted for some collateral or improper purpose. There is no finding that the appeal constituted an abuse of process. The appeal was simply dismissed on its merits. That is not a basis on which to award indemnity costs.
- No sufficient basis has been established for the ordinary course of a taxation of costs to be avoided.
9 It remains to assess the respondents' alternative proposal seeking indemnity costs orders.
Indemnity costs orders principles
10 The principles applicable to the making of indemnity costs orders in litigation may be briefly summarised, as follows:
1. A superior court, in its inherent jurisdiction, may make an indemnity costs order (see also Supreme Court Act 1935 s 37, and Legal Profession Act 2008 s 280).
2. An indemnity costs order departs from the usual costs disposition order, whereby costs are awarded on a party/party basis: EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59.
3. The court's discretion as to the making of an indemnity costs order is a discretion that must be exercised judicially. In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397, 400 Woodward J said:
Courts in both the United Kingdom and Australia have long accepted that solicitor and client costs can properly be awarded in appropriate cases, where 'there is some special or unusual feature in the case to justify the court exercising its discretion in that way'. (emphasis added)
4. To obtain an indemnity costs order, it is not the case that the successful party needs to show a collateral purpose, or establish some species of fraud against the unsuccessful party. In J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) (1993) 46 IR 301 303 French J by reference to the observations of Woodward J in Fountain Selected Meats, said:
- It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case.
- 5. Furthermore, in Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Unreported, FCA, 3 May 1991) (referred to by Ipp J in Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190, 191) French J observed:
The categories in which the discretion may be exercised are not closed.
6. Competing principles need to be balanced in assessing the making of a potential award of indemnity costs. In Quancorp Pty Ltd v MacDonald [1999] WASCA 101 [7], Wheeler J observed:
On the one hand, a party should not be discouraged, by the prospect of an unusual costs order, from persisting in an action where its success is not certain. Uncertainty is inherent in many areas of law, and the law changes with changing circumstances. It is inappropriate that a case be too readily characterised as 'hopeless' so as to justify an award of indemnity costs to the successful party. However, where a party has by its conduct unnecessarily increased the cost of litigation, it is appropriate that the party so acting should bear that increased cost. Persisting in a case which can only be characterised as 'hopeless' is an example of the type of conduct which may lead the court to a view that the party whose conduct gave rise to the costs should bear them in full.
7. An indemnity costs order may be appropriate in situations which are shown to involve some element of improper, or at least unreasonable, conduct by a party or the party's legal advisers: see Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225, 233 (Sheppard J), referred to by Pullin J in Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [9].
8. A properly crafted special costs order may obviate the need for an indemnity costs order, where components of cost scale items are allowed above the applicable scale ceiling: see Flotilla [20] - [24].
9. An indemnity costs order may not be appropriate if the claimed costs would be likely to be recovered under the standard order for party and party costs, or under a special order raising or removing
- a scale ceiling allowance: Flotilla [11]. In Unioil (No. 2) (193), Ipp J observed:
However, counsel for the plaintiffs was unable to identify any costs so incurred that would not be covered by an order for party and party costs. An order for indemnity costs on this ground is therefore not warranted.
- 10. Nonetheless, an indemnity costs order will constitute an appropriate sanction marking the disapproval of improper or unreasonable conduct: see Brookvista Pty Ltd v Meloni [2009] WASCA 180 [32], Flotilla [25]. In Flotilla Pullin J said [26]:
A solicitor should not, in my view, resort to an application for an indemnity costs order merely to secure the recovery which could be achieved by a properly formulated special costs order, unless the unsuccessful party's conduct is genuinely to be impugned by the successful party.
11 The materials filed in support of the respondents' application suggest that an award of party and party costs would cover the solicitor/client costs of both appeals. The respondents, in par 14 of the written submissions (referred to above), suggest that the amount of fixed costs that is sought is 'substantially below' the maximum level that could be awarded on a taxation and, at par 26, contend that if an indemnity costs order is made, the result on taxation would result in the same outcome as a taxation on a party/party basis. In those underlying circumstances, as explained by Ipp J in Unioil (No 2) and by Pullin J in Flotilla [11], unless the conduct of the appellants has been conduct which amounts to improper or unreasonable conduct by the appellants or their legal advisers, indemnity costs orders would not be appropriate. The question is whether that threshold has been met in present circumstances.
12 The mere fact that a party advances an argument or ground of appeal which is regarded as unmeritorious by the court will usually not be sufficient to provide a foundation for an indemnity costs order. However, the court is not limited to an examination of the events involved in the appeal. If the unmeritorious argument or ground is advanced in the course of an interlocutory appeal in circumstances where, in the proceedings under review, the party against whom the order is made has been guilty of delay, a flouting of court programming orders and the proffering of irrelevant material, then those circumstances may be taken into account in determining whether there has been improper or unreasonable conduct.
(Page 12)
13 The respondent makes the following submissions about the conduct of the appellants in relation to the respondents' application to strike out the 2008 action as an abuse of process or, in the alternative, for an order for security for costs. The applications were scheduled for a hearing and the appellants ignored the programme and attempted to file late affidavits. The master's rejection of the affidavits then led to the application for leave to appeal. Two appeals were instituted and one of them was filed out of time. The respondents submit that the appellants:
(a) acted in flagrant disregard of the orders of Master Sanderson made on 12 February 2009 without providing any explanation and without seeking an extension of time;
(b) failed to heed the warning of the solicitor for the respondents that if any attempt was made to file a belated affidavit there would be an objection;
(c) derailed the prospect of the substantive hearing or resolution of the respondents' chamber summons by reason of their conduct in filing the affidavits late; and
(d) included in the affidavits irrelevant opinions which also lacked any underlying factual basis.
14 In the interlocutory appeals, the appellants complained about the master's proper decision to reject the affidavits.
15 The respondents' submissions should be accepted. They are supported by the recital of events found in the decision of this court refusing leave to appeal. The conduct of the litigation and the pursuing of the unmeritorious interlocutory appeals was unreasonable, if not improper. The appellants were resisting an order to strike out the claims or to provide a substantial sum by way of security. By their contumelious conduct, they successfully prevented a timely disposition of the interlocutory applications. It is no refuge for the appellants to excuse such conduct by saying they were acting on the advice of senior counsel. The conduct speaks for itself. To allow unreasonable or improper conduct to pass without disapproval has the potential to cause a loss of public confidence in the legal system: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 [30].
16 The unreasonable conduct of the appellants in pursuing unmeritorious appeals in the circumstances of these appeals constitutes a
(Page 13)
- continuation of the conduct displayed in the proceedings under review and warrants the court's mark of disapproval and an indemnity costs order should therefore be made.
17 The court's order will be that the appellants pay the respondents' costs of both appeals to be taxed on an indemnity basis with the usual proviso that such an order does not authorise the recovery of costs of an unreasonable amount, or which have been unreasonably incurred: see Flotilla [28]; Unioil (No 2) (194).
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